Today, former gubernatorial candidate and political activist Mike Stagg published an insightful piece entitled “Claiming Ethics: Turning Jindal’s Ethics Campaign Gambit Into Transformative Reform of Louisiana Politics” on his Louisiana Democrat 2 Democrat website. Throughout the past two months, Stagg has extensively researched and written about the duplicitous campaign finance tactics of key Republican candidates and organizations like the Louisiana Committee for a Republican Majority (LCRM). In his latest article, he poses a simple question: How can Governor-elect Jindal institute ethics reform without also reforming our convoluted and easily-manipulated campaign finance laws? He writes:

Republican contributors have ridden roughshod over Louisiana’s campaign finance laws in this election cycle, using legally and ethically questionable means to circumvent campaign contribution caps established in state law.

The technique used involves individuals controlling multiple limited liability companies (LLCs) to use each LLC to make the maximum contribution allowable in the particular races of interest. In this way, an individual can use multiple corporate shells to make multiple contributions to a single campaign.

This practice does not pass the “hint of corruption” test Jindal wants applied to legislators. It should be noted that the governor-elect’s campaign booked in excess of $700,000 in contributions from individuals and companies via this tactic.

Other statewide Republican candidates as well as candidates for the House and Senate also benefited from this tactic which, again, raises at least a hint of corruption.

Then there was the matter of the $50,000 in contributions Jindal’s campaign received from a Colorado firm and its officers that has tried in the past to place a hazardous waste site in the Alsen community in East Baton Rouge Parish. The money was headline news on the front page of the Baton Rouge Advocate (it’s in their archives now, but here’s a link to a discussion of the coverage).

It certainly raised eyebrows and will draw further scrutiny to that company’s efforts to open that site.

Corporate bundling is an easy way to skirt campaign finance laws regarding maximum contributions. The practice may not be technically illegal, but, as Stagg points out, if Louisiana is truly committed to setting the “gold standard” in ethics, campaign finance reform should be the centerpiece in these efforts.

I am under no illusion that the type of corporate bundling described by Stagg is exclusively practiced by Republicans. Democrats have also employed these tactics. It is a bipartisan problem, and it needs to be corrected. Stagg has a couple of novel suggestions:

The simplest, surest way to eliminate what are — for now — only hints of corruption would be to overhaul Louisiana’s campaign finance laws.

The first step would be to ban corporate contributions to political campaigns, as many other states (including Texas) have done.

The second would be to adopt some of the reporting standards now in place under federal election laws, particularly requiring contributors to list their employers and whether or not their employers serve as government contractors.

Not only are direct corporate contributions banned in Texas, they are also banned on the federal level, a ruling that was upheld just four years ago by the United States Supreme Court. From The New York Times:

In describing the state of the law, Justice Souter said, ”Restrictions on political contributions have been treated as merely ‘marginal’ speech restrictions subject to relatively complaisant review under the First Amendment, because contributions lie closer to the edges than to the core of political expression.” He added, ”Within the realm of contributions generally, corporate contributions are furthest from the core of political expression, since corporations’ First Amendment speech and association interests are derived largely from those of their members.”

Richard Hasen, an election law expert at Loyola Law School in Los Angeles, said the court’s approach boded well for the two main provisions of the new campaign finance law: restrictions on corporate spending for issue advertisements, and a ban on receipt by the political parties of unregulated ”soft money” contributions from corporations and labor unions.

On the federal level, corporations may donate to so-called 527 groups (who are prohibited from coordinating with candidates) and political action committees (who are also prohibited from coordination), but corporations cannot donate directly to a candidate. Although a ban on direct corporate donations does not eliminate the practice of bundling (and would not address political action committees like the LCRM), it does eliminate corporate bundling, a practice that allows one individual or a small group of individuals to donate limitless amounts of money toward a single candidate. Moreover, such a ban would ensure that political campaigns are financed by individual voters of Louisiana, each of whom would be regulated by the same rules and regulations. Banning corporate contributions is not only more ethical; it is also more democratic.

If the dismal voter turn-out in the jungle primary is any indication, most Louisianans seem to be disengaged from the democratic process. When we allow corporations to bundle contributions, we are only further alienating individuals from participating in our democracy, and we are perpetuating a system that values the interests of corporations over the interests of the people of Louisiana (and often, as is the case with the Colorado landfill company, those interests do not align). Stagg continues:

Corporate contributions to political campaigns are a legacy of the “pay to play” system that Jindal purports to want to end. If his actions are to match his rhetoric, he can be pushed on the issue of banning corporate contributions to political campaigns.

He might back it. Republicans in the Legislature will probably balk, prodded no doubt by the heads of the corporations that contributed so lavishly to their individual campaigns, their party and to groups like the LCRM.

Democrats can seize the high ethical ground here by pushing to ban corporate contributions and to require contributors to provide more information about the sources of their income.

It takes two to corrupt: someone willing to take the money, yes; but some other party has to be willing to offer it.

Any proposal that purports to be ethics reform but which does nothing to close the loopholes on the campaign finance side of the ledger (where favors are most often bought) is not serious ethics reform. It is another empty gesture designed to convey the impression of addressing an issue of widespread concern while leaving the door open for some form of the activity to continue.

One thought

  1. It brings a smile to my face that people are starting to jump on this bandwagon. I have been talking about this loophole for a while now, and now that more people are starting to see that the only limitation on a persons campaign donations is the total number of corporations that person owns, I hope we could get some traction on this very important issue.

    And I agree with you that there are probably Democrats who benefit from these fake campaign finance “restrictions” we have.

    We can end it by just banning corporate contributions like the Federal Government does.

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