The 527 Committees, Considered as Policy, not Law

This post began weeks ago as an attempt to grapple with the issues posed by the 527 committees, those independent political groups that are the subject of a hearing at the Federal Election Commission tomorrow. Then it morphed into comments on the
question of whether the FEC might inhibit the free expression of nonprofit groups that aren't political committees. (I think this is not a real danger.) Then it became some of both, and reached Robert Caro length. Just to salvage something from this effort, it appears here pared back to one question that's particularly interesting to me and hasn't received much attention. That said, this is still a long and dense post.

The draft rules before the FEC cover all sorts of issues that don't need to be resolved, but the more urgent questions have to do with the legal constraints on the independent political committees set up for this election. I don't have an opinion on those questions, because each time I look at them, I see them differently. But just to set the context: The first question has to do with the "allocation rules," by which a committee such as Americans Coming Together, which is registered as a Federal Political Action Committee but also has a "nonfederal" arm, divides contributions between the two parts. The PAC can only take contributions of $5,000 or less; the nonfederal arm can take unlimited sums, including most famously those promised by George Soros, who established the foundation I work for. (I should say right here that nothing in the foundation is connected to his political activities, and this weblog is totally separate from my work at the foundation, so there are at least two wide degrees of separation between these comments and Soros.) The second question has to do with the other major 527 created to support Democrats, the Media Fund, which is not registered as a political committee at all. Here the question is whether a committee that, like ACT, has no purpose other than to influence a federal election needs to register and be subject to the contribution limits for at least part of its spending.

Loyola Law professor Rick Hasen, whose Election Law Blog is invaluable whether you need an expert-level immersion in these issues or just need to follow the major developments, had an op-ed in the L.A. Times a month ago, claims the argument is a lot simpler than it seems:

The 527s do not coordinate with candidates or parties. Unlike the political parties, 527s are not selling access to elected officials in exchange for large donations.

Under the Supreme Court cases that say one cannot limit spending on campaigns independent of candidates, it is hard to see how contributions to these groups could constitutionally be regulated.

The other side of the legalargument is probably best represented by University of Virginia Professor Dan Ortiz's lucid, concise brief to the FEC. If you care to read it, you'll see that the question rests on footnotes and concurring opinions in relatively obscure Supreme Court decisions. And while he makes the case that Congress can set contribution limits on independent committees, he does not answer the question of whether the FEC can do so in the absence of a clear legislative instruction.

But I have another question, and for the purposes of getting to that question, let's assume Hasen is right, and treat the legal and constitutional question as settled. As long as the committees act completely independently of candidates and parties, their spending cannot be restricted. The question I have, which is not the one before the FEC: Is that a desirable policy?

If the only goal of campaign finance regulation is to limit specific, quid pro quo corruption or the appearance of corruption between large donors and elected officials, it's probably an improvement to at least separate the large donors from the candidates. An elected official will probably know that a large donor gave to a favorable 527, but at least the official was not involved in soliciting the contribution. The particular problem that emerged in 1996 -- Clinton and others raising huge sums directly, promising everything from overnights in the Lincoln bedroom to interventions with regulatory agencies -- would be mostly solved.

But if you are concerned with the broader sort of general corruption, such as the influence of oil and gas interests on the energy bill or health insurance interests on the Medicare bill, cited by the Supreme Court in its decision upholding McCain-Feingold, then simply putting some distance between the individual elected official and the specific contributor doesn't solve much of the problem. If you are concerned with political equality, and ensuring that all candidates have an opportunity to be heard, it does nothing to help and may hurt. (In the special case of this year's presidential election, the 527s are perhaps helping level the field so Kerry is not so massively outspent, but most of the time in Congressional races 527s will, like soft money, merely enhance the voice of the already advantaged candidate, usually the incumbent.) And if you are concerned that candidates should have sufficient opportunity to speak for themselves, then it is actually undesirable. What Hasen sees as the constitutional strength of the 527s -- that they cannot coordinate their activities with the candidates -- is, to me, a major weakness. When the candidate is constrained by contribution limits and spending limits (had Kerry not opted out of the public financing system, the spending limit would have silenced him until the convention), but outside groups are free to spend, the fundamental process of democracy, in which candidates set agendas, make promises, and are held accountable for doing what they say they will do, will be broken.

My views on campaign finance reform were influenced by this 2000 article by Alan Ehrenhalt in Governing mazazine, about the political culture of Wisconsin, in which ads run by the two major interest groups in the states -- the labor unions led by the teachers' union, and the business and manufacturers group on the right -- far outspend the candidates themselves:

One morning in the fall of 1998, Judy Robson woke up to the sound of a radio ad talking about the special needs of older people. "Maybe it's for Geritol," she remembers thinking. But it turned out to be a testimonial--for somebody living in her hometown of Beloit, Wisconsin. This person sounded like a saint--willing to go to any length to make the lives of senior citizens a little brighter. "Who could that be?" she mused.

Then she found out. "Judy Robson," the announcer intoned. "She has given a lifetime of service for the community. Taking care of people, keeping them healthy."

To the unpretentious Robson, it was more than a little embarrassing-- it was bizarre. "Where on earth is this coming from?" Robson asked herself. It took her only a few seconds to figure it out. The testimonial was coming from the Wisconsin Education Association Council. Robson was running for the state Senate in a close race, and the teachers' union badly wanted her to win so that the Senate would stay in Democratic hands. They had launched a series of independent
expenditure ads that made her sound like Mother Teresa. But they didn't tell her about the ads because that might have been considered collusion--a felony under state law.

As the campaign proceeded, Judy Robson encountered a new batch of ads that were equally surprising but much less flattering. One of them showed her next to a lava lamp, and suggested that Robson, a student activist 30 years ago, was still somehow a representative of the
counter-culture. It said she had "never met a tax she didn't think was groovy."...

If you happen to be running for the [Wisconsin] legislature in a marginal district, there's a good chance you'll end up feeling like a pawn in someone else's very expensive game.

This is the result of a campaign finance system that's only mildly restrictive. States that have experimented with $100 contribution limits had an even greater shift from candidates to independent expenditures.

Why is this undesirable? Consider the Wisconsin situation. Suppose that Ms. Robson wants to run as an idiosyncratic Democrat, with positions not shared by the teachers' union? She doesn't really have that option -- her campaign is their campaign. Same for a Republican backed by business. They won't have the ability to balance competing interests that elected officials in a pluralistic democracy must have. (I don't know if this is how the situation is perceived in Wisconsin, or if Ehrenhalt's report still holds -- I just use this as a model.)

A frequent response when I've made this argument and cited Ehrenhalt is that organizations based around issues and membership, such as unions, have a vital role in democracy and should be encouraged to add their voice to elections. Which is very true. A business lobbyist quoted in the article puts it well:

"It's interesting," he says, "that the candidates think the campaigns belong to them. Politicians have deceived themselves that they are the source of honest truth and discussion in elections. Everybody has an ownership interest in the campaign. If we don't come in and talk about taxes and hold their feet to the fire, they may not talk about it at all."

That's a legitimate statement of the role that groups play in a pluralistic democracy, especially if you recognize that for the word "taxes," you could substitute, "schools," "health care," "the environment". But I would argue that candidates themselves should have at least as much capacity to drive their campaigns as outside groups, and so should be no more constrained in their spending than outside groups are.

And this also raises the question of whether groups that focus on issues in this way should be preferred to groups such as the current 527s that do not play that role, that have no objective and no existence except to influence certain elections. I think issue-focused groups have a certain legitimacy, and I worry about the idea that groups whose main purpose is to elect John Kerry can speak for him, but not to him. There is some precedent for treating issue groups differently: the small category that is known as "MCFL's" represent yet another category of political committee, in this case those that take only individual contributions and are organized around an issue. The League of Conservation Voters and National Right to Life are among the four existing MCFL's, but the barrier to becoming one is not high. Still, more generally, I'm not sure I trust regulators to make the judgment that one group is focused on issues and another just on candidates.

So, if Hasen is right, and independent groups of all kinds are going to play a large and mostly unregulated role in our political life, what is the best policy to deal with it? I believe there is a concrete public interest in ensuring that candidates have sufficient money and opportunity to speak for themselves at least as loudly as the independent groups. The top priority is to fix public financing systems so that no candidate ever faces the choice Kerry faced of either opting out of the system or being effectively silenced for six months. Let's be clear: It is the broken presidential financing system, and Bush's contempt for it, that created the 527 question, not the actions of any donor or operative. The system should be made more generous and more flexible. It should have a four-to-one match like the New York City system, and the state-by-state limits should be eliminated.

But I'm beginning to think that we need a more radical rethinking of campaign finance reform options would be in order, if the 527s survive in their current form. For many years, the American Civil Liberties Union advocated an approach it called "floors without ceilings." That is, public financing would be sufficient to allow candidates to be heard, but there would be no limits on spending and either no contribution limits or only very high contribution limits, along with disclosure. I've argued against this approach many times, and it has a lot of practical problems. For one, why would the public be willing to provide public funds to politicians if it did not at least come with strings attached to reduce spending? But if we are destined to live in a world in which independent political committees organized just to influence elections have no ceilings, then perhaps it is time to reconsider whether there is a way to let candidates have no ceilings as well. That would have the effect of bringing political money back into the candidates and parties, and restoring neutrality between candidate spending and issue spending. It would give up on the objective of reducing the corruption of large contributions, but given how little of McCain-Feingold would remains, I'm not sure that's such a great loss. It would be a tougher political sell than the kind of public financing that's coupled with restrictions, but all public financing is a hard sell.

I'm not ready to endorse this alternative, far from it. But I think everything should be on the table in considering the next generation of political reform initiatives, and I do mean everything. The questions are much bigger than anything that the FEC could ever hope to deal with in a rulemaking process.