[Richard Painter, guest-blogging, March 30, 2009 at 12:36am] Trackbacks
Money in Politics:

My last post in this discussion is on lobbying and campaign money, topics discussed in Chapters 8 through 11 of my book.

Chapter 8 is titled Bagmen in Black Tie or Professional Intermediaries: the Growth of the Lobbying Industry and Prospects for Reform. Here I point out that the present success of the lobbying industry is driven largely by our system of campaign finance. I suggest that we cannot significantly change the lobbying industry and how it operates without changing campaign finance.

Chapter 9 discusses the many advocacy groups that engage in lobbying of public officials and that overtly or covertly engage in political campaign activities for public officials. These include public policy groups, legal policy groups, single issue advocacy groups, religious advocacy groups, foreign policy advocacy groups, trade associations, 527s and others. To the extent these groups conduct activity that would otherwise be conducted by registered lobbyists subject to the Lobbying Disclosure Act of 1995 or activity that would otherwise be conducted by political campaigns subject to the FEC disclosure rules, these groups are analogous to the special purposes entities (SPEs) that businesses use to move some operations off their books. All or most of the activity of these groups is constitutionally protected free speech, but this speech is not free. These groups are a significant part of a growing industry in Washington that turns money into law and public policy.

Chapter 10 discusses political activity of White House and other Executive Branch officials, a topic addressed in my first post last Monday. This activity provides a key access point for lobbyists and SPEs as well as other campaign contributors.

Finally, Chapter 11 discusses campaign finance. This topic has been well worn by other authors and various systems for regulation have been proposed. Although I do not conduct a separate analysis of each proposal, which would require another book, I suggest that regulation of money in politics is an uphill battle. Between First Amendment protections that limit the de jure scope of regulations and practical difficulties that limit the de facto scope of regulations, there is relatively little that can be done other than to require more meaningful disclosure (in some instances I suggest less disclosure, for example eliminating disclosure of small contributions that may discourage such contributions).

In the end, I suggest that government subsidies may be needed. Expanded public financing of campaigns would by no means eradicate the influence of money on politics, but it would increase the total amount of political speech. This should reduce the marginal benefit to be obtained from private expenditures, or at least make private expenditures that have a meaningful impact more expensive. Public financing of political campaigns could also be tied more tightly to the support of small donors, thus bringing more voices into the process. In short, more political speech not less, is probably the answer.

In general I do not like government subsidies. However, the current regime allows campaign contributors and their lobbyists and SPEs to extract subsidies in ways ranging from earmarks to inefficient regulation and bailouts. It would be cheaper to subsidize political campaigns directly in meaningful amounts if doing so would reduce the marginal impact of these private expenditures on a federal budget running into trillions of dollars and a national economy that is even bigger. The alternative may be having a system that provides, but only for those willing and able to pay, the best laws money can buy.

In closing, I should point out that lobbyists do not always get what they want. Jack Abramoff and his colleagues, for example, tried to fire the chief White House ethics officer, my predecessor Nanette Everson. Everson had apparently given an ethics briefing to the White House Intergovernmental Affairs office in which she encouraged direct contact between the White House and Indian tribes. Abramoff and his colleagues were furious. As reported by the House Committee on Government Reform in investigating Abramoff: It began on March 1, 2003, when Kevin Ring reported to his associates "a disturbing problem" he had heard about from the White House:

Just wanted to let everyone know of a disturbing problem I just learned about at the White House. The Intergovernmental Affairs Office just received their ethics briefing, and when all was said and done, they concluded that they should NEVER call lobbyists anymore -- will call tribes directly -- and will NEVER have lobbyists sit in meetings, EVEN WHEN the client is meeting with the IGA Office. * * * Finally, it is scary that the White House ethics advisor -- a Nanette Everson -- told the IGA folks that tribes shouldn't even need to have lobbyists, anyway -- and that it is wrong for them to pay so much money for lobbyists when people in the government should be meeting with them as needed. Those are fighting words!!!!

Abramoff responded, "This is horrible. Why would they f**k us like this?"

Over the weekend, the team developed a game plan in a series of e-mails to "straighten out" this matter:

Kevin Ring: It's not about us, but we're included. … Neil, this is definitely something Barry Jackson needs to hear about.

Michael Williams: WH folks are getting really arrogant lately. Not sure who is driving the train but they need to remember who there friends are ... or they risk the fate of Bush 1.

Shawn Vasell: I will talk with Matt as well. This is bulls**t.

Neil Volz: I will call [Deputy Assistant to the President] Barry Jackson with this today. Unacceptable.

Duane Gibson: 1) find out if there is any basis whatsoever in the advice from the ethics person. Get this in house if possible, not from the WH. 2) get everson fired, because I cannot imagine any basis for such advice. 3) act quickly to find out as much as possible about her. 4) start a phone bank and give everson 1000 calls a day from every tribe with a problem.

Staff Report , U.S. House of Representatives, Committee on Government Reform, 109'th Congress, September 29, 2006, citing e-mail exchange between Abramoff and his colleagues.

Everson was not fired and there is no indication that she backed down on this issue. Neither did I.

Cold Warrior:
I just got back from a vacation, and checked-in to see what I'd missed on VC.

After scrolling through Richard Painter's posts, I'd just like to say this: he is one of the most interesting guest commenters the VC has ever hosted, and proof that ethics offices (and officers) play an important role in government. Now if only we could get our elected representatives to pay a bit more attention to them ...

... thanks for guest blogging. I learned a lot.
3.30.2009 1:46am
wolfefan (mail):
I second Cold Warrior's remarks. I have been impressed with how accessible the posts have been. Many guests seem to just reprint chapters from their book or their lecture notes. I've been especially impressed with Mr. Painter's willingness to dialogue with the commenters and deal plainly and clearly with their questions and objections. This is in contrast to most guest posters, and even some Conspiracy members. Thank you for your time and your insights, and I hope you will join in here again.
3.30.2009 5:13am
mls (www):
Professor Painter—I would also like to express my appreciation for your contributions here.

I am curious as to your views on the reforms adopted by the Obama administration to curb the role of lobbyists. These include making it more difficult for a lobbyist to get a job with the administration and prohibiting lobbyists from meeting with executive branch officials to discuss stimulus projects.

I see several problems with these reforms, but the most obvious is that they define a “lobbyist” as someone who is registered under the Lobbying Disclosure Act. Because the LDA’s definition of a lobbyist is fairly elastic, people can often sidestep registration if they structure their activities in such a way as to avoid (or arguably avoid) falling within the technical definition of a “lobbyist.” A great example of this is Tom Daschle, who told NPR in 2005 that he had a “clear understanding with Alston &Bird that I won’t be lobbying.” Instead, he would be giving “strategic advice” on public policy matters. Of course, Daschle was giving this “strategic advice” in his capacity as the co-head of Alston &Bird’s lobbying practice. To illustrate the transparent nature of this dodge, NPR has the interview posted on its website under the title “Tom Daschle on his New Job as a Lobbyist.”

The LDA is almost never enforced so there is very little risk in failing to register, particularly if you have any kind of plausible argument for not doing so. I don’t believe that there has ever been any formal action initiated to enforce the LDA. According to a GAO report last fall, the only enforcement of the LDA since its passage in 1995 consists of 3 settlements with lobbyists who failed to register, who paid a grand total of $47,000 in penalties.

It seems to me that the administration’s actions will create a tremendous disincentive to register under the LDA, while providing a fairly marginal benefit with regard to ethical improvement in government. What do you think?

I also wonder what you would think about the utility of lobbyist self-regulation. This would be something along the lines of requiring lobbyists, or lawyer-lobbyists, to conduct their lobbying on the merits, and to avoid using campaign donations as a means of influencing government officials. The recent ethics reform act encouraged such self-regulation. Do you think that it holds any promise as a way of curbing the worst abuses?
3.30.2009 8:04am
Fedya (www):
In the end, I suggest that government subsidies may be needed. Expanded public financing of campaigns would by no means eradicate the influence of money on politics, but it would increase the total amount of political speech.

Public financing of campaigns is one of the more iniquitous ideas out there. The more anybody tries to take "big" money out there and replace it with government money, the more calls there are going to be for government to ban ("regulate") unpopular views made by candidates.

Read up on the Vlaams Bloc as an example.
3.30.2009 8:50am
I find Professor Painter's post to be most informative. Would you please provide a link to your book on Amazon and add trackbacks to your other posts?
3.30.2009 9:35am
Soronel Haetir (mail):
While I've disagreed with nearly everything you've said, I too thank you for the work you've done over the last week. You've made me think about why I disagree.

On the particular issue of this post, I'm honestly not certain there even is a real problem. As someone said on another of these threads, politicos listen to lobbyists because that's who is talking to them.

On the campaign subsidization front I really have to wonder. My understanding is that there are currently not enough people who volunteer the $1 to properly cover the presidental fund. Moving beyond that to Congress seems like it would simply re-inforce the few messages that already get huge amounts of focus.

I find it rediculous how many people treat abortion as a touchstone issue, though I suppose others would find find my use of the 2nd amendment just as rediculous. Any sort of subszidation would simply be focused on those few messages that are already heavily trumpeted because the pols would be able to get favor from their backers by doing so.
3.30.2009 9:45am
Professor Painter has exhibited wisdom, courage and good humor in his contributions to the debate in this precinct.
3.30.2009 10:54am
Curt Fischer:
I'm intrigued by the type of subsidization that Prof. Painter mentions.

What would be the effect of a government matching program for donations? Suppose that for each person who donates between $10 and $100, the government pitched in ten times the donation?

This would, in theory, decrease campaign reliance on mega-rich donors because now a person who donates $100 dollars is just as good as one who donates $1100.

In practice I am skeptical that any such scheme would result in anything except gaming, fraud, and huge and dubious wastes of taxpayer monies. The other problem would be that any scheme like this would necessarily require the disclosure of all the small-time donors, and one of Prof. Painter's views is that the disclosure of small-time donations need not be legally compelled.

I wonder if there is some way to structure incentives for campaigns so that they are rewarded for minimizing total expenditures. Maybe a law that required the government to post-facto pay, through the creation of a one-time one-year sales tax which showed up as a separate line item on everyone's store receipts, all the costs of the winning campaign, could have that effect.
3.30.2009 10:56am
Duncan Frissell (mail):
As long as the Feds are distributing all that cash and power, it will be hard to stop people paying for goodies or protection. If not campaign finance, Fannie Mae jobs for boyfriends and recent retirees, etc.
3.30.2009 11:12am
Sean Parnell (mail) (www):
Taxpayer funding of political campaigns, as proposed here, would not achieve any of the goals outlined here or elsewhere. "Reducing the marginal benefit" of private speech hardly seems consistent with the First Amendment, and relying on small donors to somehow bring "more voices" into the process is problematic as well.

For starters, it assumes that somehow those who contribute have a voice while those who don't, don't. Well, there are an awful lot more people that believe they have a "voice" in Barack Obama than contributed to him, a staggeringly-high percentage of which likely voted for him.

Second, it ignores the way these small contributions are going to be collected - largely by well-connected and well-organized interest groups. Research by the Center for Competitive Politics on New Jersey's experiment with taxpayer funded campaigns found that about half of all the qualifying $5 donors were connected with organized interest groups, primarily just a handful - the teacher union and the largest government employee union in NJ, the statewide pro-life and pro-choice groups, the Sierra Club, and the National Rifle Association. I haven't noticed any lack of voice by these groups in the past...

In Arizona, a news report recently noted that "special interest" groups routinely gather the qualifying contributions for favored candidates. Apparently this is so well accepted that I haven't seen anybody even try to refute or challenge this statement.

Finally, there is no reason to believe there will be savings to taxpayers. Before adopting these schemes, AZ and ME had lower-than-average state government budget growth. Since, their budgets have grown faster than the national average. And Maine's taxes are at an all-time high - not exactly evidence of how these programs save taxpayer dollars.

All in all, taxpayer-funded political campaigns are a flop. If we want more political speech, we need to lift the limits on campaign contributions, not allow politicians to raid the public treasury to stuff their campaign coffers.

Sean Parnell
Center for Competitive Politics
3.30.2009 11:15am
David M. Nieporent (www):
In practice I am skeptical that any such scheme would result in anything except gaming, fraud, and huge and dubious wastes of taxpayer monies.
In the 2000 presidential election, there were two vanity campaigns based solely on campaign finance: Ralph Nader and Pat Buchanan. Nader, by his own admission, was not a Green Party member and did not endorse their platform; he was nonetheless on their ballot line because he was well known and they hoped he could get them enough votes to secure federal campaign financing for the future. Pat Buchanan was on the Reform Party line; he wasn't a member and it didn't even have a platform he was interested in, but as the tattered remnant of the Ross Perot bids of 1992 and 1996, it qualified for federal financing, so he could run.

That's what happens when you hand out federal funds indiscriminately: people run for the sole purpose of securing those funds and/or spending those funds.
3.30.2009 11:39am
Curt Fischer:
David M. Nieporent: Thanks for the information.

What do you think of the idea to have the government reimburse the total costs of the winning campaign only? It could potentially make politicians less beholden to rich donors, disincentivize profligate campaign spending (to at least some degree), and would not suffer from the Nader/Buchanan problems because their campaigns would not be reimbursed unless they won.
3.30.2009 11:46am
C. Gittings (mail) (www):
Ya, I have to agree -- your posts have been interesting and refreshingly candid.
3.30.2009 11:48am
PatHMV (mail) (www):
In trying to control campaign finance, we've made the problem many times worse. Because of the contribution caps (largely not indexed to inflation), we've forced a HUGE amount of money out of the coffers of the candidates themselves and into a much less visible, far more murky world of 527s, PACs (especially pernicious are the "leadership PACs" controlled by top Congressmen and used to sway votes of their colleagues), and other interest groups.

I remain in favor of the reform supported by George Will for a couple of decades now... no contribution caps, just immediate disclosure of all donations. The more money is directed directly to the candidates, the more transparent everything will be, and the more we can hold them accountable for their actions. In the current climate, candidates get many benefits from donations directed to third parties who are supporting that candidate (or are opposing his opponent), while remaining legally and morally not responsible for the actions of those third parties. You can be sure they know, however, who donated to those third parties to help the candidate.

It's expensive to run for office because it costs a lot of money to reach large numbers of people. That's not going to change. Moreover, many voters, consciously or otherwise, use "ability to raise money" as a proxy for "ability to be effective if elected" or "acceptable to people who have vetted him more closely than I." If a candidate is successful at raising funds, that itself signals to the average voter that (1) this candidate is not off the wall fringe; (2) this candidate can focus on a needed task; (3) people who gave large sums probably checked this guy out more closely than I have time to, and they liked him, so he must be ok; and (4) the party leaders (who have a lot of influence over early money contributions) of my party seem to be supporting this guy, so he must be ok.

We can't regulate that type of behavior by voters. As discussed in an earlier thread, the more you try to restrict normal behavior with rigid rules, the more likely you are to create an atmosphere ripe for promoting exceedingly unethical behavior which nonetheless complies with the technicalities of all the applicable rules.
3.30.2009 11:52am
The reported exchange may indicate what Messrs. Ring, Gibson and Vasell were fighting so hard for in the Florida recount.

Although the exchange indicates nothing about Barry Jackson's reaction to any pressure that reached him, it is intriguing that he was named a presidential assistant for "external affairs" several years after this exchange occurred.

I do not know Nanette Everson, but I am beginning to like her.
3.30.2009 12:39pm
Larrya (mail) (www):
You seem to view lobbying as a bad thing.

While I can appreciate that viewpoint to some extent, given lobbying abuses, I also see the other side. When I think “lobbyist” I picture Alice Tripp.

My main issue is gun rights. I’ve participated in that cause since the Gun Control Act of 1968. However, I’m too busy training people to shoot here in the Texas Hill Country to move to Austin or D.C. where I can keep watch on my representatives. So I’m a life member of both the NRA and the Texas State Rifle Association, as well as a director of the Texas Concealed Handgun Association.

TSRA is an association of tens of thousands of Texas gun owners, while TCHA has over a thousand members who are concealed handgun license holders and/or instructors. Association officers don’t have time to move to Austin, either.

So we pay a lobbyist, Alice Tripp. She’s our voice in the Legislature, encouraging representatives to vote our way on pro and anti-gun legislation. She wields tremendous influence, to the point representatives come to her and ask for pro-gun bills to file. She spends many of her working hours (way too many working hours sometimes) keeping herself current on what we think, and communicating our concerns to the legislature. She also makes sure we know what the legislature is doing. We get a lot more than we pay for with her.

The source of her influence, however, isn’t the campaign donations we make through her. It’s the voters she can call on when she emails, “Write your legislator about this.” She focuses our efforts, and makes our organizations much more effective in monitoring legislative activity, and in letting the representatives know what we want.

She thereby helps democracy work.

In your example, it’s true that Congress could theoretically listen to every individual Native American with a problem. But then what? Simply listening would be a full-time job. How would Congress figure out priorities, settle competing claims, come up with viable solutions? How much time would it take every Native American to keep informed?

I’m afraid if we somehow manage to eliminate lobbyists, we’ll have to invent something to replace them.
3.30.2009 1:05pm
JoeSixpack (mail):
The best way to take money out of politics is to take money out of the government. If you are going to have a $3 or 4 trillion government, it shouldn't be surprising that the entire political process becomes a competition for that money.
3.30.2009 3:20pm
David Drake:
JoeSixPack just said what I have long advocated.

I might rephrase it: "To get business influence out of politics, get the government out of business."

Of course, that's not likely to happen, especially given the events of the last year or so. So expect to see a whole tidal wave of business money in elections going forward.
3.30.2009 4:01pm
Mark Jones (mail):
Sadly, I agree with David Drake. As has been observed in numerous places lately, when you can get a hundreds of thousands or million-fold return on your investment in Congress it would be almost criminally foolish to invest that money in something as comparatively low-return as stocks, bonds or building a factory.
3.30.2009 5:16pm
MissB (mail):
Campaign finance has very little to do with the existence of lobbyists within the political landscape.

With new bundling laws and significant caps on the amount of contributions that Members of Congress can receive from an individual or organization, the "lobbyists control everything with money" argument is hollow. No individual can raise more than $2,400 per election cycle and Political Action Committees are limited to $5,000 per election cycle.

If you're implying that $5,000 or even $7,500 (assuming a PAC and individual gave for the same reason) per election cycle is going to significantly sway any Member of Congress, you're either vastly under-estimating how much money these members need to raise to have a shot at reelection, or you're vastly over-estimating the involvement of the average person in our political system.

The system is flawed because no one cares. If people have a problem with lobbyists petitioning the government and profiting- it would be quite simple for large numbers of constituents to simply take the rug from beneath lobbyists and do it themselves. You and your friends want to save local manufacturing jobs? Go see your Congressman or their staff and talk about it. You want to save those jobs and donate some money? You do that, too. Just keep in mind your limit for buying your Congressperson's ear is $2,400 per election cycle.

But isn't more simple for everyone to sit home, be complacent, have the pet issues they care about and complain about how the system is broken?
3.30.2009 6:02pm
PatHMV (mail) (www):
MissB, you're missing several important facts. It's quite easy for a corporation to "encourage" its employees (especially it's highest level employees) to contribute to a particular politician. When the top paid dozen or so AIG executives give to Chris Dodd, that's not an accident, a spontaneous mutual determination by all of those execs that Dodd is a splendid Senator, most deserving of reelection. No, those donations were coordinated (not that you could ever prove that). 12 execs at $2,400 is $28,800, in just one election cycle. Then if each of those 12 also give $5,000 to leadership PAC, that's another $60,000, for a total of $88,800, all from one company. And that's if only the top dozen execs give. Imagine if the top 50 give.

Oops! Forgot the wives. Ok, that's now 24 donors at $2,400 each, or $57,600 directly, plus 24 at $5,000 to the PAC, which is $120,000, for a total of $177,600 all from one real source, AIG. Add in a couple of 18 year old kids here and there who are still living at home, and one company can be the source of a LOT of contribution cash. (The above amounts are hypothetical; in reality, employees and family members of employees of AIG have given a total of at least $281,038 to Chris Dodd over the course of his career.)

Then, there's attending fundraisers Dodd hosts for, say, candidate Obama. If they each give $2,400 to attend that fundraiser, well, that helps both Obama AND Dodd. And that's before we even begin to look at unlimited contributions directly to the state and national party organizations.

Yes, that's plenty enough to sway the politician in some way. When you add that to the outright graft and corruption which take place largely through the earmarks process, yes, the system is indeed broken at the moment.
3.30.2009 6:25pm
Richard W. Painter (mail):
My answers to some of the questions posed thus far are as follows.

The reforms adopted by the Obama administration to curb the role of lobbyists are a step in the right direction, but do not fully address the problem. Many people are not registered as lobbyists, but do essentially what lobbyists do or supervise other people who are registered lobbyists. I have no objection to having stricter rules for registered lobbyists than for others, but the rules do not cover all or even close to all of the relevant players in the lobbying business.

We also have to recognize that if we go too far in this direction we may encourage noncompliance with the LDA by persons who simply fail to register. Increasing penalties for failure to register and stepped up enforcement may be required.

What the Administration does not propose is getting registered lobbyists out of the business of bundling the contributions of clients and others. This is the way in which lobbyists obtain influence far exceeding that which normally accompanies contribution limits set forth under FEC rules. There may or may not be First Amendment issues with restricting this practice on the part of lobbyists, but there is no Constitutional requirement that the government talk to lobbyists. The Administration should make it clear that lobbyists who perform a bundling – bagman – function for their clients or others will not get their calls returned and will not be welcome in the offices of Executive Branch agencies. I fully understand that such a stance might upset Congress, which is perhaps why it is not being proposed.

I discuss various proposals for self regulation of lobbyists in my book. The European Commission has some interesting proposals in this area. Congress called for self regulation of the lobbying industry in the 2007 Open Government and Honest Leadership Act. Once again, unless self regulation includes a self-imposed requirement to get out of the bundling business, the poor image the lobbying profession has achieved will not go away. I notice that the American League of Lobbyists has an ethics code, which is discussed in my book, an ethics code which of course does not include any provision relating to campaign contributions.

I do not believe public financing of campaigns will solve all of our problems, but if designed properly an aggressive public financing regime will at least dilute the effect of political fundraising by the relatively few special interests that now dominate the system. Keeping the public money out of the hands of already well funded special interests will be a challenge, but is a challenge that we should be able to overcome, particularly if the money is dispensed directly to candidates themselves.

While I believe public funding should be conditioned on campaigns agreeing to forgo at least certain types of fundraising from big donors – as proposed in the Durbin-Specter bill in the Senate – it is naïve to believe that direct fundraising is the only way in which political campaigns are funded. There are many off-the-books special purpose entities (SPEs) in politics and policy just as there are in the business world. These SPEs, whether 527s or 501(c)3s, 501(c)4s, private foundations, religious advocacy organizations, or whatever form they appear, make keeping money out of political campaigns impossible. The only choice is to put more money, and a lot more money, in.

I understand the enthusiasm of Larry Lessig and other reform activists for the Durbin-Specter proposal, but we have to be realistic about what it can accomplish. I see too much confidence being placed in the bill's restrictions and not enough concern that the subsidy offered in return may be inadequate.

Richard Painter
3.31.2009 3:11pm
My biggest objection to public financing is that the public doesn't want to pay for it. I present as proof the fact that, according to the IRS, the percentage of taxpayers checking "Yes" on the contribution box on the 1040 form in a year has never -- repeat, never -- been more than a third, usually less. So, a multi-decades election/opinion poll on public financing shows that it is a huge loser, at least with taxpayers. So why do we keep on talking about it?
3.31.2009 4:42pm

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