Democracy Drowning in Dollars

BY PHILIP SELLINGER For well over a century America has been struggling with the issue of money in politics.  Now, after a series of federal cases culminating in the Supreme Court’s 2010 Citizens United decision, unlimited funding of Super PACs and other advocacy groups has become the rule.  And this election cycle promises to be the most expensive ever.  With President Obama having earlier set the tone by forgoing public financing and raising $745 million during the 2008 election cycle, estimates are that, during this cycle, the Romney campaign and the Republican National Committee will raise over $800 million. With today’s campaigns spending more than 10 times that spent just 20 years ago,  publicly-financed presidential campaigns seem to be a thing of the past. 

More importantly, it is estimated that outside groups  will spend well over $1 billion on this Fall’s presidential campaign.  Reports say that one individual, Sheldon Adelson, may donate $100 million.

Such unprecedented sums could drown out the voices of individual voters and, in the process, hijack our democracy.  On the national level, such amounts make bipartisanship nearly impossible given that money flows to preserve, and harden, the positions staked out at both parties’ extremes.  Further cementing the status quo is the advantage incumbents have in being able to tap into this money, thus thwarting new candidates’ ability to run for office.  On a local level, the influence of large secret donors is even more pronounced, even to the point of being able to “buy” an election.  Certainly such contributions have the potential for influencing public policy in undesirable ways.

 Fortunately, several proposals before Congress, one to be voted upon early next week,  can help stem this tide. We should  demand that our representatives support such initiatives.

How did we get here?

Regulations on federal campaign spending and contributions have eroded steadily over the past 35 years.  The Supreme Court’s 2010 Citizens United decision permitting unlimited contributions by corporations and unions to “independent-expenditure committees” (Super PACs) opened the financial floodgates even wider. 

Nevertheless, comprehensive campaign finance disclosure rules are still in place.  These rules require candidates, parties, and political action committees to file records of itemized contributions and itemized expenditures on a regular basis.

Unfortunately, one glaring loophole in these disclosure rules is permitting a flood of secret “dark” money to enter this year’s campaigns.  Section 501(c)(4) non-profit groups are not subject to any disclosure requirements.  Organized as “social welfare” groups, these organizations are the new darling of big donors who seek anonymity.  These social welfare groups are prohibited from primarily engaging in electioneering activities.  But since the beginning of 2011, Crossroads GPS, a 501(c)(4) founded by Karl Rove, has spent over $44 million on ads against President Obama and various congressional Democrats and has announced plans to spend between $240 and $300 million before November.  The sources of Crossroads GPS’s money remain secret, as do the sources of an Obama-affiliated 501(c)(4), Priorities USA.  Often, the 501(c)(4) is a donor to its related Super PAC, which creates an additional layer of secrecy.  This secrecy enhances the potentially corrupting influence of large donations since it enables corporations, unions and individuals to publicly proclaim support for certain initiatives in order to promote a desired public image and, at the same time, make covert donations aimed at undermining those very initiatives.  Whether some of these organizations are actually engaged in “social welfare” and not “primarily engaged” in prohibited electioneering activities must be seriously doubted.

Exacerbating these problems is the fact that, although Super PACs are supposed to be “independent” from the campaigns of the candidates they support, such “independence” is a charade.  Large donors routinely appear with the candidates; Super PAC fundraisers camp out in the lobbies of candidates’ fundraisers; Super PACs are staffed with campaign committee former executives; and campaigns signal their future ad buys to the Super PACs.  FEC “independence” requirements are routinely ignored.

Thus, while limits on individual contributions to campaigns technically exist, the ability to contribute unlimited funds to an “independent” group that serves the campaign’s purposes renders such contribution limits farcical.

The Way Back to Democracy

The Supreme Court’s recent ruling makes clear that no limits can be placed on corporate, union or individual campaign contributions to Super PACs or social welfare groups.  Given that, what policy steps can be taken to counteract this flood of money?

            The DISCLOSE Act

Imposing disclosure requirements on social welfare 501(c)(4) groups would go a long way toward preventing the outsized influence of unknown wealthy contributors.  The DISCLOSE Act, which Congress will consider early next week,  attempts to do that.

The DISCLOSE Act would require all groups ( including the currently unregulated social welfare groups) that spend $10,000 or more on election advertising to file, within 24 hours of the spending, a report publicly naming all donors of $10,000 or more.  Such reports would be available within 24 hours on the FEC website.  With the expected barrage of well-funded negative ads during the weeks preceding this Fall’s election, such disclosure would give voters a meaningful way to determine the source and possible bias of such ads.  As the Court stated in Citizens United: “With the advent of the Internet, prompt disclosure of expenditures can provide…citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters.”

One argument sometimes made against the DISCLOSE Act is that disclosure of contributions might allow an incumbent to use government processes to punish contributors to opposing campaigns.  This argument is unfounded.  The access that citizens today have to government conduct under the Freedom of Information Act makes such abuse of government processes unlikely.

            Stronger Anti-Coordination  Requirements

As noted, campaigns and Super PACs often tread a fine line when dealing with FEC regulations preventing coordinated efforts on a candidate’s behalf.  Legislation to tighten the current anti-coordination provisions between Super PACS and other independent groups and the campaigns they support is worthy of voter support.

The Presidential Funding Act         

Also worthy of support is the proposed Presidential Funding Act.  This Act would increase the matching funds available for smaller donations and make those matching funds available to potential candidates early in the primary season when it is often most needed.

The Act would also eliminate spending limits on primary and general elections for participating candidates, provide 4:1 matching funds for small donations ($200 and less) up to $100 million in the primaries and provide $150 million in the general election.  In return, while not limiting the total amount of funds that can be raised, participating candidates would agree not to accept contributions of more than $1,000 from any one person (dropping to $500 from June 1 to Election Day) and would also agree not to accept any contributions from or bundled by lobbyists or PACs.

This type of public financing could reduce dependency on private fund raising while enhancing the role of small contributors and grass root donors and permitting candidates to spend more time on policy matters — both laudable policy goals.  Equally important, by eliminating any caps on the total amount of funds that can be raised, the Act may make publicly-financed campaigns attractive to worthy, but less well-financed, candidates.

Generous matching fund formulas could incentivize small donors, since they would see their donations become more meaningful, and they could also incentivize candidates to seek out such donations.  Similar systems could be extremely important at the state and local level where contributions by well-funded outside sources often overwhelm a candidate’s resources.

The Time is Now

As in the post-Watergate era, the monetary excesses of the current presidential campaign demand serious campaign financing reform.  The initiatives discussed above would  give voice to larger groups of  better informed decision makers and reduce the outsized  influence of the wealthy and powerful. They would produce better outcomes and promote the democratic values we all hold dear. We should hold  our representatives accountable and insist that they support these reforms.  We cannot allow  our democracy to be washed away in a tsunami of special interest money.

Philip Sellinger is an attorney.

Democracy Drowning in Dollars