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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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