MONEY IN POLITICSREVIEW & UPDATE

“This political system is awash in money. . . The effect of all this, unfortunately, leads to cynicism and the frustration of the American people and their lack of confidence in the system. It’s got to change. . .”

Senator John McCainJanuary 12, 2012

SURVEY ON MONEY IN POLITICS(2015 BLOOMBERG POLL)

1. The Supreme Court’s ruling that corporations and unions may spend unlimited amounts on political causes should be overturned

Nearly 9 out of 10 – & over 80% of both major parties - agreed

2. Campaign finance should be reformed so that a rich person does not have more influence than a person without money.

87% of all Americans agree

REASONS FOR OPPOSING RESTRICTIONS ON MONEY IN POLITICS

Money allows the funding of modern communications, which is essential to reach voters.

First Amendment guarantees free speech

Government should not regulate political speech

Political communication informs the voters.

A candidate taking contributions does not mean as an elected official s/he will do favors for the contributor

WOULDN’T IT BE NICE IF IT WERE THIS EASY?

REASONS FOR RESTRICTING MONEY IN POLITICS

Full disclosure could insure voters have access to sufficient info

Enhance political equality.

Enable candidates to compete equitably

Prevent distortion of the election process.

Combat corruption and undue influence in government through special access and special treatment.

Reduce time spent on campaign fundraising.

SUPPORTERS OF RESTRICTING MONEY IN POLITICS SEE…

LWV POSITION ON CAMPAIGN FINANCE

Methods of financing political campaigns should:

• Ensure the public’s right to know

• Combat corruption and undue influence

• Enable candidates to compete more equitably

• Allow maximum citizen participation in the political process

This position is applicable to all federal campaigns for public office — presidential and congressional, primaries as well as general elections. It also may be applied to state and local campaigns. This position was last revised in 1982.

LWV WORK ON MONEY IN POLITICS

Using this position, the League has worked toward two main goals in recent years:

• Transparency in financing political campaigns

• Fighting big money and its influence in elections and government

QUESTIONS/AGENDA

How did we get here?

What is the current situation?

Why is this important to me?

What are the challenges?

What can I do?

1st PRESIDENTIAL ELECTION:GEORGE WASHINGTON ELECTED!

Unanimous vote of electors (69 votes)43,782 popular vote out of ~3 million people, including slaves<1.3%

CHANGES TO MAKE SYSTEM MORE DEMOCRATIC

End property, tax payments and religious requirements

African-American men get the vote and all people get equal treatment under the law

Popular election of senators (17th amendment)

Expansion of the direct primary to eliminate the power of party bosses

CHANGES TO MAKE SYSTEM MORE DEMOCRATIC

Women’s suffrage (19th amendment)

White primaries banned

Elimination of poll tax and literacy tests

18-20 year olds get the vote (26th amendment)

BUT ALL ALONG, $$ IS CAUSING CONCERN

“Money is the mother’s milk of politics.”

Jesse M. Unruh, Democratic politician and California State

Treasurer, 1966

ANDREW JACKSON: THE FIRST MODERN CAMPAIGN (1828)

Hired a campaign staff to raise $$ for rallies, parades, buttons, food and booze, and votes

Rewarded supporters with political posts

“To the victor belongs the spoils.”

“Never before was a candidate placed under such great obligation to men of wealth”

- Noted Historian

Election of 1872

1/4 of campaign funds donated by ONE person

“There are two things that are important in politics. The first is money, and I can’t remember what the second one is.”Mark Hanna, iron and coal magnate, campaign manager for Republican William McKinley

1896 McKinley raises $16 MIL (approx $460 MIL today)

ELECTION OF 1904

Teddy Roosevelt calls for Congress to ban “corporate contributions for any political purpose”

RESPONSES BY CONGRESS TO $$ IN POLITICS’ SCANDALS

1867 - 1st law associated with campaign finance

1907 - BAN campaign contributions from banks and corporations 1910 - 1st law requiring disclosure & contribution limits

1939 – Hatch Act 1947 - BAN campaign contributions from unions (Taft-Hartley Act)

$$$ IS LIKE A RIVER—IT ALWAYS FINDS A WAY

THE BEGINNING OF PACs—1940s

• Unions, trade associations, corporations and individuals form Political Action Committees (PAC)

VOLUNTARY ASSOCIATIONS to allow members to donate $$$ to campaigns and political parties

• CAVEAT: can NOT use $$$ from general funds

“NOT GIVING BACK CHECKERS”

1952 -Potential VP candidate defends taking $1000s in secret donation

Makes Checkers speech

FEDERAL ELECTIONS CAMPAIGN ACT (FECA)1971

First attempt to pass comprehensive reform

• Legitimizes PACs for corporations and unions• Spending limits (including self-funded candidates)• Stricter reporting for donations and spending

After 1972 election, >7,000 cases of law violations turned over to the Justice Department

1972-1974 WATERGATE SCANDAL

Campaign finance and other abuses

CREEP

“Hush money”

REACTION TO WATERGATE SCANDAL: FECA AMENDMENTS, 1974

Limits contributions to campaigns by individuals, parties, PACs

Limits on spending in presidential and congressional campaigns

Creates the Federal Election Commission (FEC) to oversee compliance

Creates voluntary system for public funding of presidential campaigns

SUPREME COURT RULES ON CAMPAIGN FINANCE AGAIN & AGAIN & AGAIN

BUCKLEY VS. VALEO (1976) CHANGES EVERYTHING

The Supreme Court makes a distinction between

Contributions—CAN lead to corruption & CAN be limited

AND

Expenditures—are FREE SPEECH & Do NOT lead to corruption

This distinction is still the linchpin of campaign finance law.

AND CANDIDATES RESPOND BY??...FINDING LOOPHOLES

1979—”SOFT” $$ BEGINS POURING IN…

Hard Money: given directly to candidates

Soft Money: given to political parties for “party building” activities

Unlimited amounts of money from unions and corporations begin flowing into

national parties $$ starts finding its way into specific campaigns

MORE LOOPHOLES, MORE MONEY, MORE SCANDALS

Keating S&L Scandal (1991)

Clinton Lincoln Bedroom Scandal

ANOTHER WAY AROUND THE LAW: 527s

Groups avoid registering with the FEC as PACs to avoid FECA disclosure rules and contribution limits

Run issue ads

NO contributions to CANDIDATES

NO EXPRESS ADVOCACY

SUPREME COURT RULES—EXPRESS ADVOCACYEXCEPTION for NON-PROFITS—501(c)

But NO EXCEPTION for:

CONGRESS STEPS BACK IN: 2000

527s—MUST DISCLOSE DONORS

REACTION TO SOFT MONEY LOOPHOLE & 1996 election scandal:

THE MCCAIN-FEINGOLD BILL (BCRA), 2002

Congress steps back in…again...in a BIG way

Bans soft $$ contributions to political parties

Bans sham issue ads

Bans use of corporate and general funds for ads that mention candidates close to elections (electioneering communications)

Creates Millionaires’ AmendmentCreates “Stand by Your Ad” law (My name is….. and I approve this message)

2003—UPHELD by Supreme Court

WHITTLING AWAY AT THE LAW

2007 - Court overturns limitation on outside group political ads close to the election

2008 – Strikes down Millionaires Amendment

2008 – Extends both rulings to states

RESULT: BIG increase in outside political ads

CITIZENS UNITED

Eliminated limits on contributions and expenditures by independent outside groups• Who are these groups? Super PACs and politically active non-profits

Affirmed the right of all corporations to spend unlimited money independently (i.e., cannot coordinate with campaigns)

Ban on corporate contributions to candidates remains

Overturns regulations & upholds disclosure of spending on issue ads

Upholds disclosure requirements in elections

CITIZENS UNITED DECISION (2010): 5-4

“All speakers . . . use money amassed from the economic marketplace to fund their speech, and the First Amendment protects the resulting speech.” (2010)

CITIZENS UNITED MAJORITY OPINION

“This Court now concludes that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”

Justice Kennedy

JUSTICE STEVENS’ DISSENT

Before Citizens United the Court “did not rest our holding on a narrow notion of quid pro quo corruption. Instead we relied on the governmental interest in combating the unique forms of corruption threatened by corporations, as recognized in Austin’s anti-distortion . . . rationale.”

QUID PRO QUO…

• A Latin phrase that means “this for that.”

• An explicit agreement by a candidate or elected official to perform a specific act in exchange for something of value.

• The Court narrowed quid pro quo corruption so that it’s virtually the same as bribery.

TO SUMMARIZE: Citizens United

Role of Congress limited due to Supreme Court decisions.

Supreme Court ruled First Amendment ensures that speech cannot be limited.

Corporations granted same free speech rights as individuals by Supreme Court.

Definition of corruption narrowed to quid pro quo.

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The role corporations and influence in government is an

historical problem.

MONEY IN ELECTIONSLobbyingHard

MoneyCandidates

•Caps on Contributions•Disclosure Soft

MoneyPolitical Parties & PACs Caps on

contributions Disclosure 

Super PACs• Independent Expenditures

• No Caps on Contributions or Expenditures

• Must disclose donors

Dark Money 501(c)(4)'s• No Disclosure• No Cap on Contributions

• Expend Only 50% On Electioneering

Fundraising

Bundling

WHO’S GETTING THE MONEY?

ELECTION SPENDING 1998-2014

From Open Secrets.org

Spending Examples

• 2004 – Bush and Kerry raise $500 MIL

• 2008 – McCain and Obama raise $1B+ Obama rejects public funding

• 2012 – Obama and Romney spend $1.2 B Parties/Outside Groups spend $1.5 B Both reject public funding

FEDERAL ELECTION SPENDING LIMITS 2015-16

2014 McCutcheon Decision ended all aggregate limits

GIVING/RECEIVING CANDIDATE PAC NATIONAL PARTY SUPERPACINDIVIDUAL $2,700 per election $5,000 per year $33,400 UNLIMITEDCANDIDATE $2,000 per election $5,000 per year Unlimited UNLIMITED *PAC $5,000 per election $5,000 per year $15,000 per year UNLIMITEDSUPERPAC PROHIBITED PROHIBITED PROHIBITED UNLIMITEDUNION PROHIBITED PROHIBITED PROHIBITED UNLIMITEDCORPORATION PROHIBITED PROHIBITED PROHIBITED UNLIMITED

* Although we are not aware of any candidate committee donation to Super PACs, the only restriction oncandidate campaign funds is that they may not be converted to personal use. See 2 U.S.C. 439 a(b)

IT IS THE 2016 ELECTION….BUT JUST LIKE 1872…

MOST OF THE $$ STILL COMES FROM A FEW DONORS

2016 RACE AS OF SEPTEMBER 30, 2015(money in millions)

BY CANDIDATE SUPER PAC TOTAL RAISED Jeb Bush $24.8 $108.5 $133.3Hillary Clinton $77.5 $20.3 $97.7Ted Cruz* $26.6 $38.4 $64.9Marco Rubio** $14.6 $17.3 $47.7Bernie Sanders*** $41.5 $0.0 $41.5

TOTAL for TOP 5 $185.0 $184.5 $369.5

***88% of donations to Sanders are for $200 or less

* 95% of the money raised for Cruz's SuperPac are donations > $1 M

** $15.5 M raised from other groups

SO WHO RAISED THAT ADDITIONAL $15.5…

AND WHO RAN THIS AD?

A FEW THINGS YOU SHOULD KNOW ABOUT ADS

Most campaign ads – some of which are very negative – aren’t necessarily coming from the candidates themselves.

Nearly half are from Super PACS.

Almost all outside ads are negative.

According to a 2013 report issued by the Wesleyan Media project: in the GOP presidential nomination race of 2012, there was a more than 1600 percent increase in interest-group sponsored ads aired as compared to 2008.

REGULATORY APPROACHES

• Adopt a Securities and Exchange Commission rule governing corporate political expenditures.

• Strengthen and enforce 501(c)(4) political activity rules by the IRS.

• Enforce campaign finance laws (action by the FEC and state regulatory agencies)

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FEDERAL ELECTION COMMISSION

Six member bipartisan federal commission

Enforcement, regulatory, and interpretive authority over federal campaign finance law.

Four votes required to act. Most votes now are 3-3

CONGRESSIONAL OPTIONS

Congress can pass laws to

• Require full disclosure of donors who fund through outside spending

• Strengthen coordination rules

• Adopt public funding for all federal candidates

• Prohibit members of Congress from receiving donations from interests they regulate

ADDITIONAL APPROACHES

• Seek to have Buckley and/or Citizens United overturned by the Supreme Court

• Use of “democracy” vouchers: Seattle just passed in 11/2015; Oregon also has

• Work to elect a Congress committed to reform

CONSTITUTIONAL AMENDMENT SOLUTION

• Proposal for Constitutional amendments to reform MIP

• 16 states have called for the use of a national convention• Opponents criticize

lengthy process • Proponents say would

generate public awareness

IT CAN GET COMPLICATED

From the Friends Committee on National Legislation (FCNL)

WHAT STATES CAN DO

• Protect voter rights including access

• Publically funded elections

• Clean election reforms

• Full Disclosure

• End Coordination

WHAT YOU CAN DO

Learn how politics is financed at federal, state and local levels. 

Participate in community education forums.

Use Money in Politics Review resources found on the League Management site: http://forum.lwv.org/category/member-resources/our-work/money-politics-review

• Join League and participate in the Money in Politics’ study and consensus. 

• Familiarize yourself with money in politics issues by reading the background papers

WHAT YOU CAN DO: BE INFORMED

Local Elections

State Elections

National Elections

Encourage your friends,

families and neighbors to

be active, involved citizens

like you!

LEAGUE UPDATE

• Build member understanding and agreement on the extent to which political campaigns are protected speech under the First Amendment. Consider:

• What are the rights of individuals and organizations, under the First Amendment, to express their political views through independent expenditures and the finance of election campaign activities; and

• How those rights should be protected and reconciled with the interests set out in the current LWV position

QUESTIONS/AGENDA

How did we get here?

What is the current situation?

Why is this important to me?

What are the challenges?

What can I do?

QUESTIONS?

THANKS TO THE CENTER FOR RESPONSIVE POLITICS (OPENSECRETS.ORG) FOR CHARTS AND ELECTION INFORMATION

A WORKS CITED PAGE IS AT THE END OF THE POWERPOINT SCRIPT

RESOURCES

LEAGUE MEMBERS

PLEASE BE SURE TO JOI N US FOR

THE MONEY IN POLITICS CONSENSUS MEETING

JANUARY 13 , 2016

THANK YOU FOR ATTENDING!