Election Reform

Neal Pritchard

Neal Pritchard — Sat, 12 Jun 2010 16:27:05 -0400

Don't Let Citizens United Wreck Our Economy

Zach Carter — Tue, 02 Feb 2010 10:55:13 -0500

In a landmark decision last week, the Supreme Court ruled that corporations could spend unlimited funds to influence American elections, overturning a century of legal precedent. The Court's ruling in Citizens United v. FEC undermines the integrity of the U.S. government, as President Barack Obama emphasized at his State of the Union address. But the decision also deals a damaging blow to the U.S. economy by encouraging lawmakers to write economic rules that benefit specific companies at the expense of everyone else.

The editors of The Nation lay out the High Court's hubris in no uncertain terms:

The Citizens United campaign finance decision by Chief Justice John Roberts and a Supreme Court majority of conservative judicial activists is a dramatic assault on American democracy, overturning more than a century of precedent in order to give corporations the ultimate authority over elections and governing. This decision tips the balance against active citizenship and the rule of law by making it possible for the nation's most powerful economic interests to manipulate not just individual politicians and electoral contests but political discourse itself.

Citizens United and the financial crisis

How does this ruling have any bearing on the economy? Markets are not simply the product of random interactions between consumers and producers. Even under the most radical, laissez-faire economic theories, markets are defined, coordinated and policed by the government. For the economy to function at all, we need the government to define what constitutes fair play.

But over the past few decades, we've watched Congress and the executive branch rewrite those rules of the game under heavy corporate influence, creating artificial profits for a set of favored companies with very bad consequences for the broader economy.

The U.S. banking industry serves as a prime example. Since the 1980s, banks have been spending like crazy in all kinds of elections, and getting just about anything they want in return. I interviewed Harvard University Law Professor and TARP Oversight Panel Chair Elizabeth Warren for AlterNet, and she presented a concise but unsettling economic history of consumer protection law:

Thirty years ago we had laws that put some basic fairness into the consumer credit market. Over time, the large financial institutions captured the regulators who were supposed to be the cops on the beat to enforce those laws. They also pumped hundreds of millions of dollars into Washington to make sure that no new cops were put on the beat. Without good laws, the industry started selling ever-more-deceptive products, and their friendly regulators looked the other way.

The bank lobby and the AIG bailout

In Mother Jones, Corbin Hiar reveals how even a bank that engineered a massive tax fraud scheme was able to benefit from the AIG bailout. Major financial institutions convinced Congress to block any regulation of credit default swaps (CDS) all the way back in 2000. CDS contracts were essentially insurance on the value of financial assets—if the assets lost value, banks would still get paid as if they were highly profitable.

CDS insurance encouraged banks to engage in risky mortgage lending, and allowed them to book huge profits on those risky mortgages during the housing boom, even though many of those mortgages were doomed from the get-go. AIG binged so heavily on CDS that the company was on the brink of bankruptcy in the fall of 2008. But an AIG bankruptcy would have hammered the major banks who served as AIG's betting partners, most notably Goldman Sachs. Those banks would have received just pennies on the dollar from a bankrupt AIG. But under the bailout, the New York Federal Reserve paid the banks off at full value, without demanding any concessions whatsoever.

"The credit crunch was an existential threat to every over-leveraged big bank. What's most shocking about the AIG bailout ... is that these endangered banks were able to extract such a sweet deal from the government," Hiar writes. "The banks were paid the full value of all the CDS contracts they had made with AIG—including those mortgage-backed securities they had bought when it was clear the subprime market was collapsing."

The only AIG counterparty to even consider taking CDS losses was Swiss banking giant UBS, which was negotiating a separate settlement with the U.S. government over a massive tax evasion scheme. But even the tax fraudsters at UBS ultimately received full payment on their CDS exposure, and it now appears that the Swiss bank will be able to protect its wealthy tax-evading clients.

With the AIG bailout, the corporate takeover came full-circle. The banks purchased radical deregulation in Congress, and when the deregulated banks destroyed themselves, the government paid out billions to save them. The rest of the economy was ravaged by predatory lending, and taxpayers, not bankers, footed the bill for bank losses.

Redefining corruption

So the Citizens United decision will not introduce corporate influence in elections. Instead, it takes an uneven playing field and tilts it further in the favor of corporate executives. The Roberts court didn't just open the floodgates for corporate cash in U.S. elections and call it a day. It also explicitly redefined "corruption" to give corporations—and anyone else—greater leeway to financially curry favor with politicians. Heather K. Gerken details the new definition for The American Prospect:

The most important line in the decision ... was this one: "ingratiation and access ... are not corruption." For many years, the Court had gradually expanded the corruption rationale to extend beyond quid pro quo corruption (donor dollars for legislative votes). It had licensed Congress to regulate even when the threat was simply that large donors had better access to politicians or that politicians had become "too compliant with the[ir] wishes." Indeed, at times the Court went so far as to say that even the mere appearance of "undue influence" or the public's "cynical assumption that large donors call the tune" was enough to justify regulation. "Ingratiation and access," in other words, were corruption as far as the Court was concerned.

Most of us would consider the key lawmakers ensnared in the Jack Abramoff scandal as fundamentally corrupt—Abramoff flew former Republican Whip Tom DeLay of Texas to Scotland for golfing vacations in an effort to win greater leverage over DeLay's legislative agenda. The court's ruling claims that this kind of activity is not corrupt, and bars Congress from passing any laws to counteract it. As filmmaker Alex Gibney emphasizes in an interview with Amy Goodman of Democracy Now!, the court has essentially taken Tom DeLay's corporatist philosophy and made it a piece of constitutional law.

"Tom DeLay's view is, we spend more money on potato chips than we do on political campaigns. His view would be, let the money rush down like great waters,," Gibney says. "I think the court was channeling Tom DeLay when they issued their recent decision."

Why citizens need to speak out now

So what can we do about this? As GRITtv's Laura Flanders discusses in a roundtable discussion with several progressive leaders, there will be a long fight for a Constitutional Amendment to ban corporate influence in politics. Until then, as progressive strategist Mike Lux explains, citizens will have to take an aggressive stance against Corporate America as shareholders. Corporate power is exercised by a handful of executives, but the resources that support that power come from ordinary Americans who own stock in those companies, primarily through retirement plans. By demanding that the giant firms we own do not highjack our democracy with lobbying, we can limit some of the damage from the court's recent decision.

If you liked the bank bailouts, then there's plenty for you to love about the Citizens United decision. If you didn't, then it's time to speak up.

Zach Carter writes for The Media Consortium, a network of leading independent media outlets. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora.

Steve May

Steve May — Sat, 23 May 2009 00:01:48 -0400

alfredia sturrup

alfredia sturrup — Mon, 16 Feb 2009 08:21:36 -0500

Election Fairness for Millionaires

Eran Lillestrand — Tue, 22 Apr 2008 11:38:22 -0400

Today, the Supreme Court heard oral arguments in a campaign finance case, Davis v. Federal Election Commission. A rather ominous track record for the court on campaign finance reform since the appointment of Justices Roberts and Alito suggests reform proponents may have reason for concern.

The lawsuit concerns an obscure area of a major federal law enacted in 2003, the Bipartisan Campaign Reform Act (BCRA). But given the Court’s demonstrated hostility to rules on campaign finance, as shown by two recent, closely-decided decisions on contribution limits in Vermont and issue advertising in campaigns, this case is likely to be a further important signal about where the Court is headed on money in politics.

A two-time losing federal “millionaire” candidate is challenging the so-called “Millionaire’s Amendment” section of BCRA, which relaxes various contribution limits for opponents of candidates who intend to spend more than $350,000 of their own money on a campaign for federal office.

Limits are relaxed only to allow the non-millionaire to catch up to the level of spending by the self-financing candidate. This small exception to a general rule on contribution limits was designed to address part of the Court’s seminal ruling in Buckley, which declared that because self-financed candidates cannot corrupt themselves, campaign contributions from their private coffers could not be limited.

Mr. Davis’s improbable claim is that the additional contributions allowed for his non-millionaire opponent are a burden on his own speech under the First Amendment.

Filings in the case show that, at the FEC’s last count, since BCRA’s enactment in 2003, only 60 self-financed candidates triggered the millionaire’s amendment, and that of the 110 eligible opponents, only 58 candidates accepted enhanced contributions. And while the pool of self-financed candidates spent more than $144 million, their non-“millionaire” opponents raised only about $8 million in contributions over the general limits.

Notwithstanding the near-irrelevance of this provision, anti-reform groups are using the provision to attack generally applicable contribution limits, arguing that Congress cannot care about contribution limits in one context for one purpose and relax them in the narrow circumstance of self-financing.

The Court will, with luck, disagree that there is a burden on the speech of Mr. Davis and therefore not need to reach this question. It could and should also defer to the policy judgment of Congress on such a matter of degree. But another, even more frightening, aspect of this challenge is the back-door threat it poses to public funding systems adopted in several states.

As we pointed out in an amicus brief, in upholding the law below, a federal three-judge panel drew upon the provision’s similarity to “trigger provisions” used in systems of public funding for elections in several states. These provide participating, publicly funded candidates with more money to match either the spending of a non-participating opponent or hostile independent spending, up to a pre-set threshold. Matching funds are critical to ensuring that the voluntary spending limits on which public funding is conditioned do not make participating candidates into sitting ducks in the face of massive outspending by opponents.

At least one amicus brief filed with the Court takes clear aim at such measures. It is possible that a few of the more conservative Justices may provide a ready ear. If they do so, they will threaten a new and emerging option for reducing politicians’ over-reliance on wealthy corporate special interests: creation of meaningful public funding systems.

While most reforms concern limits of one sort or another, Buckley recognized that public funding systems produce more speech, not less. A robust system of public funding not only reduces the risk of campaign money corruption, it levels the playing field among participants, encourages a diverse pool of candidates to run for office, and allows officeholders to concentrate on the difficult policy questions they should be confronting rather than running off to fundraisers. In Maine, where 80 percent of statehouse candidates use public funding, a single mother and former waitress ran for office and won.

It would be a shame if this clear way forward were blocked by careless, or even intentional, language from a court decision on an anomalous section of BCRA. Viable public funding systems require a means to allow more spending when truly needed in order to maintain lower costs in general. The Court should tailor its decision to the facts at hand and reserve judgment on the balance of factors at play in a public funding case for another, and we hope far distant, day.

James Lambert

James Lambert — Sat, 16 Feb 2008 09:05:44 -0500

Ian Mishalove

Ian Mishalove — Wed, 12 Dec 2007 20:39:32 -0500

I'm currently the Director for Online Communications at the Campaign for America’s Future, where I've been since July 2004. Prior to CAF, I worked for seven years at the National Wildlife Federation, first as their webmaster and then as their technical director for activist development. I received an M.E.S from Yale’s School of Forestry and Environmental Studies and a BA from Princeton University -- and in both places focused research on how to empower progressive social movement networks -- esp. through online technology. Outside of computers and activism, I co-own and help to run Flow Yoga Center with my beautiful wife Debra, play the bass, enjoy mes animeaux -- Carmen, Maggie and Maxie -- and try to spend as much time as possible playing outdoors.

melindaegibson

Melinda Gibson — Wed, 12 Dec 2007 18:47:58 -0500

I am the Health Care Policy Analyst/ Organizer for the Campaign for America's Future. I was born and raised in Southern California. I began working on progressive causes as a teenager in the environmental movement. I was introduced to grassroots organizing by the California Public Interest Research Group (CALPIRG), and fell in love with the progressive activist lifestyle. I also worked on Moveon.org's Leave no Voter Behind Campaign for the 2004 Presidential Election in Cincinnati, Ohio.

ebarson

Emily Barson — Wed, 12 Dec 2007 17:53:07 -0500

I am the Events Manager at the Campaign for America's Future, where I have the exciting and crazy job of organizing the Take Back America conference. I arrived at CAF after living on the road on various campaigns, including Howard Dean's presidential primary campaign in New Hampshire. My time in DC began at the George Washington University, where I studied Political Communication and Judaic Studies.

Eric Lotke

Eric Lotke — Wed, 12 Dec 2007 17:22:48 -0500

--Eric Lotke was Research Director at the Campaign for America's Future from 2006 to 2010. Nowadays he works full time at SEIU, but he remains a Research Fellow at CAF.

Before coming to CAF, he worked over a decade in and around the criminal justice system. At the Justice Policy Institute and a Soros Senior Justice Fellow, he authored path breaking research on the demographics of incarceration, patterns of youth homicide, and the fiscal and electoral impact of the U.S. Census Bureau counting people in prison where they are confined rather than their original homes. As Executive Director of D.C. Prisoners’ Legal Services Project, Mr. Lotke represented inmates in a groundbreaking class action lawsuit against the private Corrections Corporation of America, and he pioneered litigation over excessive, non-competitive pricing of prison phone calls. Mr. Lotke has been an adjunct professor at Georgetown and George Washington Universities, and a judicial clerk on the Supreme Court of Connecticut.

Most recently, Mr. Lotke published a novel, 2044. 2044 starts where George Orwell’s 1984 left off. The problem isn’t Big Brother and the leviathan government. The problem is Big Brother Inc., and the all-powerful marketplace.