Posted March 15, 2007 by Paul S. Ryan

Mismatching Funds Meet Mismatching Arguments: A Response to Mark Schmitt

Mark Schmitt’s article recently published on DemocracyJournal.org, Mismatching Funds: How small-donor democracy can save campaign finance reform, claims to offer groundbreaking “principles that might breathe some new life into the campaign finance reform movement,” in order to “revive campaign finance reform” from a decade of so-called failures.  Despite Mr. Schmitt’s claim, he does little more than misconstrue the reform movement’s positions and then offer a purportedly “new” approach that is essentially what the reform community has been striving to achieve for decades.

Mr. Schmitt’s piece begins with the flawed premise that the “modern campaign finance reform movement” was born ten years ago.  In fact, the modern campaign finance reform movement, to the extent one can put a starting date on it, began at least with passage of FECA in the aftermath of the Watergate scandal.  Since the early 1970s, campaign finance reformers have been on a steady march, with noteworthy campaign finance laws being passed in the 1980s—including the New York City law Mr. Schmitt cites as a model for small-donor democracy.

Mr. Schmitt believes that, now that a decade has passed since the purported birth of the “modern campaign finance reform movement,” it’s time to take stock as to the effectiveness of the resulting reforms and concludes that “campaign finance reform has been, to put it mildly, a disappointment.”  According to Mr. Schmitt, “[c]ampaign finance reform has fallen short of its promises not because politicians are evil or because money will always find a way into the political system, but because the movement has failed to challenge or refine its own assumptions.”

Mr. Schmitt asserts that his questions regarding the effectiveness of campaign finance reform will be of no interest to reformers themselves.  The Campaign Legal Center, though not named in Mr. Schmitt’s article, is one reform organization that is profoundly interested in Mr. Schmitt’s questions.  To be clear, we don’t consider Mr. Schmitt to be a “skeptic [to be] dismissed as a self-interested agent.”  Indeed, we are aware that Mr. Schmitt served as a grant program administrator for OSI in the field of campaign finance reform, and we welcome his thoughtful analysis.  But Mr. Schmitt sells the reform community short and his comments warrant a response.

The following are Mr. Schmitt’s “principles that might breathe some new life into the campaign finance reform movement,” along with my comments.

“Encourage the healthier developments in politics, don’t fight them.”  Mr. Schmitt mischaracterizes the reform community as opposing bloggers and netroots political organizing when, in fact, we opposed netastroturf activities—and applauded the FEC’s Internet regulation exempting most bloggers and Internet activists from federal campaign finance laws.

“Political organization is good.”  Mr. Schmitt criticizes the reform community for seeking to regulate 527 organizations because, according to him, such groups facilitate the organization of large numbers of small donors—which is a good thing for politics.  Indeed, the organization of and participation in politics by large numbers of small donors is a great thing—but that’s not what is at issue in the 527 debate.  The 527 debate boils down to the question of whether 527 organizations should be registered as “political committees,” subject to contribution limits, source prohibitions, and timely disclosure requirements.  The Campaign Legal Center believes most 527 organizations should be registered as “political committees” pursuant to a law passed by Congress in the mid-1970s.  But registration as a “political committee” in no way prevents an organization from organizing and mobilizing large numbers of small donors.  Federal political committees can accept contributions up to $5,000 per year from individuals; only a tiny percentage of the population can afford to make political contributions in excess of that amount, and such individuals should certainly not be considered the foundation of a “small donor democracy.”  Instead, the 527 organizations that are targeted by reform organizations for violating campaign finance laws are funded by a small number of large donors.  In the 2004 election cycle, for example, the pro-Republican 527 organization Progress for America Voter Fund raised more than $43.8 million of its total $44.9 million from less than 60 donors who gave $50,000 or more; similarly, the pro-Democratic 527 organization America Coming Together raised more than $76 million of its total $79.8 million from less than 150 donors who gave $50,000 or more.  And again in the 2006 election cycle, big-donor 527 organizations like the Economic Freedom Fund—which raised more than $5 million from only two donors—illegally raised and spent millions of dollars to influence federal elections.  What do these organizations and their handful of wealthy donors have to do with small-donor democracy?

“Don’t overtax the ‘corruption’ rationale.”  Mr. Schmitt laments the fact that reformers target their efforts to reducing real and apparent corruption when, instead, we should be advancing reforms to achieve political equality and enable more candidates to run and be heard.  These, of course, are laudable goals.  But courts have accepted only two justifications for campaign finance reform laws—reducing real and apparent corruption, and creating a well-informed electorate.  Unless a law has been enacted for one of these two purposes, it simply will not survive legal challenge.  Would Mr. Schmitt really want to see us using already-strained, limited resources to pass laws that stand little or no chance of surviving the inevitable legal challenge?  As a campaign finance reform litigator, I would view such an approach as a waste of time and money.

“Accept that there is a place for private money in politics.”  Mr. Schmitt mischaracterizes the reformer argument as “all private money is bad.”  Instead, the majority of reformers believe that it is the unlimited, undisclosed private political contributions that are bad.  Small contributions from individuals, disclosed in a timely manner, are typically regarded by reformers as posing no threat of corruption.  The reform community has repeatedly noted the important role of the Internet in political discourse and for raising the number of small donors.

“Don’t dismiss the libertarian arguments.”  Mr. Schmitt urges that we take seriously the potential for the BCRA “electioneering communication” provisions to squelch important political speech—and he points to the Wisconsin Right to Life v. FEC (“WRTL”) case currently before the Supreme Court as illustrative of this point.  Perhaps Mr. Schmitt is unaware of WRTL’s significant and openly admitted efforts to influence Sen. Feingold’s 2004 election, if he truly believes WRTL was engaged in pure issue advocacy.  At the same time WRTL sought an exemption from BCRA to use corporate treasury funds to pay for so-called issue ads, the organization was spending money through its PAC on ads attacking Sen. Feingold on the same filibuster issue.  Indeed, the very ads WRTL sought the exemption for referenced a WRTL Web site attacking Sen. Feingold.  Mr. Schmitt may likewise be unaware of the other, nearly identical federal court legal challenge to the BCRA “electioneering communication” provisions brought by the Christian Civic League of Maine—a group that had absolutely no intent or desire to run ads before being contacted by WRTL’s attorney Jim Bopp and offered the opportunity to serve a plaintiffs in a “test case” against BCRA.  Mr. Schmitt needs some better examples if he wants his concerns regarding the potential for BCRA’s “electioneering communication” provisions to squelch legitimate “issue advocacy” to be taken seriously.

“Expand, don’t restrict.”  Mr. Schmitt argues that reformers shouldn’t worry about closing loopholes, and instead should focus on expanding the “range of choices and voices in the system.”  This is a particularly interesting suggestion given that, in the paragraph preceding this one, Mr. Schmitt notes that disclosure alone is not enough to prevent corruption.  Further, Mr. Schmitt fails to recognize that the purpose of most reform efforts to date have been to force parties and candidates to reach out to larger numbers of people, instead of relying on a small number of wealthy donors.  (See, e.g., the BCRA provisions closing the soft money loophole, to reinstate the effectiveness of longstanding federal law contribution limits.)

And, finally, comes Mr. Schmitt’s solution: small-donor democracy.  Remarkably, he identifies public financing programs in New York City, Minnesota and Arizona as models of “small-donor democracy,” as if these approaches to campaign finance reform were novel or unique or unknown to the reform community at-large.  In fact, these public financing programs are cut from the same cloth as the federal campaign finance laws that Mr. Schmitt spent 13 pages criticizing—modeled, to a great extent, on the presidential public financing program enacted in the 1970s, and adorned with many other features of federal campaign finance laws such as contribution limits and corporate/union prohibitions.

Like federal campaign finance laws that, to the dismay of Mr. Schmitt, have evolved over time, so too have the laws of the other jurisdictions he cites.  In fact, just this morning I received an email from a public official in Minnesota seeking information to assist her in advocating adoption of a BCRA-like “electioneering communication” law.  Also, since enacting its campaign finance law in 1988, NYC has strengthened the original law by increasing its public financing matching rate, lowering its contribution limits, expanding the application of its contribution limits, and prohibiting corporate contributions.  Yet, the NYC Campaign Finance Board, to its credit, perpetually strives to increase the effectiveness of the city’s campaign finance laws.  Following every election, the Campaign Finance Board publishes a report recommending specific reforms to the city council.  In its 2006 report, the Board recommended among other things that the city lower its contribution limits even further, ban contributions from organizations, enact pay-to-play restrictions, and prohibit soft money fundraising for inaugural activities.

Like the NYC Campaign Finance Board, nongovernmental campaign finance reformers are hard at work to advance the goals articulated by Mr. Schmitt—in a phrase, advancing small-donor democracy.  Campaign finance reformers in DC, for example, continue to advocate a long-overdue update to the presidential public financing system that would make it even more similar to the NYC public financing program (e.g., a $4-to-$1 match).  And outside the beltway, state and local reformers are hard at work to advance this same goal though enactment of public financing systems and other reforms, many with the assistance of the Campaign Legal Center.

In the end, though I find incomprehensible Mr. Schmitt’s distinction between federal campaign finance laws (failure) and NYC’s campaign finance laws (model), as wells as his indictment of the past decade of reform efforts, I wholeheartedly share his goal of small-donor democracy.  But while Mr. Schmitt urges “modest, non-restrictive interventions” in the political process to advance this goal (though “modest” is hardly an accurate description of the model laws Mr. Schmitt cites), I believe our democracy needs stronger medicine and will continue to dispense it.