MONEY IN POLITICS
REVIEW & UPDATE
“This
political system is awash in money. . . The effect
of all this, unfortunately, leads to cynicism and the
frustration of the American people and their lack of
confidence in the system. It’s got to change. . .”
Senator John McCain
January 12, 2012
SURVEY ON MONEY IN POLITICS
(2015 BLOOMBERG POLL)
1.
The Supreme Court’s ruling that corporations and unions may spend
unlimited amounts on political causes should be overturned
Nearly 9 out of 10 – & over 80% of both major parties - agreed
2. Campaign finance should be reformed so that a rich person does not
have more influence than a person without money.
87% of all Americans agree
REASONS FOR OPPOSING RESTRICTIONS ON MONEY IN POLITICS
 Money allows the funding of modern communications, which is essential to
reach voters.
 First Amendment guarantees free speech
 Government should not regulate political speech
 Political communication informs the voters.
 A candidate taking contributions does not mean as an elected official s/he
will do favors for the contributor
WOULDN’T IT BE NICE IF IT WERE THIS EASY?
REASONS FOR RESTRICTING MONEY IN POLITICS
 Full disclosure could insure voters have access to sufficient info
 Enhance political equality.
 Enable candidates to compete equitably
 Prevent distortion of the election process.
 Combat corruption and undue influence in government through special access and
special treatment.
 Reduce time spent on campaign fundraising.
SUPPORTERS OF RESTRICTING MONEY IN POLITICS SEE…
LWV POSITION ON CAMPAIGN FINANCE
Methods of financing political campaigns should:
•
Ensure the public’s right to know
•
Combat corruption and undue influence
•
Enable candidates to compete more equitably
•
Allow maximum citizen participation in the political process
This position is applicable to all federal campaigns for public office — presidential and congressional, primaries as
well as general elections. It also may be applied to state and local campaigns. This position was last revised in 1982.
LWV WORK ON MONEY IN POLITICS
Using this position, the League has worked toward two main goals in recent
years:
• Transparency in financing political campaigns
• Fighting big money and its influence in elections and government
QUESTIONS/AGENDA
 How did we get here?
 What is the current situation?
 Why is this important to me?
 What are the challenges?
 What can I do?
1st PRESIDENTIAL ELECTION:
GEORGE WASHINGTON ELECTED!
 Unanimous vote of electors (69 votes)
 43,782 popular vote out of ~3 million people, including slaves
 <1.3%
CHANGES TO MAKE SYSTEM MORE DEMOCRATIC
 End property, tax payments and religious requirements
 African-American men get the vote and all people get equal
treatment under the law
 Popular election of senators (17th amendment)
 Expansion of the direct primary to eliminate the power of party
bosses
CHANGES TO MAKE SYSTEM MORE DEMOCRATIC
 Women’s suffrage (19th amendment)
 White primaries banned
 Elimination of poll tax and literacy tests
 18-20 year olds get the vote (26th amendment)
BUT ALL ALONG, $$ IS CAUSING CONCERN
“Money is the mother’s milk
of politics.”
Jesse M. Unruh, Democratic
politician and California
State Treasurer, 1966
ANDREW JACKSON: THE FIRST MODERN CAMPAIGN (1828)
 Hired a campaign staff to raise $$ for rallies, parades, buttons, food
and booze, and votes
 Rewarded supporters with political posts
 “To the victor belongs the spoils.”
Election of 1872
1/4 of campaign
funds donated by
ONE person
“Never before was a candidate placed under
such great obligation to men of wealth”
- Noted Historian
“There are two
things that are
important in
politics. The first
is money, and I
can’t remember
what the second
one is.”
Mark Hanna, iron and coal magnate,
campaign manager for Republican
William McKinley
1896 McKinley raises $16 MIL
(approx $460 MIL today)
Teddy Roosevelt
calls for
Congress to ban
“corporate
contributions for
any political
purpose”
ELECTION OF 1904
RESPONSES BY CONGRESS TO $$ IN POLITICS’ SCANDALS
 1867 - 1st law associated with campaign finance
 1907 - BAN campaign contributions from banks and corporations
 1910 - 1st law requiring disclosure & contribution limits
 1939 – Hatch Act
 1947 - BAN campaign contributions from unions
(Taft-Hartley Act)
$$$ IS LIKE A RIVER—IT ALWAYS FINDS A WAY
THE BEGINNING OF PACs—1940s
• Unions, trade associations, corporations and individuals form
Political Action Committees (PAC)
VOLUNTARY ASSOCIATIONS to allow members to donate $$$ to
campaigns and political parties
• CAVEAT: can NOT use $$$ from general funds
“NOT GIVING BACK CHECKERS”
 1952 -Potential VP candidate defends taking $1000s in secret donation
 Makes Checkers speech
FEDERAL ELECTIONS CAMPAIGN ACT (FECA)1971
 First attempt to pass comprehensive reform
•
•
•
Legitimizes PACs for corporations and unions
Spending limits (including self-funded candidates)
Stricter reporting for donations and spending
 After 1972 election, >7,000 cases of law violations turned over
to the Justice Department
Campaign
finance and
other abuses
CREEP
“Hush money”
1972-1974 WATERGATE SCANDAL
REACTION TO WATERGATE SCANDAL:
FECA AMENDMENTS, 1974
 Limits contributions to campaigns by individuals, parties, PACs
 Limits on spending in presidential and congressional campaigns
 Creates the Federal Election Commission (FEC) to oversee
compliance
 Creates voluntary system for public funding of presidential
campaigns
SUPREME COURT RULES ON CAMPAIGN FINANCE
AGAIN & AGAIN & AGAIN
BUCKLEY VS. VALEO (1976)
CHANGES EVERYTHING
The Supreme Court makes a distinction between
Contributions—CAN lead to corruption & CAN be limited
AND
Expenditures—are FREE SPEECH & Do NOT lead to corruption
This distinction is still the linchpin of campaign finance law.
AND CANDIDATES RESPOND BY??...FINDING LOOPHOLES
1979—”SOFT” $$ BEGINS POURING IN…
Hard Money: given directly to candidates
Soft Money: given to political parties for “party building” activities
Unlimited amounts of money from unions and corporations begin flowing into
national parties
$$ starts finding its way into specific campaigns
MORE LOOPHOLES, MORE MONEY, MORE SCANDALS
 Keating S&L Scandal (1991)
 Clinton Lincoln Bedroom
Scandal
ANOTHER WAY AROUND THE LAW: 527s
 Groups avoid registering with the FEC as PACs to avoid FECA
disclosure rules and contribution limits
 Run issue ads
NO
contributions to CANDIDATES
NO
EXPRESS ADVOCACY
SUPREME COURT RULES—EXPRESS ADVOCACY
EXCEPTION for NON-PROFITS—501(c)
But NO EXCEPTION for:
CONGRESS STEPS BACK IN: 2000
527s—MUST DISCLOSE DONORS
REACTION TO SOFT MONEY LOOPHOLE & 1996 election scandal:
THE MCCAIN-FEINGOLD BILL (BCRA), 2002
Congress steps back in…again...in a BIG way
 Bans soft $$ contributions to political parties
 Bans sham issue ads
 Bans use of corporate and general funds for ads that mention candidates close to
elections (electioneering communications)
 Creates Millionaires’ Amendment
 Creates “Stand by Your Ad” law (My name is….. and I approve this message)
2003—UPHELD by Supreme Court
WHITTLING AWAY AT THE LAW
 2007 - Court overturns limitation on outside group political ads close
to the election
 2008 – Strikes down Millionaires Amendment
 2008 – Extends both rulings to states
RESULT: BIG increase in outside political ads
CITIZENS UNITED
 Eliminated limits on contributions and expenditures by independent outside
groups
• Who are these groups? Super PACs and politically active non-profits
 Affirmed the right of all corporations to spend unlimited money independently
(i.e., cannot coordinate with campaigns)
 Ban on corporate contributions to candidates remains
 Overturns regulations & upholds disclosure of spending on issue ads
 Upholds disclosure requirements in elections
CITIZENS UNITED DECISION (2010): 5-4
“All speakers . . . use money
amassed from the economic
marketplace to fund their
speech, and the First
Amendment protects the
resulting speech.”
(2010)
CITIZENS UNITED MAJORITY OPINION
“This Court now concludes that
independent expenditures,
including those made by
corporations, do not give rise to
corruption or the appearance of
corruption.”
Justice Kennedy
JUSTICE STEVENS’ DISSENT
Before Citizens United the Court “did
not rest our holding on a narrow notion
of quid pro quo corruption. Instead we
relied on the governmental interest in
combating the unique forms of
corruption threatened by corporations,
as recognized in Austin’s anti-distortion
. . . rationale.”
QUID PRO QUO…
• A Latin phrase that means “this for
that.”
• An explicit agreement by a candidate or
elected official to perform a specific act
in exchange for something of value.
• The Court narrowed quid pro quo
corruption so that it’s virtually the same
as bribery.
TO SUMMARIZE: Citizens United
 Role of Congress limited due to Supreme
Court decisions.
 Supreme Court ruled First Amendment
ensures that speech cannot be limited.
 Corporations granted same free speech
rights as individuals by Supreme Court.
 Definition of corruption narrowed to
quid pro quo.
The role corporations and influence in government is an
historical problem.
40
Hard Money
MONEY IN ELECTIONS
Candidates
•Caps on
Contributions
•Disclosure
Soft
Money
Fundraising
Bundling
Political Parties &
PACs
Dark Money

• No Disclosure
• No Cap on
Contributions
• Expend Only 50%
On
Electioneering

501(c)(4)'s
Lobbying
Caps on
contributions
Disclosure
Super PACs
• Independent
Expenditures
• No Caps on
Contributions or
Expenditures
• Must disclose donors
WHO’S GETTING THE MONEY?
ELECTION SPENDING 1998-2014
From Open Secrets.org
Spending Examples
• 2004 – Bush and Kerry raise $500 MIL
• 2008 – McCain and Obama raise $1B+
Obama rejects public funding
• 2012 – Obama and Romney spend $1.2 B
Parties/Outside Groups spend $1.5 B
Both reject public funding
FEDERAL ELECTION SPENDING LIMITS 2015-16
GIVING/RECEIVING CANDIDATE
INDIVIDUAL
$2,700 per election
CANDIDATE
$2,000 per election
PAC
$5,000 per election
SUPERPAC
PROHIBITED
UNION
PROHIBITED
CORPORATION
PROHIBITED
PAC
$5,000 per year
$5,000 per year
$5,000 per year
PROHIBITED
PROHIBITED
PROHIBITED
NATIONAL PARTY
$33,400
Unlimited
$15,000 per year
PROHIBITED
PROHIBITED
PROHIBITED
SUPERPAC
UNLIMITED
UNLIMITED *
UNLIMITED
UNLIMITED
UNLIMITED
UNLIMITED
* Although we are not aware of any candidate committee donation to Super PACs, the only restriction on
candidate campaign funds is that they may not be converted to personal use. See 2 U.S.C. 439 a(b)
2014 McCutcheon Decision ended all aggregate limits
IT IS THE 2016 ELECTION….BUT JUST LIKE 1872…
MOST OF THE $$ STILL COMES FROM A FEW DONORS
2016 RACE AS OF SEPTEMBER 30, 2015
(money in millions)
Jeb Bush
Hillary Clinton
Ted Cruz*
Marco Rubio**
Bernie Sanders***
BY CANDIDATE
$24.8
$77.5
$26.6
$14.6
$41.5
TOTAL for TOP 5
$185.0
SUPER PAC TOTAL RAISED
$108.5
$133.3
$20.3
$97.7
$38.4
$64.9
$17.3
$47.7
$0.0
$41.5
$184.5
* 95% of the money raised for Cruz's SuperPac are donations > $1 M
** $15.5 M raised from other groups
***88% of donations to Sanders are for $200 or less
$369.5
SO WHO RAISED THAT ADDITIONAL $15.5…
AND WHO RAN THIS AD?
A FEW THINGS YOU SHOULD KNOW ABOUT ADS
 Most campaign ads – some of which are very negative – aren’t necessarily
coming from the candidates themselves.
 Nearly half are from Super PACS.
 Almost all outside ads are negative.
 According to a 2013 report issued by the Wesleyan Media project: in the GOP
presidential nomination race of 2012, there was a more than 1600 percent
increase in interest-group sponsored ads aired as compared to 2008.
REGULATORY APPROACHES
•
Adopt a Securities and Exchange Commission rule governing
corporate political expenditures.
•
Strengthen and enforce 501(c)(4) political activity rules by the
IRS.
•
Enforce campaign finance laws (action by the FEC and state
regulatory agencies)
54
FEDERAL ELECTION COMMISSION
 Six member bipartisan federal
commission
 Enforcement, regulatory, and
interpretive authority over federal
campaign finance law.
 Four votes required to act.
 Most votes now are 3-3
CONGRESSIONAL OPTIONS
Congress can pass laws to
•
Require full disclosure of donors
who fund through outside
spending
•
Strengthen coordination rules
•
Adopt public funding for all
federal candidates
•
Prohibit members of Congress
from receiving donations from
interests they regulate
ADDITIONAL APPROACHES
•
Seek to have Buckley and/or
Citizens United overturned by the
Supreme Court
•
Use of “democracy” vouchers:
Seattle just passed in 11/2015;
Oregon also has
•
Work to elect a Congress
committed to reform
CONSTITUTIONAL AMENDMENT SOLUTION
•
•
Proposal for Constitutional
amendments to reform MIP
16 states have called for the use
of a national convention
•
Opponents criticize lengthy
process
•
Proponents say would
generate public awareness
IT CAN GET COMPLICATED
From the Friends Committee on National Legislation (FCNL)
WHAT STATES CAN DO
•
Protect voter rights including access
•
Publically funded elections
•
Clean election reforms
•
Full Disclosure
•
End Coordination
WHAT YOU CAN DO
 Learn how politics is financed at federal, state and local levels.
 Participate in community education forums.
 Use Money in Politics Review resources found on the League Management
site: http://forum.lwv.org/category/member-resources/our-work/moneypolitics-review
• Join League and participate in the Money in Politics’ study and consensus.
•
Familiarize yourself with money in politics issues by reading the
background papers
WHAT YOU CAN DO: BE INFORMED
 Local Elections
 State Elections
 National Elections
 Encourage your friends,
families and neighbors to be
active, involved citizens like
you!
LEAGUE UPDATE
• Build member understanding and agreement on the extent to which
political campaigns are protected speech under the First
Amendment. Consider:
• What are the rights of individuals and organizations, under the First
Amendment, to express their political views through independent
expenditures and the finance of election campaign activities; and
• How those rights should be protected and reconciled with the
interests set out in the current LWV position
QUESTIONS/AGENDA
 How did we get here?
 What is the current situation?
 Why is this important to me?
 What are the challenges?
 What can I do?
QUESTIONS?
RESOURCES
THANKS TO THE CENTER FOR RESPONSIVE POLITICS
(OPENSECRETS.ORG) FOR CHARTS AND ELECTION
INFORMATION
A WORKS CITED PAGE IS AT THE END OF THE POWERPOINT
SCRIPT
THANK YOU FOR ATTENDING!
LEAGUE MEMBERS
PLEASE BE SURE TO JOIN US FOR
THE MONEY IN POLITICS CONSENSUS MEETING
JANUARY 13, 2016