AN ANALYSIS OF MONEY IN POLITIC$ Authored by The League of Women Voter of Greater Tucson Money In Politic Committee Date Prepared: November 14, 2015* *The following changes were made to the presentation made on 11/14/15: Slides 3, 26, 27, and 29 were removed. Discussion questions were added.
Money in politics has long had a significant impact in the outcome of races and also with corruption In the past few years, the issue has been highlighted with the advent of a key Supreme Court ruling LWV groups across the nation are analyzing campaign finance to consider First Amendment political speech issues for both candidates and Donors
Today We Will Provide understandable and relevant information on this topic based on LWV recommended books and position papers Use three key teaching blocks Democratic Values and Interests Methods for Regulating Campaign Finance Each block of information will be followed by discussion of key issues and long/arduous Test with no partial credit We hope you leave today s meeting more informed on this topic and are prepared for a consensus study at a later date
What does a Snuff Box have to do with campaign finance in the U.S.? SNUFF BOX * * not actual gift box
The history of financial regulation of finance in politics is long: Pitfalls recognized early on; corruption may be minimized by structure and culture The U.S. Articles of Confederation and many later governing documents tried to deal with potential corruption issues Have these past efforts actually helped?
(January 1974; revised 1982) Methods of financing political campaigns should: Ensure the public s right to know Combat corruption and undue influence Enable candidates to compete more equitably Allow maximum citizen participation in the political process This position is applicable to all federal campaigns for public office presidential and congressional, primaries as well as general elections. It also may be applied to state and local campaigns.
SUPREME COURT MAJORITY OPINION for CITIZENS UNITED This Court now concludes that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption. Justice Kennedy
Justice Stevens Dissent "The Court's opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding".. "It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this court would have thought its flaws included a dearth of corporate money in politics.
QUID PRO QUO A Latin phrase that means this for that. An explicit agreement by a candidate or elected official to perform a specific act in exchange for something of value. The Court narrowed quid pro quo corruption so that it s virtually the same as bribery.
MCCUTCHEON V. FEC DID AWAY WITH AGGREGATE LIMITS Now there are no limits to the total amount of money an individual may donate in an election season. Used with permission from Steve Sack 1/28/15
Citizens United The Practical Impact Our founding father s intended to prevent corruption in politics Citizens United narrowed exactly what is corruption The data says the impact in our system is significant (Source: Gilens and Page as presented by Larry Lessig Harvard Law)
This graph shows the responsiveness of law and policy to the pressure of interest groups In a nutshell, the more interest groups that oppose a policy, the less likely it is to be adopted
This graph shows the responsiveness of law and policy to the pressure of economic elites The greater the percent of elites favoring a policy, the greater the probability of the policy s adoption
This graph shows the responsiveness of law and policy to the percent of average citizens favoring a particular measure. What does it mean? Lessig summarizes it well:
What might be a practical impact.
The Bottom 90% loses The Top 10% likes this trend
Discussion: What are the implication of the recent narrowing of the definition of corruption, removal of the aggregate limits on campaign contributions, and the related disconnect between public opinion and public policy for workers rights and the distribution of wealth in our society? Does our country still stand for the democratic principles we espouse? Test for Bottom 90% Top 10% get a relaxing Coffee Break and Free Donuts
FIRST AMENDMENT PROTECTIONS
THE FIRST AMENDMENT Congress shall make no law... abridging the freedom of speech, or of the press...
Common Tax Law Restrictions on Activities of Exempt Organizations The chart below compares seven federal tax law attributes of five common types of tax-exempt organizations: 501(c)(3) 501(c)(4) 501(c)(5) 501(c)(6) 527 Receive tax-deductible charitable contributions YES NO NO NO NO Receive contributions or fees deductible as a business expense YES YES YES YES NO Substantially related income exempt from federal income tax YES YES YES YES YES Investment income exempt from federal income tax LTD* YES YES YES NO Engage in legislative advocacy LTD YES YES YES LTD Engage in candidate election advocacy NO LTD LTD LTD YES Engage in public advocacy not related to legislation or election of candidates YES YES YES YES LTD *Private foundations are subject to tax on their net investment income.
Common Tax Law Restrictions on Activities of Exempt Organizations The chart below compares seven federal tax law attributes of five common types of tax-exempt organizations: 501(c)(3) 501(c)(4) 501(c)(5) 501(c)(6) 527 Receive tax-deductible charitable contributions YES NO NO NO NO Receive contributions or fees deductible as a business expense YES YES YES YES NO Substantially related income exempt from federal income tax YES YES YES YES YES Investment income exempt from federal income tax LTD* YES YES YES NO Engage in legislative advocacy LTD YES YES YES LTD Engage in candidate election advocacy NO LTD LTD LTD YES Engage in public advocacy not related to legislation or election of candidates YES YES YES YES LTD *Private foundations are subject to tax on their net investment income.
CONTRIBUTION LIMITS FOR 2015-2016 FEDERAL ELECTIONS PAC 1 RECIPIENTS Additional National Candidate State/District/Local National Party Party Committee DONORS Committee (SSF and Nonconnected) Party Committee Committee Accounts 2 Individual $2,700* $5,000 $10,000 $33,400* $100,200 * per election per year per year (combined) per year per account, per year Candidate Committee $2,000 $5,000 Unlimited Transfers Unlimited Transfers per election per year PAC - $5,000 $5,000 $5,000 $15,000 $45,000 Multicandidate per election per year per year (combined) per year per account, per year PAC - $2,700* $5,000 $10,000 $33,400* $100,200 * Nonmulticandidate per election per year per year (combined) per year per account, per year State, District & Local Party Committee $5,000 $5,000 Unlimited Transfers per election per year National Party Committee $5,000 $5,000 per election 3 * Indexed for inflation in odd-numbered years. per year 1. PAC here refers to a committee that makes contributions to other federal political committees. Independent-expenditure-only political committees (sometimes called super PACs ) may accept unlimited contributions, including from corporations and labor organizations. 2. The limits in this column apply to a national party committee s accounts for: (i) the presidential nominating convention; (ii) election recounts and contests and other legal proceedings; and (iii) national party headquarters buildings. A party s national committee, Senate campaign committee and House campaign committee are each considered separate national party committees with separate limits. Only a national party committee, not the parties national congressional campaign committees, may have an account for the presidential nominating convention. 3. Additionally, a national party committee and its Senatorial campaign committee may contribute up to $46,800 combined per campaign to each Senate candidate.
Discussion: Justice Powell said, The inherent worth of... speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual. If an entity or person has vast amounts of money and thus more access to media outlets, should restrictions be placed upon its First Amendment freedoms in the political arena? Incredibly difficult exam unless you are a contributor to a Super PAC
METHODS FOR REGULATING CAMPAIGN FINANCE
Four types of controls are used for regulation: Contribution Limits Expenditure Limits Public Financing Disclosure
M$ 12 10 8 6 4 2 0 MONEY IN POLITIC$ Total Dollar Amount of All Closed FEC Enforcement Matters for 2 year periods between 1996 and 2015-87% from Peak Source of Data: http://www.fec.gov/press/bkgnd/enforcementstatistics.shtml (10/25/2015) Official reasons given for this decline include: Vacancies in key personnel, such as the positions of General Counsel, Associate General Counsel for Litigation and Associate General Counsel for Policy FEC s relatively small budget of $67.5M
Discussion: In the past, the US Supreme court has upheld reasonable disclosure requirements on political speech. In Citizen s United the Court said: The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages. Disclosure seems to be the most acceptable method of campaign finance regulation across the political spectrum. Are there ways we can make it more meaningful and effective? Arduous Test unless you are a FEC regulator, then you just get time off.
Wrap Up