Tuesday, January 15, 2008

Senator Ensign: Show us the Money
I was in Reno, Nevada yesterday with former Nevada Common Cause Board Chair Jim Hulse and a group of activists who were calling on Senator Jim Ensign to explain his obstruction of a bill to require U.S. Senators to tell us who they are taking money from -- now.

Watch a video of our event here

Currently, Senators file campaign finance disclosure reports on paper. The paper reports are scanned into a computer, printed out, and then retyped to be placed on the Federal Election Commission website. This process takes about four months and costs about $250,000 in taxpayer dollars.

Senator Ensign has objected to a vote on the bill. He says he would like to attach an amendment that would require non-profit groups to disclose their donors if they file an ethics complaint against a sitting Senator. This amendment is controversial -- and appears more to be a ploy to prevent the electronic disclosure bill from passing.

This bill had been held up by an anonymous Senator for months. But then the Senate rules changed to forbid "secret holds." At that point, Senator Ensign stepped up to offer his amendment. See the real footage from the Senate as Senator Feingold explains the situation

My question for the Senator is this: "On whose behalf are you stopping timely disclosure of campaign finance information? Are there constituents from Nevada who have asked him to block this bill?"

For past Commonblog coverage of this issue, go here.

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Wednesday, December 12, 2007

Ameriquest Shows How Big Money in Politics Hurts Real People

When I head home for the holidays, my relatives sometimes have a hard time grasping what I do as a "reformer" and how that impacts their daily lives. This year, I'll point them to a recent story in the Seattle Times that describes how 96-year old Francis Taylor is about to lose her home of more than 40 years when banks foreclose on loans she took out from the now defunct lender Ameriquest.

After inventing the "sub-prime" mortgage industry, the collapse of which now threatens to throw the country into a recession, Ameriquest has gone into bankruptcy and sold its remnents to Citifinancial. The company settled a lawsuit with 49 states recently for $325 million out of claims of predatory lending. They also recently paid a fine for violating the do not call list. Greed has no bounds, certainly not privacy in your own home (that they plan to take away from you.)

The sad thing is, things didn't have to work out this way. Years ago, consumer advocates saw the crisis coming and urged state governments to put stricter regulations in place. Today's Sacramento Bee reminds us how the California legislature failed to enact reforms back in 2001. Ameriquest and others said this would make it harder for first time homeowners to buy their first abode, but it turns out that almost all of Ameriquest's loans went to existing homeowners -- many of whom the company probably knew could not make the payments and would end up losing their houses.

But rather than casting a skeptical eye toward Ameriquest's arguments, California legislators went to Hawaii on trips financed by Ameriquest. They ate $170 worth of cookies, supplied by Ameriquest lobbyists.

Common Cause has documented here and here how the mortgage industry spent millions lobbying Congress and doling out campaign contributions to try to get a federal law passed that would have pre-empted states from protecting folks like Francis Taylor. One small, but telling part of the story is how Ameriquest owner Dawn Arnall bundled hundreds of thousands of dollars for president Bush's campaign and was then rewarded by being made ambassador to the Netherlands. No wonder many observers are saying that the new mortgage relief plan announced by the White House appears more aimed at bailing out the industry and preventing more sweeping reforms than at helping strapped homeowners.

The good news is that there are things we can do to make this better. Congress, to its credit, recently enacted ethics legislation to cut down on lobbyist funded trips. California legislators could do the same, but it would mean giving up those nice cookies in Hawaii.

Even more significantly, congress and the states could enact full public financing of campaigns as several states have now done. That would mean that politicians wouldn't have their hands outstretched to take campaign cash from the mortgage industry. Had they done so a decade ago, Francis Taylor might still have her house, and the house you live in might now be going down in value as the entire county's real-estate market goes down the tubes.

All too often, business groups fight political reforms that would weaken their grip on decisionmakers. But as the Ameriquest, and others like Enron who have gone before them (not to mention the whole Savings and Loan crisis -- remember that?) when greed goes unchecked by a government that looks out for the common good, we all wind up suffering.

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Wednesday, December 05, 2007

I could not make this up if I tried.

Yesterday, the Public Policy Institute of California (PPIC) hosted a panel discussion among former and current elected officials in California. The topic was how to improve public confidence in the legislature. The PPIC has found in recent surveys that only 34 percent of Californians approve of the legislature's performance.

Former Senate leader John Burton said that the problem was that politicians don't really get to know each other. As reported in the Sacramento Bee, he told a story about he and another member bonded while eating diner at a lobbyist sponsored event and watching a topless dancer. These opportunities came to an end upon passage of a reform measure that prevented lobbyists from spending more than $10 per month wining and dining legislators.

"You find out your kid plays Little League baseball, you find out that your daughter's in ballet, you find out you have things in common," Burton said. "But then something called Proposition 9 came in and said nobody could buy anybody anything more than $10 per month per person."
Former Governor Pete Wilson said that legislators don't get along well because they are too sober:

"It may have something to do with the fact that when John, Willie and I were all in the Assembly, there was a great deal more drinking in the Legislature,"

Former Assembly Leader Willie Brown said that the problem is with reforms that put an end to backroom deals and made government more open and accountable:

"Unfortunately, much of that is done now where everybody in the world can see," Brown said. "When Randy Collier was the chair of the Senate Finance Committee and I served as the chair of Ways and Means, we had a private arrangement of the conference committee writing the budget. ...

"Some would say reforms set in the early '70s where they started requiring open conference committees, where they started requiring recorded votes, where they started requiring a number of things that inhibits good judgment," he added. "The results were that you now had this clear and present danger out there trying to operate and produce a result where every member is trying his or her best to protect his or her relationship with his or her constituency, and the results were stalemate or gridlock."

Imagine that. Legislators are more concerned about protecting their relationships with their constituents than they are at cutting back room deals with other politicians over a drink and a cigar.

It may be true that one reason for public dissatisfaction with the California legislature (as well as Congress) is that nothing seems to get done other than partisan bickering. It might even be the case that when exposed to the glare of sunshine, legislators are less likely to cut compromises that might sell their constituents short and that this leads to more gridlock.

But the solution to gridlock is not to allow lobbyists to grease the skids for special interest legislation to flow more easily. It is to create an elections process that allows voters to remove legislators who can't get things done, rather than further insulating them.

Former Assemblymember Jim Brulte had a better idea. Wouldn't it improve the legislatures standing with the public if they gave up the self-interested task of drawing their own political districts? That would be one step toward a more functional legislature.

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Thursday, November 30, 2006

Derek Signs Off

This will be my final entry to Democracy's Daily Posts. After three years since founding TheRestofUs.org, I'm moving on to tackle new challenges, including writing a book titled "The Recall's Broken Promise-- How Big Money Still Runs California Politics." I'll also be consulting to democracy groups on various campaigns and raising my second daughter, who is due in 3 weeks.

Thanks for all the tips and comments that readers have generated over the years. You can contact me in the future at cressman(at)PoplarInstitute.org.

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Tuesday, September 12, 2006

Independent Expenditures Explode
Over the past year, California has seen a tremendous increase in so-called political independent expenditures. This is where a powerful donor spends money to praise or trash a candidate with their own ads or mailings rather than giving a contribution to the candidate to spend as they wish. This rise in independent spending is in part a reaction by donors to recently implemented limits on how much they can give a candidate directly. However, some of the independent expenditures we're now seeing dwarf the amounts that donors used to give to candidates even when there were no restrictions in place.

I've been asked to testify about independent expenditures before the California Assembly Elections Committee on September 12. You can read my complete testimony here, but this is a brief overview of what I'll be saying:

The underlying concept of one person, one vote, that promises political equality and gives legitimacy to majority rule is threatened when a few donors fund massive independent expenditures. The U.S. Constitution’s guarantee of a republican form of government erodes when elected representatives are accountable to a relatively small number of narrow interests as opposed to the public at large. If a handful of people have a louder voice than the rest of us, then the electorate does not have the balanced information from all perspectives that it needs to make an informed decision and the goals of the First Amendment are undermined.

Some examples:

1) Independent expenditures allow a few fat cats to unduly influence election outcomes. In the 2006 primary election for governor, developer Angelo Tsakopoulos and his family contributed $8.7 million to a committee set up by the firefighters union called Californians for a Better Government. This committee then ran ads that expressly promoted Phil Angelides for governor. It is likely that this expenditure played a decisive outcome in the race.

2) Because large expenditures unduly influence elections, they also unduly influence legislation. Also in the 2006 primary election, car dealers financed an independent expenditure campaign to promote Alex Padilla for the California Senate. Mr. Padilla was running against Cindy Montanez, who as an Assemblymember had sponsored a car buyers’ bill of rights that gave consumers two days time to return used car. The car dealers thus identified Ms. Montanez as detrimental to their financial self-interest and spent at least $122,000 to promote her opponent. While the legislature may occasionally do stupid things, legislators themselves are not stupid people. Legislators are smart enough, I submit, to figure out that if they too stand up to the car dealers that they might fall victim to a large independent expenditure in a future election. Interestingly enough, as the 2006 legislative session ended Senator Torlakson gutted a bill that had previously dealt with air quality issues and replaced it with a last minute increase in vehicle document preparation fee that car dealers charge customers from $45 to $55. This favor to the car dealers is like raising the car tax by $10, only the money doesn’t even go to the state to cover public expenses but instead goes into private interests’ bank accounts.

3) Because large expenditures unduly influence elections, they can also unduly influence other government decisions. This summer, while they were negotiating a contract with Governor Schwarzenegger, the prison guards’ union publicly announced that it might spend $10 million on independent expenditures to influence the upcoming governor’s election. Governor Schwarzenegger knows that the guards’ track record of damaging Diane Feinstein and aiding Gray Davis in previous elections demonstrates that they are a powerful interest. This threat of an independent expenditure completely undermines Governor Schwarzenegger’s pledge not to accept contributions from public employee unions that he is negotiating with.

4) Because corporations can make large expenditures to unduly influence elections, they give inappropriate political advantage to citizens who organize their interests through business corporations. This spring, the U.S. Chamber of Commerce financed ads that promoted Arnold Schwarzenegger’s accomplishments as governor. Because these ads avoided the magic words of telling viewers to vote for Schwarzenegger, the Chamber did not have to disclose the funding sources, although clearly the Chamber relies heavily on contributions from business corporations. Some media reports estimate $10 million was spent. It is wholly appropriate for citizens who want to support a pro-business regulatory climate in California to make political contributions as individuals and to form political associations and organizations to pool their contributions together. But it is inappropriate for these individuals to make contributions or expenditures to influence elections using money from the corporate treasury, which comes from customers who are making an economic purchase from the corporation but who do not necessarily support the corporation’s political agenda.

Fortunately, there are several options available to California to deal with these problems of massive independent expenditures.

1) Repeal contribution limits for candidates. This non-solution tends to be a favorite approachy among many officeholders who would much prefer to have big money flowing into their own campaigns instead of independent committees who they cannot control. Even when a committee is trying to help a candidate, their message and tactics may not fit well within the overall strategy of a candidate and may in fact be counter-productive. Plus, it’s just downright uncomfortable to have other folks out there talking about you. But, some discomfort is par for the course when you offer yourself for public service. It’s a noble act to be willing to serve, but even nobler to have the confidence that voters will support you even when critics assail you through independent expenditures. Raising or eliminating contribution limits to candidates is akin to having the state start selling crystal meth at a discount in order to prevent private drug dealers from selling it. The donor influence is still there, both on election outcomes and on legislation, only it is more corrosive and less obvious.

2) Ban corporate independent expenditures. For the last century, federal law has banned corporate contributions to federal candidates. It is high time that California caught up with this basic reform. Courts have long upheld these rules. Further, in the case Austin v Michigan Chamber of Commerce, the Supreme Court of the United States upheld a complete ban on independent expenditures by corporations precisely because they can accumulate vast sums of wealth that bear no relation to political support for the corporations ideas. Proposition 89 on this November’s ballot would ban corporate expenditures to independent campaigns to $1000.

3) Place similar contribution limits on independent committees as exist for candidate committees. California’s current system of unlimited contributions to independent committees is an open invitation to evade the candidate contribution limits. Federal law applies a $5000 limit on contributions to a political action committee that conducts independent expenditures. Congress is currently considering legislation that would extend these limits to so-called 527 committees that promote, support, attack, or oppose candidates but currently accept unlimited individual contributions. Congress has already required these committees to disclose their donors and banned corporations from funding TV ads that attack or promote candidates near elections even if they fall short of an independent expenditure. While California is leading the country in tackling global warming and other issues, we are embarrassingly far behind the federal government and other states in dealing with this problem of independent expenditures. Prop 89 would place a $1000 limit on contributions to independent expenditure committees.

4) Provide public funds to match independent expenditures. Disclosure, contribution limits, and corporate bans would go a long way toward reducing the undue influence of big-money independent electioneering. But they would not eliminate the problem. Just as current court rulings allow a wealthy individual to spend an unlimited amount on their own candidacy; they also allow a wealthy individual to spend an unlimited amount on their own independent expenditure. So, California could prevent Angelo Tsakopoulos from making a large contribution to the firefighters’ independent committee, but it could not prevent Tsakopolous or anyone else from unlimited spending as an individual and unduly influencing election outcomes. California could make things more fair by ensuring that candidates who are targeted by massive independent expenditures can respond. This session, the Assembly wisely passed AB 583, which would have provided candidates who entered a binding system to accept no private contributions would receive a limited amount of public funds to respond to independent expenditures that attacked them or promoted their opponent. Think of it as opening a free methadone clinic next to every drug dealer. Unfortunately, the Senate did not consider the bill. Proposition 89 contains similar provisions for matching funds and offers an immediate, and workable, solution to the challenges posed to democracy of large independent expenditures.

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Tuesday, September 05, 2006

California Welcomes Future Abramoff Scandals
The Los Angeles Times gets kudos for keeping a watchful eye on the California legislature as it conducted all sorts of mischief in the final hours of the legislative session last week. This story details a bill pushed through after midnight on the last day of business that will allow politicians to raise money from lobbyists and other interests for so-called officeholder expenses accounts.

An officeholder expense account is basically a slush fund that a politician can use to travel, eat fancy dinners, give gifts, or make contributions to charities in their district that will make them more popular people. If these things were truly necessary to do their jobs, they could ask their employer (that's us, the voters) to pay the tab. But instead, they want to hit up special interests for yet more cash to cover the bill.

Here is a link to the summary of the bill, which includes links to the legislators who voted to give themselves this privilidge (it passed the Senate 36-0).

This bill amends the California Political Reform Act, the basic rules for money in CA politics. Prop 34, which passed in 2000, amended the PRA to say this about campaign contributions raised after a campaign is over:

§ 85316. Receipt of Contributions After the Date of the Election.

A contribution for an election may be accepted by a candidate for elective state office after the date of the election only to the extent that the contribution does not exceed net debts outstanding from the election, and the contribution does not otherwise exceed the applicable contribution limit for that election.

This little piece of law effectively prohibits officeholders from continuing to raise campaign money once in office. Now, most politicians get around this by starting a new campaign to run for re-election immediately after winding up their old campaign. This means that they get to keep raising money round the clock, and can keep using their campaign account for travel and meal perks if they want to. But, if you are a termed out politicians, like Kevin Murray (who sponsored this bill), you can't just run for re-election so it's harder to keep raising your slush fund.

The right solution would be to prohibit all officeholders, not just termed out ones, from raising slush fund money. Really, we should prohibit them from raising any money at all until the year of the election -- there's just no need for permanent campaigns. Instead, the legislature opted to let all politicians, even termed out ones, raise money for expenses that are questionable at best.

Powerlobbyist Jack Abramoff got himself into trouble for (among other things) illegally arranging travel junkets for members of congress. Abramoff also used a restaraunt he owned to wine and dine politicians. California may make it easier for the future Abramoff's of the world. They'll simply be able to cut a politician a check, which can then be used for travel and meal perks at the legisltors fancy.

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Wednesday, August 30, 2006

Dodging Disclosure
Reporter Brian Joseph of the Orange County Register has uncovered a disturbing trend: politicians are now routinely accepting pledges for contributions at their fundraising event rather than demanding checks ahead of time to come in the door. (see his story here.)

What's the problem, you ask? Well, this in-effect creates a system where donors can signal their support for a legislator, but wait to hand over the check until later. This creates two potentially troubling situations:

1) At a minimum, this arrangement delays disclosure of the contribution. California law has among the tightest disclosure requirements in the country. All large contributions must be reported within 24 hours of receiving them once you are within 90 days of an election. But, neither the politician nor the donor has to report the pledge. As we are nearing the end of the California legislative session, special interest swindles are thick in the air. So are political fundraisers. But, it becomes impossible to track which lobbyists are giving contributions to legislators at the same time they are asking those legislators for special treatment for their clients, because the check will come in long after the session is over.

2) This secondary market of pledges instead of checks actually creates a system where the donor can wait to see if a legislator does what they want before they make good on their pledge. A politician can figure out how they should vote on an issue by hosting a fundraiser, seeing who makes pledges (possibly among competing interests), and then quickly calculate what position would earn them the most campaign cash. All this can happen, mind you, without any explicit agreement by donor or politician to exchange a vote for a contribution.

The practice highlights one of the weaknesses of relying upon disclosure as a way to combat corruption from campaign contributions. The disclosure model presumes that large contributions can be corrupting and that the best way to guard against this is to require all contributions to be reported so that the media and the public can then see if there are any connections between donors and actions by legislators. Setting aside the impracticality of monitoring these conflicts among thousands of donors and thousands of legislative acts, this pledge system shows how easy it is to evade disclosure laws.

The better solution is to set tougher limits on what big donors can give to politicians. Better yet would be to provide candidates a system where by they would be prohibited from accepting any contributions if they instead agreed to a rigid system of public financing for their campaigns.

Opponents of these hard-hitting campaign finance reforms often argue that they can undermine disclosure because donors seek other ways of helping politicians rather than giving them money directly. For instance, donors give money to bogus front groups which run ads praising or trashing a candidate, but don't actually contribute to them. The solution, of course, is to require similar disclosure and limits on those front groups. But, as this example shows, donors can find may ways to avoid disclosure even absent tough limits on contributions. Bottom line: if disclosure is effective in its own right, fat cats will dodge it to then ruin its effectiveness.

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Wednesday, August 23, 2006

Reform Measure Passes in Alaska
On Tuesday, August 22, voters in Alaska overwhelmingly approved a campaign finance ballot measure. With 87% of the precincts reporting, Measure 1 had support from 74% of the voters. (click here for updated results.) This article has more details on the measure.

This measure lowers contribution limits to candidates from $1000 to $500 and tightens the rules on who must register as a lobbyist. The effort was led by Alaska PIRG in response to the legislature's recent move to increase these limits. The Alaska legislature had enacted the $500 contribution limit after AKPIRG and other reformers had gathered enough signatures to place an initiative on the ballot in 1996. Governor Frank Murkowski introduced and then signed a law in 2003 to double those limits. Measure 1's passage reverses that.

Interestingly, voters also canned Frank Murkowski as Governor. He had come under heavy criticism for appointing his daughter as U.S. Senator when he vacated that post to become Governor in 2002.

This may be a sign of things to come. There are reform measures on the ballot in California (Prop 89 to enact public financing and tighten limits on private contributions), Oregon (Measures 47 and 48 to amend the Oregon Constitution to allow for contribution and spending limits and then enact a tough set of limits) and Colorado (to tighten ethics laws and ban gifts from lobbyists to legislators.)

Likewise, other incumbents have been losing in primaries, including Joe Lieberman in Connecticut, Cynthia McKinney in Georgia, and Joe Schwarz in Michigan. Voters may be in a mood to clean house.

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Monday, July 24, 2006

Cunningham Scandal: Rep. Harris Under Investigation, Guilty Plea From MZM Employee

As Jim Stratton reported last week in the Orlando Sentinel, federal investigators recently questioned the former top political aide to Florida Congresswoman Katherine Harris about her relationship with defense contractor Mitch Wade, one of the men who bribed former congressman Duke Cunningham. The report signals that the federal investigation into the aftermath of the Duke Cunningham scandal has turned its sights on Harris.

Duke Cunningham's guilty plea to bribery and other charges last November signaled the beginning, not end, of a widespread federal investigation into possible corruption by members of Congress and government contractors. As prosecutors delved into the dealings of the men who bribed Cunningham, several aspects of their relationships with other members of Congress emerged which were eerily similar to their relationship with Cunningham, including massive campaign contributions from the contractors to the congressmembers and congressional earmarks from the members to the government contractors.

One such member was Katherine Harris.

At the time he pleaded guilty to bribery and corruption charges this past February, Wade also pleaded guilty to making illegal campaign contributions to Rep. Harris and Virginia Congressman Virgil Wade. Wade and his employees had given $50,000 to Harris, $32,000 of which Wade illegally funneled through his employees to skirt federal contribution limits. Just as Cunningham rewarded Wade and fellow defense contractor Brent Wilkes for their campaign contributions and outright bribery, Harris had attempted to earmark $10 million for Wade's company MZM.

At one point, Wade and Harris had dinner in a posh D.C. restaurant. At the dinner, Wade offered to host a fundraiser for Harris's campaign for U.S. Senate. (This on top of the $50k she'd already received from MZM.) A few weeks later, Harris amended the list of earmarks she had requested from House leadership to include the $10 million for Wade. The quid pro quo nature of the Wade/Harris dealings raised the strong possibility of bribery.

Harris's explanation of these circumstances to her staff was so changing and inconsistent that many members of her staff resigned. One such staffer, top political strategist Ed Rollins, thought the circumstances sufficiently damning to recommend that Harris get a lawyer. Rollins was the subject of the federal interview mentioned earlier. Rollins, a longtime GOP operative, said he assumed more interviews with other Harris staffers would be forthcoming.

In related news, Richard Berglund, a former employee for Mitch Wade at his defense contracting firm MZM, pleaded guilty last Friday to making illegal campaign contributions to Harris, as reported in the St. Petersburg Times.

In short, the Cunningham fallout has only just begun. Three of the four co-conspirators named by both Cunningham and Wade in their guilty pleas remain unindicted, including big kahuna Brent Wilkes.

Nor is Harris the sole member of Congress who received $50,000 or more in campaign contributions from Wade and Wilkes while steering them various government contracts worth tens of millions. In addition to Harris and Cunningham, other members of this group, include Virgil Goode (VA), Jerry Lewis (CA), Duncan Hunter (CA), and John Doolittle (CA). Doolittle alone received upwards of $130,000 from Wilkes and his associates, in turn steering $37 million in federal tax dollars to Wilkes company PerfectWave Technologies.

Stay tuned.

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Monday, July 17, 2006

Rich Buy Political Influence on Both Sides of the Atlantic

As Jim VandeHei and Chris Cillizza report in the Washington Post, a network of wealthy liberal donors is spending tens of millions of dollars to create a network of think tanks and other organizations to support liberal political ideas and leaders. The group, which calls itself the Democracy Alliance, vets left-leaning groups for possible donations, steering money only to those which meet both its ideological and secrecy requirements.

Yes, secrecy requirements. Many of the donors don't want their names revealed to the public. So much for political courage. In other words, they want the power but none of the accompanying responsibility.

Across the pond, as the BBC reports, a scandal involving Prime Minister Blair's chief fundraiser (and tennis partner) is shaking English politics. Lord Levy, apparently known as Lord Cashpoint for his fundraising prowess, has been arrested on suspicion of offering peerages to wealthy donors in exchange for undisclosed loans to Blair's Labour Party.

The English scandal and its numerous American counterparts highlight the constant struggle democracies face in maintaining the power of the electorate within the system of government. Private individuals and groups will always seek to coopt the people's government for their own purposes, if possible, often using their financial power as a means to do so.

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Wednesday, July 12, 2006

Politicians Divert Campaign Cash to Personal Use

As WTVF (Nashville) investigative reporter Phil Williams reports, Tennessee state representative Mary Pruitt has been using campaign funds to rent out campaign office space ... from herself, paying herself more than $11,000 rent in the last two years on a $28,000 property. (Check out the video links to the right.)

The office in question is a house in East Nashville. Other than being owned by Rep. Pruitt, it has very little going for it in the way of being a campaign office: it is boarded-up, the electricity is shut off, and neighbors say they never see any activity. Abandoned, in other words.

If Pruitt was paying fair market value for legitimate campaign expenses, that would be legal. But from all appearances, Ms. Pruitt's payments to herself are neither fair market value for the house nor are for a legitimate campaign expense. She is using her position as public servant to line her own pocket.

600 miles and a level of government away, another politician is engaged in the same brand of ethically questionable, and possibly illegal, self-enrichment. As Jonathan Weisman and Jeffrey Birnbaum report in the Washington Post, Congressman John Doolittle has paid his wife some $170,000 from his federal political committees over the last several years for fundraising.

Just as it is in Tennessee with state Rep. Pruitt, such an arrangement is allowed if Mrs. Doolittle is being paid fair market value for legitimate campaign expenses. Otherwise, big political donors could steer money into the bank accounts of officeholders, essentially putting people that are supposed to be public servants on their private payroll.

Fundraising seems a legitimate campaign expense, so the question is whether Julie Doolittle is getting paid fair market value. It doesn't look like it:

The Doolittle arrangement pays Mrs. Doolittle 15% of every donation received by Doolittle's PAC. Only one other member of Congress - New York Congressman John Sweeney - pays a family member on commission for campaign work, and Sweeney pays 10%, which Sweeney's spokesperson insists is "standard" in the industry. A national association of fundraisers has also said the Doolittle arrangement violates its ethical guidelines.

Making things worse, Julie Doolittle gets paid for every single donation received by Doolittle's PAC. An analysis by TheRestofUs shows that nearly 60% of the donations for which Julie Doolittle received a commission in 2004-5 came from people or groups who were already Doolittle donors. More than half the battle in fundraising is finding donors. So Julie D. got paid more than $120,000 in that period for doing half the work.

Further undermining the notion that the payments were fair market value are the committee assignments Congressman Doolittle has. In 2002, he won a seat on the powerful House Appropriations Committee, a spot which guarantees easy campaign money from interest groups. Doolittle doesn't need someone to raise money - it gets thrown at him by all the wealthy interest groups in the nation's capital.

And yet, he pays his wife 15%.

It just doesn't wash. Just like Pruitt, Doolittle is using his public office to line his own pocket. That the payments are made to his wife changes nothing. It is ethically wrong, possibly illegal, and should be stopped.

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Friday, July 07, 2006

Nebraska Pol Booted From Office for Campaign Finance Violations

The Nebraska Supreme Court has convicted Regent Dave Hergert on impeachment charges related to violating the state's campaign laws and lying to cover it up, as WOWT of Omaha reports. With today's ruling, Hergert is immediately removed from office.

In order to level the playing field for candidates whose positions aren't backed by wealthy interests, Nebraska offers candidates the option of receiving some public money for their campaigns, if they agree to a voluntary spending cap. Candidates whose opponents exceed the spending cap get public funds with which to compete.

For the system to work, candidates who opt to exceed the spending caps must estimate their projected spending and inform the relevant state commission when they reach a certain spending threshold, so that the commission may disburse funds to their opponent.

Hergert opted out of the program, choosing to exceed the overall spending limit of $50,000 (for both primary and general). But, he underestimated how much he would exceed the limit and failed to notify the commission when he did so, which had the effect of depriving his opponent of some of the public funds to which he was entitled. Hergert spent much of the under-reported money attacking his opponent, who because he did not receive the funds, was unable to respond effectively.

After the election, Hergert reported spending twice his original estimate. In other words, he broke the law and lied about it in order to win the election.

Recognizing the potential damage to the public financing program that would occur if Hergert's
actions went unpunished, the Legislature first called on him to resign, and ultimately impeached him. Today's conviction by the Supreme Court was the last step of the process.

Nebraska candidates who don't represent positions with the backing of wealthy interests deserve just as much a shot at public office as those that do. Today's decision by the state Supreme Court helps maintain that opportunity, leaving democracy in Nebraska a stronger institution tomorrow than it was yesterday.

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Wednesday, July 05, 2006

More Illegal "Straw" Contributions in the Cunningham Scandal

As Lindsay Nair reports in the Roanoke Times, on last Thursday, federal authorities accused another MZM official of funneling illegal "straw" campaign contributions through MZM employees to Rep. Virgil Goode (VA). Earlier this year, when former MZM CEO Mitch Wade pleaded guilty to bribing former congressman Duke Cunningham, he also pleaded guilty to making straw contributions to both Goode and Rep. Katherine Harris (FL).

"Straw" contributions are contributions to political candidates or parties which have been funneled through an intermediate donor to disguise the true source of the funds, often so that the true source may make further contributions without running afoul of contribution limits.

The MZM official accused last week, Richard Berglund, is a former district manager for the company. The charging document accuses Berglund of being an illegal conduit of Mitch Wade's contributions to Goode and of illegally directing his own money to Goode through two different employees.

As to that charging document: the account in the Roanoke Times and the Richmond Times-Dispatch seem to conflict with that offered by the Washington Post as to its exact nature. The Times and Times-Dispatch are describing it as an indictment, while the Post describes it essentially as an "information" - a statement of facts about the illegal activities of someone cooperating with investigators.

If the latter report is accurate, Berglund may be implicating others involved in possible illegal campaign activity. With Mitch Wade pleading guilty earlier this year, it seems likely that Berglund's help would entail naming others involved in the scheme.

Regardless, last week's accusation against Mr. Berglund shows that federal prosecutors are still digging into possible campaign corruption by Duke Cunningham and the rest of the Gang That Couldn't Cheat Straight. Three men named as accomplices in the guilty pleas of Duke Cunningham and Mitch Wade have not yet been indicted, Brent Wilkes foremost among them. These men have contributed more than $1 million to various federal officials. And there is still a pretty stack of public officials who currently use the Members' elevator in the Capitol who have received tens of thousands of dollars from Wilkes, Wade, and their employees, some of whom doled out millions in federal contracts to the men.

Stay tuned.

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Friday, June 30, 2006

Former Alabama Governor Convicted of Bribery and Corruption Charges

As Sallie Owen and Bill Barrow report in the Mobile Register, on Thursday, a jury found former Alabama Governor Richard Siegelman guilty on six counts of corruption-related charges in connection with $500,000 in campaign contributions he received from HealthSouth CEO Richard Scrushy, who was also convicted. In return for the $500k, Siegelman put Scrushy on the state Certificate of Need Review Board, which oversees hospital expansions.

Siegelman and Scrushy still protest their innocence and promise to appeal what Scrushy's lawyer calls "the worst miscarriage of justice since General Sherman burned Atlanta". (Apparently he hasn't been watching the World Cup matches.)

The $500k went to Siegelman's campaign fund to support a failed lottery initiative. As we've seen in other states with the initiative process, politicians have figured out that a great way to advance themselves as candidates is to push a ballot measure. At the same time, bigtime donors have figured out that a great way to curry favor with politicians is to give a ton of money to their ballot initiative committees. And when you put the two together, you have a perfect peanut butter cup blend of systemic, if not personal, corruption.

This is not the first time Siegelman has stuck his thumb in the eye of Alabama democracy. In 1989, when he was the state attorney general, Siegelman interpreted Alabama's limit on corporate contributions of $500 per candidate as permitting corporations to funnel unlimited funds through PACs. The ruling served as spring rain for PACs in the state, which doubled in number in the years that followed, allowing wealthy corporations to multiply their campaign donations many times over.

Yesterday's decision by a jury of his peers suggests that Mr. Siegelman's cavalier attitude towards the representation that his fellow Alabamans deserve may have finally caught up with him.

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Wednesday, June 28, 2006

Effect of Recent Supreme Court Decision on CA Campaign Reform Initiative

As Joan Biskupic reports in USA Today, on Monday, the U.S. Supreme Court issued a decision in Randall v. Sorrell striking down Vermont's law limiting political contributions and spending. Three justices support both spending and contribution limits, three justices want to get rid of both, and three want to have the latter but not the former. Given that they can’t agree among themselves what the U.S. Constitution says, you might think they would defer to the state of Vermont to figure it out for themselves. Nope.

While the decision likely signals an end to the modestly more expansive approach recently used by the Court in reviewing the constitutionality of campaign finance laws, the Court's ruling leaves intact the basic constitutional framework which has been in place since its seminal (and near-criminal) 1976 decision Buckley v. Valeo.

The $64 million (remember when that seemed like a lot?) question is: how will the Court's decision affect current or prospective campaign finance reforms? Specifically, how is the forthcoming campaign reform ballot measure sponsored by the California Nurses Association, which the California Secretary of State recently certified for the November ballot, affected?

The short answer, at least as to the Nurses' initiative, is not much. A look back at Buckley is informative:

Buckley Paradigm
The Buckley Court reviewed the federal reforms passed in the wake of Watergate. The decision made a fateful and oft-ridiculed distinction between limits on campaign spending and limits on contributions to campaigns.

The Court viewed spending limits as a direct infringement on the free speech rights of candidates, and thus any attempt to limit spending must pass a very strict scrutiny. Such review must find that the government has a compelling interest which is met through a law drawn as narrowly as possible. In a moment of colossal myopia, the Buckley Court found that the only permissible compelling governmental interests in campaign finance law were to prevent corruption or the appearance of corruption. This reading ignored the right to a small-r republican form of government - representative democracy, essentially - explicitly guaranteed by the Constitution (see our amicus brief in Randall). In the Court's view, limiting campaign spending did neither, and was thus unconstitutional.

Contribution limits, on the other hand, did not prevent donors from expressing their support for a candidate, and received a middle tier of scrutiny. Limiting political contributions directly reduced both corruption and the appearance of corruption, according to the Court, and could pass constitutional muster if they were not too low. The Court also approved, even encouraged, voluntary public financing programs.

So - spending limits no, contribution limits yes, public financing yes. On its face, this week's decision by the Supreme Court did nothing to change that. Spending limits are still no, although 87% of the public thinks we need them. Contribution limits are still fine, but must be carefully drafted. Public financing, ballot measure spending, and independent expenditure committees weren't discussed in the opinion.

But the Court's decision to strike Vermont's contribution limits arguably signaled a shift from its recent jurisprudence. As recently as 2000, in the case Nixon v. Shrink, the Court had upheld Missouri's campaign finance law, which included contribution limits of $1,075 per election for statewide offices and $275 per election for state legislative races. What was different about Vermont?

Vermont's contribution limits were $200 for state representative, $300 for state senator, and $400 for statewide office. Whereas most limit regimes apply per election, which allows donors to give the max to a candidate once for the primary election and again for the general election, Vermont's limits were per election cycle, giving donors only one bite at the apple. Vermont's limits were not indexed for inflation either, meaning their effective value would gradually drop.

In striking these limits, the Court looked at five factors:

1) The contribution limits appear to significantly restrict the amount of money available to challengers to run competitive elections.
2) The same low limits are imposed on political parties, harming the right to association.
3) The law's treatment of some volunteer expenses as campaign expenditures chills volunteer activity, especially in concert with the low contribution limits.
4) The limits are not adjusted for inflation.
5) The record does not show past corruption sufficiently to justify such stringent limits on constitutional rights.

California Nurses' Campaign Reform Initiative
The California Nurses campaign reform initiative has two main parts: 1) a program of voluntary public financing for qualifying candidates for public office, and 2) a very nearly comprehensive series of reforms - including limits on contributions to candidates, parties, and independent expenditure committees among others - aimed at creating a level playing field for California candidates and ballot measures to compete with those backed by financially powerful interests.

While the Randall decision should have no effect whatsoever on the public financing program, an analysis of its effect on the second part of the initiative is a bit more complex.

First off, the contribution limits: the measure limits contributions to candidates to $500 per election for legislative races and $1,000 per election for statewide races; contributions to parties are limited to $7,500 per year. These are not only significantly higher than Vermont's limits going toward the first and fifth concerns listed above, but also address the Court's second and fourth concerns. As to the volunteer expenses, the ballot measure is silent, which should adequately address that issue. So, if we are to believe the Court's sincerity in laying out those five factors, the measure's contribution limits are constitutionally sound.

These limits apply to individuals, corporations, and unions alike.

But as most Californians could attest, limits on contributions to candidates alone will not take back our electoral processes from the financially powerful interests in this state. As this year's Democratic gubernatorial primary demonstrated, wealthy interests will resort to independent expenditure committees to influence elections. The Tsakapouloses (father Angelo and daughter Eleni) spent nearly $8 million on behalf of their business partner, Phil Angelides. Other IE committees spent millions in the June 2006 primary in support and opposition to candidates.

And the ballot initiative process, created as the people's answer to a legislature dominated by special interests, has also been made captive by the state's financially powerful. The pharmaceutical industry alone spent $80 million on two initiatives last year. Tobacco companies, energy companies, gaming tribes, and developers have all spent tens of millions of dollars in recent years on initiatives. Even labor unions have gotten into the act, spending over $120 million in 2005 opposing Governor Schwarzenegger's special election initiatives.

Tha ballot process has been further corrupted by the new technique pioneered by Cruz Bustamante and perfected by Arnold Schwarzenegger, in which candidates for public office use ballot measure committees to evade the state's contribution limits. Bustamante, Schwarzenegger, and Phil Angelides have all used these committees, which are currently not subject to any limits on the size of contributions they can receive, to advance themselves as candidates.

The Nurses' initiative takes on all these issues, addressing them to the fullest extent allowed by constitutional doctrine. The effect of the Randall decision on any of these reforms is unclear, perhaps especially so because the Randall Court addressed none of these issues directly. But a look at where things stood constitutionally prior to Randall suggests that the Nurses' initiative, while important cutting edge policy, remains on sound footing.

1) Independent Expenditure Committees
IE committees are currently allowed to raise and spend money without limit to influence candidate elections in California. As state GOP chairman Duf Sundheim recently pointed out in a discussion we had on the radio program Insight, these committees currently are a huge loophole in California's scheme of contribution limits. Mr. Sundheim recommended a constitutional amendment to allow for mandatory limits on how much anyone can spend on an election, including candidates and independent actors. That’s a good idea. But, the Nurses’ initiative does take some good measures to address the problem.

The Supreme Court has upheld a ban on corporate contributions to IEs in the case Austin v. Michigan Chamber of Commerce. More recently, and perhaps more importantly, the Supreme Court upheld the 2002 Bipartisan Campaign Reform Act's ban on soft money to political parties in the case McConnell v. FEC. In McConnell, the Court found that limiting contributions to parties was a necessary and constitutional way to prevent evasion of BCRA's contribution limits.

As IE committees have been used to evade contribution limits in California, limiting contributions to such committees is a constitutional way of preventing such evasion. The Nurses' initiative does just that, limiting contributions to IE committees to $7,500 per year as part of its overall limit on aggregate contributions by a person or entity to $15,000 per year.

2) Candidate-controlled Ballot Committees
Lt. Gov. Cruz Bustamante was fined $260,000 by the Fair Political Practices Commission for using a ballot committee to evade contribution limits. In just three short years, Gov. Arnold Schwarzenegger has raised tens of millions of dollars into his ballot committees, much of it spent to raise his profile as a candidate. State Treasurer and current gubernatorial candidate Phil Angelides used his ballot committee to send out flyers touting his support for pre-school in the days before the June primary. Assembly Speaker Fabian Núñez is raising $25,000 a piece into his ballot committee from corporations with financial interests in legislation before the Assembly.

You would be hard pressed to make a distinction between the influence gained with a $50,000 contribution to a candidate's campaign committee as opposed to a candidate's ballot committee. Clearly, politicians from both parties are eviscerating California's contribution limits with their ballot committees. The FPPC recognized this when they passed a regulation applying the contribution limits on candidate committees to ballot committees controlled by candidates.

The Nurses' initiative limits contributions to candidate-controlled ballot measures to $10,000 per person. While the original FPPC regulation was struck as unauthorized in the Political Reform Act by a Sacramento County Superior Court judge in a lawsuit by Governor Schwarzenegger and his business ally funders, McConnell would seem to allow for this type of regulation if it is necessary to prevent the evasion of contribution limits. Loyola Law Prof. Rick Hasen, the Campaign Legal Center's Paul Ryan, and others have this point better than I.

3. Ballot Measure Spending
California's love-hate relationship with the ballot initiative process has been a lot more hate than love lately. As wealthy interests have turned the process into a playground for the rich, voters have turned increasingly hostile towards any ballot measure, even those whose general intent is backed by a majority of Californians. While corporate interests have played the predominant role in the corruption of this process, labor unions and wealthy individuals have done their fair share as well.

The Buckley paradigm has traditionally been interpreted to prohibit any attempt to check the influence of big money on the initiative process - there are no candidates to corrupt, after all. But, the ban on corporate contributions to IE committees in Austin also didn't involve candidates. In the Austin case, the Court ruled that the very nature of corporations - that they are designed and given public tax breaks in order to generate profits - created such a risk of overwhelming the political process that corporate political spending could be seen as inherently corrupting, and could thus be limited or even prohibited even when no candidates are involved.

The same rationale applies to corporate spending in California's ballot initiative process. Pharmaceutical, tobacco, energy, financial services, and development corporations have used the massive profits generated by their corporate form to completely overwhelm the California initiative process. While labor unions have done so on a smaller level, there is less of an argument to be made, if any, under current constitutional doctrine that the spending by those groups can be limited because these groups are formed in part for political purposes.

The Nurses' initiative is written accordingly. Corporations are limited to spending $10,000 a year from the corporate treasury on ballot measures. Both for-profit and non-profit corporations are free to create a PAC which can spend unlimited sums on ballot measures. Spending by labor unions and wealthy individuals on ballot measures isn't limited, because there is no readily apparent constitutional basis for doing so.

So what is the upshot of Randall on these provisions? While respecting the Buckley paradigm, the Nurses' initiative is ground-breaking in a couple of areas. In so doing, the measure makes some reasonable assumptions based on the factual record of big money in California politics over the last 30 years (which has never been squarely considered by a court) and on current constitutional doctrine.

Most experts will say that the Randall decision signals that the current Court is less open to campaign finance regulation. Opponents of the Nurses' campaign reform measure will likely cherry-pick Randall's language to argue that the whole thing is folly, that the Court won't uphold any of it.

But that does not mean that any of the Nurses' initiative will be stricken (and even if any provisions are stricken, it isn't fatal to the whole measure - the measure contains a well-written severability clause). California has seen big money pour into its elections on a level unmatched even at the national level at the time of the Buckley decision. This can only help. Likewise, constitutionally, the Court recognized only three years ago not only that contribution limits are constitutional, but that loophole-closing techniques to prevent their evasion are also constitutional.

The facts are behind the measure. The law is behind the measure. Standing between the measure and its enactment will be a whole host of special interests, all of whom have two things in common - a desire to maintain their stranglehold over California policy and politics, and the ability to spend millions to do so.

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