No Small Change
Commentary: Reformers are overly optimistic about ridding politics of Big Money
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"This was a referendum on campaign finance reform, and we won," proclaimed Sen. Russ Feingold (D-Wis.) after his re-election in November. Feingold, who, along with Sen. John McCain (R-Ariz.), has led the fight to get big money out of politics, cited the passage of a campaign reform ballot measure in McCain's home state as evidence the movement was gaining steam. He also assured reformers that, in a post-election phone call, McCain had promised to "go to battle" once more for their eponymous reform bill in 1999.
McCain and Feingold are kidding themselves. The 1998 elections, far from vindicating campaign reform, exposed its weaknesses. Money is shifting from campaigns to outside interest groups, from PAC checkbooks to independent expenditures, from mechanics to message, and from campaign ads to "issue ads." Influence is becoming subtler, spending is increasingly indistinguishable from speech, and power centers have, like a cancer, metastasized beyond the control of political surgeons. Getting money out of politics is becoming a practical and constitutional nightmare. If you want to know how bad it's going to get for McCain and Feingold in 1999 and beyond, look at what happened to them in 1998.
Feingold, in an effort to practice the virtues he preaches, limited PAC donations to his campaign and pledged to spend no more than $1 per eligible voter in his state ($3.8 million). His Republican challenger, Rep. Mark Neumann, joined him. But Neumann, unlike Feingold, didn't pledge to turn away funds from his party, which proceeded to spend $2 million on television ads bashing Feingold's record on taxes, spending, crime, and Social Security. Within two months, the ads wiped out Feingold's double-digit lead. He survived by a single percentage point.
The Republican ads were bought with "soft money" -- funds national parties can raise from individuals, businesses, and interest groups in unlimited chunks, as long as it is spent on "party- building." Parties are spending more and more soft money on issue ads designed to help candidates. Technically, these aren't supposed to endorse candidates. But they have the same effect. One Republican ad in Wisconsin, for example, called Feingold ''slippery" and urged voters to "tell him, 'Don't take my Social Security away!'"
McCain and Feingold would like to stop this scam by banning soft money. But Feingold's experience suggests that parties and interest groups will find other ways to channel money. After the Republican ads erased his lead, the Democratic Senatorial Campaign Committee stepped in. Rather than spend soft money, which would have violated Feingold's pledge, the DSCC organized a $425,000 "independent expenditure" campaign that clearly endorsed Feingold, calling Neumann "too extreme for Wisconsin."
Unlike soft money, independent expenditures are subject to strict disclosure requirements and cannot be coordinated with the favored candidates. For these reasons, parties prefer soft money. But for interest groups, independent expenditures provide a way to spend unlimited money without having to go through parties.
What would the McCain-Feingold bill do about this? Virtually nothing. Such ad campaigns can't be blamed on the candidate, because they're independent. Feingold should know: The DSCC launched its ads without consulting him, and after he demanded that the ads be pulled off the air, the DSCC didn't comply until it had spent nearly half its budget. Furthermore, independent expenditures can't be banned, because they're free speech. If parties don't run them, individuals will: In Kentucky's U.S. Senate race last year, a private group spent nearly $500,000 on ads that urged viewers to support the Democratic candidate because he would fight for a good cause. Guess what the cause was? Campaign finance reform. How could reformers conscientiously, much less constitutionally, outlaw such advertising?
While independent expenditures may be subject to strict disclosure laws, interest groups have learned to evade these laws by copying the parties' issue ad strategy. This is quickly becoming the chief conundrum for reformers: The more they restrict how parties can spend interest group money, the more the interest groups will bypass the parties and spend the money themselves. Who needs the Republican National Committee when the Health Insurance Association of America can buy all the polling and media expertise it needs? Interest groups spent between $270 million and $345 million on political ads during the 1998 election cycle. In Wisconsin, the National Rifle Association spent $56,000 on Neumann's behalf, while the National Right to Life Committee ran ads attacking Feingold's support of abortion rights. Likewise, the Sierra Club, the League of Conservation Voters, and the AFL-CIO spent more than $700,000 on ads that criticized Neumann's record on HMOs and the environment.
Unlike candidates and parties, interest groups aren't accountable to voters -- or, for that matter, to candidates or parties. Feingold asked liberal interest groups not to run ads on his behalf, but many ignored him. After all, their interests differed from his: He was willing to lose his seat in the name of campaign reform, but they weren't. And although the ads helped Feingold win, interest group ads sometimes hijack elections and take them where neither candidate wants to go. Republicans found that an anti-abortion ad campaign in a California special election earlier in the year hurt the Republican nominee by informing the district's pro-choice majority that he was pro-life.
McCain and Feingold have proposed to control interest group issue ads by restricting their content during the final two months of the election. In that period, if an ad uses language "that a reasonable person would understand as advocating the election or defeat of [a] candidate," McCain-Feingold would regulate it as a campaign ad, not as an issue ad. This provision is likely to fail for several reasons. To begin with, the "reasonable person" standard is too vague. But the more interesting question is, What if it succeeds? What if McCain-Feingold drives interest group ads out of elections? Will they disappear?
McCain should know better. He spent 1998 fighting for a $500 billion levy on tobacco companies that would have compensated states for smokers' medical care, subsidized anti-smoking education, and forced a cigarette price hike big enough to discourage kids from smoking. The tobacco companies had plenty of lobbyists to marshal against the bill, but McCain had public opinion on his side. So the companies bought public opinion. They spent $40 million on ads that redefined the bill as a tax on working people. The polls shifted, politicians who favored the bill lost their enthusiasm, and politicians who opposed it lost their apprehension. On June 17, according to the Wall Street Journal, Sen. Mitch McConnell (R-Ky.) assured Republican senators that "the tobacco industry would mount a television ad campaign to support [senators] who voted to knock off the bill." That day, the Senate killed the legislation.
McCain's allies cried foul. They asked the government to investigate whether McConnell's assurance amounted to an illegal campaign donation. McConnell replied that he had simply reminded his colleagues that the ad campaign was under way and that the tobacco companies had pledged to continue it. The Washington Post pointed out that, without a quid pro quo, the government would have to drop the case. This is precisely the nightmare facing campaign reformers: If interest groups are driven out of elections and devote their money instead to influencing legislation directly -- not by dealing with politicians but by reshaping public opinion -- then there are no transactions to regulate. There is only speech.
The good news for reformers is that even if McCain's bill fails again in Congress, his constituents are leading a reform movement. In November, Arizona enacted a law that offers public financing to state candidates who limit their private fundraising and spending. The law also provides matching funds to those who are targeted by independent expenditures and issue ads. How did the Arizona reformers get their proposal past their enemies in the legislature? They drafted it as a ballot measure, took it to the voters, and waged a successful campaign for it, thanks not to McCain -- who declined to endorse it -- but to big money from George Soros ($100,000) and other out-of-state contributors. It's hard to see how McCain could plug this final hole in the dike between money and politics. And a good thing, too.
