When I was growing up, My father was active in politics. You would never see him on the stump, and he never ran for office. He was a critical member of various politicians’ teams, mostly republican. One thing he was particularly good at was fundraising. I remember him telling me, “The small donation from a family is important. If the person who handles the family money will give you $5.00, you have to understand what that means. $5.00 is a roast and all the fixings (this was the 60’s, after all). That is at least one family meal. They have given you a meal off of their table. If they will give you that, they will give you their vote. These donations are a sign that they are with you.”
Was the small donation also a way to gain influence over the candidate? Probably, but it didn’t matter. The donation was small, and their were a lot of them in relation to the district. Lots of donations of similar amounts meant that the influence was dispersed across a whole lot of families. The politicians had to listen to a lot of people with a lot of different ideas if they wanted to fund their campaigns and win their elections. While they hated having to beg for donations, the process led to democratic (small d) representation. Those families, and their neighbors, were the constituency, and the politicians never forgot it.
When I returned to Colorado in 1989, I joined up with the Douglas County Republicans, because I lived in Douglas County. We were immediately involved in the local elections and midterms. I was looking forward to putting into practice the things I had learned from my father. However, something had happened to Colorado politics while I was away. I was told, “We don’t do fundraising that way any more. It is too hard, too time consuming, and undignified. We have big dollar sponsors now. All we have to do is select candidates that our sponsors can support.” And so it was. At the time, the big donors were people like Marvin Davis and Philip Anschutz and corporations like major banks and large developers. It soon included the Koch brothers and other donors at the national level. While the smaller donations were never turned down, they were no longer the focus of fundraising. With the change in fundraising came a change in the constituency. The politicians no longer had to accommodate the families who made up the small donor class. They had to accommodate the big donors. And the influence was no longer dispersed, it was concentrated. The constituency was now the wealthy individuals and corporations, who seemed to have the same policy focuses.
Then came the The Bipartisan Campaign Reform Act of 2002, also known as McCain Feingold Campaign Finance Act. But first, a bit of history on campaign financing.
The first federal laws concerning campaign finance were passed in 1867 to prohibit Navy yard workers from being solicited for campaign funds. I don’t know why this law was passed. Over the years, other laws were passed to regulate campaign financing. Essentially, these laws were meant to limit contributions to ensure that wealthy individuals and special interest groups did not have a disproportionate influence on Federal elections, prohibit certain sources of funds for Federal campaign purposes (i.e., the Tillman Act prohibited corporations and national banks from contributing money to national campaigns), control campaign spending (laws passed in 1910 covering U.S. House of Representative races, and 1911 to add the Senate, both laws limited the amounts that could be spent on a candidate’s election), and require public disclosure of campaign finances to deter abuse and to educate the electorate (essentially the Federal Corrupt Practices Act of 1925). The public disclosure was an important element of the regulations passed.
However, these laws were approved without including a way to enforce them. Thus, the campaign finance provisions of all of these laws were pretty much ignored. In 1971, Congress passed a more rigorous set of disclosure provisions under the 1971 Federal Election Campaign Act as the primary law regulating political campaign spending and fundraising. It focused on increased disclosure of contributions for federal campaigns.
After Watergate, Congress passed the Federal Election Campaign Act Amendments of 1974, which put new limits on contributions to campaigns. Unfortunately, within four years, the FEC had decided that donors could donate unlimited money to political parties, but not the candidates themselves, as long as the party used that money for “party building activities” such as voter registration drives, but not to directly support candidates. Political parties still used this money to support their candidates. This money donated to parties became known as soft money. In 1992, President George HW Bush vetoed a bill restricting use of soft money.
Because of a series of scandals (including Enron) brought the issue of campaign finance to the fore of public consciousness in 2001, and the McCain-Feingold bill was passed. The important provisions of this act included a prohibition of national political party committees from raising or spending any funds not subject to the federal limits previously set, and limited the use of issue advocacy adds. It also prohibited any issue advocacy ad from being paid for by a corporation, including non-profit issue organizations, or union general treasury funds. It also included a ban on foreign corporations or foreign nationals being involved in decisions regarding political spending. Mitch McConnell was a major opponent of this act.
To comply with McCain-Feingold, many “527s” have been registered. 527s get their name from section 527 of the IRS code. 527s are mostly funded by wealthy individuals, labor unions, and businesses. While 527s existed before McCain-Feingold, they became more popular after it was passed.
McCain-Feingold had in it a section known as the “millionaire’s amendment,” which tried to equalize campaigns by increasing the legal limit on contributions to candidate when his opponent used personal wealth to overwhelm the spending of the candidate. As McCain said, “Money does buy access in Washington, and access increases influence that often results in benefiting the few at the expense of the many.” In other words, the millionaire amendment was specifically designed to offset the ability of the very wealthy to buy elections. This is the provision that the Supreme Court ruled as unconstitutional in the case known as Citizens United in 2009. Specifically, Citizens United struck down campaign financing laws related to corporations and unions. The minority argued that the court erred in allowing unlimited corporate spending, arguing that corporate spending posed a particular threat to democratic self-government. However, it did also make it easier to hide the source of funds. According to President Barack Obama, “With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests—including foreign corporations—to spend without limit in our elections. I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities. They should be decided by the American people. And I’d urge Democrats and Republicans to pass a bill that helps to correct some of these problems.” He also said the decision was, “a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.”
In fact, the Supreme Court decision in 2009 did make it easier to hide where soft money was coming from. The elections of 2012 and 2016 are evidence of this fact. Now our elections are largely financed by the 1%. We know that Robert Mercer was a major contributor to the Trump campaign. We know that Sheldon Adelson largely funded the failed Newt Gingrich campaign and was sought by all the Republican candidates in 2016. We also know that the Koch brothers have invested heavily in elections throughout the country from school boards to state assemblies and legislatures to U.S. Congress and President. So financing campaigns has been moved from the family donations to the company donations to corporate and special interest donations to the 1%. So the influence, and thus, the constituency, has shifted accordingly.
However, these are the things we know about soft money. The difficulty in finding out the sources of funds in the soft money world opens up a whole new problem. Because of the lack of transparency, there is every possibility that a significant portion of that soft money is in fact laundered money from foreign sources. We do know that there are questions about several individuals involved in the Trump campaign as to whether they have been laundering money. There are transactions, for example, that Manafort has been involved in that have all the earmarks of money laundering. It is not a far stretch to ask whether the Trump campaign was an experiment in a new way to launder money. If the Trump campaign was benefiting from laundered money, was he the only one? If politicians were accepting money from foreign sources, then who do they represent? Does the influence belong now to foreign entities? Are these foreign entities now the true constituency of our politicians? This is a really scary thought. Imagine if the real constituent to whom our congress and President are responsible to is Vladimer Putin. Perhaps the time has come to ask our congresspersons, who are your real constituents?