Resource

Background Information on Get Big Money Out of Politics

Last updated: 10/12/2012

Summary

In 2010, the Supreme Court ruled that the super-rich and corporations can spend as much money as they want to promote or oppose political candidates. As a result, our elections are dominated even more by just a small handful of wealthy people. The more that big money dominates politics, the less that the rest of us matter.

We have to get big money out of politics. A constitutional amendment that gives citizens back the power to limit the big money in politics is a key solution. There is a nationwide effort to build awareness about how a constitutional amendment could solve the problem. On campus, we want to educate the campus broadly about the issue, and get students to join our petition of support for getting big money out of politics.

We will use our petition to demonstrate to the campus and our local leaders that students are concerned and want to see change. That is the first and most important step towards reclaiming our democracy.

Taking a Step Back: What’s at Stake

First, it is useful to take a step back and highlight why campaign finance laws are important in the first place.

We live in a representative democracy with a capitalist economy. This means that we hold different values dear in the economic and political spheres. 

Most Americans will tolerate some economic inequality so long as it results from meritocratic competition, because we respect that other values such as efficiency and proper incentives have a role to play in structuring our economy.  One’s political ideology to a certain extent determines how much inequality one is willing to sanction in the name of other values—with, all else being equal, self-identified conservatives comfortable with a wider income gap than self-identified liberals or progressives.  Few argue that everyone should receive the same income regardless of effort, talent, or other factors.

Political equality, on the other hand, is a core American value. Regardless of partisan or ideological affiliation, the vast majority of Americans agree that it is critical that we all come to the political table as equals.  Through multiple amendments and Supreme Court decisions, the concept of political equality (“one person, one vote”) has become a core constitutional principle.

But, we cannot maintain a democracy of equal citizens in the face of significant economic inequality if we allow those who are successful (or lucky) in the economic sphere to translate wealth directly into political power.  Our democratic public sphere is where we set the terms for economic competition.  It is where we decide—as equals—how much inequality, redistribution, regulation, pollution we will tolerate.  These choices gain legitimacy from the fact that we all had the opportunity to have our say.  If incumbents are able to rig the rules in favor of their own success it undermines the legitimacy of the economic relations in society.

In short, democracy must write the rules for capitalism, not the other way around.  And, the only way to ensure this happens is to have some mechanism for preventing wealthy individuals and institutions from translating their wealth into political power.  Campaign finance rules are that mechanism.  These common sense restrictions on the unfettered use of private wealth for public influence are the bulwarks or firewalls that enable us to maintain our democratic values and a capitalist economy simultaneously.   When we remove these protections, we risk creating a society in which private wealth and public power are one and the same.

The Problem

There are three main problems:

1.      A small number of wealthy individuals and institutions have vastly outsized influence over who runs for office, who wins elections, and therefore who makes policy in the United States.

We know that financial resources make a huge difference in election campaigns.  For decades, candidates who have raised the most money have won the vast majority of races—often more than 90% in a given year.[i]  And, for decades, candidates have raised the majority of their funds from a tiny minority of very wealthy Americans.[ii]

This means that Americans who can afford to give thousands of dollars to political candidates or outside groups that support them are more likely to see candidates who share their views on the key issues of the day win office and assume positions of power.  This is the influence of money on elections, rather than on politicians.

2.      All this money creates the danger that winning candidates will feel more accountable to a narrow set of large donors than to the broad swath of constituents they are supposed to represent. 

This can lead to quid pro quo corruption—an officeholder supporting or opposing certain policies at the request of a donor.  Or it can lead to a more subtle desire to please a political patron. 

From 2001 to 2011, the United States fell from the 16th least-corrupt country on Transparency International’s Corruption Perceptions Index to 24th place, and “nearly three in four Americans believe that corruption has increased over the last three years.”[iii] The World Bank also reported recently that corruption controls in the United States had weakened since the late 1990s and that it now trails most developed nations.[iv]

3.      All this money creates the appearance of corruption and causes the public to lose confidence in the political system. As that happens, participation drops and our democracy slowly erodes. Polling has shown time and again that that big money in elections reduces Americans’ trust in government. 

The Rise of Super PACs and (Sometimes Secret) Outside Spending

A long line of Supreme Court decisions have restricted Americans’ ability to curb the influence of wealthy donors through the democratic process.  Recent court decisions have made a bad problem worse, and introduced two new problems as well: direct business spending on elections and overall lack of transparency of political spending.

Since the 1976, Supreme Court decision Buckley v. Valeo,[v] individuals have been permitted to spend unlimited money to support favored candidates.

The 2010 decision in Citizens United v. FEC[vi] allowed corporations to spend general treasury funds—wealth they have aggregated through the benefits of the corporate form—to influence elections. 

This decision, along with D.C. Circuit Court of Appeals decision in SpeechNow.org v. Federal Election Commission[vii] and a subsequent FEC advisory opinion,[viii] gave rise to Super PACs and opened the floodgates to record levels of private money, much of which cannot be traced to an original source.

Here’s the latest lay of the land, from a joint report from OSPIRG’s federal office and Demos:[ix]

Super PACs continue to be tools used by a small number of wealthy individuals and institutions to dominate the political process:

·         Just over 57% of the $230 million raised by Super PACs from individuals came from just 47 people giving at least $1 million. Just over 1,000 donors giving $10,000 or more were responsible for 94% of this fundraising.

·         Sheldon and Miriam Adelson have given a combined $36.3 million to Super PACs in the 2012 cycle. It would take more than 321,000 average American families donating an equivalent share of their wealth to match the Adelsons’ giving. 

·         For-profit businesses contributed $34.2 million to Super PACs, accounting for 11% of their fundraising. There are reasons to suspect businesses are contributing much more to nonprofit organizations and trade associations that do not disclose their donors.

Outside spending by organizations that aggregate unlimited contributions from wealthy individuals and institutions is playing a significant role in the 2012 election cycle, and much of it is not disclosed.

·         Outside spending organizations reported $167.5 million in spending to the FEC. Of this, $12.7 million (7.6% of the total) was “secret money” that cannot be traced back to an original source.

·         But, because of gaps in reporting requirements, spending reported to the FEC is only part of the picture. When all types of outside spending on television ads related to the presidential race are taken into account, just over 50% of the spending has been by “dark money” groups that do not disclose their donors. According to Kantar CMAG data, the top five 501(c)(4) spenders on the presidential race have spent $53 million through July 1st on advertising in the presidential race alone, but our analysis shows these same groups have only reported $420,920 in spending collectively on all races to the FEC through June 30th. This means that these groups are currently reporting less than 1% of their total spending.

Solutions

Congress, the President, federal agencies, and state legislatures can all act to reform our system.  Because the Supreme Court had tied its hands, the U.S. Congress cannot immediately ban Super PACs or limit outside spending—but there is plenty it can do. For example, it could:

Propose a constitutional amendment to clarify that Congress and the states may regulate individual and corporate political contributions and spending.  Short of a dramatic shift in Supreme Court jurisprudence, the only way to break the dominance of wealthy individuals and institutions over our elections is to amend the U.S. Constitution to clarify that the First Amendment was never intended as a tool for use by corporations and the wealthy to dominate the political arena.  To truly solve the problem, an amendment must overturn the Buckley decision referenced earlier, not just Citizens United.

Amending the Constitution will require the support of two-thirds of both the House of Representatives and the Senate and then ratification by three-fourths of the state legislatures. This is, admittedly, a very high bar.  But, we have reached this high bar in the past, often specifically to expand political participation and vindicate the core value of political equality.  The Fourteenth, Fifteenth, Nineteenth, and Twenty-Sixth Amendments all extended the right to political participation to previously disempowered groups while limiting the disproportionate political influence of existing stakeholders.

In addition, public opinion is clearly on the side of reform. Back in 1994, 72% of Oregonians voted for a ballot measure to strictly limit campaign contributions to $100—and would be Oregon law were it not for the courts.

Since Citizens United was handed down, large majorities of Americans from both parties have indicated that they opposed the ruling.[x] Polls from around the time of the decision showed that 72% of Americans supported "backed congressional action to curb the ruling”[xi] and nearly 80% would support a constitutional amendment.[xii]

Propose and confirm only judges and justices who understand the importance of political equality and who will interpret the First Amendment properly.  The vast majority of Americans understand that the First Amendment was intended to promote robust political participation by all the people, not lock in the privileges of wealthy individuals and institutions.  We need the next generation of judges and justices to break from the Roberts Court’s antiregulatory orthodoxy and give Congress, states, and localities more flexibility to promote political equality, safeguard our democracy, and strike the proper balance between liberty and equality.

Encourage small political contributions by providing vouchers or tax credits.  Encouraging millions of average-earning Americans to make small contributions can help counter-balance the influence of the wealthy few.  Several states—Oregon included—provide refunds or tax credits for small political contributions, and the federal tax code did the same between 1971 and 1986.[xiii]  Past experience suggests that a well-designed program can motivate more small donors to participate.[xiv]  An ideal program would provide vouchers to citizens up front, eliminating disposable income as a factor in political giving.[xv]

Match small contributions with public resources to encourage small donor participation and provide candidates with additional clean resources.  Candidates who demonstrate their ability to mobilize support in their districts should receive a public grant to kick-start their campaign, and be eligible for funds to match further small donor fundraising.  This would both encourage average citizens to participate in campaigns and enable candidates without access to big-money networks to run viable campaigns for federal office.

Require robust disclosure of all contributions and expenditures used to influence elections. Voters have the right to know who is attempting to influence our elections and to whom their elected officials may feel accountable once elected. For state-level elections, Oregon has among the best transparency in the country. Unfortunately, Oregonians are as in the dark as the rest of America when it comes to our federal elections.

Protect the interests of shareholders whose funds may currently be used for political expenditures without their knowledge or approval.  Congress should require for-profit corporations to obtain the approval of their shareholders before making any electoral expenditures; and require any for-profit corporation to publicly disclose any contributions to a 501(c)(4) organization that either makes an independent expenditure or contributes to a Super PAC.

Tighten rules on coordination.  Current rules prohibiting coordination between Super PACs and candidates are riddled with loopholes.  The Federal Election Commission should issue stronger regulations that establish legitimate separation between candidates and Super PACs.  For example, the Commission could prevent candidates from raising money for Super PACs; prevent a person from starting or working for a Super PAC supporting a particular candidate if that person has been on the candidate’s official or campaign staff within two years; and prevent candidates from appearing in Super PAC ads (other than through already-public footage). If the FEC refuses to act, Congress can pass legislation codifying these common-sense rules.

 

[i] Bob Biersack, The Big Spender Always Wins?, Center for Responsive Politics: Open Secrets Blog, http://www.opensecrets.org/news/2012/01/big-spender-always-wins.html.

[ii] Adam Lioz, The Role of Money in the 2002 Congressional Elections, U.S. PIRG Education Fund (2003).

[iii] Eduardo Porter, The Spreading Scourge of Corporate Corruption, The New York Times, (July 10, 2012), available athttp://www.nytimes.com/2012/07/11/business/economy/the-spreading-scourge....

[iv] Id. See also “Worldwide Governance Indicators: Country Data Report for United States, 1996-2010,” The World Bank, available athttp://info.worldbank.org/governance/wgi/pdf/c228.pdf.

[v] Buckley v. Valeo, 424 U.S. 1 (1976).

[vi] 130 S.Ct. 876 (2010).

[vii] SpeechNow.org v. FEC, 599 F.3d 686 (2010).

[viii] Federal Election Commission, Advisory Opinion 2010-11, available athttp://saos.nictusa.com/aodocs/AO%202010-11.pdf.

[ix] Adam Lioz, Demos, & Blair Bowie, U.S. PIRG, Million Dollar Megaphones, (2012) available at http://uspirg.org/reports/usp/million-dollar-megaphones.

[x] Stan Greenberg and James Carville, Democracy Corps, Erica Seifert, Greenberg Quinlan Rosner, & David Donnelly, Public Campaign Action Fund, “Two years after Citizens United, voters fed up with money in politics,” (January 19, 2012), available at http://campaignmoney.org/files/DemCorpPCAFmemoFINAL.pdf; Dan Egan, Poll: Large majority opposes Supreme Court's decision on campaign financing, Washington Post, (February 17, 2010), available at http://www.washingtonpost.com/wp-dyn/content/article/2010/02/17/AR201002....

[xi] Id.

[xii] Hart Research Associates poll available at http://freespeechforpeople.org/

[xiii] Thomas Cmar, Towards a Small Donor Democracy: The Past and Future of Incentives for Small Political Contributions, U.S. PIRG Education Fund (2004).

[xiv] Id.

[xv] See Bruce Ackerman and Ian Ayres, Voting with Dollars: A New Paradigm for Campaign Finance (2002).