The Evil of Access
The History of Money in Politics

excerpted from the book

Selling Out

How big corporate money buys elections, rams through legislation,
and betrays our democracy

by Mark Green

Regan Books (HarperCollins) , 2002


* 0.1 percent of Americans who contribute $1000 or more to political candidates have far more influence than the other 99.9 percent;

* senators from the ten largest states have to raise an average of over $34,000 a week, every week, for six years to stay in office;

* legislatively interested PAC money goes 7 to 1 for incumbents over challengers-and 98 percent of House incumbents win;

* most other democracies get a 70 to 80 percent turnout of eligible voters, while in the U.S. it's half in presidential elections, a third in congressional elections, and often only a fifth in primaries;

... is it a democracy if 0.1 percent pay the piper, if 80 percent stay at home in primaries, if 98 percent of incumbents return to a "permanent Congress"?

Joan Claybrook head of Public Citizen

" ... political money from the Enrons and others bought loopholes, exemptions, lax law enforcement, underfunded regulatory agencies, and the presumption that corporate officials could buy anything they wanted with the shareholders' money."

when the Supreme Court in the 1976 v. Valeo decision struck down the Federal Election Campaign Act's spending ceilings, the alms race took off. Then-and now-the sky's the limit.

While in 1976 it cost an average of $87,000 to win a House seat and $609,000 a U.S. Senate seat, those amounts grew by 2000 like beanstalks to $842,000 for the House and $7.2 million for the Senate-a tenfold leap (or more than threefold in current dollars). And more money brought with it intended leverage. "We're all tainted by this corrupt system," concludes Senator John McCain (R-AZ), a national leader for cleaner elections.

... the scandal of strings-attached money corrupting politics and government is the most urgent problem in America today-because it makes it harder to solve nearly all our other problems.

The New York City system was good but flawed. So in 1998, I co-authored a municipal campaign finance law that reduced the maximum gift from $8500 to $4500 and increased the public funding match to 4 to 1 for contributions of up to $250 per resident (so $100 became $500 or $250 became $1250), in order to better level the playing field for City candidates.

... the current system of financing political campaigns, which pits each candidate in a race to raise more than his or her opponents-and enough to feed the broadcasting monster called airtime. And just like professional athletes would see performance diminish if they lost half their training time, elected officials who raise money rather than legislate, read, travel, and meet with constituents will underperform as well.

"Senators used to be here Monday through Friday; now we're lucky to be in mid-Tuesday to Thursday, because Mondays and Fridays are for fund-raisers," complained one midwestern senator, requesting confidentiality. "Also, members are-loath to vote on controversial issues because it'll be used against you when you're raising money. And people wonder why nothing much happens in the Senate."

Robert Reich
"... Democrats became dependent on the rich to finance their campaigns. It is difficult to represent the little fellow when the big fellow pays the tab. The problem is not corruption. The inhibition is more subtle. Democrats have come to sound like Republicans because they rely on the same funders to make the same contacts as the GOP."

... of twenty-four western democracies, we (U.S.) rank twenty-third in voting turnout.

Progressive Reform?

As the nineteenth century became the twentieth, public outrage over backroom payoffs, outright vote buying, and corporate corruption of the political process began to build. The rise of the Progressives was partly a backlash against what many Americans saw as the excessive influence of money in politics. Recognizing the need to regulate corporate power, Progressives advocated such economic and political reforms as antitrust laws, fair labor standards, women's suffrage, and greater citizen participation in and control of politics. Muckraking journalists, political satirists, and Progressive advocates exposed the destructive power of unrestrained monopolies and the corrupting influence of political money. At the local and state levels, Progressives attempted to reform the political process through secret and standardized ballots, stricter voter registration procedures, restrictions on corporate lobbying and campaign contributions, the use of the referendum, and direct primaries.

Then occurred an event that shifted the battle lines between corruption and reform: the assassination of President McKinley in September 1901, only a few months into his second term, which elevated Theodore Roosevelt, his war-hero vice president, to the Oval Office. Roosevelt had been added to the McKinley ticket partly because Republican political bosses like Matthew Quay of Pennsylvania wanted him politically "out of the way." On the McKinley funeral train from Buffalo to Washington, Mark Hanna, now a U.S. senator, was heard cursing the day McKinley chose him.

Roosevelt was exactly the kind of president Hanna feared he would be. The Rough Rider's distaste for corporate influence in politics in general, and his vigorous trust-busting activities in particular, persuaded the usual corporate contributors that Roosevelt would not faithfully represent their interests. Hanna, still a Republican Party kingmaker, led the business opposition to Roosevelt's reelection, and for a while hinted that he himself might be their candidate. But Hanna died before the 1904 election, and eventually corporate financiers realized that Roosevelt was their only choice.

Any Progressive hopes for less corporate influence in the 1904 campaign were also quickly shattered. Fearing defeat, Roosevelt rejected pleas by Progressives to rely on small individual contributions and turned instead for financial support to the very bankers and industrialists who had only recently supported Hanna as the most acceptable Republican candidate. Roosevelt especially worried about losing in his native New York, but his campaign operatives assured him victory could be had as long as "the funds were furnished." Some of the country's richest men-Cornelius Bliss, J. P. Morgan, and Andrew Carnegie among them-contributed hundreds of thousands of dollars, and once it was known that the President was accepting corporate money, other financiers flooded the campaign with contributions, many of which were never publicized. Roosevelt won the presidency by a landslide.

Roosevelt's reliance on corporate money to finance his campaign was a topic of bitter controversy, and eventually led to the first real attempts at comprehensive campaign finance reform. In the final days of the race, Democratic nominee Alton Parker charged that the Republican Party was whoring itself to the corporations. At the same time, it was alleged that E. H. Harriman had raised $250,000 for the Republican Party, of which $50,000 came from his own pocket, in exchange for a promise by Roosevelt to appoint New York senator Chauncey Depew ambassador to France. "They are in a hole," Harriman bragged to an aide, "and the President wants me to help them out." Roosevelt vigorously denied the charge and Depew wasn't appointed, but the President was never able to shake the presumption that a quid pro quo had indeed been involved. Like Watergate seven decades later, the general stink of corruption led to a national call for reform.

Roosevelt himself was embarrassed by his reliance on corporate money. "Sooner or later, unless there is a readjustment," he complained to a reporter during the campaign, "there will come a riotous, wicked, murderous day of atonement." Nevertheless, Roosevelt was too calculating, or too enamored of the presidency, to acknowledge the full corrupting potential of big money in politics. "It is entirely legitimate to accept contributions, no matter how large they are, from individuals and corporations," he wrote in defense of his fund-raising efforts, as long as funds were raised with an "explicit understanding that they were given and received with no thought of any more obligation."

On the defensive, Roosevelt's first message to Congress after his election included a call for the publication of spending records by both political committees and candidates. There was already a movement for legislation requiring the disclosure of campaign expenditures by the National Publicity Law Association, a citizens' lobbying group. New York adopted such a disclosure law for state elections, but despite the President's endorsement of the association's goal for a national law, Congress delayed adopting any federal disclosure requirements for a decade.

At the local level, corruption continued without pause. In 1905, as many as 170,000 votes were bought in one district in Ohio. In New York City, an investigation revealed that 26 percent of voters had sold their vote for cash. In fact, vote buying was still so widespread that one Ohio woman defended her husband's decision to sell her vote by saying "we thought it was the law to pay us for our votes."

Public opinion was increasingly critical of the pervasiveness of corporate funding of campaigns. The discovery by New York State's Armstrong Committee of widespread attempts by insurance companies to influence state politics with campaign contributions caused a public outcry. When Charles Evans, counsel for the committee, asked Republican State Senator Thomas Platt if he felt morally obliged to work for the corporations that funded his campaign, he replied, "That is naturally what is involved."

In 1907 Congress finally responded with the first really significant campaign finance reform law, the Tillman Act. It outlawed campaign contributions and expenditures by banks and corporations- something that a century later many states, including New York, Illinois, and Florida, have still failed to do. The same year Congress also strengthened the Pendleton Act by prohibiting campaign participation by civil servants. Also in 1907, Teddy Roosevelt became the first president to propose caps on individual contributions, full disclosure of campaign funding and expenditures, and public financing of campaigns. "The need for collecting large campaign funds," Roosevelt said, "would vanish if Congress provided for an appropriation for the proper and legitimate expenses of each of the two great national parties."

Reform continued, and so did scandal. In 1908, for the first time in the nation's history, both presidential candidates volunteered to disclose their campaign funding sources and expenditures. This disclosure revealed that the Republicans spent $1.7 million and the Democrats spent $629,000. The same year two U.S. senators were charged with buying their seats from their respective state legislatures.

With Progressive legislators pushing continually for reform, the movement to require public disclosure of campaign funding and expenditures finally succeeded in 1910 with passage of the Publicity Act. Then, in 1911, Congress took the extraordinary step of limiting campaign contributions and expenditures for Senate and House campaigns to $ 10,000 and $5000, respectively; although the First Amendment had been around for more than a century, no commentators thought to claim that such restrictions on money violated the free speech of the rich. And finally, due to widespread public disgust over the buying of Senate seats through state legislatures, in 1913 the states ratified the Seventeenth Amendment, requiring that Senate elections be decided by popular vote.

Despite these essential reforms, money continued to pervade politics. Why? First, as the mass-advertising style of political campaigning invented by Mark Hanna became the predominant way to run for office, media costs and hence campaign costs continued to climb. Second, both the direct election of senators and the concurrent move to a direct primary as the prevalent method for choosing party candidates increased campaign costs. The passage in 1920 of the overdue Nineteenth Amendment granting suffrage to women also raised costs of reaching these new voters. It was the price of democracy, but it didn't come cheap.

After the 1907 prohibition on campaign contributions by banks and corporations, both parties simply relied more heavily on contributions from the heads of corporations. In fact, so much money was being spent on just the nomination of the GOP presidential candidate in 1920 that a special Senate committee was formed to investigate whether there was a plot to buy the nomination. Even though the committee found no such plot, the scandal undermined the Republican front-runner, Leonard Wood, and led to the nomination of Warren Harding instead. When all was said and over, it was revealed that the Republicans spent $6 million and the Democrats $ 1.4 million on the 1920 campaign.

In 1921, the Supreme Court ruled in Newberry v. United States that Congress had no constitutional authority to regulate spending in the primary process. (This overly restrictive view of federalism remained the law of the land until 1941, when in United States v. Classic the Court reversed Newberry and ruled that Congress did have the authority to regulate primaries wherever a state's election law influenced the general election. Congress did not assert its newly confirmed authority until three decades later.) Under Newberry, money was so pervasive and corruption such a fear that Calvin Coolidge felt compelled to declare in his speech accepting the 1924 Republican presidential nomination that "no individuals may expect any governmental favors in return for party assistance." Apparently, this had not been previously made clear.

The next year saw the passage of the Federal Corrupt Practices Act, the most ambitious attempt at reform to date. The act-provoked by the Teapot Dome Scandal where the company leasing the oil reserve bribed a leasing official and contributed huge amounts to retire the Republican Party's 1920 campaign debt-required candidates to report all receipts and expenditures in federal congressional campaigns but exempted presidential races. The law also imposed caps on federal campaign expenditures. As with previous attempts at reform, however, the act was full of loopholes and provisions without teeth. For one thing, the limits on expenditures were easily avoided by the claim that any excessive expenses were incurred without the candidate's "knowledge or consent." Moreover, by limiting expenditures by candidates themselves or by their political party only, the act later encouraged the creation of the first political action committees, through which campaign funds could be legally laundered. Not only was no auditing of campaign funding or expenditures required, but campaign financial statements filed with the clerk of the House of Representatives were virtually inaccessible, unintelligible, and very rarely made public. By almost all accounts, the act was essentially meaningless.

The weakness of federal law governing campaigns was vividly demonstrated in a 1926 Illinois Senate campaign by Republican candidate Frank M. Smith. He defeated the incumbent Republican by engaging him in a spending war in which each candidate illegally spent over half a million dollars. It was revealed that half of Smith's contributions came from public utilities executives who had cases pending before the Illinois Commerce Commission, of which Smith was the chairman. The Senate eventually refused to seat Smith or his Democratic opponent.

Also, in 1926, William Vare, a Republican congressman from Pennsylvania, seized on Newberry to start a spending war to defeat the incumbent in his party's Senate primary, and then went on to win the seat while flagrantly accepting illegal postprimary contributions. A formal investigation by the Senate Committee on Privileges and Elections revealed contributions by industrialists more than half a million dollars over the $10,000 limit set by the Corrupt Practices Act (and complied with by Vare's Democratic opponent). In response, the Senate refused to allow Vare to occupy the office. But corruption won out when the governor appointed Joseph Grundy, an industrialist who had himself illegally contributed more than half a million dollars to Vare's campaign. Vare was never prosecuted under the act's enforcement provisions. In fact, no one ever was.

The ineffectual Corrupt Practices Act would serve as the nation's only federal campaign finance regulation for the next forty-six years.

Embarrassed by media attention on the excesses of political money in the 1968 and 1970 campaign cycles, and spurred by newly formed citizens' lobbying groups like Common Cause and Public Citizen, Congress finally decided to act. In 1971, in a period of two months, it attempted to regulate campaign finance in a systemic way for the first time since the Federal Corrupt Practices Act of 1925. The landmark Federal Election Campaign Act (FECA) and the Revenue Act revolutionized campaign finance-at least on paper.

First, the FECA required far more disclosure than any previous reform effort, by compelling candidates and political committees to make detailed, periodic reports of contributions and expenditures and by making the information more accessible to the public. Every contribution of $ 100 or more had to be reported. (Needless to say, campaign coffers were filled with checks for $99.99.)

Second, it limited the amount a candidate could contribute to his or her own campaign. Presidential candidates were limited to $50,000 in personal and family contributions, senators to $35,000, and representatives to $25,000.

Third, the act limited the expenditures candidates could make for media purposes during any stage of the campaign process. House candidates were limited to $50,000, or 10 cents for every eligible voter in the district, whichever was greater. Senate candidates were limited to $50,000, or 10 cents for every eligible voter in the state. Limits on media expenditures by presidential campaigns were also calculated at 10 cents per eligible voter.

The Revenue Act gave taxpayers a choice to receive either a tax deduction or a tax credit for political contributions made to a campaign at any of the three levels of government. It also created a system allowing taxpayers to help subsidize a presidential campaign by checking off a box on their tax form indicating that they wished to participate.

One immediate effect of this reform effort was to start an all-out race to fill party war chests with as much unregulated cash as possible before the FECA went into effect on April 7, 1972. Between January and April, President Nixon's reelection campaign engaged in a concerted program to raise $10 million in unregulated and unreported contributions. In an effort eerily similar to Mark Hanna's corporate assessment scheme almost a century earlier, Nixon's campaign managers established a "conduit system" that assessed corporations 0.5 percent of their net worth. As one fund-raising letter put it, "The standard of giving is !/2%, more or less of net worth . . . [and] we have a deadline of April 7th . . . because this is the effective date of the new Federal Campaign Finance Law [sic] which will require reporting and public disclosure of all subsequent campaign contributions in excess of $ 100, which we all naturally want to avoid."

The April 7 deadline also played a role in the Watergate scandal, which exploded in the summer of 1972. In fact, without campaign money and without the ability to maintain unaudited accounts before the FECA took effect, Watergate would not have been possible. "Watergate is not primarily a story of political espionage," wrote John Gardner, the founder of Common Cause, in April 1973, "nor even of White House intrigue. It is a particularly malodorous chapter in the annals of campaign financing. The money paid to the Watergate conspirators before the break-in-and the money passed to them later- was money from campaign gifts."

When Nixon's henchmen were arrested breaking into the headquarters of the Democratic National Committee at the Watergate Hotel on June 17, they were carrying $100 bills that had been laundered partly by utilizing the pre-April 7 disclosure grace period. A $25,000 cashier's check from Ken Dahlberg, the President's campaign finance chair for the Midwest, was discovered in one of the burglars' bank accounts. Also found in the account was $89,000 from Manuel Ogarrio Daguerre, a prominent lawyer from Mexico, which was later traced to $750,000 in campaign cash from Texas fat cats that was contributed via a suitcase flown from Texas, which arrived just prior to the April 7 deadline.

As reporters Bob Woodward and Carl Bernstein disclosed only a month before Nixon's landslide reelection, the FBI investigation revealed that "virtually all the acts against the Democrats were financed by a secret, fluctuating $350,000-$700,000 campaign fund." Numerous other cash accounts were held in safes by campaign operatives. Millions of dollars were laundered through Mexico and Luxembourg, and hundreds of thousands more deposited into the accounts of political committees that didn't exist. And as the tape recordings of the President demonstrated just four days before his resignation, Nixon knew that campaign funds were being used to finance the Watergate break-in, and had even agreed to help in a cover-up. Never before had the need for spending caps and disclosure requirements been more forcefully demonstrated.

The [Watergate] scandal, and the attendant revelations of massive contributions made during the 1972 campaign, blew new wind into the sails of campaign finance reform. In 1974 Congress enacted a series of amendments to the FECA. These "Watergate reforms" did the following:

* limited the amount an individual could contribute to a federal candidate in an election cycle to $1000;

* limited the total amount an individual could give to all federal candidates in a year to $25,000;

* limited PAC contributions to a candidate to $5000 per election, with no aggregation cap;

* limited the amount a candidate or his or her family could contribute to $50,000;

* limited spending per House seat to $140,000 and a sliding scale for Senate campaigns based on the number of votes per state;

* established the Federal Election Commission to monitor and enforce the new law.

For the first time in American history, between 1971 and 1974 Congress had made a real effort to reduce the influence of money in politics. Unfortunately, however, this time the Supreme Court stepped in to defend the status quo and to reinforce the marriage of money and democracy by declaring several key provisions unconstitutional. Buckley v. Valeo set the ground rules for the big-money game we still play today, and it ensured that yet another generation of Americans would ~,e forced to watch their pay-to-play democracy from the sidelines.

... Reforms to keep corrupt money out of politics have been infrequent, inadequate, and evaded. Scandal leads to reform that fails because of designed-in loopholes. Ergo, nothing works.

But it's also important to recall that, unlike a century ago, we have little if any vote buying. Contributions that were once made in secret are now made public on-line, and limits on hard and soft money have dammed up a lot of corrupt influence. Progress has occurred- glacially perhaps, but it has occurred.

But as the volume and targeting of so-called legislatively interested money increases-and corporate governance and accounting scandals continue-so will the public clamor for change more enduring than the laughable 1925 Federal Corrupt Practices Act and even the laudable 1971 Federal Election Campaign Act. When will the cycle of scandal and reform finally cease? When members of Congress fear angry voters more than they fear overturning the system that got them into Congress?

Selling Out

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