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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