Money in Politics

Join Brad and Dan Weiner of the Brennan Center to discuss the history of campaign finance laws in the US, the mess that we're in today, and some proposals to move forward. On this episode, we look from George Washington to Stephen Colbert. 

Continue the conversation on Twitter by tweeting @ bradleysfallon with your thoughts on the episode. Or email podcastwhyandwhynot@gmail.com with feedback or suggestions for a future episode. 

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SCRIPT

Intro 

Hi, I’m Brad Fallon and you’re listening to Why and Why Not, the show where we take a look at how the American government got to be what it is, and ask ourselves: why not make some changes? Let’s dig in. 

Cold Open

After years of sitting on the sideline, you finally got involved with politics in your community. You have Sally Rogers to thank for this. Sally was a local nurse who was fed up with the healthcare system in the US and decided to run for Congress to make some changes for her patients. Her story and vision inspired you and you started volunteering with her campaign on a weekly basis.

After a tough year of campaigning, Sally and her team pulled off what many thought was impossible and narrowly won a seat in Congress. Energized, she headed off to her new DC office and you feel confident that she’ll be an agent of change.

She’s now in her first month as a member of Congress and she carefully reviews all the bills that she’ll be voting on. This is how she notices a bill on the docket that would significantly expand a tax loophole for major corporations. Her first reaction is to hate this bill. In fact, while it wasn’t at the forefront of her campaign, she promised to work to ensure that corporations and rich Americans pay their fair share in taxes. Given this, she communicates to her colleagues that she’s decided to vote against the bill.

A few days later, she receives a threat from the owner of a major corporation that stands to benefit from the tax loophole. They tell her that if she comes out against the bill, she can count on having a very well financed opponent in the next election. 

The new Congresswoman thinks about everything she wants to get done. Lowering healthcare costs and improving benefits for patients. Bringing federal dollars back home to invest in her community. Directing funding to technology that will combat climate change. She realizes that she won’t accomplish any of this if she loses to a well-financed candidate, likely in the pockets of major corporations. 

When the bill comes up for a vote, Sally sets aside her pride, and as she feels, her dignity, and votes in favor of it. With her vote, the bill passes, the loophole is expanded, and Sally’s career in Congress lives on to see another day. 

I’m Brad Fallon and on this episode of Ways and Means, we’re tackling money in politics and taking a look at money in politics. 

Opening Section

Even in today’s highly polarized times, it seems that nearly everyone can agree on one thing: there is just  too much money in our politics. This has been shown in polling with the overwhelming majority of Americans time and time again saying that money has too much influence on our democracy. A Pew Research Center poll from 2018 found that a staggering 77% of Americans felt we need to limit campaign spending and 74% felt that people who give a lot of money have more influence in our government. And this is far from a partisan issue. 

I mean on one side of the spectrum we have this guy:

[Bernie]

And on the other side, we have this guy:

[trump on money in politics]

And while Trump and Bernie go about this issue very differently, they were both saying essentially the same thing about the way that money influences our government. 

So this is clearly something worth checking out. But before we can understand exactly where we are with money in politics today, it’s important to figure out how we got here in the first place. With things so widely considered to be bad today you might be surprised to find out that we actually had less regulation at the beginning of our country. 

So let’s go way back. And check in on the father of our country, the ole American Cincinnatus, the man feared by cherry trees, George Washington. 

*kick in music*

Before the United States was the United States, George Washington announced a run for the Virginia House of Burgesses. This was like their state legislature of the time. And Washington had wealth. So he took a page out of any wealthy bachelor’s book and decided to woo voters with fancy dinners and alcoholic beverages. Unsurprisingly, this made people like Washington and he won his campaign. 

However, as soon as the larger House of Burgesses heard of this, they moved to pass a law prohibiting candidates from exchanging things like food and drinks for votes. And thus, the first campaign finance laws were passed in what would become the US. 

Now you might think that this set a precedent for the new country to closely regulate how candidates spend money to win votes. But, it actually took a little over a century before Congress passed anything to this effect. 

The first law came about as a result of navy officers and other government employees soliciting campaign contributions from navy yard workers. Essentially this was where someone’s boss would come to them and heavily imply that if they wanted to keep their job,  they should donate to a campaign. Congress saw the problem here and so the Naval Appropriations Bill passed in 1867 prohibited this. 

And this was the only thing in the law books until tragedy struck when in 1881 President of the United States James A Garfield was shot and killed by Charles Guiteau. Now, I would encourage everyone to look into this story because it is a crazy tale involving a sex cult and Alexander Graham Bell and one of the first uses of the metal detector. But all that is important to now for this story is that Guiteau pulled the trigger after being denied a job by Garfield despite supporting him in the election. 

And at this time in the US, jobs were largely given via appointments to those who financed campaigns. And many government employees were expected to contribute to campaigns just to keep their jobs. This assassination ultimately pushed through the Pendleton Civil Service Reform Act which required that government jobs be given based on merit and not political affiliation. 

Now still, this is clearly not campaign finance in the way that we think of it today. And we have to jump forward several decades for that. But that means we get to check in on perhaps the most interesting American historical figure, Theodore Roosevelt. 

At this time in America, public pressure was building to rein in the power that major corporations had on the country. This led to trust busting and all sorts of progressive regulations. This also led to the trust buster himself being caught up in controversy around who had donated to his campaign for President. Whispers had begun about a quid pro quo and Roosevelt, ever aware of public sentiment, decided to take major steps to get ahead of the scandal. 

So during his 1905 State of the Union address to Congress, the President called for a ban on quote  “contributions by corporations to any political committee or for any political purpose.”

This led to the passage of the Tillman Act of 1907 which prohibited corporations from donating to federal political campaigns. And in large part, this is still in effect today. But back then, they didn’t actually have much of a way to enforce this so it’s impact is debatable.

To see major action on campaign finance reform again, we need to hum forward to the 1940s. During this time, both the Smith-Connally Act and the Taft-Hartley Act were passed. And there is a lot to unpack with both of these and their impact on organized labor in the US. But for the purpose of this story, just know that these prohibited unions from donating to political campaigns and made it illegal for both corporations and unions to even make independent expenditures in federal campaigns. 

Now this is where we need to touch on a definition. An independent expenditure is money spent on public communications for or against a candidate in an election but made without coordinating with the candidate themselves. Think about spending your own money to put up a billboard informing the public to vote for the Green Party candidate in your state’s Senate election. This would be an independent expenditure. 

The other thing important to define here is a political action committee, a PAC. Because following the prohibition on unions donating to campaigns, a prominent union known as the Congress of Industrial Organizations, or CIO, created the first PAC as a workaround. 

[Weiner PAC Definition Clip]

That’s Dan Weiner, Director of the Brennan Center’s Elections and Government Program.. So PACs are essentially legal entities created so that people and groups can pool their resources together to enhance their influence on political campaigns or public opinion. In the case of CIO, while unions were prevented from donating to political campaigns, PACs were not. So members of the union could donate to the PAC and the PAC could turn around and give that money to campaigns. So just remember, there’s always a loophole. 

The next major development in campaign finance came amidst the age of disco, the 1970s. 

This is when Congress passed the Federal Elections Campaign Act, or FECA. Though it was amended several times that decade, the Act really got into the weeds on campaign finance laws and regulations and for the first time, it put a cop on the beat though the creation of the Federal Elections Commission, the FEC. And as a side bit of historical irony, the Act was signed into law by this guy: 

[Nixon clip]

But the FECA didn’t stand as Congress had originally passed it. In 1976, the Supreme Court overturned substantial portions of it in Buckley v Valeo. And this was essentially the first time the court had ruled that spending money was protected speech. As a result of the decision, caps on campaign spending and candidate contributions to their own campaign were lifted. And so were the limits on independent expenditures that I mentioned earlier. 

And this is where a new issue came to the forefront. Following amendments to FECA -  national, state, and local parties were able to receive unlimited donations from corporations and unions for what was called “party building: activities. But these activities were not well defined and this was serving to subvert the effect of other campaign finance laws that had come before.

So to address this, Republican Senator John McCain and Democratic Senator Russ Feingold came together to introduce and pass the Bipartisan Campaign Reform Act, also known as BCRA or McCain-Feingold. This law did two primary things: 1) It regulated soft money and 2) it prohibited corporations from running broadcast ads that name a federal candidate within 30 days of a primary or caucus or within 60 days of a general election. 

And this is where a group that you’ve probably heard of comes into the story. 

Bernie Citizens United 

Obama Citizens United

Hillary CU

Citizens United is a conservative 501c4 nonprofit that runs political ads to help Republican candidates. The group’s founder, Floyd Brown, is most famous for creating the Willie Horton ad released in 1988 to attack Presidential candidate Michael Dukakis on behalf of George HW Bush. 

[Clip of Willie Horton Ad]

So yeah.. If anyone ever tells you that things were just nicer in politics back then, just remember that ad. 

Ahead of the 2004 Election where President George W Bush was squaring off against John Kerry, Michael Moore released a documentary critical of the Patriot Act and the Bush administration. 

[Let the Eagle soaaaar]

This was “Fahrenheit 9/11” Which by the way is where I found this incredible clip of Bush on the golf course:

[Fahrenheit 9/11 1:53]

But given BCRA’s prohibition on corporations releasing ads 60 days prior to a general election, Citizens United called foul. They filed a complaint with the FEC to stop ads promoting Fahrenheit 9/11 from airing but the FEC said there was no wrongdoing since Michael Moore was an established filmmaker and just making a documentary. 

So Citizens United set out to establish themselves as a filmmaking company by releasing titles like Celsius 41.11, The Border War, and ultimately, Hillary: the Movie. 

[Hillary the Movie clip] 

Now this film came out in 2008 when Hillary Clinton was running for the Democratic Nomination for President. And while the movie itself was one big attack piece on Hillary, ads for the movie seemed more like campaign attack ads than trailers. 

So this time, the FEC did say that ads stepped over the line and that they couldn’t air before the primary. Citizens United thought this was unfair - and sued, saying that BCRA violated the group’s first amendment right of speech through restrictions on political messaging. And the case ultimately ended up before the Supreme Court. 

Citizens United made the case the BCRA’s restrictions on political messaging could allow Congress to suppress political speech in newspapers, books, television, and so on. And the caught the attention of the Justics. 

In the end, in a highly contentious 5-4 decision, the Supreme Court ruled that parts of BCRA violated the 1st amendment by limiting political speech through independent expenditures. 

In essence they said that the government has reason to regulate money given to campaigns or PACs that serve as extensions of campaigns. But that the government shouldn’t be able to stop someone or a group of people from communicating to the public about a particular candidate. 

That, in their view, is protected speech and if you want to pay for a commercial on CNN that says Ted Cruz is too extreme, that’s your right and we shouldn’t set limits on how much you can spend to do that. They went on to say that this right is also enjoyed by corporations. So after Citizens United, no law could restrict independent political committees from receiving money from corporations or unions, how much they could receive, or when and how they could spend the money in particular ways. 

And this decision plus a subsequent lower court decision turned out to be somewhat of an origin story, because it created something new. 

[Super hero music] 

Super PAC

*laugh* but these really aren’t as super as the name implies. Here’s Dan Weiner from the Brennan Center again. 

[Dan on Super PACs]

And, to clarify, these decisions didn’t allow corporations to start donating directly to campaigns as is often thought. Rather, it said that corporations have the same rights as people, people have the right to speech, spending money is speech, therefore corporations have the right to spend money on campaigns as long as they’re not directly coordinating with candidates. 

So for the purposes of this episode, that about catches us up to the present. Super PACs exist and as long as they don’t coordinate with campaigns they can receive unlimited amounts of money and spend it to influence elections. But - there is one more thing I left out. Remember earlier when I mentioned that Citizens United was a 501c4 nonprofit? Well, those are important to understanding campaign finance today. 

This jumble of numbers and letters refers to the place in the tax code that allows these groups to exist. These are so-called social welfare organizations. And these nonprofits can influence elections or public opinion just like a PAC. Except where donors to PACs must be disclosed to the public, C4s can keep their donors private. So.. is there a catch?

[Weiner Clip on 501C4s]

Now it should be pointed out that C4s can legitimately be organizations to do a lot of good. The AARP is a C4 and so is the NAACP. But, as you’ll see in the next section, these can be used to create what’s called “dark money”. 

We’ll touch on that and steps ahead, after the break. 

Colbert Section

So with all the acronyms and acts, this can be pretty hard to get your head around. But fortunately, one man actually gave us an inside look at setting up and operating a Super PAC. And, it might not be who you expect.

[Colbert opening theme clip] 

Ahead of the 2012 presidential election, Stephen Colbert, still acting as his character on Comedy Central, announced that he would be starting his very own political action committee. But as happens so often in comedy, corporate lawyers got in the way 

[Quick clip of colbert being told he can’t start a PAC because of in-kind contributions “No PAC” clip]

And this is pretty simple logic: corporations are not allowed to donate to PACs. Since Comedy Central paid the salaries of people who laid the groundwork to set up this PAC, this would be considered an in-kind contribution. That is, a donation of something other than just cash. So since the corporation already donated, the PAC was not allowed to exist. 

But this was after Citizens United so he could create a Super PAC. 

[“radioactive lobbyist”]

His lawyer and former FEC Chairman Trevor Potter explained that as long as the PAC wasn’t directly coordinating with any campaign, it could receive unlimited donations from corporations. So those in-kind contributions that prevented the Colbert PAC from being formed would no longer be an issue. 

And for a federal bureaucracy, making this switch was made pretty easy. 

[“Cover Letter”]

So with a couple checked boxes and and a cover letter stapled to the front, Colbert’s Super PAC was born. And it could receive unlimited amounts of money to be spent on way more than you might think. 

[“Allowable Expenses”] 

However, even with all that, Colbert found that there may be some factors limiting the amount of money coming in. You see, PAC contributions must be disclosed to the public. And this is where 501C4 non-profits come back into the story. 

Imagine a billionaire and wanted to fund a PAC but didn’t want everyone to know their political stances or how they’re influencing elections. You could set up a 501C4 as a shell corporation which is not required to disclose who donates to it. So you donate money to the C4 and as the sole member of the C4 you could subsequently donate that same money to the PAC. The PAC would have to disclose that the C4 donated to it, but no one would really know where that money came from. 

So Colbert set up a C4. 

[“Anonymous Shell Corporation”]

And he was able to either channel that money through his Super PAC, or just spend the money directly through the C4. Oh, and he didn’t actually have to file with the IRS until after the election so his C4 could receive and spend all that money and no one would know what happened until after all the votes have been cast. And even then, no one would know who funded it all. Well, this one was created on national television so people were in the loop but you get the idea. 

And the story doesn’t end here. Because in January of 2012, Colbert made a big announcement. 

[“Candidacy Announcement”]

But this announcement created a problem for the Super PAC. Now that he was running for President of South Carolina, he would technically be coordinating with his Super PAC which is like the one thing not allowed and really undermines the whole reason that super PACs were created in the first place. However, he could get around this by transferring control of the Super PAC to someone else. 

And fortunately, Colbert had someone for the job. Daily Show host and Executive Producer of Colbert’s show, Jon Stewart. And with a single form, the transfer was made. 

[“Reborn”]

And yeah you might be thinking that there was clearly not a huge separation between Jon Stewart and Stephen Colbert at this time. But according to the lawyers, this was totally fine. And even if they did cross over some line, the penalties really aren’t that daunting. Here’s Dan Weiner from the Brennan Center again.

[“Small Fine”] 

But as the director of the Definitely Not Coordinating with Stephen Colbert Super PAC, Jon Stewart even did a plan for this with his lawyer. 

[Stewart clip asking if he can pay the fine using super PAC money]

And that’s right - so even if they broke the law, they could just use this Super PAC that can receive unlimited money to pay the fine. 

The PAC went on to run comical ads calling Mitt Romney a serial killer for believing corporations are people despite ending several, endorsing Herman Cain for President, and even attacking Stephen Colbert himself to prove a lack of coordination. But the ultimate takeaway is just how ridiculous these laws have become and how easily money can corrupt in politics. 

Reform Proposals 

I think we can all agree that this all sounds pretty shady, but how do we know if there is really a problem here?

To answer this I think we can simply think through how this plays out. Take the 2016 elections, where the political network operated by Charles and David Koch spent $889 million on political campaigns. Now, I don’t know about you, but I don’t know anyone who would spend $900 million and not expect anything in return. If that person exists, I would very much like to get to know them. But sometimes what these people want in return is just access.

Here’s Dan Weiner again. 

[“So what?”]

And that makes sense. If money leads to electoral victories and, say, the CEO of Target can donate a million dollars while I can only donate 50 bucks, who do you think the candidate will spend time speaking with? Probably not me.

And then there’s the impact that this has on which candidates step forward to begin with. 

[“Who can run”]

Now clearly reproductive rights is partisan but this isn’t a partisan issue. I mean, most gun-totin’ blue collar conservatives aren’t in any better place to run a competitive campaign for higher office. And sure, we see exceptions to this like AOC in New York but, by and large, average people just can’t pull the funds together for a large-scale campaign. 

And lastly there’s the issue of how our representatives behave once they’re in OFFICE. Lawrence Lessig reported a story in one of his books that I think perfectly captured this problem. When Al Gore was Vice President he had the idea to deregulate large parts of the telecommunications industry. So Gore’s staff set off to the Hill to work the idea and the overwhelming response from Congress was “hell no!”. If they stopped regulating the industry, there would be no way to fundraise off of them. And while it should concern everyone that Congress passes and keeps law on the books for fundraising purposes rather than some societal benefit,, this may strike a particular nerve with conservatives who tend to favor a smaller government. 

And the ultimate impact of all this is that the people in office and those influencing our representatives are likely out of touch with the concerns of the people. 

So maybe there are better ways to do this. And to start, I think we need to set realistic goals and expectations. 

[“Politics costs money”]

And he’s right. I work in politics and have experience with the amount of money it takes to run a campaign. But he makes an important point about the source of the money. One way that we could potentially change the tide on whose money is influencing politics is through something called public financing. 

And we actually already have a version of this for presidential campaigns. In the Primary, any candidate that can raise $5,000 in each of 20 states can receive public financing. This comes in the form of a match of up to $250 for each donation that the campaign receives. However, using this program comes with spending limits. Campaigns that receive public financing can’t spend more than about $52 million nationally in 2020 dollars and there are limits for each individual state. 

In the General, the nominees of each major party are eligible for a grant of $103.7 million in 2020 dollars. But again, this comes with spending limits and campaigns can’t spend more than that $103.7 million. Which may sound reasonable but, for perspective, Joe Biden’s campaign raised over a billion dollars in 2020 while Donald Trump’s campaign raised about $775 million. Oh and total spending on the 2020 election is estimated to have been $14.4 billion. So that $103.7 million looks like a drop in the bucket in comparison and no campaign can expect to win while raising as little as 10% of their opponent’s money.  

This is why in 2008, Barack Obama became the first major party nominee since the 1970s to not use public financing. And no major party candidate has used it since. The current program also does not allow congressional candidates to receive this public financing which is where a major part of the problem lies anyway. 

But there are proposals to build on this program to make it truly impactful. Here’s Dan again on how the Brennan Center is looking to address this:

[“Donor Matching.1”]

And we’ve seen what he’s describing here setup in local governments and states around the country. New York City, for example, allows candidates to receive an 8-1 match for contributions of up to $175. So if you live in New York City and donate, say, 100 bucks to your preferred candidate, the campaign would get $800. Many have credited this program with allowing a much more diverse group of men and women to be elected to the city council, 97 percent of which used public financing. 

But this isn’t the only way that public financing could be done. An idea that seems to particularly catch on in Republican circles is public vouchers. This would essentially be where every American gets a voucher of, say, $50 that they can donate to the candidate of their choice. And in the aggregate this can be serious money delivered by the people. This was actually recently enacted in Seattle. The exact proposals vary a bit with some arguing that candidates should be able to receive small dollar donations on top but the voucher but the ultimate idea is for campaigns to target smaller donations from more people rather than large donations from the few. 

Of course, public financing comes with a public cost. I asked Dan Weiner what he would say to someone who likes the idea but isn’t sure if it’s worth the investment. 

[“Worth the Investment”] 

And while this is the proposal that gets talked about the most, its not the only thing that could be done. Many say that we need to strengthen the FEC to make sure that we have a well-funded cop on the beat with clear regulations to enforce promptly. Others argue that overturning the Citizens United decision is a necessary step. And scholars on both the left and the right are putting forth new proposals frequently. 

Frankly, this is a place where we can imagine real progress being made. The US has a history of changing campaign finance regulations when things get out of control and maybe we’re at another one of those places. So what do you think? Should we move to change this system or will this create further unintended consequences. I want to hear from you. Let me know by leaving a review and comment or by tweeting me at bradleysfallon on Twitter. 

And that’s it for this episode of Why and Why Not! A special thanks to Dan Weiner for agreeing to speak with me for this episode. Sources used can be found in the show notes. If you enjoyed this episode, please consider giving us a share so we can reach more listeners. 

Until next week, I’m Brad Fallon, and thanks for listening.