Topic: General

The Future of Campaign Finance Restrictions?

Last week the Campaign Finance Institute published a working paper on nonprofits and campaign finance. CFI styles itself as the moderate to conservative wing of the “reform community.” This paper, however, makes a radical proposal.

First, here’s some political context for the paper:

McCain-Feingold largely outlawed soft money contributions to the political parties. In the 2004 election, erstwhile Democratic soft money contributors used 527s as a vehicle for their political efforts. The Republican party by and large did not use 527s. So after the election, the GOP has naturally tried to eliminate the 527 vehicle. Democrats (and a few Republicans) have resisted that effort, and Congress seems unlikely to do anything about 527s this year. The effort to restrict political activities (i.e. “campaign finance reform”) has gotten bogged down for the moment.

The CFI paper tries to broaden the thinking of Congress and thereby the power of the government over free speech. It studies how 12 interest groups used political action committees, 527s, and nonprofit groups in the 2000, 2002, and 2004 elections. (The federal tax code puts nonprofits in the 501c section; they are allowed to engage in education efforts that involve political advocacy).

The sample relied on by the study should give pause. The study seeks to influence public policy, and campaign finance policy covers everyone involved in elections. Ideally, a study of interest groups in elections should be representative of all groups involved in elections. The CFI study does not try to show that their sample is broadly representative. That’s not surprising. It is highly unlikely that the CFI sample can be generalized. The interest groups chosen for the study will be familiar to students of American elections and policymaking; they are well-funded and highly organized. They are outliers and not a good foundation for making public policy that covers everyone.

The sample does have some interesting characteristics. It is evenly divided along partisan and ideological lines. Since the study looks at well-funded and highly organized groups, it thus examines potent threats to members of Congress on both sides of the aisle.

However, if Congress restricts only 527 spending, Democrats would be harmed more than Republicans. The CFI authors say that Republicans use the 501c groups more than the Democrats. The CFI study thus intimates that new restrictions on the political activities of 527s and nonprofits could be a good bipartisan compromise: Republicans would be rid of the 527 threat while Democrats would gain relief from the GOP nonprofits.

Yet upon further examination, the deal looks like more of a hit to the Democrats. The CFI data show that Democratic 527s spent many times what the GOP nonprofits expended in 2004. (The CFI authors contend public data underestimates spending by nonprofits because of inaccurate reporting to the IRS). So the CFI authors are essentially asking the Democrats to sign on to a bad deal.

Politics aside, the CFI study poses larger and more disturbing questions, too.
Preventing corruption has long been the primary legal justification for regulating campaign spending. To prevent corruption courts have allowed Congress to regulate campaign contributions and to treat spending at the behest of candidates as a contribution. The interest groups studied by CFI abide by these laws by using their political action committees to contribute to campaigns.

The focus on corruption also erected a wall between elections and politics. If you give money to a candidate, the thinking goes, you might bribe him and hence, your contribution should be regulated. If you didn’t give money to a candidate but wanted to spend whatever sums advancing your ideas independent of his campaign, that fell under free speech and enjoyed constitutional protection.

527s and nonprofits, on the other hand, spend money on elections and politics but cannot give to candidates. As they CFI study shows, much of this spending involves groups communicating with their members or trying to persuade the public in general. The 527 and nonprofit spending thus falls under free speech.

The CFI authors suggest otherwise. They argue that 527 and nonprofit spending could corrupt representatives. Members of Congress, they say, do not distinguish spending by legal category; PAC contributions, 527 efforts, and nonprofit work are all understood to be payments to a candidate, presumably prompting legislative favors in response.

If such spending risks “corruption,” it may legally be brought under the restrictions of campaign finance law, primarily mandatory disclosure of sources and limits on donations. Those strictures would eliminate all significant 527 spending and many small nonprofits.

The CFI authors provide no evidence that representatives see spending by 527s and nonprofits as quid pro quo contributions. They are also strikingly indifferent to the consequences of their proposal for the rights of their fellow citizens.

For CFI, the distinction between elections and politics and between contributions and free speech has outlived its usefulness. Not surprisingly, the CFI authors do not mention an unmistakable implication of their proposal: in the future, all spending on political advocacy sooner or later will be subject to campaign finance laws. The CFI authors do not mention how this extension of state power comports with the freedom to engage in politics promised by the U.S. Constitution.

Perhaps that’s because it doesn’t.

Working to Cut the Deficit

In an online fundraising letter, President Bush (or someone authorized to sign his name) writes, “Republicans are also working to cut the deficit. The best way to reduce the deficit is to keep pro-growth economic policies in place, and be wise about how we spend your money – which is exactly what Republicans are doing in Washington.”

Just how high would spending be if the Republicans weren’t being wise about how they spend our money?

‘Marriage’ Problems

There were 15,000 divorces in Massachusetts last year. Guess which one made the front page of the Washington Times, above the fold, today. Well, none of them, actually. But the separation of Julie and Hillary Goodridge, plaintiffs in the landmark same-sex marriage case Goodridge v. Massachusetts, did. With a classic Washington Times headline:

Gay ‘marriage’ first couple splits up in Massachusetts

It’s not a real marriage, you see, no matter what the Commonwealth of Massachusetts says, so “marriage” has to be in ironic quotes.

But what’s the point of such a prominent display of this story? Is the (apparent) failure of one marriage, even that of a landmark plaintiff couple, supposed to undermine the case for legal equality? If Linda Brown had flunked out of high school, would that have undermined the moral authority of Brown v. Board of Education? If John Peter Zenger’s newspaper failed, would that undermine the case for freedom of the press?

The Big Dig

With Boston’s Big Dig highway project in the news, a brief review is in order:

As the project was getting started in 1985, government officials claimed that it would cost $2.6 billion and be completed by 1998. The cost ultimately ballooned to $14.6 billion and new problems continue to arise as the project finally nears completion. (The federal share of the project’s cost was $8.5 billion.) In 2004, hundreds of leaks were found in the project, which added millions of dollars in taxpayer costs. And in recent weeks, parts of new road tunnel ceilings have collapsed. 

Raphael Lewis and Sean Murphy wrote an excellent Boston Globe series a couple of years ago revealing how the Big Dig had been grossly mismanaged. A key problem was that Massachusetts repeatedly bailed out bungling Big Dig contractors instead of demanding accountability. Contractors were essentially rewarded for delays and overruns with added cash and guaranteed profits.

When federal money is involved, state and local profligacy and corruption are usually the result. For background on the general problem of cost overruns on federally funded projects, see my compilation of evidence here.

Boldly Buying Votes

Yesterday, at a news conference featuring New York Senator Hillary Clinton and Iowa Governor Tom Vilsack, the Democratic Leadership Council (DLC) unveiled “a bold new plan” for American higher education. The American Dream Initiative would “award states $150 billion over 10 years to reduce tuition and increase graduation rates”; consolidate several federal tax breaks into “a single, refundable $3,000 college tuition tax credit”; and bolster “accountability” by instituting federal price controls.

What terrific, bold ideas these are! First, plow even more government money into a system that has grown obese on taxpayer funds, then throw government “accountability” on top of it, creating a groundbreaking socialist blend of wealth redistribution and government control!

Of course, in reality there’s nothing bold or new about anything in the DLC’s proposal; politicians have been dumping huge loads of money into higher education for decades, and proposing price controls for years. No, far from being “bold,” the American Dream Initiative is just another disgusting attempt to buy American votes by politicians who believe that a big enough dollar sign, wrapped in just enough lofty rhetoric, is the key to political power.

No Consensus

The Wall Street Journal reports that “as gas prices again approach $3 a gallon, consumers are buying new vehicles that are faster and heavier than ever,” much to the annoyance of the EPA. Sometimes, no matter how much we hector and even tax and regulate them, the masses just persist in doing what they want to do in defiance of elite opinion. The story reminded me of several other stories that I wrote up recently at the Guardian blog:

A weekend article in the FT comes with this teaser: “A generation ago, Shin Dong-jin was trying to stop South Korean women from having babies. Now his planned parenthood foundation has the opposite problem–there aren’t enough babies being born. He must persuade the country to go forth and multiply.”

Apparently Shin Dong-jin is just the only person in South Korea who knows, at any given time, how many children people should have. But people make their own decisions.

The FT piece reminded me of some other recent articles about how stubborn people just won’t do what the planners want. A front-page headline in the Washington Post read: “Despite planners’ visions, outer suburbs lead in new hiring.” I was particularly struck by the lead:

As a consensus builds that the Washington region needs to concentrate job growth, there are signs that the exact opposite is happening.

Over the past five years, the number of new jobs in the region’s outer suburbs exceeded those created in the District and inner suburbs such as Fairfax and Montgomery counties … contradicting planners’ “smart growth” visions of communities where people live, work and play without having to drive long distances.

Maybe if tens - hundreds - of thousands of people aren’t abiding by the “consensus,” there is no consensus: there is just a bunch of government-funded planners attending conferences and deciding where people ought to live. It’s like, “Our community doesn’t want Wal-Mart.” Hey, if the community really doesn’t Wal-Mart, then a Wal-Mart store will fail. What that sentence means is: “Some organised interests in our community don’t want Wal-Mart here because we know our neighbours will shop there (and so will we).”

Similarly, another Post story reported that the Ford motor company has dropped a pledge to build 250,000 gas-electric hybrid cars per year by the end of the decade. Environmentalists accused the company of backpedalling: it seems not many people want to buy hybrid cars - even though the planners want them to.

Again and again, individuals insist on making their own decisions rather than conforming to planners’ visions and purported consensuses.