The Hard Fight Against Soft Money

A breakdown of campaign-finance reform following the 1996 presidential election

Credit: cla78/Getty

If you haven't heard the news, money is still winning. Though each day more dirt tumbles forth about the disgraceful role of special-interest money in the 1996 elections, Congress has turned its back on campaign-finance reform. Many people will despair that anything can change, but it's important to remember this bit of history: All of the great American reform movements – from civil rights to child-labor laws – started far from Washington, D.C. In state legislatures and town halls, activists first pushed their bold experiments locally. Their energy and momentum eventually led to legislative action at the national level.

And it's happening again. An impressive grass-roots victory occurred last fall in Maine when voters approved, by a 56 to 44 percent margin, a statewide referendum establishing a "clean elections" option for their state government. Candidates for governor or the legislature will now have a choice: Either rely on the usual private sources for money or accept only public financing and a spending ceiling for their campaigns. Since special-interest money might bury a "clean money" candidate, the Maine plan offers matching grants to help challengers keep up.

The same idea, with many variations, is now stimulating debate and optimism in at least 14 states, from Connecticut to Vermont to North Carolina to Oregon. "We have to surround them," says Ellen Miller, the executive director of Public Campaign, a new organization that's coordinating the charge. "As long as an inside strategy is played, we will get what we've always gotten."

"The level of distaste for Washington fund raising is very high right now," says Miles Rapoport, Connecticut's reform-minded secretary of state. "And that substantially enhances the public's desire for reform. What we need to do is get candidates off the treadmill of raising large-scale money from special interests – or at least make it possible for those who want to choose the alternative."

The Connecticut clean-money measure failed narrowly on its first assembly vote last month, but it will be back. "This issue will be with us for years," Rapoport promises, "because the surge of corporate money isn't going to get any better. Absent reform, it's going to get worse."

In North Carolina, the reform coalition does not have to turn to Washington for campaign scandals, since there are plenty right at home. The Institute for Southern Studies, in Durham, has discovered, for instance, that a mere 350 families and business associates give one-third of all the campaign money raised by North Carolina's politicians from both parties. Who are these public-spirited families? Industrialists, real-estate developers, agribusiness owners, oil millionaires, financial brokers, utilities executives and, of course, the lawyers who represent those interests.

"They really believe in democracy – right," snorts Pete MacDowell, coordinator for the North Carolina Alliance for Democracy. "They're investing in the political system, and they get an enormous return on their investment. The North Carolina banking industry, for example, puts $1 million [each year] into lobbying and contributions, and it gets $54 million in a tax loophole." MacDowell knows that the legislative struggle will be long and arduous, but he is excited by the reform energies mobilizing across the South, where business interests have always dominated politics.

Washington yawns. The insiders (including, probably, Bill Clinton) assume that except for reform agitators, nobody really cares about the corrupting influence of campaign money. People figure that everyone takes it, so what's the point of fighting it? Republicans deride the public-financing remedy as "welfare for politicians," and many voters no doubt agree.

I have a hunch that the insiders are wrong this time, that public revulsion will deepen as we hear more about the fund-raising scandals swamping Bill Clinton and the Republicans. The real barrier to reform, I suspect, is the public's sense of utter resignation about politics accomplishing anything worthwhile for it.

If the clean-money campaign were to choose a national poster boy, he might be the retired Marine general who is now Florida's state comptroller. Bob Milligan overcame great odds in 1994 to defeat a long-entrenched Democratic incumbent whose campaigns were bankrolled by the very financial industry he was supposed to regulate. Floridians were fed up with banking scandals; Milligan promised to clean up the office. His candidacy seemed quixotic – until public financing arrived for a dramatic rescue.

"The special-interest groups are driving the train," Milligan says. "That's why public financing is so good. It helps people like myself who are interested in participating in public service but don't have any support base and, as a result, can't raise the funds."

At 64, Milligan seems to be a model of the citizen politician who wants to serve without making a career out of it. He retired from the Marine Corps, in 1991, as a three-star general and became active in Republican politics in his hometown of Panama City. In Florida, the savings-and-loan scandals of the 1980s included outrageous cases of looting by highflying bankers. Milligan figured that he could improve things by depoliticizing the comptroller's office.

"I found out pretty quick that I wasn't going to get any support from the financial industry," he says. "My opponent was very cozy with the industry he regulated, and one of my pledges was to try to separate myself from that. You'd have thought I was going to assassinate the pope."

Florida's system of partial public financing was enacted back in 1986 but, because of various legal challenges, didn't get activated until the 1994 election. The state provides matching funds to candidates, who must first raise a substantial threshold amount on their own from small contributors who give $250 or less. Candidates who opt out and rely solely on private contributions can exceed the spending limits, but their opponents will receive a dollar-for-dollar match from the state, up to a point. "It creates a disincentive for a nonparticipating candidate to exceed the limit," says Sally Spener, executive director of Florida Common Cause. "For every dollar you raise over the limit, you're giving a dollar to your opponent."

Bob Milligan was such an extreme underdog that he struggled even to raise the qualifying threshold of $100,000. His opponent, meanwhile, had $1.3 million to spend. "He was extraordinarily overconfident," Milligan recalls. "He gave me no chance at all. But neither did anybody else. That's why it was so hard to raise money."

The cause of public financing is generally promoted by Democratic progressives (formerly known as liberals), whose candidates are typically outspent by big-money Republicans. But Milligan's victory illustrates that conservative groups and Republican candidates might benefit as much or more. The key to qualifying for the public funds is grass-roots organizing – the ability to collect small contributions from a large number of people. In many locales, conservative groups like the Christian Coalition are far better prepared for that chore than liberals are.

The larger point is that public financing doesn't eliminate the power of corporations and other big donors, but at least it does give challengers a viable chance to enter the race and be heard. Since Republicans typically raise more campaign money than Democrats or independents, it's not surprising that Republicans are generally opposed to the idea of public subsidies for campaigning. So are the powerful economic interests that now dominate our politics. In Florida, there's a continuing effort under way to gut or repeal the new reform system.

Milligan, now the incumbent, understands the pressure all too well. "The perfect situation for me right now would be no public financing at all, because I'm in the driver's seat," he says. "A lot of my Republican friends don't like public financing, and they ask me why I support it. But I would be hypocritical if I didn't."

The first federal legislation enacted to curb the political influence of private money was the Corrupt Practices Act of 1907, a law championed by President Teddy Roosevelt after he was embarrassed by his own money scandals. The act flatly prohibited corporations from financing congressional and presidential candidates. Today, corporations are back at the same game – funneling money to both parties through various back channels and loopholes – and, ostensibly, it's legal.

Common Cause president Ann McBride, whose organization is conducting a drive called Project Independence to collect 1,776,000 petition signatures to demand congressional action, says, "In 1996 we had the most corrupt election since Watergate, and it struck a nerve with people. They desperately want reform; they want a government they can respect." "What we've done is go back to 1907, which is a hell of a way to run a railroad," says Fred Wertheimer, the former president of Common Cause. "The only problem is, we don't appear to have a Teddy Roosevelt around now to do something about it."

Wertheimer, a leading reformer, helped to draft the 1974 campaign-financing law that followed the Watergate scandal. The central elements of that 1974 legislation are now in tatters, shredded by court decisions, regulatory compromises and political default.

In the early 1980s, congressional Democrats went after the business money big time – moving away from working-class constituencies and cozying up to Wall Street and other monied interests. Democratic presidential candidates did the same and, along the way, pioneered some of the abuses that subverted the law.

The biggest of these is the so-called soft-money channel, which allows unlimited contributions to political parties from anyone – money supposedly intended for "party building" activities but channeled, with a wink, into electing candidates. By Wertheimer's reckoning, the breakthrough was led by Michael Dukakis, in 1988, despite his reputation as a liberal reformer. The two parties consumed about $50 million in soft money that year, Wertheimer calculates, and $84 million in 1992. Last year, $236 million was pumped into the national elections.

"Both Clinton and the Republicans massively broke the law in 1996," Wertheimer charges, "because both the Democratic and Republican national committees were just totally pass-throughs for the presidential campaigns. It's on a scale we haven't seen since Watergate."

Though Common Cause has volunteers in all 50 states, it is still concentrating fire on Washington – pushing legislation that would eliminate the soft-money loophole and restore some meaning to the rules and limits that already exist in the law. "I don't believe – when you have the greatest campaign-finance scandal in our history – that it is the time to turn your back on Washington," Wertheimer says.

Still, there's a depressing message in these facts that most reformers don't wish to face: The long, tortuous history of legislating political reforms has been subverted again and again by the inexorable hydraulic force of private wealth on political levers. Sooner or later, money finds a way.

Public financing, for instance, ought to enable many worthy challengers to run for office at state and federal levels. But partial public financing has been provided to presidential candidates for more than 20 years, and it hasn't cleaned up the political money system. The system, in fact, got much, much dirtier. The fundamental struggle of American democracy has always been a political contest between organized money and organized people. As history demonstrates, when citizens are actively mobilized, they can prevail. Right now, the money is winning.

While voters in Maine were enacting their clean-elections system last fall, voters in Arkansas passed a different kind of reform initiative. Among other things, it provides a modest tax credit to reimburse citizens who contribute money to politics ($50 for individuals; $100 for joint returns). The initiative was led by a national network of neighborhood organizations called ACORN; the Service Employees International Union Local 100; the New Party; and others. Their slogan was, "Take the big money out of Arkansas politics and put the people back in." The measure passed by 66 to 34 percent and, it turns out, got more votes in Arkansas than Bill Clinton did.

In the long run, I believe, measures like Arkansas' may have a greater impact on reviving American democracy, because they create the means for ordinary people – including the poor and working classes – to regain their political voice. Among many voters, there is a widespread feeling that challenging the entrenched powers is hopeless. People of modest means lack the resources – that is, money – to launch viable candidates or formulate their own agendas.

The Arkansas tax credit is designed to help people see real daylight ahead. It creates small-donor PACs that would let citizens aggregate their small contributions and support candidates – or even independent parties – of their own choosing. And it gives political organizations an incentive to switch their own focus from the big money to the little folks, because it makes it easier to raise funds at the grass roots.

My own concept of political tax credits (outlined in my 1992 book, Who Will Tell the People) would make them even broader. People should be able to contribute money to almost any activity that they think of as "political" and still be eligible for the tax credit – the Boy Scouts or an environmental group or a church-led community project, or, if they choose, a candidate or political party. This would encourage citizens to rebuild civic organizations across a very broad front, restoring the vital fabric of communities that is now so damaged.

At present, the tax code makes fictitious distinctions that allow the wealthy, corporations and tax-exempt foundations to contribute to so-called "educational" projects like Washington think tanks and propaganda campaigns, which everyone knows are really about politics. My notion is that citizens should have the same right to influence the public agenda.

If Congress enacted a federal tax credit for political contributions, I would add one other proviso: People will be eligible only if they voted in the last election. That's another incentive for voters to re-engage. In 1996, more than half of the people stayed home.

In the end, accountability will not be restored to our democracy unless there is an engaged citizenry willing to sustain a continuing dialogue with elected officials. That requires a complicated process of democracy – organizing collective voices for the many – that is far more difficult than finding clean-money candidates to serve in government. It puts the burden on the citizens themselves. It requires them to throw off their passivity and to create their own politics. Democracy is hard work in the best circumstances, and, right now, it is in trouble.