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Everything old is new again



 (The Spokesman-Review)
(The Spokesman-Review)

WASHINGTON — It was barely more than two years ago that Congress passed its latest version of campaign finance reform. The legislation best known by the last names of its Senate sponsors, John McCain and Russ Feingold, was widely hailed as the greatest advance in a generation in cleansing the political system of the corrupting effects of money. Now, in the first election under the new regulations, here is what we see:

For the first time, the nominees of both major parties have discarded public financing of their preconvention campaigns. Instead, George Bush and John Kerry have entered a free-spending competition and have shattered all fund-raising records.

Second, the money chase by members of Congress has reached what Roll Call, the Capitol Hill newspaper, called “dizzying new heights.” The Federal Election Commission reported that by the end of March, House and Senate candidates had raised $583 million — one-third more than at a comparable point two years ago.

Third, a whole new category of groups — allied with but formally separate from the party — has sprung up to raise hundreds of millions of additional dollars for the presidential campaign. These “527 organizations” are collecting the same huge “soft money” contributions that were outlawed by McCain-Feingold, from many of the same individuals and groups.

To be sure, these are not the only after-effects of the legislation. As Fred Wertheimer, the veteran “clean government” lobbyist, points out, you must also count one positive accomplishment. No longer can federal officials personally solicit six-figure donations from people with a powerful interest in issues pending before Congress. But he quickly adds, “Instead of the money being solicited by federal officials, it is being collected by their natural allies and longtime associates.”

Beyond that questionable achievement, Wertheimer can cite only one other positive result of the legislation: Both parties — but especially the Democrats — have learned that they can thrive without soft money. Thanks to the Internet and to more systematic solicitation of small donors, Democrats and Republicans have found far more “hard money” (regulated small contributions) than they thought was available.

Nonetheless, McCain-Feingold is one more chapter in a long history of campaign finance regulation. Once again, unanticipated consequences of new rules are largely subverting their intended purposes.

What happened to the promise of this latest reform? It has been undercut by its backers’ inability to foresee two changes in the real world.

They did not anticipate the phenomenal success of Internet fund raising, demonstrated first by Howard Dean and now by Bush and Kerry. Succumbing to Democratic fears that the abolition of soft money would leave their party unable to cope with Bush’s fund-raising machine, the reformers in Congress (most of them Democrats) doubled the limits on hard money contributions to $2,000.

That doubled Bush’s take and also created an incentive for Dean and Kerry to follow Bush in abandoning the system of publicly financed primary campaigns, with its limits on preconvention spending. Now it’s likely that all future candidates for presidential nominations who hope to be taken seriously will shun public financing and go for the green — exactly opposite what the reformers intended.

Second, they did not anticipate that the ban would simply divert the flow of big contributions into other channels. Concerned about the constitutionality of limiting free speech rights of advocacy organizations, the sponsors did not include a ban on soft money contributions to nonparty groups. Democrats quickly seized on that opportunity by creating “527 organizations” (named for the section of the tax code under which they’re organized). These groups are nominally independent of the party. But one is headed by Harold Ickes, who ran Democratic politics from the Clinton White House; another, by Steve Rosenthal, the former political director of the AFL-CIO.

Wertheimer claims the FEC is derelict in allowing the 527s to operate this way. He may be right, but last week the agency voted for a 90-day delay in imposing new regulations — tantamount to a pass for this election cycle. Republicans who had been pressing to shut them down now say they have no choice but to create their own 527s.

The reality, as Sen. Mitch McConnell, a leading critic of McCain-Feingold, has argued, is that in a country like ours, with its constitutional guarantees and its welter of interests, it is virtually impossible to control the flow of money from the private sector into the political world. Any regulatory scheme will likely be quickly circumvented if it is not countermanded by the courts or the administrative agencies.

The best one can hope is that new rules do not produce more unintended negative consequences than benefits. McCain-Feingold is flunking that test.

 

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