The Common Good
July 2004

The Best Democracy Money Can Buy

by Marty Jezer | July 2004

Why incremental reform is not the solution.

Advocates of campaign finance reform approach the issue from two different strategic perspectives:

Advocates of campaign finance reform approach the issue from two different strategic perspectives: Abolitionism and incrementalism. Abolitionists espouse comprehensive reform - full public financing that removes all private money from the electoral process. They see money in politics as a raging river - dam it at one point and it will create a new riverbed elsewhere. Under the name of the Clean Money, Clean Elections (CMCE) reform, public financing is successful law to varying degrees in four states.

A federal "clean elections" bill has been introduced that, like the state bills, gives public financing to qualified candidates who agree not to take campaign contributions from private sources (except for a limited number of small "qualifying" contributions that serve to establish eligibility for the full public stipend). Right now, the federal bill lacks the grassroots support to make it a pressing issue.

The difficulty of passing a comprehensive public financing bill is why many reformers choose the incremental approach. On the assumption that it is better to pass a limited bill than no bill at all, they hope to reform the system in stages. The 2002 McCain-Feingold bill (officially known as the Bipartisan Campaign Reform Act or BCRA), is their primary accomplishment. It is meant to prohibit "soft money," the hundreds of millions of dollars that corporations, labor unions, and wealthy individuals launder through unregulated state parties for use in federal elections.

Many abolitionists predicted that McCain-Feingold would prove to be one big loophole that would spawn new conduits for soft money and dilute efforts to build popular support for comprehensive public financing.

THE ABOLITIONISTS seem to have been right. First, McCain-Feingold doubled the contribution limits on legal "hard money" contributions, from $1,000 to $2,000. In reality, such limits are phony. Wealthy donors often give money in the name of every member of their family, including their children. Corporations and other special interest groups also bundle donations so they, rather than the individual donor, get credit for the donation.

Some interest groups and politicians despise the quest for money. But interest groups know that money buys access to legislators as well as customized small print in omnibus legislation. Candidates fear that if they reject special interest money, their opponents will outspend them and flood the airwaves with negative advertising. Incumbents almost always raise more money than challengers, and the candidate who spends the most money almost always wins. (For House seats the number is more than 90 percent.)

The biggest soft money loophole has proven to involve tax-exempt, nonprofit organizations (known as 527s by their IRS Code number) that, under the bill, are allowed to do partisan education and issue advocacy work as long as they are "independent" from political parties and campaigns. Many of the same wealthy individuals and powerful interest groups, prohibited from giving traditional forms of soft money, are forming these IRS-approved nonprofit groups as conduits for this new form of legal soft money.

In the 2004 election, the advantage that the Republicans have in raising hard money has been partly offset by the success of the Democrats in raising 527 money. The most prominent Democratic Party large donor is billionaire financier George Soros, who has given more than $12 million to the Democratic Party through two new 527 organizations, "America Coming Together" and the Internet-based "MoveOn.org Voter Fund." However grateful Democrats are for this financial infusion, Republicans are obviously capable of matching or exceeding their windfall.

Despite McCain-Feingold, little has changed. Money still dominates the electoral and legislative processes. And the rich will always have more money than the poor to invest in political candidates and their parties. Incremental reform, however well-intentioned, has not solved the corrupting influence that money has on American politics.

Marty Jezer was a founding member of The Working Group on Electoral Democracy that first conceived the Clean Money, Clean Elections reform. For information about CMCE, visit www.publicampaign.org. To learn who gives and gets campaign contributions, including 527 funds, see www.opensecrets.org.

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