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League of Women Voters | Rochester Metropolitan Area, Rochester, NY
Untitled Document

Money in Politics

Part III: Methods for Regulating Campaign Finance to Protect the Democratic Process

Options for Reforming Money in Politics

1. Legislative Reforms 

  • Expand disclosure requirements for contributions and expenditures (Congress and states).
  • Tighten coordination rules. The Supreme Court decision allowing unlimited spending by independent groups is based on the premise that such spending is not coordinated with the candidate in any way.  Current rules are weak and allow coordination in a number of ways. 
  • Adopt public funding for all candidates (Congress and states).
    Prohibit fundraising from interests they most directly regulate (Congress and states).
  • Close the "revolving door" by extending the existing time limitations on negotiating or accepting a job from a firm with whom they have been involved as a member of Congress. (Congress).
  • Change the makeup of the Supreme Court to change the majority opinion on campaign finance regulation.  This could be done by appointments to the court or by adding to the number of justices on the court.  (President and/or Congress)
  • Enact state corporate laws. One possibility is to require directors to obtain shareholder approval for campaign donations and expenditures as well as public disclosure.  Another possibility is to require noninvolvement in state and local elections by corporations that hold a business license. (state)

2. Regulatory Reforms

  • Enforce campaign finance laws.   The votes of the 6-member Federal Election Commission (FEC) which is supposed to enforce federal campaign law often end in partisan stalemates. The FEC currently has a small budget compared to its task of reviewing and prosecuting possible violations.  Major leadership positions are vacant (Federal Election Commission and state agencies).
  • Adopt a Securities and Exchange Commission (SEC) rule requiring disclosure of campaign contributions and lobbying by public companies.  An SEC rule change would not require a vote by Congress. (SEC or possibly Congress).
  • Strengthen and enforce the political activity rules governing 501(c)4s.  501(c)4 organizations must be non-profit and operate exclusively for social welfare in order to have this tax-exempt status.  A section 501(c)(4) social welfare organization is allowed to engage in some political activities so long as that is not its primary activity.  The IRS could close loopholes that allow secret spending in elections while protecting truly non-partisan voter service activity. (IRS)  

3. Other approaches

  • Overturn Buckley and /or Citizens United rulings by the Supreme Court. (Supreme Court)
  • Wait for the ideological makeup of the Supreme Court to change. (President and Congress)
  • Work for a reform-minded Congress. (grassroots)
  • Amend the US Constitution to overturn rulings. (Congress and states) There are 2 categories of proposed amendments:
    1. Restore the authority of Congress and the states to limit campaign funding.
    2. Assert that the rights protected by the Constitution are limited to natural persons, not corporations.

Click here for more information on Options for Reforming Money in Politics

Actions on the state level

While considerable media and public attention has been focused on campaign finance on the federal level, many campaign finance reformers have shifted their attention to the states as they recognize that state and local levels are the arena where voters retain the most influence and where political action is possible.

Disclosure

Expanding and strengthening donor disclosure requirements continues to be one of the most viable reforms at the state level.
Effective disclosure regulations would include most to all of the provisions listed below:
  • Timely reporting of contributions prior to elections and in real time
  • Timely reporting of expenditures prior to elections and in real time
  • Entity must identify responsible human and address
  • Easy accessibility by the public through a searchable campaign finance data base and electronic filing system
  • Whistle-blower protections
  • Anonymous reporting of violations
  • Reporting of gifts
  • Contributor’s employer and occupation
  • Disclosure of top contributors of independent expenditures, electioneering communications and ballot spending through TV, internet and print ads

Coordination

The assumption of the majority Justices in the Citizens United case that there were sufficient safeguards against coordination by outside groups, candidates and parties has proven flawed.  Close scrutiny has revealed that outside groups are often run by groups who are closely associated with candidates and campaigns who work in concert with them to coordinate campaigns.

The following recommendations are taken directly from a 2014 report by the Brennan Center for Justice at NYU School of Law.

  • Make laws apply to a realistic universe of spending. 
  • If a candidate raised money for a group, treat all spending by that group on behalf of the candidate as coordinated.               
  • Provide "sensible cooling off" period before a candidate’s former advisors may staff a group that is permitted to make unlimited expenditures to promote the candidate’s election.                
  • Treat as coordinated any spending to promote the election of a candidate that reproduces a material produced by the candidate’s campaign.               
  • Treat as coordinated any spending to promote the election of a candidate, when the spender uses a consultant who has also served the candidate in a position privy to related campaign information              
  • Publish scenario-based examples of what constitutes prohibited coordination and what does not.               
  • Ensure adequate enforcement and deterrence.               
  • Allow use of firewalls under appropriate circumstances as evidence that an outside group's spending was truly independent.

Contributions and Expenditures

 All but 6 states have limits on contributions in varying degrees.

NYS limitations are based upon the number of registered voters and, for a primary, the number of registered voters in that party. Thus, the limit in a race with districts may vary from one district to another. In 2013 the limits were:

Individual to candidate State Party to candidate PAC to candidate

Primary election:
$19,700/Dem statewide candidate
$13,675/Rep statewide candidate
$6,500/other party
statewide candidate
$6,500/senate candidate
$4,100/assembly candidate

Primary election:
Prohibited

 

 

 

Primary election:
$19,700/Dem statewide candidate
$13,675/Rep statewide candidate
$6,500/other party
statewide candidate
$6,500/senate candidate
$4,100/assembly candidate

General election:
$41,100/gubernatorial & Lt. Gov. slate
$41,100/other statewide candidate
$10,300/senate candidate
$4,100/assembly candidate

General election:
Unlimited

 

 

General election:
$41,100/gub & LG slate
$41,100/other statewide candidate
$10,300/senate candidate
$4,100/assembly candidate

Amounts are per election.

Aggregate political contributions from an individual:
$150,000 per year.

 

Amounts are per election.

 

 

Corporate to candidate   Union to candidate

Primary election:
$19,700/Dem statewide candidate
$13,675/Rep statewide candidate
$6,500/other party statewide
candidate
$6,500/senate candidate
$4,100/assembly candidate

  Primary election:
$19,700/Dem statewide candidate
$13,675/Rep statewide candidate
$6,500/other party statewide candidate
$6,500/senate candidate
$4,100/assembly candidate

General election:
$41,100/gub & LG slate
$41,100/other statewide cand
$10,300/senate candidate
$4,100/assembly candidate

 

General election:
$41,100/gub & LG slate
$41,100/other statewide cand
$10,300/senate candidate
$4,100/assembly candidate

Amounts are per election

Aggregate political expenditures, including contributions, by a corporation:
$5,000 per year.

 

Amounts are per election

 

 

Pay to Play

Pay-to-Play refers to campaign contributions from those seeking government contracts to public officials and candidates responsible for awarding contracts. A 2015 Brennan Center report points out that government contractors, affiliates and principals are major contributors of disclosed money; we have no insight into their contributions to dark money groups. Lack of transparency is an issue for all contributions; it is particularly troubling in contract situations since they could influence awards of public money for government services, thereby threatening the integrity of the contract award process, and the public’s trust that taxpayer dollars will be awarded based on merit, not the size of donor checks.

Pay-to-Play laws have been implemented by the Federal Government, Municipal Securities Rulemaking Board and the Securities and Exchange Commission and 15 states. But taking a cue from a Supreme Court that has ruled against many of the nation’s campaign finance laws, lawsuits from contractors and political parties are mounting, threatening to weaken or end pay-to-play safeguards.

SEC rules related to Wall Street, and state laws in Connecticut, Illinois and New Jersey are examples of the strongest and most effective rules in effect as of this writing. Components of effective pay-to-play restrictions are:

  • “define government contractors as not just the business itself, but also its owners and senior management combined;
  • restrict contributions well before contract negotiations begin and well after termination of the contract; and
  • mandate that contractors themselves document and certify compliance among their senior management. . .”

Oversight and Enforcement of Campaign Finance Rules at State and Local Level

“The reality is that the FEC (the Federal Elections Commission), the IRS and the Department of Justice are not enforcing the laws on the books and if they would enforce the laws on the books, a number of the issues that …would go away or at least would be more manageable.” 

Fortunately, guidelines for oversight and enforcement practices equal to the critical tasks of monitoring campaign finance money and investigating and enforcing regulations are in place in several states that serve as models. Those guidelines include:

  • Establish a single, independent agency responsible for oversight and enforcement of both chambers of legislature
  • Mandate random audits of percentage of campaign disclosures by state Boards of Elections
  • Mandate specific audits in cases of suspicious activity by Boards of Elections
  • Vest oversight agencies with investigative authority
  • Give oversight agencies the power to assess meaningful penalties
  • Give oversight agencies authority to recommend that criminal charges be pursued by the Attorney General

Small-donor, publicly financed elections

Small-donor, publicly funded elections are viewed by advocates as a direct way to shift the influence of money from mega-donors to individual voters and broaden the field of candidates who run for office to include those without substantial personal wealth or a network of established mega-donors.

The system of public funded elections that has evolved in New York City over the past two decades, offers a “proven blueprint for success”. The key elements of the NYC model are:

  • A distinctive, small- donor, multiple match system
    Provides a matching ratio for small donor contributions ($175 or less), that is greater than 1:1 and applies the largest matching ratio to the lowest matchable amount.
  • Eligibility criteria
    Must meet a “qualifying threshold” based on small-donor donations ($175 or less) only. Donations over $175 do not count toward the qualifying threshold.
  • Voluntary expenditure limits
    Candidates opting into the system agree to expenditure limits set by the program.
  • Accurate and timely disclosure requirements
    Both participating and non-participating candidates must file frequent, timely disclosure statements  that are available to the public.

Click here for more information about Actions on the State level.

SuperPAC. A political action committee that makes unlimited independent expenditures that are not coordinated with any candidate or party. SuperPACs run ads, send mail or communicate in other ways with messages that may advocate the election or defeat of a particular candidate. There are no limits or restrictions on the sources of funds or on the amounts of SuperPAC expenditures. However, both PACs and Super PACs are required to file timely financial reports with the FEC that include the names and amounts from donors above a base level (generally $200), along with the amounts of their expenditure.

The Federal Election Commission (FEC)

The Federal Election Commission was created in 1974 by amendments to the Federal Election Campaign Act of 1971.  It was created to enforce the Federal Election Campaign Act and currently is responsible for administering, enforcing, defending and interpreting the FECA  The President appoints the 6 members of the commission, who require confirmation by the Senate.  An independent Inspector General's Office was created in 1989 and reports to the Commission and to Congress.

The FEC has sole jurisdiction over civil enforcement of the FECA.  It investigates reported violations and is responsible for pursuing resolution and/or prosecution.  In 2013 it received 81,600 campaigns filings which disclosed about 30 million financial transactions.

Enforcement Challenges

  • The FEC has 3 key leadership positions which are currently unfilled.
  • The FEC is tasked with one of the most complex statutory missions but it is one of the smallest Federal agencies with a budget of $67,500,000.
  • The partisan votes of the 6-member commission consistently end in ties, resulting in a stalemate. The current Commission Chair Ann Ravel states "The likelihood of the law being enforced is slim.  I never want to give up, but I'm not under any illusions.  People think the FEC is dysfunctional.  It's worse than dysfunctional."

Click here for more information about the Federal Elections Commission

All information on the Money in Politics pages has been taken from materials provided by LWVUS.

Remember when thinking about your answers to the Consensus questions, we should respond "without regard for the Supreme Court's current views on the First Amendment," or its current narrow definition of corruption.

Part III Question 1. In order to achieve the goals for campaign finance regulation, should the League support?

(Please respond to each item in Question 1 a and b.)

a. Abolishing SuperPACs and spending coordinated or directed by candidates, other than a candidate’s own single campaign committee.
☐  Agree     ☐  Disagree     ☐  No consensus

b.   Restrictions on direct donations and bundling by lobbyists? (Restrictions may include monetary limits as well as other regulations.)
☐  Agree     ☐  Disagree     ☐  No consensus

c.   Public funding for candidates?   Should the League support: (You may respond to more than one item in Question 1 c.)

i.   Voluntary public financing of elections where candidates who choose to participate must also abide by reasonable spending limits?
☐  Agree     ☐  Disagree     ☐  No consensus

ii.   Mandatory public financing of elections where candidates must participate and abide by reasonable spending limits?
☐  Agree     ☐  Disagree     ☐  No consensus

iii.   Public financing without spending limits on candidates? 
☐  Agree     ☐  Disagree     ☐  No consensus

Part III Question 2. How should campaign finance regulations be administered and enforced? 

(You may choose more than one response for Question 2.)

☐ a.  By an even-numbered commission with equal representation by the two major political parties to ensure partisan fairness (current Federal Election Commission [FEC] structure)?

☐ b.  By an odd-numbered commission with at least one independent or nonpartisan commissioner to ensure decisions can be made in case of partisan deadlock?

☐ c. By structural and budget changes to the FEC (e.g., commission appointments, staffing, security, budget, decision making process) that would allow the agency to function effectively and meet its legislative and regulatory mandates.

 ☐ d.  No consensus.

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