Controlling Legal Authority

There is no controlling legal authority that says this was in violation of law."
-- Al Gore, seven times (in one form or another),
White House news conference, March 3, 1997

That has been called, with intentional irony, “Al Gore’s money quote.” Mr. Gore was answering questions about using phones in the White House to solicit campaign contributions. People laughed at the obvious attempt to confect Clintonian word-pretzels to defend something we all know is wrong. And it must be wrong, because it’s against the law. And it was against the law, right?

Maybe. And maybe not. It’s hard to tell, even for candidates. American election law is ruled by a building code mentality: you can’t tell if you have violated the law until the inspector visits. The McCain-Feingold reform, or Bipartisan Campaign Reform Act (BCRA; for information on the Act, click here ), is only the most recent incarnation of the building code approach. But it is also the most dangerous, because it damages both the competitiveness and the openness of our political system. After BCRA, our campaign finance scheme does two things, both bad: (1) It maximizes the impact of narrow, often one-issue, interests, and (2) It raises a nearly impenetrable financial force field of protection around incumbents

Here is what the controlling legal authority does tell us: there are two kinds of money (even though it’s all dollars, in the end). Soft money is unregulated money, the kind that people might contribute to parties, local organizations, or private groups. Almost any institution that might advocate for broad political agendas and responsible, accountable political discourse depends on soft money contributions. Hard money is donations allowed under the Campaign Finance Act of 1971, as amended repeatedly (in 1974 in response to Watergate, 1976 in response to the Supreme Court decision in Buckley v. Valeo, in 1979, and so on) by the U.S. Congress. (For more on campaign finance law and background)

The most recent set of amendments, contained in the BCRA and passed in 2002, focused on stamping out those nasty unregulated soft money contributions and doubling the allowance on hard money contributions. Now BCRA supporters claimed (and, presumably if inexplicably, genuinely believed) that these amendment made special interests more accountable. But BCRA left a hole in the wall of protection: according to 116 Stat. 82, Sec. 203(c)2, organizations defined in section 527 of the Internal Revenue Code 0f 1986 are exempt from the provisions of BCRA.

And through this hole have poured in a growing flood of uncontrolled contributions. Now, organizations referred to as “527s” have come to dominate the headlines, with groups like “Moveon.org” or “Swift Boat Veterans for Truth” having a greater impact on the 2004 presidential campaign than any other independent groups in U.S. history. Total spending by 527s in the 2004 election cycle totaled nearly $400 million; the money was used to buy attack ads in hundreds of television markets, with no clear accountability or even ability to identify the source of the spending.
The irony is that candidates and party representatives, hamstrung by the law and desperate to understand its Byzantine provisions and requirements, have to spend more time than ever before meeting disclosure and reporting requirements, and figuring out whether there any “controlling legal authority.” They have no idea if they are breaking the law or not. They have to wait for the building inspector.

How did this mess happen?
Surprisingly, the answer is fairly simple. McCain-Feingold / BCRA is based on a dodgy, Progressive-era assumption. That assumption is this: the key to good democratic government is the total exclusion of all taints of interest, or money. So average citizens, local party organizations, and private groups of all kinds that have an identifiable affiliation or interest are squeezed out. Yet organized 527s with vague, untraceable names like “America Coming Together,” “Safer Together 04,” or “Americans for Better Government” can cry havoc, and let slip the weasels of war.

Truthfully, there is little Constitutional basis for barring self-interested political activity. The First Amendment could have read like this: "Congress shall make no law...restricting freedom of speech, unless the speech is self-interested, in which case Congress can do what it wants, especially if it protects incumbents."
But that is not what the First Amendment says, because we cannot hope to outlaw self-interest. Trouble arises when privately funded and supported organizations, or even just wealthy individuals are denied their crucial role as the antidote to narrow, particular organized interests.

As James Madison pointed out,
It could never be more truly said [that the] remedy…was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency.

Madison's celebrated solution is to control the effects of faction, or specialized interests, through a system where debate is enlarged and refined. Enlargement was to be achieved in a federal republic, in which regional factions could be checked by others, and no one faction is likely to be encompassing enough to dominate the nation unless it also represents the interests of the nation. Refinement of the desires of the public was to be achieved by "passing them through the medium of a chosen body of citizens, whose wisdom may best discern the true interest of their country."

Smith and Jones: A Parable of Protected Power
Consider a mythical example. Ms. Jones dislikes the policies of Representative Smith, the incumbent from her Congressional district. Jones challenges Rep. Smith, but needs some source of contributions to have a chance. When powerful local interests hear she might be running, they begin to court her.
But local interests have narrow aims: one wants new defense contracts, another wants to develop a "brown fields" site, and a third wants to build a museum honoring retired local baseball hero George “Razor” Lynch, the famed bean ball pitcher. The groups ask Ms. Jones if she supports these "initiatives," but of course she doesn’t. She has national goals, and believes that Rep. Smith is not representing the district well in Washington. But when she answers no, the local groups go back to contributing to Rep. Smith, since Ms. Jones has no chance to win. They don't try to bribe her, but they quite reasonably (from their perspective) don't want to make contributions to someone that doesn't share their narrow (from a national perspective) interests.
Ms. Jones goes to her local party organization, and to other organizations that in the past have been able to use soft money at least for get-out-the-vote activities. But they are broke, hamstrung by campaign finance designed to limit the influence of special interests. What should our candidate do? What must she do? There are only two alternatives: (1) give up, and accept the legally protected invulnerability of the incumbent, Mr. Smith; or (2) go back to those special interests that want to contribute hard money, and collect enough funds from all these different interests that she can cobble together a campaign.

Unintended Consequences
In short, the desire to limit the power of special interests by regulating "soft" money has had the opposite effect. No other system of private financing could have more room for domination by organized interests, because narrow interests have moved in to occupy the vacuum created by BCRA. A narrow building code mentality, forgetting that only more competition, not less freedom, can control factions, has crippled the competitiveness of our political system. We need to look to private organizations with encompassing, enlarging visions of governance; instead, we have allowed, and even encouraged, each Senator and member of Congress to build a secure private fiefdom based on corrupt local interests.
The very idea that a controlling legal authority can restrict and direct the activities of faction violates the principles of institutional architecture described in the Federalist Papers and embodied in the Constitution.

We need to rebuild the architecture of democracy by eliminating the hundreds of complex regulations that stifle debate and confuse participants themselves about what the law is. We, the people, need to control our own impulses to use legal authority like the BCRA to control competition. The fact is that competition among strong and financially independent private sources of influence is our only hope for a vibrant and responsive democracy.