Practical Thoughts on Fixing Campaign Finance

The recent spate of activity at the FEC regarding regulations and litigation, namely the Club for Growth suit, has brought about some new thoughts about how real campaign finance reforms should be implemented. Specifically, we are on the wrong path entirely and unless we make a turn for the better, significant political freedoms will become limited.

Like many people, including Senator Mitch McConnell and others, I have always thought of campaign finance matters from a First Amendment viewpoint, but that is where many of the similarities end. I do not subscribe to the viewpoint of "money equals speech." Rather, for me, the First Amendment right impacted is one of association. The concept of me giving my hard earned money to a candidate is symbolic of my alliance with that candidate. I am saying to the candidate and the world, "by giving this money to you, I am publicly supporting you and your candidacy." If I want to give more than $2,000 to show how much I support that candidate, why can't I?

Here has been the progression of campaign finance regulation on the federal level. First, there were no regulations and the concern was that the citizenry did not know who was funding the campaigns of candidates for public office. Thus came the Federal Election Campaign Act, designed to prevent corruption or the appearance of corruption in the system. The big part of this law was disclosure of sources of funds. I am a big believer in this system of disclosure as it is open to the press and public.

However, over time, this kind of activity proved limiting and the concept of soft money was born. Soft money soon overtook the regulated activity under the FECA and so we got BCRA which banned overtly political actors from using soft money. But as the Court said in McConnell v. FEC, money, like water, will always find an outlet.

Soon came the pernicious influence of 527 organizations. The FEC tried to regulate them, but that was questionable. Now they are trying to sue to get the regulatory authority. Assuming some regulations are passed on 527s, what is next?

As can be seen, each step of regulation attempting to prevent the appearance or actual corruption represents more regulatory creep. The problem with this regulatory creep is that the regulations deal with core, protected political rights, that of speech and association. The fundamental basis of the First Amendment and the structure of our Constitution is to permit political speech, regulating it only so far as necessary. In the realm of campaign finance regulation, we have long passed the road of necessity.

The "reform" community's efforts, while certainly their right to advocate for their viewpoints, has debased the concept of an informed voter. Not that the campaign finance reformers have a lock on their view of the American voter, over the past 40 years, parties, politicians and even issue advocates have treated the voter like idiots or children that need to be protected from themselves or others. The regulatory creep in campaign finance is nothing more than a type of paternalism, implicitly telling voters, "You can be trusted to determine for yourselves, so we will have rules to tell you."

To me we have a three option tree for campaign finance reform. The options are:

1. Maintain the current path--that of regulatory creep and run the risk of bad cases making bad law in the courts.
2. Go to a completely publicly financed campaign finance system.
3. Move to a "no limits, full disclosure" model espoused by Congressman John Doolittle.

As I have said, option 1 is not an option.

Option 2, one favored by some, creates regulatory problems of its own. First, how will the public funding work? How will disparities between campaign costs for different congressional districts and states be accounted for? It is far more expensive to run a campaign for office in New York City than it is in rural Nebraska. How will candidates qualify for public financing? What are the spending limits? What if a candidate opts out of the public financing? What recourse do his opponents have? In short, more problems may be raised by a publicly financed system.

That leaves us with the No Limits, Full Disclosure model. Under this model there would be no limits on campaign contributions, but full and rapid disclosure of contributions would have to be made via the internet and the FEC. Thus, the only limits on campaign contributions are what I call the "Red Face and Laugh" Test. A candidate could accept $1 million dollars from a contributor, but would have to face public scrutiny of his activities. If the candidate cannot explain his actions without embarrassment or laughter by his critics, then he can take it and the voters could then decide whether his views on the matter are corrupted or not.

Four months ago, I wrote this idea about campaign finance regulation. But I now have a better plan. Here are the elements of my modified plan:

1. No contribution or expenditure limits at all. Any candidate, PAC or Party may raise funds in unlimited amounts. Corporations, unions and foreign nationals would still be prohibited from making contributions.
2. All contributions in excess of $10,000 must be reported to the FEC within 24 hours. All contributions in excess of $5,000 up to $10,000 must be reported within 48 hours. All contributions between $2,000 and $5,000 must be reported in 72 hours. All candidates, PACs and parties must file reports according to currently promulgated schedules. These numbers come from currently written regulations regarding independent expenditures and late contributions. The availability and ease of internet based reporting and freely available software from the FEC and commercial software for managing campaigns would make this requirement quite easy.
3. Ban the raising of all funds for re-election or election campaigns until the earlier of the filing of candidacy papers with the FEC by any candidate other than an incumbent or Jan. 1 of the year of the general election. Thus, if a candidate for any federal office files papers with FEC declaring their intent to run for office, at that point, all candidates, including the incumbent, may begin raising funds. But if no one declares against the incumbent until after Jan. 1 of election year, the incumbent may begin raising funds for re-election. Special election fundraising can only begin when the governor declares the vacancy and all candidates must start from scratch.
4. PACs and parties may raise funds at all times, with no limits, but the same disclosure scheme noted above. The problem here is leadership PACs. Given the reality that these leadership PACs are alter egos of the member, I am inclined to create a separate category of PACs, officially called leadership PACs which would be subject to the same rules on fundraising as candidate committees. But I am flexible on this issue.
5. Prohibit the carrying over of funds from previous elections. One common means to scaring off challengers is have a big bank balance, if all candidates have to start at zero, the early funding advantage for incumbents is eliminated. For those who are elected, the candidate must dispose of excess campaign funds by March 1 of the following year in the means currently allowed, usually throughout contribution to party committees, refunds to contributors, or gifts to charities.
6. Repeal the Millionaire's Amendment. This to me is blatantly unconstitutional on equal protection grounds and on practical grounds is nothing more than a subtle incumbent protection racket.
7. Those who are elected and have debts may raise funds to pay down the debts, but no more until the start of the next even numbered year.

My goal with this proposal is to accomplish two goals. First, reduce the incubency advantage as much as possible, facilitated by limiting the time in which a candidate may raise funds and making each candidate for office start at the same point, i.e. zero. Second, reduce regulatory creep in campaign finance. Disclosure of funding and activities works and provides the public with the opportunity to judge for themselves whether the candidate has been corrupted by his/her contributors.