How Money Runs Our Politics

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Joshua Roberts/Reuters
Las Vegas casino magnate Sheldon Adelson—who spent at least $92 million to support ­Republican candidates in the 2012 election—waiting with his wife, Miriam, for Israeli Prime Minister Benjamin Netanyahu to address Congress, Washington, D.C., March 2015

With each election come innovations in ways that the very rich donate and the candidates collect and spend increasingly large amounts of money on campaigns. And with each decision on campaign financing the current Supreme Court’s conservative majority, with Chief Justice John Roberts in the lead, removes some restrictions on money in politics. We are now at the point where, practically speaking, there are no limits on how much money an individual, a corporation, or a labor union can give to a candidate for federal office (though the unions can hardly compete).

Today a presidential candidate has to have two things and maybe three before making a serious run: at least one billionaire willing to spend limitless amounts on his or her campaign and a “Super PAC”—a supposedly independent political action committee that accepts large donations that have to be disclosed. The third useful asset is an organization that under the tax code is supposedly “operated exclusively to promote social welfare.” The relevant section of the tax code, 501(c)(4), would appear to be intended for the Sierra Club and the like, not political money. But the IRS rules give the political groups the same protection.

The contributions to these last groups have come to be called “dark money” because the donors can remain secret. The very wealthy can contribute to such dark money groups in the knowledge that people won’t know who is trying to buy a candidate.

At this stage of the campaign, while some politicians are ostensibly still agonizing over whether or not to run, the would-be candidates are engaged in setting up the “independent” fundraising groups that will support them; they aren’t even bothering to call mere millionaires. And the idea that campaign contributions aren’t intended as a quid pro quo is fast crumbling.

Fortunately for the candidates, given the way the benefits of the economy are concentrated there’s an adequate supply of billionaires—people who enjoy investing in a candidate, in whom they may actually believe, and whose gratitude would be most useful if that candidate were to win. Meanwhile, the billionaire can indulge in name-dropping, in the reality or illusion of being on the inside of a campaign with the prospect of access to the candidate who ends up in the Oval Office.

With enough money behind him or her, even a preposterous candidate can at least for a while be a real factor in the nominating contest. The billionaires sometimes seemingly come out of nowhere. Few had heard of Foster Friess, who suddenly popped up in 2012 supporting Rick Santorum—a seemingly improbable prospect for winning the presidency given his retrograde social views and his reputation for having been a brash but mediocre senator. Friess, a business investor and evangelical Christian conservative, kept Santorum in the primaries for a lot longer than would have been reasonably expected. Friess himself became famous when, defending Santorum’s opposition to contraceptives, he asserted that women (“gals”) could stave off pregnancy by putting an aspirin “between their knees.” He is now supporting Santorum again for the 2016 race.

The erratic but seldom boring Newt Gingrich, never a serious candidate for the presidency, came in fourth in Iowa and fifth in New Hampshire in 2012, but with the help of the billionaire Las Vegas–based casino magnate Sheldon Adelson, he swept the important South Carolina primary and seemed to truly believe that he could win the nomination.

Thus, a single exceptionally rich person can distort the nomination race, meanwhile confusing candidates into thinking that they’re more popular than they are. Of course other factors can play into the successes of the well-backed candidate: Gingrich benefited from what were seen by many as strong performances in debates.

Adelson’s prominence in 2012 as well as his generosity to congressional candidates has made him one of the most powerful people in the country. His wealth is estimated at over $35 billion, and he and his wife, Miriam, a dual citizen of Israel and the US, are fervent supporters of Benjamin Netanyahu’s aggressive policies. Adelson is reported to have spent at least $92 million on the 2012 election. As a casino owner, Adelson unsurprisingly also seeks a ban on Internet gambling. Lindsey Graham, said to be nearing an entrance into the 2016 Republican free-for-all, is the principal sponsor of this Adelson cause in Congress. Graham recently told The Wall Street Journal, “I may have the first all-Jewish cabinet in America because of the pro-Israel funding.”

As early as March 2014, Jeb Bush, Chris Christie, Scott Walker, and John Kasich flew to Las Vegas to appear before a gathering of the Republican Jewish Coalition—the pilgrimage was to seek Adelson’s favor. Christie had to apologize to Adelson for having referred to “occupied territories.” Walker let the group know that he owns a menorah. This year a larger number of Republican candidates trooped to Las Vegas. Adelson pressured the donees to support Netanyahu’s position against the nuclear deal with Iran.

Most of the candidates for the nominations for 2016 have their pet billionaires. Hillary Clinton has more than one. Among them so far are Alice Walton of Walmart and Marc Benioff, a San Francisco businessman who supported Barack Obama. All contributed early to Clinton’s Super PAC, Ready for Hillary. For now, to give the impression that her campaign is supported by the ever-expanding idea of who the “grassroots” are, donations to Ready for Hillary are limited to $25,000. Clinton also enjoys the support of some Hollywood billionaires, such as Jeffrey Katzenberg and Haim Saban, an entertainment executive worth an estimated $3.4 billion who has been generous to the Clintons in the past and is another supporter of right-wing Israeli policies. The big money for Clinton is expected to go both to Priorities USA, a Super PAC that backed Obama but is now switching to support her and will spend dark money on ads, and also to another group, called Priorities USA Action, that won’t be hiding its contributors.

Clinton’s side hoped to scare off serious rivals for the Democratic nomination by letting it be known that she planned to raise a staggering $2.5 billion for her campaign. Obama and Romney each spent less than half that amount in 2012—Obama $1.1 billion and Romney $1.2 billion. The closeness of these totals obscures the important difference between where the two men got their funds. As an incumbent president Obama could raise more money for his own campaign, and he outstripped Romney in this category by slightly more than $250 million. But Romney benefited far more from outside contributions to Super PACs, as opposed to his own campaign, by slightly more than $287 million. Thus a nonincumbent Democrat could be outraised by a Republican. Clinton is trying to make sure that this won’t happen in the 2016 election.

On the Republican side, Walker has had the generous support of the Koch brothers since he first ran for governor of Wisconsin in 2006. They poured millions into his successful effort to break the power of the Wisconsin public employees’ union, which has made him a darling of many on the far right. They contributed a reported $300 million to his recall election in 2012. The Kochs, who operate through their own aptly named Americans for Prosperity, a dark money group also contributed to by their network of super-rich allies, have said that they plan to spend a humongous $889 million in the 2016 campaign—all of it dark money, so the public won’t know who made the contributions. This makes the Kochs virtually a political party of their own.

Walker also has the support of John Menard Jr., the wealthiest man in Wisconsin and the owner of a chain of home improvement stores throughout the Midwest that has been embroiled in a number of environmental controversies. The publicity-shy Menard has made his contributions to help Walker through “dark money” avenues, though an investigation found that he’s donated more than $1.5 million. Walker has scaled back the activities of the state environmental protection agency, and Menard’s company has received $1.8 million in tax credits from the state. (Walker’s office denies any connection.) Walker also solicited and directed funds to the Wisconsin Club for Growth, which backed him. His popularity in Wisconsin has been sinking of late but Menard can keep Walker afloat.

Early on, a candidate’s status is now largely measured by how much money he or she is able to raise. Ted Cruz has the backing of Robert Mercer, who heads a New York hedge fund. Cruz, long considered a fringe figure since he’s so far on the right, astounded the political world by amassing an unprecedented $31 million from a network of sympathetic Super PACs in the first week of his campaign (more than Obama raised in the entire first quarter of 2007), which suddenly catapulted him to the top ranks of Republican candidates.

Shortly thereafter Marco Rubio went Cruz one better when his donors announced that in less than a week Rubio had obtained pledges of all of the $40 million he was expected to need for the primary campaign. He has the backing of Norman Braman, a Miami billionaire car dealer who used to support Jeb Bush but is expected to pump around $10 million into Conservative Solutions, a Super PAC supporting Rubio.

Jeb Bush’s camp let it be known that he’s expected to have raised $100 million during the first quarter of this year. This information was aimed at discouraging Mitt Romney from entering the race. Bush already has both a Super PAC, Right to Rise, and a dark money group, Right to Rise Policy Solutions, lined up to support him. Bush was reported to be seriously considering turning over the management of his campaign to the Super PAC, which is supposedly “independent” of his campaign, but this shortly raised questions of the legality of such an arrangement.

Mike Huckabee, Rick Perry, Bobby Jindal, and Santorum also have their own Super PACs. Each of these would-be candidates actually helped establish their money pots before they officially announced their campaign, using the fiction that then they weren’t coordinating with them, although the law against such coordination is often evaded and in any case the question of when a candidate is officially a candidate is hardly clear. Two reform organizations, the Campaign Legal Center and Democracy 21, have filed complaints with the Federal Election Commission against Bush, Santorum, Walker, and former Democratic governor of Maryland Martin O’Malley, alleging that by traveling around the country and raising money and behaving like candidates they met the definition of a candidate and therefore were violating the law by raising money for friendly Super PACs before they officially announced their candidacies.

The Super PACs and dark money groups are the progeny of the infamous Citizens United decision by the Supreme Court in 2010, along with an appeals court decision later that year, SpeechNow.org v. Federal Election Commission. The Citizens United ruling was one of the most blinkered Supreme Court decisions since Dred Scott. Citizens United is a conservative group that makes ads and documentaries. The decision erased the limit on corporate funds in elections going back to Theodore Roosevelt in 1907. By a ruling of 5–4, the five being the usual conservatives, including, crucially, Anthony Kennedy, the Court held for the first time that businesses could make contributions to influence federal campaigns.

The Court majority acted on the faulty assumption that so-called independent committees are truly independent of the campaigns. Whether Kennedy, who wrote the majority opinion, was being ingenuous or disingenuous in making this uninformed observation, it changed the shape of American politics. The idea that the so-called independent committees remain absolutely separate and apart from the candidate or the campaign they support is laughable. The two entities have various ways to coordinate so that the independent group knows precisely what kinds of ads would be helpful. The chairman of the Super PAC might well be a former aide of the candidate, often as not a chief of staff, or a close friend or a brother-in-law. The two entities can share the same consultants and advertisers. The Super PAC can sell its data to the campaign. It can also tell simply from its staff reading the newspapers what themes the campaign it’s helping is promoting.

Under the federal rules people from the campaign and the Super PAC can talk to each other, as long as the conversations aren’t what the federal regulations call “substantial discussions.” This term has never been clarified. The federal rules on communication between the candidate’s campaign and the so-called outside groups are very rarely enforced. Though Citizens United left intact the limits on amounts that people and old-fashioned PACs could give directly to each candidate ($2,700 and $5,000 respectively per election), the McCutcheon decision of April 2014 combined with the Citizens United opinion have rendered these limits meaningless.

If people are concerned about the gaping and growing disparity of wealth in this country, the pattern of political donations is one place to look for its source. By and large the middle class doesn’t donate, except through the labor unions, which the Republicans, especially Scott Walker, have been working hard, with some success, to render powerless. Republican governors can come down hard on the overwhelmingly pro-Democratic public employee unions because they have direct power over them through government contracts.

Such is the strength of the billionaires that while the House Republicans are considering severe cuts in domestic programs (including of course food stamps) and an increase in spending on defense, on April 16 they voted to end the estate tax—what Grover Norquist, in order to get it killed, has dubbed the “death tax.” If it were ended, this boon for millionaires and billionaires would cost the federal government $269 billion and help all of 0.2 percent of the people. Since the estate tax, in existence for nearly a hundred years, has been the subject of a running argument for some time, what was the hurry to pass this bill when so much else, including a large-scale revision of the tax code, is on the agenda?

The bill also contained a provision that explicitly exempted large donors from having to pay gift taxes on their donations to political groups—a measure some billionaires had urged on Congress in order to protect themselves since the IRS had hinted that it might consider political donations subject to the gift tax. The IRS made a statement to this effect in 2011 when it called off an investigation of Karl Rove’s dark-money operation Crossroads GPS and suggested that Congress might want to speak on this matter. After the Republicans took over both chambers this year, it did. Only three House Republicans voted against the bill, and all but seven Democrats voted against it. The president has threatened to veto the bill, which isn’t expected to become law; the exercise was essentially a piece of political theater at tax time, but it revealed the disposition of the two parties toward benefiting the wealthiest.

A frequently heard rationale for the money frenzy is that the other side also has a lot of money, or might get it. Bill Allison of the Sunlight Foundation, a nonprofit that advocates for more accountable and transparent government, says that we now have “slush fund politics.” The question is what can be done about it.

The perennial problem is that incumbents who have succeeded within the system as it is are reluctant to change it—and this reluctance has been largely bipartisan. The first adoption of real campaign finance controls was approved on a broad bipartisan basis in 1974, after the Watergate revelations, in which a suitcase stuffed with cash was a symbol. The nation was shocked to learn that ambassadorships had been bought for $100,000. Now they are simply more expensive.

The McCain–Feingold law regulating the financing of political campaigns was adopted in 2002 in reaction to the scandals in the 1990s when both parties, but particularly the Democrats because they controlled the presidency, were caught accepting illegal foreign contributions. John McCain, who had narrowly lost the Republican nomination to George W. Bush in 2000, was determined to pass new legislation. Russ Feingold was the only Democrat McCain could find to cosponsor his bill. After the George W. Bush White House tried to torpedo it and failed, Bush signed it when McCain was out of town on a congressional recess. The combination of political self-protection and the Supreme Court has rendered real reform by Congress seemingly hopeless for the time being. But that doesn’t mean that there’s nothing to be done—in the near and somewhat further term.

Some elected officials have been willing to call for disclosure of the big donations that the IRS rules now allow to be hidden in dark money accounts. The theory is that at least some of the donors or recipients of big amounts of money could be embarrassed into giving up such donations. I’m not so sure, though such disclosure is obviously desirable. But as with voting rights and even foreign policy, campaign finance reform is more partisan than ever before. Now that the Republicans have shown themselves more able than Democrats to raise outside money, they have no interest in disclosure of contributions to such funds.

In 2010, following the Citizens United decision, the Democratic-controlled House passed a bill requiring dark money accounts that contribute to federal campaigns to disclose their donors, but in the Senate this bill fell short by one vote of surviving a threatened filibuster. Fifty-nine Democrats voted for it but not one Republican supported it. Since then, Sheldon Whitehouse, Democrat of Rhode Island, has reintroduced a disclosure proposal in the Senate, but despite the fact that Whitehouse has forty-two cosponsors it’s not likely to go anywhere in this Congress.

Difficult as it is to change the campaign finance system since incumbents benefit from the status quo, a number of proposals have been floated. One that’s popular on the left of the Democratic Party is to amend the First Amendment to overcome Citizens United. Hillary Clinton, obviously trying to ward off a serious challenge from her left in the primaries, said on the second day of her campaign that she was interested in amending the First Amendment as a way of trying to fix the “dysfunctional political system.” But it’s extremely difficult—as it should be—to amend the Constitution and it takes an interminable amount of time, since an amendment must be approved by two thirds of the House and the Senate and by three fourths of the states.

Moreover, once the First Amendment is opened up for changing, who is to say that the larger and better-organized forces of the Christian right, eager to remove barriers between church and state, wouldn’t outmaneuver the forces of campaign finance reform?

Also unhelpful are the activities and proposals by Harvard Law School professor Lawrence Lessig. A prominent specialist in copyright law, Lessig took on the problem of money in politics just a few years ago and has since pushed various proposals. At first he called for a Constitutional Convention, which would be a disaster since it could lead to all sorts of other proposals. When this idea came under attack from, among others, law professors, Lessig retreated and encouraged people in the Occupy Wall Street movement to think they could overcome Citizens United through political pressure to amend the First Amendment.

After that movement fizzled out—at least in its initial form—Lessig formed his own Super PAC, called Mayday, to raise funds to fight the Super PACs. He selected eight candidates to back in the 2014 midterms, on the grounds that they would support campaign finance reform. All but two of his selections lost, and the candidates who won had been expected to anyway.

Now Lessig has a new proposal for 2016: it involves a complicated process by which his followers would identify members of Congress who are leaders on campaign finance reform—though there’s really no mystery about who they are. In addition his followers would campaign in the primaries on the side of the candidate most interested in such reforms. His followers also would discourage contributions to a candidate in the primary who wasn’t backing campaign finance reform.

The problems with Lessig’s proposals are several: he’s leading people, from whom he now receives contributions, to believe that their efforts will be able to transform Congress into a body that’s ready to back campaign finance reform, election by election, which means that even if his scheme worked his younger followers would be very old by the time such a transformation occurred. Second, his funds will always be overwhelmed by the corporations that are raising money for their own political interests. There are no shortcuts.

The Brennan Center for Justice has a promising idea: it calls on President Obama to issue an executive order requiring government contractors to disclose their campaign contributions. This would cover a large number of businesses, which would likely pressure other businesses to follow suit. A small group of Democratic senators— Sheldon Whitehouse, Al Franken, Bernie Sanders, Tom Udall, and Elizabeth Warren—have also written to the president asking him to issue such an executive order. Since the president knows how distorted the campaign finance system is, and has called for reform a few times, there’s good reason to ask him to act on this proposal.

The Brennan Center is also preparing for the time—however near or far it may be—when there’s a Supreme Court more amenable to reform by working through the possibilities of changing the jurisprudence that has so misled the Court, so that it can extricate itself, and the country, from the benighted decisions that it has made on campaign financing. The main problem with the Supreme Court decisions is that they’re based on a myth. The majority’s assumption has been that in Buckley v. Valeo (1976), the first decision following the passage of the 1974 campaign finance act, the Court held flatly that money equals speech. That isn’t accurate, but it has been a convenient assumption. While the court did say that “spending money to influence elections is a form of constitutionally protected free speech,” it also upheld limits on contributions to candidates. The campaign finance system worked best in the years following passage of the 1974 act.

The indefatigable Fred Wertheimer, the head of Democracy 21, which consists mainly of himself, has proposed shutting down outside groups formed to back a particular candidate. He would block communication between a supposedly independent group and a political campaign. Democracy 21’s proposal has been introduced in the House by Democrats Chris Van Hollen of Maryland and David Price of North Carolina.

The ideal would be to return to the system of public financing of presidential campaigns that was passed in 1974, but this hasn’t been accepted by recent candidates. Obama could be said to owe the country some action on campaign finance reform, since he was the first presidential candidate to decide not to take the public money because he didn’t want to be subject to limits on how much he could raise.

The late John Gardner, the founder of Common Cause, said, “Reform isn’t for the short-winded.” Unfortunately, given the differing inclinations of the two parties, the situation calls for partisan action: the election of a Democratic president who will appoint justices open to campaign finance reform. It’s been futile thus far to try to make the composition of the Supreme Court an election issue, the makeup of the Court seeming so far removed from people’s daily concerns. It would take effective candidates for Congress as well as the president, plus civic leaders to draw the connections between the appointments to the Supreme Court and how the decisions they make affect people’s lives, particularly the rights of all qualified citizens to vote, or whether they have rightful representation. The Court’s decisions will also do much to determine whether representatives in Washington are listening to voters or to large donors who may not even live in their state.

The three major defects of our election system—in voter registration, redistricting, and campaign finance—have all become worse in recent years. As a nation we’ve drifted very far from our moorings of truly representational government. Because of what has become known about the large sums of money being invested in the candidates by the super-wealthy at an early stage of the 2016 campaigns, the fact that something has gone wrong has begun to take hold. That may be the first step toward reform; what’s needed after that are stamina and keeping our attention on the fundamental requirements of a democracy.

This is the second of two articles.

Letters

Should We Convene? June 18, 2015