What Campaign Finance Reform Could Look Like

Today, The Shreveport Times reported that Louisiana campaign finance reports receive practically no oversight whatsoever from the (apparently) understaffed Louisiana Ethics Board. This is alarming. From the article (bold mine):

Political analyst Elliott Stonecipher said those and other shortcomings, such as a small annual budget and the agency’s vulnerability to political pressure, are evidence the state is not committed to ethics enforcement.

The Ethics Board’s 2007-08 budget is $1.97 million, up nearly 30 percent from the previous fiscal year. The Times’ review of the agency’s funding over the past four years reveals it had increased moderately, even falling nearly 12 percent in 2006-07.

“The system is structurally flawed, and that’s as polite as I can be,” said Stonecipher, of Shreveport. “If you have the kind of problem with corruption and ethics enforcement we know Louisiana has, then your response shouldn’t be less than $2 million, a small staff and a cursory, at best, review of campaign finance reports.”

Governor-elect Bobby Jindal made ethics reform the centerpiece of his successful campaign. If this reform is to be effective, campaign ethics reform should be at the top of the list.

The Shreveport Times also published an editorial today about ethics reform. They suggest:

Toughen campaign finance laws. Prohibit candidates from borrowing money to run their campaigns to avoid the potential murkiness of how they might retire those loans. Eliminate third-party spending that allows often previously unheard of groups from forming to smear a candidate through ads and direct mail, allowing the favored politician to keep his or her hands “clean.”

Although it is difficult to deny the need to eliminate (or at least better regulate) third-party contributions, a prohibition against loans seems to be aimed against candidates like John Georges and Walter Boasso, without any consideration of candidates who do not have the political machines or the personal wealth to compete in an expensive election. Instead of eliminating personal loans, perhaps, like other states, we should simply place limits on those loans.

The Center for Responsive Politics published a list of fifteen methods (proposals) to reform campaign finance.

They’re worth a look (bold mine) I’ve redacted #4 and #8, which were ruled unconstitutional, #10, which addresses soft money on the federal level, and #13, which is about campaign vouchers:

1. Electronic Filing and Full Disclosure

Although electronic filing and full disclosure, by themselves, have little impact in terms of creating a more level playing field or severing the connection between elected officials and vested-interest contributors, they are essential measures that can help lay the groundwork for more substantive reform. Electronic filing — i.e., filing campaign finance reports by computer — greatly reduces the time it takes election monitoring agencies to record and make available campaign contribution information, thus making it easier for voters to get the information quickly. Full disclosure — i.e., disclosure that mandates contributors’ occupations and employers — allows the public to know the identity and economic or ideological affiliations of individuals and groups financing the campaigns of elected officials. Most states do not yet require full disclosure and fewer still require electronic filing. The federal government requires full disclosure but not, as yet, electronic filing.

At the very least, we can improve Louisiana’s electronic filing database, but if we’re going for the “gold standard,” we should require contributors to provide full disclosure of their occupations and employers.

2 . Low Contribution Limits

Limiting campaign contributions to certain amounts reduces the disparity of political influence between large donors, small donors, and non-donors — and the lower the limits, the less disparity. But forcing candidates to raise money in smaller amounts often encourages wealthy individuals to finance their own campaigns in order to avoid a fundraising task they perceive as onerous. Also, the lower the limits, the harder it is for non-wealthy candidates to compete against wealthy, self-financed candidates. Contribution limits make it harder for major vested-interest contributors to buy access and influence, but they may also encourage such contributors to get around the limits via non-regulated “independent expenditures” and “bundling” — although the lower the contribution limits, the harder it is to amass large “bundled” contributions. Lower contribution limits compel candidates to broaden their bases of support, and may encourage non-wealthy persons to contribute for the first time. However, such limits may also require candidates to spend more time raising money — assuming campaign costs do not go down and candidates receive no public resources. In addition, limiting the size of contributions sometimes leads to illegal laundering of campaign money. Most states and the federal government impose some kind of contribution limits.

Louisiana already imposes contribution limits; the real problem seems to be the ability of companies and individuals to bypass those limits through bundling.

3. Time Limits

Twenty states prohibit some aspect of campaign fundraising during the period when the state legislature is in session. In most of these states, the law bars legislators, and sometimes also the governor and persons holding other statewide offices, from receiving any campaign contributions during legislative sessions (including, in three states, 30 days before and after legislative sessions). In a few states, the law simply prohibits lobbyists from making contributions during this period. By making it impossible for vested interests to make a contribution to a legislator just before a vote or committee hearing is about to take place, these measures are useful in addressing the appearance of corruption (sometimes referred to as “legal bribery”). They do little to deal with the reality of it, however. Contributors are still able to give large amounts of money when the legislature is not in session, and there is nothing to prevent them from making a promise of a large contribution during the session. This kind of time limit does not level the playing field for non-wealthy candidates and voters, nor does it significantly reduce politicians’ dependence on vested-interest contributors.

Another version of time limits has been enacted by the City of Los Angeles, which prohibits the mayor and city councilors from raising campaign money during the first year and first two years, respectively, of their four-year terms. Measures such as this can free elected officials from the burden of constant fundraising and allow them to devote more time to their governmental duties.

5. Candidate Loan Limits

An increasing number of federal and state candidates are financing their campaigns, wholly or in part, with loans from themselves. In order to pay themselves back, many of these candidates, once elected, raise money from PACs and wealthy individuals interested in gaining special access and influence. During the campaign, voters have no way of knowing who these contributors are; the pre-election disclosure forms only show the loans. Such loans are usually based on a calculated gamble — that the candidates making them will be elected. When they lose, they are sometimes left with an enormous debt that takes many years to pay off. Thus far, the state of Kentucky and several cities are the only political jurisdictions where candidate loans to their own campaigns are restricted. In Kentucky, the maximum amount candidates can loan their campaigns is $50,000 for the gubernatorial elections, $25,000 for other statewide elections, and $10,000 for legislative races. Such limits can make it somewhat easier for non-wealthy candidates to compete (although their opponents, if they are wealthy, are usually capable of making large contributions to their campaigns as well as large loans). Limiting candidate loans is not likely to have any significant effect in reducing politicians’ reliance on the monied interests that finance election campaigns.

6. Ban on PAC Contributions

Banning PAC contributions alone, while leaving individual contributions untouched, will not reduce the disparity of political influence between large donors, small donors, and non-donors. In fact, it may increase this disparity, particularly between individual corporate contributors and individual labor contributors. Although corporate PAC money far outweighs labor PAC money — at both the federal and state levels — more corporate money comes in the form of large individual contributions than in the form of PAC contributions; whereas almost none of labor’s money comes as large contributions. If candidates cannot accept PAC money but still need to raise large sums of campaign money, they will likely depend even more on large individual contributors, many of whom will represent the same monied interests previously represented by corporate PAC contributors. Nevertheless, prohibiting PAC contributions may make it harder for some kinds of monied interests (for example, those that do not employ large numbers of well-paid managers and executives) to exercise undue influence. Also, banning PAC contributions will address the public’s perception that PAC money is the principle source of political corruption. The problem is that this perception is inaccurate; in most federal races, and even more so in most state races, PAC contributions account for much less money than do contributions from wealthy individuals. Because it is much easier to determine the economic and ideological interests of PAC contributors than those of individual contributors — disclosure requirements being more rigorous for PACs and there being far fewer PAC contributors than individual contributors to identify — banning PAC contributions will make campaign finance analysis much more difficult. Serious questions have been raised about the constitutionality of banning PAC contributions. As of January 1995, no such ban had been enacted at the federal or state levels.

7. Ban on Bundling

Bundling — the practice of pooling individual contributions from employees of the same corporation, people in the same profession or trade group, or persons who share the same concern or ideology — is one of the principle ways that vested interests exercise political clout. Banning bundling is very likely to make it more difficult for vested interests to exercise as much influence as before. It is not likely, however, to make it easier for candidates without access to big money to wage competitive campaigns; nor is it likely to change the sources of money candidates must depend on for their campaign funds. Because bundling can take many forms (it does not necessarily depend on an intermediary, or “bundler,” who physically gathers or delivers the contribution checks) and is thus difficult to define, a bundling ban may be equally difficult to enforce. Proposals for a ban on bundling usually accompany proposals for lower contribution limits. Bundling bans were passed, by ballot initiative, in Oregon and Missouri in 1994 and in Washington state in 1995, but not enough time has elapsed to assess their effectiveness.

9. Ban or Restrictions on Out-of-
State/District Contributions

Banning or restricting out-of-state or out-of-district contributions may decrease the advantage of candidates with access to big money, but such candidates are likely to have access to similar sources within their states or districts. Conversely, candidates who represent lower-income communities and districts and who are not personally wealthy are likely to have just as hard a time raising large amounts of money once this kind of limitation is in place. A ban on out-of-state or out-of-district contributions would eliminate candidates’ dependence on big contributors outside their states or districts, but most candidates would still be dependent on big contributors within their states and districts — contributors who often represent the same vested interests. The principal advantage of this measure would be to make elected officials more accountable to people, whatever their interests or economic status, who live and vote in their own states or districts. In 1994, Oregon voters approved a ballot initiative that contained a ban on contributions from outside candidates’ electoral districts (for statewide candidates, outside the state); the courts subsequently declared the ban unconstitutional.

11. Free or Reduced-Rate Broadcast Time and Postage

Candidates without access to big money are at less of a disadvantage when they can receive free or discount campaign resources such as media time and postage — particularly when these benefits are tied to candidates’ acceptance of spending limits (and when their opponents abide by the limits). Providing such resources decreases the amount of money candidates must raise from monied interests in order to mount competitive campaigns. In congressional races, providing challengers with free postage can bring them up to par with congressional incumbents, who can use their “franking privilege” to send out free mailings to voters. Candidates who accept free or discount broadcast time can be required to adhere to content and format guidelines for their broadcast advertisements — for example, establishing 60 seconds as the minimum length of an ad and requiring the candidates themselves to appear (on television ads) or be heard (on radio ads) during at least half the duration of the ad. Free or reduced-rate broadcast time and postage must either be paid for by the government — which may raise opposition from taxpayers — or, in the case of broadcast time, by radio and TV stations, as a condition of receiving a license to use the public airwaves. Thus far, broadcast stations have vigorously opposed such a condition. Because the airwaves are federally licensed and regulated, only the federal government — not state or municipal governments — could impose this condition.

12. Contribution Tax-Credits/Deductions

To the extent that tax credits (or refunds) and tax deductions succeed in encouraging more people to make small contributions, they can make it easier for candidates without access to big money to raise campaign funds. However, because it is necessary to first spend money on a contribution in order to later benefit from a tax credit or deduction, lower-income voters are less likely than higher-income voters to take advantage of this measure. By themselves, tax credits and deductions may reduce, but they do not eliminate, vested interests as major sources of election money. Tax credits and deductions for candidates’ contributors can be used as an incentive to encourage candidates to abide by spending limits. Such schemes, however, can generate considerable public expense, and, if most of those who take advantage of them are people who would be making political contributions anyway, they may not be cost-effective. Three states and the District of Columbia offer tax credits or refunds; in Oregon, for example, individuals who make contributions to state candidates can get a tax refund of up to $50. Three states offer tax deductions; in Oklahoma, taxpayers can take a deduction of up to $100 for political contributions. Between 1971 and 1986, when it was repealed, a similar tax-deduction provision was part of federal income tax law.

14. Partial Public Financing

As of 1995, 23 states provided a limited amount of public financing to candidates, in most cases directly and in some cases via political parties (though in the latter instances the amounts were not significant). The federal government, since 1976, has provided partial public financing directly to candidates in presidential primaries. Twelve states, as well as the federal government, use a voluntary check-off on income-tax forms to provide funds for their partial public financing systems. However, check-off participation rates at both the federal and state levels are declining, and in most of the states with check-off systems the amounts of money candidates receive is usually a small fraction of their total campaign funds. In nine states, the partial public financing system relies on an income-tax add-on, but this method (in which taxpayers voluntarily agree to increase their taxes by one or more dollars) has proven even less effective at producing sufficient funds than check-off systems.

Most partial public financing systems operate on a matching basis, awarding a grant of public dollars when the candidate has raised a threshold amount of private dollars. But the rationale for providing “clean resources” — public money — is undermined when, in order to qualify, candidates must first raise large sums of private money. As in providing free or reduced-rate broadcast time and postage, giving candidates some public financing, depending on the amount, can make it easier for candidates with little or no access to big money to compete. And especially when tied to spending limits, partial public financing (depending on the amount) can reduce candidates’ dependence on vested-interest contributors, as well as decrease the time they have to spend raising money. In theory, partial public financing could also be used as a way to give additional money to candidates whose opponents benefit from “independent expenditures” or reject public financing and exceed spending limits — thus discouraging such activities. In addition, candidates who accept partial public financing could be required to participate in public debates.

15. Full Public Financing

The only system of full public financing at the federal or state levels is the one covering presidential general elections, which went into effect in 1976. While it puts the two major-party candidates on a roughly equal financial footing for the general election (“soft money” and “independent expenditures” aside), no one can become a major-party candidate unless he or she is the incumbent president or has raised tens of millions of dollars in private contributions during the presidential primaries. At the state level, legislation has been drafted that provides for a voluntary system of full public financing of both primary and general elections. Under these proposed systems, candidates qualify for public financing, not on the basis of access to wealth, but on the basis of public support — usually demonstrated by collecting a threshold number of $5 “qualifying contributions” from within their districts. Candidates who qualify for the same office would receive the same amount of campaign money, thus creating a financially level playing field and allowing all candidates an equal opportunity to reach the voters.

Because receiving full public financing would be contingent on candidates’ agreement not to accept or spend any private money (including their own) during the designated primary and general election campaign periods (before the primary period begins they could raise limited amounts of “seed money” in order to cover expenses associated with the qualifying process), their dependence on monied interests for campaign funds would be virtually eliminated. In addition, by freeing candidates from the task of fundraising during the primary and general election periods, such a system would allow them to spend all their time talking to, and hearing from, the voters. Full public financing systems include provisions to match, and thus discourage, “independent expenditures” and excessive spending by opponents who opt for private financing. Most also contain a provision requiring candidates to participate in publicly broadcast debates.

The initial cost of a full public financing system is high — which may cause taxpayer resistance — even though the eventual savings (in terms of tax breaks, subsidies, regulatory exemptions, and other favors legislators currently perform for their major contributors) is likely to far outweigh the initial cost. As with partial public financing arrangements, a system of full public financing can lead to taxpayer dollars going to candidates with racist, bigoted, or otherwise distasteful views (provided they have enough public support to qualify) — and this, too, may be a source of public opposition. Legislation to create voluntary systems of full public financing have been introduced, though not yet passed, in seven states and in New York City.