Commentary

Campaign Finance Folly

Most members of the political class welcome any opportunity to sing the praises of curtailing political speech, especially the necessity of banning “soft money” donations — the unlimited donations made to political parties to pay for issue advertising, voter registration, and voter mobilization campaigns. But lofty rhetoric designed to impress suburban soccer moms recedes when it comes face-to-face with the reality of funding a modern-day political operation.

A case in point: The Democratic National Committee recently alleged before the Federal Election Commission that it had suffered a drop in fundraising as a result of its decision, following the Sept. 11 attacks, to cancel eight fundraising events projected to raise $1.65 million.

Although soft money can be donated in unlimited amounts, there are limits on how party committees such as the DNC may spend it. Consequently, the DNC wanted the FEC to suspend regulations that provide a 60-day window for transferring soft money funds to its hard money accounts in order to give the DNC more time to cover operating expenses (such as rent) using soft money donations.

Curiously, no other party committees made a similar request. Even Common Cause, the reliable campaign finance reform gadfly, objected to the DNC’s shenanigans. Interestingly, in the midst of its financial dry spell the DNC ignored the rent bill and chose to spend $3.4 million in September and October supporting Democratic candidates in New Jersey and Virginia.

Once the money was spent, the DNC still had non-FEC options. It could borrow funds from other Democratic Party committees, borrow funds from a bank, or, heavens forbid, tighten its belt and cut its budget. Instead, the DNC sought special treatment under the law - just the kind of campaign finance high jinks it regularly demonizes as corrupt.

The FEC, an agency that can normally be counted on to chip away at the First Amendment, concluded that the principle of equal enforcement and application of the Federal Election Campaign Act and FEC regulations is paramount.

Campaign regulations must be applied consistently across political parties and their respective committees. Hence, the DNC’s request was rejected. The DNC isn’t the only culprit when it comes to favoring one kind of campaign reform for itself and another for everyone else. Arizona Sen. John McCain (R) is a skilled practitioner of this approach to campaign regulation.

McCain, the principal backer of campaign finance reform, is also a loyal backer of Indian political causes. As a result, McCain is the number one recipient of the political donations provided to candidates by the nation’s 550 Indian tribes. In fact, McCain receives twice the amount given to the second-highest recipient.

Under current law, a person may donate a maximum of $1,000 to a specific candidate up to an annual limit of $25,000. This is known as “hard money.” The candidate may use it directly for his own campaign. In May 2000, the FEC ruled that an Indian tribe may make the current maximum hard money donation of $1,000 per candidate to each of the more than 500 candidates running for federal office, i.e., Indian tribes can make aggregate annual hard money contributions in excess of $500,000.

In April, McCain’s campaign finance bill passed the Senate and remains in legislative limbo in the House. However, if a McCain-style campaign finance bill is eventually passed, thereby banning soft money, McCain’s favored tribes will possess a huge advantage over other Americans in exercising their right to political speech.

Curiously, this discrepancy wasn’t resolved before McCain’s bill reached the Senate floor last spring. But the Senator’s senior advisor on this issue offers the reassurance that “there may be flaws that need to be rectified, but they can be handled at a later time.” Let’s not hold our collective breath on that one.

With the House of Representatives just seven signatures short of the magic number needed to force a vote on campaign finance reform, both the DNC’s action and McCain’s inaction is instructive. They highlight the double standards characteristic of most efforts to reform campaign finance. The result of increased constraints on political speech is never cheaper, fairer, or more honest campaigning. The only result is more power for the regulators and less freedom for the rest of us.

Patrick Basham is senior fellow and John Samples is director of the Center for Representative Government at the Cato Institute.