Change for Good

excerpted from the book

Selling Out

How big corporate money buys elections, rams through legislation,
and betrays our democracy

by Mark Green

Regan Books (HarperCollins) , 2002

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Newton Minow, former Federal Communications Commission chairman, 2000

'We've got a real irony here. . . We have politicians selling access to something we all own-our government. And then we have broadcasters selling access to something we all own- our airwaves. It's a terrible system. "

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Solutions

A comprehensive campaign finance reform program is ideally suited to achieve the conservative goals on which our economy and society are built-competition, efficiency, accountability, open markets, and market integrity. Specifically, four reforms would restore our electoral democracy by elevating voters over donors: spending limits, public financing, a restructured enforcement agency, and free broadcast time and mailings.

Buckley Must Be Overturned

Limits on campaign spending are an integral part of restoring our democracy; Congress understood this fact when it included expenditure limits in the 1971 and 1974 campaign finance laws. Furthermore, the experience of the last quarter century has taught us that without caps on campaign spending to complement contribution limits, money will always find ways back into the system. But as long as Buckley v. Valeo remains the law, the courts are likely to strike down any attempts to place limits on campaign spending.

As discussed in chapter 3, the Court in Buckley concluded that expenditures did not raise the problem of corruption in the same way contributions did. The Court's conclusion is based on two critical errors: (1) subjecting expenditure limits to a higher standard than contribution limits, and (2) considering only the anticorruption rationale while dismissing the other interests.

Why should campaign expenditures be entitled to much greater constitutional protection than campaign contributions? Neither expenditures nor contributions actually are speech; both merely facilitate expressive activities. And the argument that contributions pose a greater danger of quid pro quo corruption than expenditures seems ridiculous on its face: Are we really to believe that a $2000 contribution to a candidate will create a greater sense of obligation than millions of dollars in independent expenditures for that candidate?

And what makes preventing quid pro quo corruption so much more important than any other governmental interest? Of course, it is unacceptable for public officials to sell votes, access, or influence to the highest bidder. Why? Not because of the quid pro quo-ness of it all; we exchange money for goods and services all the time in our daily lives. Rather, it is because the sale of our government undermines the most fundamental principles of our democracy: competitive elections, effective government, and-most important of all-the guarantee that our public officials answer to their true constituents, not a handful of wealthy benefactors. Quid pro quo arrangements are surely egregious violations of these democratic norms, but they are not the only ones.

Some may argue that any effort to overturn Buckley is a pipe dream; and that even if the Court reconsiders Buckley, it will adopt an even harsher position on campaign finance regulation. However, if and when the Court finally breaks from Buckley, it will not be the first time the Court has overruled a long-standing precedent on an important constitutional issue ... while it took a century, Dred Scott was overturned by Brown v. Board of Education in 1954.

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As an alternative to the judicial route, Senator Fritz Hollings has proposed overturning Buckley through a constitutional amendment. I, His proposed amendment states that "Congress shall have power to set reasonable limits on the amount of contributions that may be accepted by, and the amount of contributions that may be made by, in support of, or in opposition to, a candidate for nomination for election to, or for election to, Federal office."

But to amend the Constitution, a proposal must gain a two-thirds majority in both houses and be ratified in three quarters of the states. As any of the proponents of the ill-fated Equal Rights Amendment can attest, this is a very tall order; there have been only seventeen successful amendments since the original Bill of Rights. In 2001, Hollings's proposal was voted down in the Senate, though it picked up 40 votes. Senator Feingold opposes the Hollings amendment on the grounds that we ought to make changes to the freedoms enshrined in the Bill of Rights not by amendment but rather through the Supreme Court. But if President Bush (or his successor) manages to fill the Supreme Court with more justices who don't care whether democracy is for sale and who have never run for office and so cannot understand the problem-thereby making it virtually impossible to overturn Buckley through the courts, Senator Hollings's proposal may become more urgent and feasible.

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Enact Public Financing

Because public financing enhances speech, promotes competition levels the playing field, and reduces reliance on special-interest money, it is the essential reform of the next generation-along with overturning Buckley. So the question is, what form of public financing? The full public financing programs of Arizona, Maine, and Vermont are very attractive, promising experiments. But few elections have been held under Clean Money laws, and the body of evidence supporting them is limited. Because Clean Money is still in its infancy, it's hard to see Congress adopting it in the near future, which is precisely the reason that the movement's founding organizers focused their initial efforts in ~e states. They understood that you have to walk before you can run.

The bill that stands the best chance of both appealing to members of Congress and re-creating the large, diverse coalition behind McCain-Feingold is one built on a law that already has bipartisan support: public funding of presidential candidates. Qualifying presidential candidates who agree to accept spending limits receive public matching funds in the primary election and a flat grant in general election. No one can argue that the system protects incumbents: three of five incumbent presidents have been defeated running under it. Nor can anyone argue that it violates conservative principles: as noted, Ronald Reagan accepted over $90 million in public funding in his three presidential bids.

From lessons learned in presidential, state, and local campaigns, public financing for congressional candidates should include the following elements:

A GENEROUS MATCHING RATE.
At the presidential level, the matching fund program provides a dollar-for-dollar match up to the first $250 contributed. New York City has shown that by increasing the matching rate to 4 to 1, candidates with grassroots community support can rely on small contributions and still raise the money needed to run competitive campaigns.

Although matching-fund programs aren't intended to eliminate fund-raising, as Clean Money aims to do, they can provide the bulk of funds available to candidates. There is no perfect matching rate, but none has proven more effective than New York City's in accomplishing the chief goals of reform: elections that are more competitive and candidates who are less dependent on special interests. For this reason, the congressional matching rate for public funds should be set at 4 to 1, up to the first $250 contributed by individuals (or more if a rich opponent opts out). Contributions from PACs should not be matched, nor should out-of-state contributions.

If candidates raise all of their money in small contributions, they should be able to receive public funds in amounts up to two-thirds of the spending limit. Most candidates will raise some of their money in amounts exceeding $250, and thus the average candidate will receive less than two-thirds of his or her money in public funds. But the 4 to 1 match, resulting in grants up to two-thirds of the spending cap, protects candidates with broad-based support in low-income communities from being significantly outspent by rivals with better financial connections.

REASONABLE QUALlFYING THRESHOLDS.
For candidates to receive public funds, they must raise enough money from enough local residents t o prove their viability. How much is enough? The trick in setting thresholds is to set them high enough to exclude frivolous campaigns, but low enough to include serious grassroots contenders. In Los Angeles, where City Council districts are about 40 percent as large as the average congressional district, council candidates must raise $25,000 from a total of at least 100 different contributors to qualify for public funds, and only the first $250 of a contribution applies toward this threshold. A report by the Center for Governmental Studies found that the thresholds are "appropriately set."

A comprehensive report on campaign finance reform by Professor Richard Briffault and the New York City Bar Association recommends the same qualifying threshold for congressional candidates. For Senate races, the Briffault report recommends that the House threshold apply to candidates in states with only one congressional district, and that $10,000 be added for each district thereafter, up to a maximum threshold of $75,000. In state-level public financing programs, the qualifying threshold for gubernatorial candidates ranges from $35,000 in contribution increments up to $50 (Minnesota), to $300,000 in increments up to $500 (Kentucky).

In my view, a House candidate should raise at least $25,000 in donations of $250 or under to meet the threshold, which means attracting 100 to 200 contributors at least. For Senate races the Briffault formula is sound, though with a higher cap of $150,000 for large states. In states like California and New York, where high spending limits will allow candidates to qualify for millions of dollars in public funds, a $150,000 threshold-again, with only the first $250 of each contribution counting toward it-is not an unreasonable precondition for such a large public investment. To ensure that a candidate is supported by his or her own constituents and not merely outside interests, only contributions from a House candidate's district and a Senate candidate's state should count toward the threshold. These are fair standards. Frivolous candidates will not meet them; serious candidates will.

SPENDING LIMITS.
Until Buckley falls and a spending cap is found constitutional, funding limits can only be encouraged by offering public funds to candidates who voluntarily accept them. Only spending limits can end the arms race for campaign cash and reduce the power of war chests that incumbents build to scare off competition. And only the combination of spending limits and public funds can level the political playing field.

Spending limits that are set too high tend to favor incumbents, because few others can raise the resources to compete with them. Limits that are set too low, however, also favor incumbents, since challengers need to spend enough to overcome the natural advantages that accrue to incumbents through years of constituent service, free media, and use of the franking privilege. So the porridge must not be too hot or too cold. When weighing these two considerations, a third must also be taken into account: incumbents and the well-connected will not voluntarily join a public financing program if they feel its spending limits are significantly below what they could otherwise raise. If limits are too low, so too will be participation rates, and the program's purposes will be seriously compromised.

Of these three considerations, two point toward higher spending limits, which suggests that it is better to err on the side of caution. The average House winner spent $842,245 in 2000; the average candidate who challenged an incumbent spent just $143,685. In 1988, only 22 House campaigns hit the million-dollar mark; in 2000, the number reached 176. To control costs without discouraging participation or diminishing a challenger's ability to compete, House candidates should be held to inflation-adjusted spending limits of $900,000-$450,000 each for the primary and general election. A strong argument may be made that a $900,000 limit, which memorializes a level of spending that is about the current average, does not do enough to suppress campaign spending. But to undercut opponents who will use inadequate spending limits as an excuse to oppose reform, and to ensure that challengers can spend at significant levels, it is in the reform coalition's best interests to support limits around the current average cost of a winning campaign. By definition, this amount can't be too low or too high if it's the average amount it takes to win.

Senate candidates should be able to spend $1 million, plus fifty cents for each voting-age person in the state-which would come to about $8 million (for the primary and general election combined) in New York State, $7 million in Florida, $5 million in Ohio and Pennsylvania, and $2 million in Arkansas-or about one-fourth to one-half of what's recently been spent in these states. But in comparison to House contests, Senate races have higher profiles and receive significantly more media attention, making it harder for incumbents to dominate. Consequently, spending limits lower than current averages will protect challengers from the war chests that Senate incumbents can build over six years, and still ensure-because of free media coverage- that challengers will have ample opportunity to get their message out.

For instance, in Michigan's 2000 Senate race Debbie Stabenow spent $8 million in her victory over incumbent Senator Spencer Abraham, who spent $ 14.5 million. Under the spending-limit formula just outlined, both candidates would have been held to about $5 million. Similarly, in Pennsylvania, a $5 million limit would have helped challenger Ron Klink, who was outspent by nearly $10 million in his losing 2000 campaign against incumbent Senator Rick Santorum.

Separate limits for the primary and general election ensure that the winner of a hard-fought primary will not be placed at a disadvantage by facing a general-election opponent who suffered no primary challenge. To ensure equity, of course, candidates without primary election opponents should be allowed to spend up to the limit in the primary election period, although no public funds should be given to candidates without serious opponents, whether in primary or general elections.

A BONUS PROVISION.
Again, so long as Buckley is the constitutional standard, legislation cannot prevent the super-rich from spending tens of millions of dollars on their campaigns. We can, however, help their opponents by eliminating the spending limit. It is unfair to keep a lid on a non-rich candidate when his or her opponent effectively says the sky's the limit.

Florida's public financing program attacks the issue head-on: candidates whose opponents reject spending limits are entitled to a dollar -for-dollar match up to the amount spent by their opponent. In 1994, Jeb Bush did not participate in the state's public financing program and exceeded its $5 million spending limit by $4 million. As a result, his opponent, Governor Lawton Chiles, received several million dollars more in public funding that allowed him to equal Bush's spending. Many observers cited the law as an important factor in Chiles's reelection. Indeed, after the 1994 election swept Republicans to power in Florida's legislature, they refused to renew the program.

It is unfair, however, to expect taxpayers to underwrite a spending battle with a billionaire. Had Florida's law been in effect in New York City in 2001, it would have entitled the Democratic nominee for mayor (yours truly) to an additional $58 million in public funds-an obscene amount to ask the taxpayers to spend on one mayoral candidate, particularly in a time of financial crisis. Currently, in New York City, the bonus for candidates who face big spenders is a bump in the matching rate from 4 to 1 to 5 to 1, which meant an additional $700,000 under this provision. But, if a $58 million increase is too gargantuan, given a $74 million campaign, an amount equal to only 1 percent of that total was insignificant.

One reasonable solution in the future is the approach of Maine's Clean Money program, which offers a participating candidate his or her opponent's theoretical share of public funds, times two. So if a rich person opts out and spends $5 million in Maine or $75 million in New York City, the complying candidate in a general election could receive a bonus up to a maximum of $850,000 in Maine and $8.5 million in New York City-amounts that would make a challenger more competitive.

CONTRIBUTION LIMITS.
The passage of McCain-Feingold increased the contribution limit from $1000 per election to $2000, the first such increase in nearly thirty years. If Congress enacts a public financing program, these limits should ideally be returned to their original level for House races and left to stand for Senate races, reflecting the different fund-raising demands of each office.

Admittedly, going back to a $1000 maximum in hard money gifts may be a nearly impossible goal politically. A more promising avenue may be to bring PAC limits in line with individual limits, or to limit the total that may be raised from PAC contributions, as Los Angeles does (although some might question the constitutionality of such a move). Limits on total PAC giving would diminish the relative importance of any one PAC contribution, because each could be theoretically replaced with another, and reduce the incumbent's "temptation" when weighing legislatively interested PAC money against his or her own better judgment.

As for self-financing candidates, the Committee for Economic Development recommends a reasonable limit on personal contributions of $25,000-or $50,000 per couple. And to avoid the obvious loophole, personal loans should be regulated so that loans not repaid by election day are considered contributions, and subject to penalty if they exceed contribution limits.

Minnesota prohibits PAC fund-raising while the legislature is in session, and New York governor George Pataki has proposed a ban on fund-raising within twenty-five miles of the state capitol when the legislature is in session. If such a ban is good for state capitals, why not for our nation's capital? At the very least, it would mean a more productive workweek for members of Congress, who would not be dashing off to fund-raising cocktail parties and dinners several nights a week.

FUND-RAISING BLACKOUTS.
In 2001, the Los Angeles City Council passed a bill tightening the city's previously mentioned fund-raising ban from eighteen months prior to elections to twelve for City Council candidates, and from twenty-four months to eighteen months for citywide candidates. The bill, which contained other provisions, was vetoed by Mayor Jim Hahn, but the shorter time allowed for fund-raising is likely to be resurrected in future legislation.

Non-election-year contributions overwhelmingly favor incumbents, and they usually come from special interests seeking to exert influence on legislation, not from citizens seeking to aid a candidate's election campaign. For both reasons, a blackout is a good idea. In addition, a fund-raising blackout in the years before elections would ease the perpetual campaign that now characterizes American politics. "Twenty years ago, you basically ran a Senate campaign in the last year of your term, if not the last six to nine months," said Frank Greer, a Democratic political consultant. "Now, senators who are elected have to begin planning for their next campaign right away." Greer made this remark in 1989; since then, as described in chapter 5, things have only gotten worse. Much worse.

Incumbents are already the huge favorites in the arms and ads race, so why should they also have a head start? Putting everyone on the same starting line would ensure that incumbents don't get halfway to the finish line before challengers hear the gun go off. And the next time you listen to elected officials call reform an "incumbent protection act," call their office and ask if they support a fund-raising I blackout.

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Free Broadcast Time and Mailings

The airwaves belong to us, the public. We provide broadcasters with federal licenses-for free-on the condition that they agree to serve "the public interest, convenience, and necessity." They have not lived up to their end of the bargain.

How have they gotten away with it? (You'll never guess.) The powerful broadcast industry vehemently opposes reforms affecting the.. bottom lines. The industry gave $6.8 million to candidates and parties in the presidential election year of 2000, with half coming in soft money. Their annual largesse has allowed them to skirt their public duty, and then some: despite a thirty-year-old law designed to hold down campaign ad rates, broadcasters routinely gouge candidates ... When the Senate included a provision in McCain-Feingold to close the loophole that allows for such price gouging, the industry went on the attack, showering both parties with hard and soft money. Their efforts paid off: the House stripped the provision from Shays-Meehan and the loophole remains.

Why is the broadcast industry unwilling to live up to its public service obligations? In the 2000 elections, broadcasters pulled down revenue from political commercials that approached $1 billion. Reducing that revenue would mean cutting into profit margins that average between 30 and 50 percent. So it makes perfect business sense for the industry to invest a relatively minute amount in contributions to candidates and parties, because the payoff is astronomical. Dan O'Connor, the general sales manager of WSYT-TV in Syracuse, New York, put it this way: Ad buyers for candidates "call you up and say, 'Can you clear $40,000 [in TV ad time] next week?' It's like, 'What? Am I dreaming? Of course I can clear that!' And they send you a check in the mail overnight. It's like Santa Claus came to town. It's a beautiful thing."

Paul Taylor, executive director of the Alliance for Better Campaigns, a nonpartisan group that advocates for free airtime, sums up the scam this way: "Let's follow the bouncing ball. Our government gives broadcasters free licenses to operate on the public airwaves on the condition that they serve the public interest. During the campaign season, broadcasters turn around and sell access to these airwaves to candidates at inflated prices. Meanwhile, many candidates sell access to the government in order to raise special-interest money to purchase access to the airwaves. It's a wonderful arrangement for the broadcasters, who reap windfall profits from political campaigns. It's a good system for incumbents, who prosper in the big-dollar, high-ante political culture of paid speech. But it's a lousy deal for the rest of us."

Walter Cronkite, the iconic American newsman, is chairman of the Alliance for Better Campaigns. According to Cronkite, "In the land of free speech, we've permitted a system of 'paid speech' to take hold during the political campaigns on the one medium we all own-our broadcast airwaves. It's long past time to turn that around. Free airtime would help free our democracy from the grip of the special interests." That's the way it is, and even Senator Mitch McConnell, the self-described Darth Vader of campaign finance reform, agrees that the broadcasters are not giving the public a fair shake. And for the rest of the world, this is a no-brainer. "America is almost alone among the Atlantic democracies in declining to provide political parties free prime time on television during elections," writes historian Arthur Schlesinger Jr. [If it did so], it could do much both to bring inordinate campaign costs under control and revitalize the political parties "

It's time for electronic consumers to negotiate a better deal with those we give free licenses to. Cronkite's alliance is pushing an innovative and market-based proposal-first discussed in a 1982 monograph from the Democracy Project, Independent Expenditures in Congressional Campaigns: The Electronic Solution-that would provide free broadcast vouchers to candidates and parties. Here's how it would work: Qualifying candidates who win their parties' nominations would receive vouchers for use in their general election campaigns. Candidates, particularly those from urban areas who don't find it cost-effective to advertise on television or radio, could trade their vouchers to their party in exchange for funds to pay for direct mail or other forms of communication. Parties, in turn, could use the vouchers themselves or give them to other candidates. The system creates a market for broadcast vouchers that, because of pricing incentives, ensures their efficient distribution.

A comprehensive campaign finance reform program should provide candidates with a right of access to the public airwaves. Until then, the alliance's voucher proposal should be restricted to those candidates who accept spending limits. Whether vouchers were used for airtime or exchanged for party monies for direct mail, candidates would report them as expenditures. Under such a system, spending limits would retain their integrity. The value of the vouchers should be set at $250,000 for House candidates and vary by population for Senate candidates, with candidates in midsize states receiving up to $2.5 million in vouchers. As in public financing, candidates should be required to reach contribution thresholds to qualify for vouchers.

One might argue that vouchers would simply encourage the proliferation of slickly produced thirty-second advertisements. Yet the reality, for better or worse, is that political commercials are part of elections in America, and there's little chance that will change. The voucher proposal bows to that reality, but it also offers hope: candidates who accept the vouchers should be required to feature their own voices in at least 50 percent of all their ads-whether paid for by vouchers, private contributions, or public funds. There is a growing public distaste for anonymous negative advertising, and candidates, given free access to the airwaves, should be held accountable for their ads.

And there are other ways to promote civic discourse. Cronkite's alliance has put forth a complement to its voucher proposal, called "Voters' Time," that would require broadcasters to air a minimum of two hours a week of candidate discussion in the month preceding every election. At least half of the programs would have to be aired in prime time or drive time, and the formats-debates, interviews, town hall meetings-would be of the broadcasters' choosing. A voters' time requirement is necessary, because broadcasters are airing less and less campaign news and candidate discourse.

In the 2000 election campaign, despite the closest presidential election in a generation, ABC, CBS, and NBC devoted 28 percent less time to campaign coverage than in 1988. In a nationwide survey conducted two days prior to the 2000 elections, more than half the population could not answer basic questions about Bush's and Gore's positions on the issues. There are many factors contributing to that result, but two of them-the domination of election by big money interests, and the unwillingness of the broadcast industry to be a part of the solution-can be cured.

Mandating free airtime for candidates and candidate discussion would appropriately hold broadcasters to a minimal standard of what it means, under the Federal Communications Commission Act, to serve "the public interest, convenience, and necessity." But this will require a committed Congress standing up to an unusually powerful industry, one that gives big contributions and confers access to voters via the airwaves.

Selling Out

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