The Great Money Chase: Campaign Financing

[Arthur Clark <aclark@essential.org>]

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  TAXPAYER ASSETS PROJECT - NATURAL RESOURCES POLICY ADVISORY
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  TAP-RESOURCES
  August 20, 1996
  
  
  
  This post was prepared by the Environmental Resources
  Information Network (ERIN) for TAP distribution.  It 
  was originally released as an issue report at the 
  1996 National Forest Reform Rally.  
  
  
  
  	The financing of political campaigns and parties by 
  private economic interests, corporations and their political 
  action committees, is considered by many to be the 
  fundamental problem with our current system of government.  
  Each new revelation of money-driven impropriety, whether from 
  a retiring member of Congress or a federal corruption trial, 
  reinforces public cynicism towards the electoral process.  
  Reforming campaign financing is perhaps the lynch pin of 
  any credible plan to reinvigorate democracy in America.
  	The issue report shown below is divided into several 
  sections.  The first section, "Introduction," is a very brief 
  primer on the current regulatory system regarding federal 
  election campaigns.  Those who are already familiar with FECA 
  and the FEC may wish to skip over this section.  The second 
  section, "The Basics of Reform," outlines the fundamental 
  approaches to reforming campaign financing.  The third 
  section, "Focus:  The Forest Products Industry and Campaign 
  Contributions," discusses timber industry contributions to 
  federal legislators and the payoffs that the industry has 
  received in return.  The fifth section, "Beyond PACs," is a
  very brief discussion on viewing PACs with a realistic 
  perspective.  The sixth and final section, "The Bipartisan 
  Clean Congress Act," presents two opposing viewpoints on 
  the premier campaign finance reform bill proposed thus far 
  in the 104th Congress.  This section has been deleted from 
  the post due to its length.  It is available by e-mail 
  request to aclark@essential.org or on the ERIN web site, 
  <http://www.tap.org/erin/>, after September 1, 1996.
  
  For more information on campaign financing, contact the 
  Center for Responsive Politics at (202) 857-0044, U.S. 
  Public Interest Research Group at (202) 546-9707, Public 
  Citizen at (202) 588-1000, Common Cause at (202) 833-1200, 
  or Americans Against Political Corruption at (202) 546-
  9707.
  
  
  
  
  Introduction
  
      The system of campaign finance regulation in
  effect today began to take shape with the passage of the
  1971 Federal Election Campaign Act (FECA).  The
  limitations on the size of contributions to candidates
  by political action committees (PACs) and individuals
  enacted under FECA were strengthened by amendments to
  FECA passed in 1974.  These amendments also created the
  Federal Election Commission (FEC) as the regulatory body
  responsible for implementing the Act's provisions.  
      In the 1976 case of Buckley v. Valeo, the U.S.
  Supreme Court struck down some key provisions of FECA. 
  The Court found the sections of the Act limiting
  spending of personal wealth by a candidate on the
  candidate's own behalf, mandatory limits on total
  expenditures by a candidate and limits on independent
  expenditures to be unconstitutional restraints of free
  speech.  The Court upheld provisions of the law
  requiring record keeping of contribution data and
  disclosure of such records to the FEC, limiting
  individual contributions to candidates and capping
  spending by candidates who voluntarily accept public
  financing.  Following the release of the Buckley
  decision by the Supreme Court, Congress again amended
  FECA to change or remove the provisions which had been
  struck down.  The last major legislative amendments to
  FECA were made in 1979.  These changes further weakened
  FECA by preventing the FEC from conducting random
  compliance audits of campaigns, increasing the amount of
  money which an individual can contribute to a campaign
  without being reported to the FEC and allowing political
  parties to spend unregulated local and state party funds
  on behalf of federal candidates for certain purposes.  
      The legacy of this progressive weakening of FECA
  by litigation and legislative amendment has produced a
  weak regulatory structure.  The regulations governing
  federal electoral campaign spending today are extremely
  complex, but ultimately ineffective in deterring
  candidates and parties from relying heavily on funding
  from corporate business interests and wealthy
  individuals.  In theory, individual citizens may give no
  more than $1,000 to the campaign of candidates for
  federal office and a PAC may give no more than $5,000
  per election.  In reality, wealthy individuals and
  business PACs use a plethora of loopholes and schemes to
  effectively flood the coffers of candidates, especially
  incumbents, with huge sums of corporate money. 
      The tactics used to evade the intent of the law
  are myriad.  One of the most well-known is so-called
  "soft money."  The money collected by the Republican and
  Democratic parties as soft money is used to promote
  candidates in a variety of ways.  Soft money can legally
  be used only for overhead expenses of the parties and
  for "party building" activities.  In fact, such funds
  are frequently spent to affect specific races. 
  Collected by the two parties' national committees in
  enormous amounts ranging from quite common $100,000
  donations up to multimillion dollar checks, these funds
  are doled out to the state party committees in order to
  evade regulation under FECA.  The state party committees
  often spend these funds in ways that affect races for
  federal office.  An example of this practice surfaced in
  the congressional hearings regarding the sexual
  harassment charges against U.S. Senator Bob Packwood 
  (R-OR).  His diaries detail a 1992 discussion he had with
  Senator Phil Gramm (R-TX) in which they planned to
  channel $100,000 in soft money from the Republican
  National Committee to the Oregon state Republican Party
  specifically for the purpose of boosting Packwood's 
  re-election campaign.  
      Another popular way of evading the law is the
  practice of "bundling."  When exploiting this loophole,
  individual citizens or PACs collect large numbers of
  legal contributions to a candidate or party and then
  bundle them together.  By delivering all these checks at
  one time, the person or PAC can give a candidate or
  party very large sums of money in a way that is
  technically in accordance with FEC regulations.  While
  all of these contributions are from different donors,
  the delivery of the bundled checks sends a clear message
  to the recipient that the person or PAC is working hard
  on their behalf.  Also common is what may be called
  "family bundling."  This practice pools the
  contributions of one family into a small bundle of
  checks.  A head of household will often contribute the
  maximum of $1,000 and then also give additional one
  thousand dollar checks in the name of their spouse and
  each of their children. This practice makes it quite
  easy for wealthy individuals to effectively flout the
  official $1,000 limit on individual contributions to
  candidates for federal office.  
      An additional source of unregulated campaign
  spending is that of "independent expenditures."  Such
  spending to benefit a candidate is done by an
  "unauthorized, non-connected committee."  Such a
  committee is one that is not controlled by, authorized
  by, or in consultation with the candidate or her
  campaign committee(s).  This loophole allows friends or
  associates of a candidate to pay for political
  advertising as long as they do not ask the candidate for
  permission to do so or discuss it with them or their
  authorized campaign committee members.  This legal form
  of campaign spending is quite easy to abuse.  Again, the
  diaries of Bob Packwood provide an example.  Packwood's
  diaries reveal that independent expenditures by an auto
  industry PAC may have been illegal.  The entries suggest
  that the PAC may have discussed the expenditures with
  the senator or his staff, a violation of federal law.  
      As is evident to all people today, the current
  system of funding political campaigns is rife with
  problems.  While it seems that major reform of the
  system never quite makes it through the Congress, there
  are many bills introduced concerning campaign financing
  in every session of Congress.  Reform advocates and
  their allies continue to press for change.  
  
  
  
  The Basics of Reform 
  
      While each new session of Congress brings another
  deluge of campaign finance reform bills, there are a in
  fact a small number of approaches to changing campaign
  finance laws.  One that addresses the problem from the
  supply side is the concept of strict $100 limits on all
  contributions to a candidate, whether from a PAC, union
  or individual citizen.  Such a limit is designed to
  force candidates to seek a large base of support for
  their campaign rather than relying on a smaller number
  of well-heeled backers.  Experience with voluntary $100
  contribution limits in Florida and elsewhere suggests
  that it presents no barrier to raising sufficient funds. 
  Candidates who have successfully campaigned under a
  self-imposed $100 limit have found that while the
  methods used to reach voters change, successful outreach
  is no more difficult than before.  This change in
  outreach is characterized by a shift from large
  expenditures for television and other mass media to a
  reliance on direct mail, personal appearances by the
  candidate and radio advertising.
      The demand side approach to reform, emphasizing
  limits on spending by candidates and public financing,
  is also a popular fixture of reform proposals.  The main
  concept is a quid pro quo in which a candidate
  voluntarily agrees to specified caps on campaign
  spending in exchange for receiving public funds.  Due to
  the Supreme Court's 1976 Buckley ruling, caps on
  candidate spending must be voluntary.  The intent of
  public financing is to decrease or even eliminate the
  use of private funds in federal races.  Backers of this
  approach see it as a way to remove the conflict of
  interest inherent in a system which supposedly elects
  representatives to advocate in the public interest, but
  finances campaigns with the money of private economic
  interests.  Perhaps the most radical of reform ideas is
  to amend the U.S. constitution such that mandatory caps
  on all campaign spending would be upheld in the courts.  
      Many campaign finance reform bills contain a
  combination of contribution limits, voluntary spending
  caps, public funding and other restrictions.  Common
  additional restrictions include bans on bundling,
  substantial tightening of what qualifies as an
  independent expenditure, regulating the percentage of
  total funds which a candidate may raise outside of their
  district or state and provision of free or reduced cost
  access to television advertising time.
      In examining the present campaign financing system
  from any reform perspective, it is clear that the public
  interest is not being advanced.  Fundamental
  restructuring is needed to break the link between
  private money and candidates for public office.  The
  current system is, perhaps, the greatest barrier to the
  passage of countless measures needed to advance the
  interests of the taxpayers, voters and commonwealth
  property owners of our country.  Whatever issue is being
  debated, be it national health insurance, a strong
  Endangered Species Act or a ban on clearcutting, the
  perversion of our democracy by private campaign funding
  is at the root of the opposition to legislation which
  truly advances the interests of the public.
  
  
  Focus:  The Forest Products Industry and Campaign
  Contributions
  
      Corporations which contribute to political
  campaigns expect and indeed receive handsome returns on
  their "investments" in individual candidates and the two
  major parties.  Year after year, despite increasing
  concern over government deficit spending, U.S.
  corporations enjoy tax loopholes, subsidies and pork-
  laden contracts courtesy of the U.S. Congress and
  President.  Estimates of the total cost to taxpayers of
  this largesse range from $50 billion to upwards of $300
  billion per year.  Even such huge estimates take into
  account none of the incalculable damage to public health
  and the environment from federal regulation of
  industrial and commercial operations weakened by the
  undue influence of corporate money in politics.
      In terms of examples of the payoffs which business
  interests receive, few are more instructive than the
  recent attempts to weaken or waive environmental
  protection laws, culminating the passage of the salvage
  logging rider. The forest products industry has used
  campaign contributions to candidates of both parties to
  ensure that the management of publicly-owned assets
  (timber, public lands, fisheries, etc.) favors their
  industry over the taxpayers.  The following information
  from the Center for Responsive Politics shows the
  willingness of the forest products industry to invest
  substantial funds in the Representatives and Senators
  who have direct oversight of forest management policy.
      The forest products industry was well positioned
  to take full advantage of the Republican takeover of
  Congress.  In the 1993-94 election cycle, the industry
  continued its practice of contributing most of its PAC
  money to Republicans.  As in the 1991-92 cycle, 75% of
  timber PAC funds went to Republicans.  This solid
  financial support of the Republicans may explain why the
  industry has realized two of its dream goals: 
  unfettered "salvage" logging, exempt from all 
  environmental laws, and a moratorium on new listings of 
  endangered species.  
  
  
  Source:  PACs in Profile:  Spending Patterns in the 1994
  Elections, p. 40.  The Center for Responsive Politics,
  Washington, D.C.
  
  
  LEADING SENATE ENERGY COMMITTEE RECIPIENTS OF TIMBER PAC
  CONTRIBUTIONS, 1989-94*
  
  
  Senator                           Amount
  
  
  Mark O. Hatfield (R-OR)           $70,650
  
  Howell Heflin (D-AL)              $47,500
  
  Larry E. Craig (R-ID)             $41,300
  
  Conrad Burns (R-MT)               $35,465
  
  Don Nickles (R-OK)                $26,078
  
  Dale Bumpers (D-AR)               $23,500
  
  J. Bennett Johnston (D-LA)        $20,000
  
  Rod Grams (R-MN)                  $19,500
  
  Frank H. Murkowski (R-AK),
  Chairman                          $14,500
  
  Wendell H. Ford (D-KY)            $11,500
  
  Jon L. Kyl (R-AZ)                 $11,000
  
  Craig Thomas (R-WY)               $10,000
  
  Pete V. Domenici (R-NM)           $ 5,000
  
  James M. Jeffords (R-VT)          $ 4,000
  
  Ben Nighthorse Campbell (R-CO)    $ 2,000
  
  Bill Bradley (D-NJ)               $ 2,000
  
  * Jeff Bingaman (D-NM), Daniel K. Akaka (D-HI), Paul D.
  Wellstone (D-MN), and Byron Dorgan (D-ND) accepted no
  money from timber PACs.
  
  
  
  
  LEADING HOUSE RESOURCES COMMITTEE RECIPIENTS OF TIMBER
  PAC CONTRIBUTIONS, 1/93 - 6/95
      
  
  Member                            Amount
  
  W.J. "Billy" Tauzin (R-LA)        $18,300
  
  Linda Smith (R-WA)                $16,625
  
  Helen Chenoweth (R-ID)            $15,500
  
  Wes Cooley (R-OR)                 $10,500
  
  Don Young (R- AK), Chairman       $ 9,050
  
  John T. Doolittle (R-CA)          $ 9,000
  
  Jack Metcalf (R-WA)               $ 7,122
  
  James B. Longley, Jr. (R-ME)      $ 7,000
  
  Walter B. Jones, Jr. (R-NC)       $ 6,000
  
  Peter A. DeFazio (D-OR)           $ 5,382
  
  Richard W. Pombo (R-CA)           $ 4,125
  
  Frank A. Cremeans (R-OH)          $ 4,000
  
  Dale E. Kildee (D-MI)             $ 3,985
  
  
  
  Beyond PACs
  
      While PACs play a major role in the current system
  of campaign financing, they are far from the sole
  problem.  In fact, PACs only contribute about 40% of the
  money raised by candidates for federal offices.  Wealthy
  citizens using individual contributions, soft money
  contributions and bundling contribute the bulk of funds
  spent by or for the benefit of federal candidates. The
  wealthy also use independent expenditures to boost their
  candidate's prospects and evade FEC contribution limits. 
  All too often, individuals use their contributions to
  further the interests of the same business interests
  which provide most of the money given to candidates by
  PACs.  The percentage of the American population
  participating in this big money game is around 0.33%. 
  With such a small proportion of the electorate
  contributing to federal campaigns, it is clear that this
  system of funding is in no way a democratic,
  participatory exercise.
      
  
  
  The Bipartisan Clean Congress Act
  104th Congress - S. 1219 & H.R. 2566
                                               May 21, 1996
  
       At present there are 44 bills introduced in Congress 
  dealing with campaign financing.  Of these bills, one has 
  stood out from the rest.  Senate bill 1219, and its House 
  counterpart, H.R. 2566, have garnered substantial attention
  from lawmakers, reform advocates, and opponents of reform.  
  While these bills unquestionably contain substantive changes 
  in campaign finance law, there is considerable debate about 
  how effective these changes would be.  Below are two opinions 
  of the bills, one pro and one con.  Both organizations 
  represented in the following letters are well-respected 
  public interest groups.  [July 1996 Update - this bill has 
  been effectively killed by a filibuster in the Senate.  Pro-
  reform senators and their allies were unable to muster the 60 
  votes needed in the Senate for cloture and a floor vote.]
  
  -Pro & Con texts deleted-
  
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