A New Campaign Reform Strategy and Its Political Consequences

By Jerrold E. Schneider
April 21, 2008

Seven federal campaign reform laws were enacted since 1946. None of these laws stopped Congress from giving huge payoffs to campaign contributors in return for their contributions. Congresspersons need to finance expensive TV advertising for their election campaigns. So they pay off contributors with taxpayers’ money, which then is unavailable for national needs. Total contributor windfalls add up to trillions of dollars per year in a $14 trillion economy. The number of lobbyists in DC is now estimated at 34,750 (Jeffrey Birnbaum).

Each of the seven failed “reform” bills was modified (loop-holed) in congressional committees, with lobbyists exerting their influence from a nearby room. Reformers praised each new reform law, as they had to. So now, few observers believe effective reform can be achieved.

Yet reformers are encouraged by the 74 per cent of U.S. voters who say they want campaign reform (pollster Celinda Lake’s 2006 data). Polls by Public Agenda with Common Cause show “ 72 percent of Americans…feel that those who contribute large amounts to campaigns have undue access to lawmakers and shady influence on legislation.”

A future campaign reform effort will only improve on past failures if, drawing on the Gingrich / GOPAC strategy of the ‘80s and ‘90s, it adopts an expensive new strategy that bypasses the obstacles that have blocked effective reform in the past. Such a strategy is offered here.

But why does reform matter? Reformers need to tell voters that (1) the country’s growing problems can only be met by government programs, which (2) can only be paid for by capturing contributors’ spoils, which (3) only effective campaign reform can capture. Most voters, already highly taxed, do NOT need to pay higher taxes for new government programs. Contributors’ “loot” will serve instead.

WHAT HINGES ON REFORM OUTCOMES?

Reform will cause Congress to reallocate contributors’ windfalls to national needs: global warming; proliferation of nuclear & other weapons; terrorism; pandemics; growth in inequality, a weak education system, inadequate health care, weak job re-training, missing child care, insecure pensions, shortfalls in long-term technological innovation; deteriorating infrastructure; anti--growth fiscal policy, an unstable financial system, etc. etc.

What we hear over and over is that “the money is just not there,” to pay for the programs Americans need. But the money IS there, and would become available, if, and only if, effective campaign reform is enacted into law. A reformed Congress would have the right incentives to break the back of systemic corruption in the USA. Effective reform will cause a reformed Congress to capture contributor windfalls that total up to MUCH more money than is now understood. Contributor-driven waste includes:

(a) Many, but not all, tax deductions, exemptions, credits, allowances, special
benefits, preferences and inequities in the tax code.

(b) Many, but not all, direct business subsidies.

(c) Federal program waste that would not pass an objective review by the GAO.

(d) Retrievable and uncollected revenue owed to the government, mostly by business - alone nearly $1 trillion a year. ( J. Slemrod).

(e) “Rent-seeking,” which economists define as: “contributors’ purchase of government protection from both competition and government regulation.” It is perhaps the largest drain of all. For example, investment firms have used their influence in Congress to block a national saving plan, that would increase national saving, investment, and growth. These firms prefer to protect fees and commissions they now get on the saving and investment vehicles they offer. A national saving plan
would increase national income dramatically, as the Nobel Laureates (the late)
James Tobin, Joseph Stiglitz, and other economists have stressed. But legislators,
protecting their contributions from these firms, have rejected such advice.

(f) Re-configured fiscal, monetary, and regulatory policies would reduce the national
debt, and increase saving, private investment, public investment, and economic
growth. Then every American’s income would increase dramatically in a few years.
Standard investment models show that if wasted dollars were reallocated so as to increase annual saving and investment by 10%, every American’s income would rise one third or more in ten years. (Joseph Stiglitz, Economic Report of the President, February 1999, 364, Table B32.)

So, the total amount of waste from (a) – (f) equals trillions of dollars each year, in a $14 trillion a year U.S. economy. Identifying all government waste would require an independent task force. Reform would give birth to such a task force. Then a reformed Congress, and only a reformed Congress, would reallocate national resources in the national interest.

PROVISIONS IN AN EFFECTIVE REFORM BILL

An effective campaign reform bill, call it “The Bill,” would:
(a) Provide full public financing of the campaign of any candidate who refused private contributions. When opponents of publicly financed candidates receive private contributions that exceed the funds candidates receive from public financing, MATCH the difference. Give publicly funded candidates additional public funds to MATCH private spending on issue advertising that “directly affects an election” (to be redefined).

(b) MATCH the unlimited funds that may be spent for election related activities by non-profit issue advocacy organizations under the tax code [ 501( C) 4 ‘s and 527 ].

(c) Provide an independent, non-partisan, neutrally competent, and generously funded Federal Election Commission to enforce the campaign laws.

(d) Require voting machines to have “paper trails” to reveal stolen votes. Require fair voter registration rules, rules on the accessibility of voting places and times, rules on vote counting, etc. paid for with standardized federal subsidies.

(e) Broadcast candidates’ messages, and debate their views, on publicly licensed media, without their having to raise private contributions. Candidates for debates would be chosen by petitions distributed by neutral agents. The classic debate format replaces candidates’ set speeches; so voters learn candidates’ differences.

(f) “The Bill” would forbid media concentration and fees for access to the Internet.

(g) Writing “The Bill,” offer those with knowledge of specific loopholes1% of what they retrieve, or 5%.

The Supreme Court has affirmed the constitutionality of public financing (Buckley v. Valeo, 1976), and of using public funds to match private funding (Austin v. Michigan State Chamber of Commerce,1990). The Court has all but closed the door on contribution limits (Randall v. Sorrell, 2006). Yet using public funds to MATCH private funds is an effective substitute for contribution limits. MATCHING is the only way to have both unrestricted speech, the Supreme Court’s chief concern, AND a balanced presentation of candidates’ competing views.

A coalition led by Senator Richard J. Durbin (D-Ill) has introduced new reform legislation in the Senate (S. 936, Fair Elections Now) centered on full voluntary public financing of campaigns. The success of this and other reform legislation will depend on whether it adopts both the provisions listed above and the reform strategy outlined next.

HOW TO GET THERE? A NEW STRATEGY

Reformers need a strategy to get “The Bill” through Congress and avoid a presidential veto. First, to succeed, contrary to usual legislative practice, reformers must construct a finished reform bill PRIOR to entering the legislative process inside Congress. Then, under conditions discussed below, reformers can block ambiguous provisions and the deflection of key issues. The process need not be “porous” if certain reform-oriented funding sources are involved.

Second, such a bill, duly endorsed, can be the rally point for reform’s supporters in primaries and general elections. Reform candidates will pledge to support “The Bill”, and challenge their opponents to do the same. Primary voters will face a simple choice: vote for a candidate who supports “The Bill,” or vote for one who doesn’t. Voters need only make a small effort to learn where candidates stand. Issue linkage comes next: candidates and others link reform prospects to resource reallocation, which is then linked to being able to fund health care, education, and a host of other issues, because “the money IS there.”

In 1992 the conservatives asked candidates to pledge support for “No New Taxes.” The pledge was a “line in the sand” that was clear to voters. President George H.W. Bush learned to his sorrow the power of this pledge. He was defeated in part by conservatives’ belief that he had broken his pledge when he raised taxes. Reformers can give voters a similar choice.

Reformers’ Must:
(a) recruit reform candidates
(b) fund their recruitment and their campaigns
(c) require reform candidates to pledge their support for “The Bill”
(d) run those candidates in primaries nationwide
(e) mobilize voters behind these candidates, and
(f) elect enough reform candidates to win votes in Congress.

This expensive new strategy needs support from such wealthy reform advocates as
George Soros, Warren Buffett, John Bogle, key reform groups, and key interest groups.

The amount of money needed for a national reform campaign is much larger than many reformers acknowledge. Large funding sources may not be supportive now because they haven’t yet seen a strategy that can be successful.

Voters favoring reform would be a larger percent of primary voters than general election voters. Low turnout in primaries (15% of eligible voters) would reduce costs of defeating anti-reform incumbents. A stronger reform message/organization would attract stronger candidates, and elect many more reform candidates to Congress.

Only when pledged reformers constitute majorities in both Houses of Congress will a true reform law, “The Bill,” emerge from the legislative process. Then reform legislation can bypass congressional committees, and get an up-or-down vote on the floor of both chambers. A reform majority would prevent the bill from going to a conference committee - famous for deflecting legislation. A conference can be avoided if both chambers’ versions of the bill are identical. Presidential vetoes can be countered if Congress passes the reform bill again after each veto, until the mounting political costs of that president’s next veto achieves his acquiescence. If a reform-minded president is elected, but reform is not supported by Congress, using the “bully pulpit” to push reform will only lead to a loop-holed law. All this might seem somewhat improbable, except that IT HAS ALREADY BEEN ACCOMPLISHED by GOPAC in the 1980s and 1990s.

Reform strategy would benefit from the creation of an independent Advisory Strategy Group, to compare strategies and anticipate opponents’ strategies. It would coordinate subgroups that analyze legal, economic, electoral, legislative, and administrative dynamics, and macro-political dynamics. It would push back against truncated agendas.

ARGUING WITH THE DOMINANT PESSIMIST VIEW

Pessimists doubt that effective reform can be achieved. Their doubts seems amply supported by the failures of the 7 campaign finance reform laws enacted since 1946. McCain - Feingold (BCRA, 2002) actually increased contributors’ windfalls, Ornstein & Corrado’s (2007) arguments to the contrary notwithstanding. But new strategy needs to be judged on its merits.

Pessimists claim congressional funding of local pork barrel projects is inevitable, as payoffs to local interests in congresspersons’ districts and senators’ states. They claim that even after passage of an effective reform law, legislators will be pressured to deliver local projects. Yes, there will always be some pork.

But this story is misleading. To suppose the amount of money spent on local projects - new post offices, bridges, local highways, etc. is anywhere near the amount spent on national pork is a mistake. In Congress, the amount of money captured in the legislative and administrative processes by investment firms, oil companies, large agricultural interests, large drug companies, large auto manufacturers, large insurance companies, large military contractors, etc. - is much greater than local projects. Local pork is used as a “cover story” for much larger corruption. Moreover, after reform, elected representatives would seek support from different local supporters than now, since after reform, candidates they will only need votes and public financing instead of private campaign contributions. Pessimists ignore these points.

The data cited above, from Celinda Lake’s polls and from the Public Agenda/ Common Cause survey, show the about 3 / 4 of U.S. voters want effective campaign reform. This evidence does not fit the pessimists’ story. Pessimists believe that voters would not be responsive to reformers, even geared-up reformers. But voting data tell a different story. Voter turnout in U.S. midterm elections in the 1990, 1994, 1998, and 2002, was, respectively, 33.1, 36.6, 32.9, and 34.3; Compare percent voter turnout in 1962, 1966, and 1970 - Kennedy and Johnson years and the two years thereafter. Then turnout was 45.4, 45.4, and 43.5. The period with higher turnout reflects voters’ belief that their concerns were being met, which suggests that reform has better prospects than pessimists suppose.

Pessimists also fail to factor in “the money – message tradeoff.” Congressional candidates who became free of obligations to contributors would be more likely to develop a message that voters want to hear. Reform candidates could plausibly promise policies now unattainable. They only need say where the money would come from to pay for new policies. (see above).

Pessimists’ worst mistake is being too optimistic. They neglect to count the costs and dangers to the nation that flow from failing to reallocate resources to national needs, in an ever more competitive world economy, and an ever more militarized globe. So, after all, it is remarkable that pessimists dominate the discussion of campaign reform.

CONCLUSIONS: IDEOLOGY, REFORM, & THE ELASTIC POLITICAL BALANCE

Effective campaign reform will enable legislators to offer voters the programs they need, by capturing contributors’ loot and applying it to needed programs. Then the heterogeneity of America’s people, supposedly an obstacle to their unity of purpose, will be subordinated to their common interests, common principles, and shared history. Corruption has starved Americans’ common interests, putting the American nation on a path that its citizens would not freely choose. After all is said and done, the democratic ethos of the Founding Fathers, the ethos of reason and justice, still appeals to most Americans, but they doubt that American politics will serve those ends any time soon.

President Ronald Reagan said: “Government is the problem, not the solution.” A top Gingrich strategist/operative recently described to me how conservatives’ gained control of Congress: “Ideology was crucial to pulling things together” he emphasized. The anti-government ideology gave conservatives their common ground, as presented in the pledge, “No New Taxes,” and the “Contract for America.”

The post World War II pro-government ideology of Democrats and moderate Republicans was abandoned by President Carter. In 1977 he rejected as too expensive Senator Kennedy’s universal health care proposal, previously expected to become law under a new Democratic president. Then Carter politicized the higher civil service, all in the name of “responsiveness.” Since those turning points in 1977-8, many government programs have been hammered.

To the dismay of many Democrats, President Bill Clinton also attacked the role of government, when he announced on January 27, 1996, that “The era of big government is over.” Since then, neither the Democrats nor the Republicans have told the American people that they support a larger role for democratic government. Yet most other advanced countries have long embraced government as the solution, not the problem. Voters are attracted to an anti-government ideology, because they fear that their taxes will go up if government programs are expanded. U.S. taxes are high compared with other advanced countries, except on the rich.

Voters’ negative view of government will change once they learn that increases in government’s responsibilities will only be paid for by capturing the funds contributors have stolen by buying Congress. Yes, corruption is that great. Yes, corruption can be removed.

Then, campaign reformers can anchor their arguments in a pro-government ideology. Without a pro-government ideology, reformers appear disorganized: “Reform? So what?” Reallocation of contributors’ booty - to what? How are you going to get it?

As to fundamentals,
Would the nation be better off if, instead of increasing taxes, corruption-driven waste is reallocated to fund government programs, to fund what the nation needs to do, that business cannot do efficiently, or do at all?

Would the nation be better off if government blocked those corrupt business practices the nation cannot afford to tolerate, like the borrowing and lending of unregulated financial institutions, or an FDA that fails to protect Americans from dangerous drugs?

We need to trust both our businesses and our government. But today’s massive corruption undermines that trust. The only remedy is effective campaign reform, which would fix legislators’ anti-American incentives.

Last, reformers will inevitably be forced to choose between two quite different philosophies of reform. “Do the do-able” once again, or figure out a strategy for doing what is needed. The stakes are enormous.

Jerrold E. Schneider
University of Delaware (ret.)

Email: jes@udel.edu
Tel: 202-237-0869

Author: Campaign Finance Reform & the Future of the Democratic Party (Routledge, 2002)