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Just Because it is Called “Reform” Doesn’t Mean It’s Progress;

This summer the Congress is expected, finally, to take up the subject of campaign finance reform. If you believe the interpretation put upon this issue by most of the media and the permanent, self-designated “reform” lobby, the only reason to oppose the proposals being made is the self-interest of politicians and their major backers. But this simplistic view increasingly is contradicted by the actual results of the reform measures we already have adopted in the past 25 years. In few other areas does the “law of unintended consequences” operate so fiercely.

Most, though not all, campaign reform proposals in Washington, D.C., would result in just the opposite of what reformers claim. They would reduce accountability of politicians, increase the power of rich candidates and special interests, decrease electoral competition and stifle the very free political speech that the American Founders cared about most when they enshrined it in the First Amendment.

Arguably, we need more money in politics, not less, and more people giving, not fewer, and that to protect free political speech, we need less government regulation, not more.

Look at the Alice in Wonderland situation that has developed recently in this year’s presidential race. For the past couple of months, Bob Dole, his poll numbers sagging, must have wondered why he ever agreed to accept public matching money for his presidential campaign. Under the law, a “reform” measure of its time, Dole received federal matching grants from revenue raised by the check-off account to which about 20 percent of the taxpayers contribute on their income tax forms; but in return, he had to agree to limit his campaign spending during the primary season. Now, effectively having secured the Republican nomination, he is only about $150,000 away from his legal limit and the GOP convention is still months away. He cannot legally raise and spend campaign dollars until after the Republican convention.

Meanwhile, Bill Clinton, who had no primary opposition, was able to husband most of his millions in federal matching money and can campaign to his heart’s delight. In fact, as an incumbent president he already enjoys enormous advantages, garnering campaign-like publicity while simply performing as president. At the same time, his allies in the AFL-CIO, who are able to operate outside the campaign laws, are spending $35 million to defeat Dole and the Republicans. The Democratic Party has been similarly focused all spring, placing TV ads in crucial election states. The cumulative effect on Dole’s numbers could not have been good.

Dole is left now with the option of using the resources of the Republican party, but even there he has to be careful. The Republican National Committee plans to spend $20 million to boost its cause before the party convention, but the White House and the Democratic party’s lawyers are watching to see if, for example, Dole or other Republicans at party-sponsored events target Bill Clinton by name in a way that will allow a campaign ethics charge to be lodged with the Federal Elections Commission. Both parties at this point can talk about “issues,” the law appears to say, but cannot explicitly support their candidate’s election. On either this ground or the likelihood of “overspending,” Dole could find himself in another of our country’s synthetic “scandals,” and a defendant before the Federal Elections Commission.

Thus we see in this one situation, the potential for absurdity in modern campaign “reform” legislation. One of the major party candidates is nearly incapacitated and tempted to technical error by the rigidity of federal law–in a dilemma not anticipated years ago by reformers. The parties themselves can campaign, but only if they pretend otherwise. The special interests, however, including besides the AFL-CIO, a host of powers, such as the National Rifle Association, the National Chamber of Commerce, the trial lawyers and the pro-and anti-abortion groups, can spend unlimited funds free of public scrutiny — so long as they don’t use explicit words urging a vote for their preferred candidates. And billionaire Ross Perot (who claims to be a reformer, of all things) can spend as much as he likes, and say whatever he likes, so long as he spends his own money. Ralph Nader, another potential third party presidential candidate who claims “reform” credentials, indicates that he may not release his income tax return, since where he gets his money is nobody’s business.

“Reform,” you see, is for other people. For oneself it increasingly is mostly a dandy way to get the tactical upper hand over one’s ideological foes. Specifically, it is a means to handicap accountable political parties to the benefit of unaccountable special interests, to handicap challengers to the benefit of incumbents, and to enable personally rich candidates to place their competition at a disadvantage. At least, that is the way it is working out.

Twenty five years ago, when the post-Watergate Federal Elections Campaign Act was adopted, the Supreme Court (in Buckley v. Valeo) allowed the law’s limits on contributions (a $1000 amount in federal elections that has never been adjusted for inflation), but cited First Amendment free speech objections to permit limits on spending for wealthy candidates, special interest groups or candidates who decline to accept federal matching money in presidential races.

On their own terms, therefore, the reformers wound up with a lopsided system that is shot through with unfair exceptions and contradictions. And the results show it. Though reformers sought lower cost campaigns, campaign spending levels, in constant dollars, have gone up threefold. The incumbency advantage actually increased after the post-Watergate reforms were enacted; even in 1994, 91.4 percent of incumbents who sought re-election were successful. Where reformers wanted to reduce the influence of special interests, they failed spectacularly. The best example is the creation of political action committees (PACs) that collect voluntary contributions in a given industry or civic organization. This was originally a reform meant to replace straightforward corporate support of candidates. Now the PACs themselves are under attack.

Even if the Supreme Court had accepted the full dose of reform medicine first advanced in law–controlling expenditures as well as contributions — we probably would have been disappointed by the consequences. As Larry J. Sabato, a campaign finance expert at the University of Virginia, has written, “One cannot dam the flow of political money in a society as free as ours. If it’s blocked in one area, it will simply find other channels … These alternative means of influence are often obscured and unaccountable, eliminating visible disclosure.”

Of course, Sabato’s reality check runs directly contrary to what reformers and much of the public believe to be the case. They always imagine that good clean election campaigns are right around the corner, if only we pass a few more regulations. What we forget is the “law of unintended consequences.”

Take the “Bi-partisan Clean Congress Act” introduced in the U.S. House by Republican Rep. Linda Smith of southwest Washington, and several other legislators — Rep. Marty Meehan (D-Mass.) and Rep. Chris Shays, (R-Conn.) — with strong support from the permanent reform lobby, including Common Cause, the League of Women Voters, Ross Perot and most of the liberal media (the latter have lionized Rep. Smith, though they oppose nearly every other political view she holds). This bill would ban PACs, curb out-of-state contributions to Congressional candidates, and further limit spending by the political parties. A companion measure in the Senate, sponsored by Senators Fred Thompson (R-Tenn.), John McCain (R-AZ) and Russ Feingold (D-Minn.), would seek to convince candidates to limit spending voluntarily by offering them free or reduced TV advertising time and government-financed mailings, and penalizing those who do not go along by giving their opponents even more government campaign support. The Senate bill also would expand further the regulatory powers of the Federal Elections Commission.

You can’t blame them for trying. But how would it work out? Linda Smith ran last time against an incumbent, Rep. Jolene Unsoeld, who received a lot of out-of-state money and outspent Mrs. Smith, then the challenger, two to one. But Linda Smith, a leading power among segments of the religious right, had a well-organized power base that raised enough money to enable her to get her message out. It would make political sense for her now, as an incumbent, to entrench this advantage by limiting out-of-state contributions and providing overall spending caps.

But consider the case of Rep. George Nethercutt of Spokane. As a challenger in 1994 and facing mighty Speaker of the House Tom Foley, he found initial fundraising very difficult. Even local Republicans were afraid of offending a powerful incumbent Democrat. Nethercutt was a challenger who required out-of-state support to get enough traction to make his race credible.

Thus, whether out-of-state contributions hurt or help incumbents depends a great deal on the circumstances of a particular race. And the same goes for efforts to keep a lid on personal spending. A challenger’s only hope against a well-known incumbent, especially if that officeholder enjoys media support, is to raise a large enough war chest to get his message out on his own. Says Bradley A. Smith, who teaches election law at Capital University in Ohio, “What is important is not who outspends whom, but that the challenger spends enough to stimulate voter interest in the race … Efforts to cap spending help entrench incumbents and so foster public frustration with the system.”

The same also is true of contribution limits. Little-known challengers need to raise large sums early if they hope to win, and they usually cannot raise such sums without getting large contributions from a few family members and close friends. Contribution limits like those in the Smith and McCain bills mainly help incumbents, people (like Smith) with an already organized donor base, and the personally wealthy, who can contribute all they want. One person’s “reform” is thus another’s restraint on fair competition and voter choice.

A major flaw with the thinking of most reformers is the idea that there is too much money in political campaigns now. As Bradley Smith points out, the total spent on all Congressional races in 1994, including primaries, was $600 million, less than half the annual advertising budget of General Motors, or about $3 per eligible voter — the amount of a video rental. It is also false to think that the amount of money spent on campaigns is responsible for “negative” campaigning and attack ads on TV. There is no evidence for this, nor for the conventional impression that expensive campaigns always prevail. If the complaint is based on false assumptions, therefore, it is not surprising that that it has bad consequences.

If we can all agree that we want ample political competition to assure the voters choices, adequate airing of issues to provide voter’s information for making those choices and prevention of hidden influences, then a better kind of reform might be possible.

First, raise the limit on personal contributions. In truth, there probably should be no limit, so long as the money is disclosed. Personal donations are far more disinterested than those of PACs, let alone the soft money spending of special interests, that goes unreported. Contribution limits for individual donors have tilted the playing field to millionaires and billionaires, who by court ruling, are burdened with no such restrictions. As a compromise, at least raise the present contribution limit enough to take account of 25 years of inflation; i.e., to $5,000.

Second, don’t weaken the political parties, strengthen them. It is ridiculous to try to limit or curtail their spending . They are the proper and historical home of politics and the institutions of democracy that are most regulated by political disclosure laws — in contrast to the court-protected unions, industry associations and special interest advocacy groups. Fortunately, a Colorado case is about to be decided which could determine that money parties spend on their candidates constitute an “expenditure” under the law, not a “contribution,” and therefore, they, too, are covered by the First Amendment’s free speech clause.

Indeed, in Washington State, as a result of Initiative 134, we already have reached a similar conclusion.

Third, if we are going to have strict disclosure laws, they should be applied to special interest groups — including the reformer’s own organizations — that lobby the public on political issues.

Fourth, instead of trying to shrink spending on politics, which is wrongheaded, and futile in any case, stimulate the ordinary citizen to participate more. Nothing would go farther to liberate citizen politicians than expanded support in the form of citizen campaign contributions. We can do this by offering a tax deduction for all contributions up to the legal limit and a tax credit for all those below a set figure; say, $50. Parties should be included, as well as candidates.

Fifth, if the above is accomplished, it then would not hurt to limit PACs further, and it will not be necessary to turn eventually to direct public finance of political reform.

This kind of program suggestion is not unique. Variations of it recently have been embraced by groups and individuals as diverse as the libertarian CATO Institute and the liberal Center for the Study of the American Electorate, Speaker Newt Gingrich and liberal columnist David Broder, the conservative Wall Street Journal and the liberal Roll Call. They all have seen that what we need now is not another round of reform, but, if you will, a reform of the reforms already in place.

Political freedom, after all, is really an analog to economic freedom, as well as its natural companion. Just as over-regulation can stifle the economy and lead to government control, so too can over-regulation of politics. Our object, therefore, should be to increase competition and free speech in the political process.

Bruce Chapman

Cofounder and Chairman of the Board of Discovery Institute
Bruce Chapman has had a long career in American politics and public policy at the city, state, national, and international levels. Elected to the Seattle City Council and as Washington State's Secretary of State, he also served in several leadership posts in the Reagan administration, including ambassador. In 1991, he founded the public policy think tank Discovery Institute, where he currently serves as Chairman of the Board and director of the Chapman Center on Citizen Leadership.