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Statement of Joan Claybrook, President of Public Citizen, on

June 28, 2001

Statement of Joan Claybrook, President of Public Citizen, on Introduction of House Campaign Finance Reform Bills

Public Citizen strongly supports the basic thrust of the new Shays-Meehan campaign finance reform bill. However, we deplore its failure to close or adequately limit a major loophole in the soft money ban ? the Levin Amendment allowing continued corporate, union, individual and other contributions of soft money to state parties for voter registration and get-out-the-vote efforts during federal elections. Reps. Chris Shays (R-Conn.) and Marty Meehan (D-Mass.) have promised further “dialogue and debate” on this issue as well as on proposals to raise the bill?s $30,000 limit on annual aggregate political contributions by individuals to candidates, PACs and parties (the Senate bill provided $37,500).

This new version of Shays-Meehan includes the key features of their past reform measures as well as of the Senate-passed McCain-Feingold bill. It has a general ban on unlimited soft money; it curbs corporate- and union-financed pre-election ads that discuss candidates but masquerade as “issue” ads; and it provides lower rates for TV and radio political advertisements by candidates and parties during the campaign season. Furthermore, in a creative effort to take account of Congressional Black Caucus and other reform supporters? opposition to the Senate-passed increase in individual contribution limits to candidates (from $1,000 to $2,000), it maintains the $1,000 limit for House races.

However, the Levin Amendment — inserted in the Senate bill at the last moment by Sen. Carl Levin (D-Mich.) and strenuously supported by his brother Rep. Sandy Levin (D-Mich.), both key reform leaders — could unintentionally undermine the soft money ban. While it has been justified by Sen. Levin as a “limited” effort to continue support of traditional “core” state party voter registration and get-out-the-vote activities in combined federal/state elections, it threatens to provide a large opening for special interest influence on national parties and candidates. It permits corporations, unions, wealthy individuals and PACs to give as much as $10,000 a year each to a plethora of state, county, district ward and other party committees within a state and then to do the same thing in every other state that allows such contributions.

While there is no comprehensive list of all existing party committees, one can get an indication of the magnitude of the loophole by considering the fact that there are 3,066 counties in the U.S. Each of the two major parties is likely to have a committee in each county. A big corporation could give $20,000 over the two-year cycle to, for example, 25 party committees within a state, totaling $500,000. It could repeat the process approximately in 20 other states that allow large or unlimited corporate contributions for another $500,000 per state. The total contributions could add up to $10.5 million. A rich individual could give even more money because more states allow large or unlimited donations by individuals. Soft money could return with a vengeance.

By focusing their contributions on states where there are competitive federal races (like Florida, Missouri, Michigan and others during the last election), fat cat donors could curry favor with national party leaders without formally coordinating with them, creating big chits for legislative and regulatory payoffs to special interests. And since state party voter registration and get-out-the-vote activities are the only ones that could benefit from six- and seven-figure soft money checks, the parties would have huge incentives to expand these activities further, to justify more soft money via innumerable mailings to voters, massive expansion of phone banks and rampant newspaper advertising. Soon, Congress and the public would be disgusted by the rebirth of the soft money system they clearly condemn, lose faith in campaign finance reform and reform leaders, and become even more disillusioned and alienated from the political system.

Some have justified this loophole on the grounds that the activities it furthers ? party voter registration and get-out-the-vote ? are good citizenship. But that is not the issue. Parties are good for democracy, but the kind of money used to support their activities can corrupt them and the entire political process. If parties persuade people to vote and then sell out the public to powerful interests that donate large amounts, there is no democracy. That is why the House in 1998 and 1999 passed bills that said the parties should raise only “hard money” contributions in limited amounts (and none from corporate and union treasuries) as prescribed by federal campaign law.

While the new Shays-Meehan bill includes a number of conditions (agreed to by Sen. Levin and Rep. Levin) that are designed to limit the impact of the Levin Amendment (especially prohibiting expenditures for broadcast, cable and satellite issue ads, solicitation by national candidates and parties, and requiring a 50 percent hard money match), these do not go far enough to close a potential gaping loophole in the law.

Rep. Robert Ney?s (R-Ohio) House Republican leadership bill, to be marked up today by the House Administration Committee, is transparently phony “reform.” A warmed over version of the defeated Hagel bill in the Senate, it allows the national parties to raise up to $150,000 per cycle in soft money from corporations, unions, wealthy individuals and others and spend it for everything (including party administration as well as voter drives) except for public communications promoting or opposing candidates and for radio and TV advertising. It allows the state parties to raise and spend unlimited soft money to conduct the limited activities prohibited with national party soft money. Finally, it provides for disclosure of pre-election communications mentioning candidates ? except for the most crucial information, which is who contributed to the ad.

The Ney bill maintains the $1,000 individual contribution limit to candidates not only for the House but for the Senate and presidency as well. But unlike the creative Shays-Meehan two-limit approach, this is a transparent attempt to create a major dispute with the Senate and force the bill into a conference, where House Republican leaders could bury it.