Campaign Finance

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Campaign Finance

• An overview

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Why is this stuff so important?

• Politicians do notice campaign contributors
• That doesnt mean it buys votes, but it does buy
  access and the opportunity to persuade an elected
  politician to see things your way

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How to get attention

• Top Verizon executives, including CEO Ivan
  Seidenberg and President Dennis Strigl, wrote
  personal checks to Rockefeller totaling 23,500
  in March, 2007. Prior to that apparently
  coordinated flurry of 29 donations, only one of
  those executives had ever donated to Rockefeller
  (at least while working for Verizon).

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If you start looking for these patterns, youll
find them

• This is Rep. Tim Holden, hardly a household name.
• Holden is a Democrat, and represents 17th
  congressional district which covers a large chunk
  of Central Pennsylvania

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Here are some of Holdens top donors

• Lets take a look at AFSCME
• This is very simple Just Google Tim Holden and
  AFSCME

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• Three of the twelve bills and the only resolution
  sponsored by Rep. Tim Holden concerned prisons

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In fairness to Holden

• Pennsylvania has a burgeoning prison population
• There is one federal prison in his district
  (Schuylkill FCI, which houses about 300
  prisoners)
• There are most likely county jails as well
• Not clear to me that any of these bills are
  particularly bad in and of themselves (though one
  could argue that private companies should be able
  to bid on prison business)
• But why are prisons guards and private prisons a
  priority for Holden, as opposed to other
  businesses in his district?

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Money might not buy votes, but you can discern
patterns from who gives to whom
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Two different perspectives on this

• Money is inconsequential
• Contributors give to lawmakers because the of the
  members positions (Phil Gramm and NRA)

• Money is decisive
• Presidential campaigns are auctions Congress is
  a big flea market with all sorts of bric-a-brac
  policies on sale

Truth is always somewhere along the continuum
between the two
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• When elected officials solicit these
  contributions from interests who almost always
  have matters pending before the Congress, they
  become at least psychologically beholden to those
  who contribute. It is inevitable and
  unavoidable.
• --William Brock, former Senator, former RNC
  Chairman

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That doesnt mean

• That all politicians are bought and paid for
• Very few make up bribe menus like the one to the
  right
• But politicians tend to grant more access to big
  contributors than non contributors, and their
  views and actions sometimes reflect this

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• Bank of America increased the interest rate on
  Bonnie Rushings credit card from 8 percent to 23
  percent.
• Sen. Thomas Carper But let me just ask you --
  put yourself in the shoes of the credit card
  company

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• And how do the credit card companies feel about
  Sen. Tom Carper?
• Rushings monthly interest bill went from about
  150 to 674
• Small change to a U.S. Senators campaign
  committee

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Its not particularly hard to find these
patterns.
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So before we go further into the fun stuff, lets
look at the rules

• Federal elections have one set of rules (and
  multiple sets of resources for following the
  money)
• State elections have 50 separate sets or rules
  (one for each state)
• Some local jurisdictions have rules specific to
  them (sometimes dependent on state law)

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• Corporate and labor contributions are banned,
  except when they arent
• Colorado Springs is the largest home rule
  municipality in Colorado

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Lets focus on Federal rules. Individuals can
donate

• (inflation adjusted)
• Up to 2,300 per election to a candidate, that
  is, 2,300 for the primary, 2,300 for the
  general
• 28,500 to a national party committee (RNC, DCCC,
  etc.)
• Up to 108,200 every two years to PACs, parties,
  candidates

• (not inflation adjusted)
• Up to 5,000 to a Political Action Committee per
  year
• 10,000 to state, district local party
  committee (for use in federal elections, that is)
  (combined limit)

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but potentially a lot more if they have a lot of
friends

• Bundlers put together networks of donors, all of
  whom can write 500, 1,000 or 2,300 checks to
  campaigns
• They are much more important to presidential
  campaigns, but members of Congress also rely on
  them

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Individuals can also give unlimited amounts to
section 527 committees

• These are tracked not by the Federal Election
  Commission, but by the IRS
• Federal candidates cant coordinate with or talk
  to 527s
• 527s are somewhat limited in how they can spend
  money on the federal level

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and 501(c)4 committees

• Dont have to disclose donors
• Also somewhat limited in their federal activities

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Big trend in 2008?

• Rise of the small donor
• Contributions under 200 dont have to be
  itemized
• Campaigns must still keep donor lists for small
  donors, subject to FEC audit

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Bigger trends in 2008?

• Bundlers are bigger than ever
• They operate at the presidential, congressional
  and state level (probably local too)
• No requirement that their identities be
  disclosed, except

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• As part of the Honest Leadership and Open
  Government Act of 2007 (sonorously called HLOGA
  by DC insiders)
• Lobbyists must disclose the bundling of
  contributions they do for federal candidates
• Applies to individuals they bring to fundraisers,
  PACs they control or persuade to contribute
• All bundles over 15,000 would have to be
  reported.

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but

• For most of 2008, the FEC had only two
  commissioners, rather than six
• Without a quorum, the FEC couldnt adopt the new
  rules to disclose lobbyist bundlers
• Maybe for 2010

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• Thats a shame
• Every week, hundreds of fliers like this one go
  out to lobbying offices, trade groups and big
  donors in the D.C. area
• Who will we be joining?

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Three out of four are currently registered
lobbyists
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What a corporation or labor union can do

• Form (and pay expenses of) a political action
  committee
• PACs can contribute 5,000 per election (i.e.,
  primary, general) to a candidate 15,000 to a
  national party committee 5,000 to state,
  district or local parties per year 5,000 to
  other PACs per year
• Funds must be segregated from other corporate
  money

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Note this language

• Where are corporations like ExxonMobil and
  Imperial Oil, and labor unions as well, making
  contributions?

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They can make unlimited contributions to 527s
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to 501(c)4 organizations
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and to some state level parties for non-federal
purposes
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Number of PACs over the years
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Main recipients of PAC cash Incumbent members of
Congress

• Rep. Tim Holden is getting 73 of his funds from
  PACs
• Thats extreme, but most incumbents get hefty
  wads of PAC cash, unless they make a point of not
  accepting such money

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Not as big a deal for presidential candidates

• Clinton 1, McCain 1, Obama 0 (250!)
• No need to report it when a presidential
  candidate says hes refusing to take PAC
  moneyhes also not taking green cheese from the
  moon, but you wouldnt report that

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Relatively simple so far

• But what makes this stuff complicated is
• What each of these groups is and isnt allowed to
  do under Federal Election Law
• How these groups interact (and some arent
  allowed to interact at all)
• Heres a hypothetical situation A
  Republican-leaning 527 runs an ad contrasting
  heroic, all-American John McCain with Barack
  Hussein Obama (heyisnt that a Muslim name?)

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• McCain already repudiated a talk show host who
  did something similar at a campaign event
• So lets say he tells the 527 to knock it off,
  that he hates their ad and its not helping him
• Has he violated campaign finance laws?

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• Candidates for federal office can't have their
  own 527 committees (up til 2002 they could)
• They can't raise money for a 527 committee
• And they can't coordinate activities with a 527
  committee
• Giving explicit instructions to a 527 Don't air
  this adcould be construed as coordination

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One complication is federalism

• On one election day we have...
• Federal elections
• State elections (for some states)
• Local elections
• Different actors raising money according to
  different rules want to use it to influence some
  or all of those races

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• Let's say a state party wants to run an ad with a
  popular U.S. Senator up for reelection, shaking
  hands with a bunch of candidates for the state
  legislature.
• The State Party's tagline, under the photo, is,
  Vote Democratic on Nov. 4
• Do they need to use federal money (i.e., hard
  dollars), or can they use money raised under more
  permissive state rules (i.e., from corporate or
  union sources)?
• Express advocacy rules follow

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In practice, how effective are these regulations?
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Not very

• 527s fined two years after the fact for not
  filing with FEC as political committees

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Parties, 527s, nonprofits and other groups also
do get out the vote efforts

• Remember our ballot
• You can use 527 money to register voters, state
  party money to get out the vote, etc. etc.
• GOTV efforts can be much more permissibly funded
  than advertising efforts

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The Landscape in 2008

• Dems with a big party lead for House and Senate
• GOP has a big lead for presidential
• Limitations on coordinated spending

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527s
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501(c)4s
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Presidential campaigns
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• In 2006, McCain and other Republicans tried to
  amend BCRA to allow political parties to
  coordinate with candidates
• They failed

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Congressional campaigns

• Lots of open seats due to retiring incumbents
  (Republicans mostly)
• Where are the challengers getting their money
  from?

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And come January 2009

• What will those interests be asking for?