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CAMPAIGN FINANCE REFORM

Table of Contents

Introduction
The Hagel Bill
The President's Ideas on Campaign Finance Reform
Is There Too Much Money in Politics?
Is Campaign Spending Excessive?
Campaign Spending and Government Mistrust
Public Cynicism and Mistrust of Government
Soft-Money
The Cause of the Soft-Money Problem
Soft-Money and Regulation
The Controversy over Campaign Finance Reform
Elections Are Not Decided by Money
Case Studies of Campaign Spending
Buckley v. Valeo
Express Advocacy
Issue Advocacy
If McCain-Feingold Became Law
Real Campaign Finance Reform

INTRODUCTION

Senate Majority Leader Trent Lott announced on January 26, 2001, after receiving general agreement on a timetable with Senator John McCain (R-Arizona), that the Senate would start debate on campaign finance legislation (Bipartisan Campaign Reform Act of 2001 [Introduction to the Senate]) [S.27.IS] see http://thomas.loc.gov/cgi-bin/bdquery/z?d107:s.00027: ) in mid to late March . On March 19, 2001 the debate began for a period of two weeks. (1)

The Majority Leader said, "I think it's a win-win for all concerned." He also agreed that the timetable gives President Bush, "The opportunity that I thought he deserved…to roll out his agenda" and grants McCain's insistence that the issue come up for a vote early in the year. (2)

In a reply statement, Senator McCain said he was pleased with the agreement and looked forward to working out remaining details to govern Senate action.

Large, unregulated "soft money" donations from corporations, unions and individuals would be outlawed by the campaign finance measure. The proposed legislation would also include other provisions to regulate the influence of money in politics.

In recent years, similar bills have become victims of fillibusters and have died in the Senate. This year Lott has indicated he has no plans to support such blocking tactics: "I want to get this issue done and out of the Senate."(3)

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THE HAGEL BILL

An alternative bill to the McCain-Feingold Bill is being offered by Senator Chuck Hagel, (Republican-Nebraska), whose less-sweeping proposal would limit but not totally ban, "soft-money" contributions to political parties. (4)

Soft-money would be capped at $60,000 per elections and the amount that individuals could give candidates would increase to $3,000 from $1,000 by the Hagel measure.

Three Democrats support the Hagel measure including Senator John Breaux (Louisiana), the only member of his party who has publicly said he cannot support McCain-Feingold in its present form, Senator Ben Nelson (Nebraska) who opposes the soft-money ban but supports the issue and restrictions, and Senator Mary Landrieu (Louisiana) who supports Senator Hagel’s bill as a backup measure to McCain’s legislation. (5)

According to figures complied by the Federal Election Commission (FEC), the Democratic and Republican national party committees raised a record $487 million in soft-money for the 2000 election up from $263 million during the last Presidential campaign. When comparing Republicans to Democrats on the raising of soft-money, the two parties’ totals were very close. $243 million was raised by Democrats and $244.4 million by Republicans. (6)

In soft-money donations, the Democrat's House and Senate campaign committees out raised their Republican counterparts, with Democrats raising $120 million to the Republicans $94 million on the Congressional front. (7)

In hard-money contributions, Republicans enjoyed a huge advantage. During the 2000 race, Republican Party committees took in $447.4 million in such contributions compared to the Democrats’ $270 million. (8)

In part since Democrats have eliminated the one time Republican domination in soft-money donations, they might give Senator Hagel's bill a second look despite their backing of McCain's soft-money ban and restrictions on some advertising by unions and corporations.

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THE PRESIDENT'S IDEAS ON CAMPAIGN FINANCE REFORM

On March 15, 2001, President Bush presented his ideas for campaign finance reform legislation. His three main goals included

*A ban on soft-money donations by corporation and labor unions

*Protection of the rights of individuals and groups to express their views

*Prohibiting of unions or corporations from using stockholder or member funds for political activities without their permission (9)

And, unless the McCain-Feingold bill includes "paycheck protection" for union members and other provisions that Democrats consider unpalatable, Senator McCain’s measure will not be signed by the President even if it makes it through Congress. (10)

The Administration remains deeply skeptical of what many conservatives consider unconstitutional abridgment of free speech although the White House has publicly refrained from threatening to veto the bill's restrictions on campaign fund-raising.

On March 18, 2001 Senator John McCain said that his effort to ban unlimited large donations to the nation's political parties will rise or fall on how the Senate votes on a large number of proposed changes being drawn up by opponents and supporters. (11)

Particularly those changes aimed at organized labor could drive apart the fragile coalition of Democrats and some Republicans supporting the bill. As many as 30 amendments will be considered according to some senators, as well as the bill being offered by Republican Senator Chuck Hagel.

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IS THERE TOO MUCH MONEY IN POLITICS

Congressional campaign finance is not out of control contrary to the opinions of reformers. Money is nowhere near the dominant force that reformers claim. Over a two-year period, general election candidates spent $740 million for the 1998 election. (12) This amounts to about $4 per eligible voter, although even that spending set a record. Some predict that campaign spending in 2000 might have reached as high as $3 billion, a record increase over the previous Presidential cycle that ended in 1996. However, that increase still would amount to no more that about $15 per eligible voter.

To compare campaign spending to personal spending, more money is spent on chewing gum, greeting cards, and frozen yogurt than on political campaigns throughout an election cycle. (13) Once this is realized, the McCain-Feingold legislation will lose its appeal to limit the freedom of speech in the name of cleaning up the political election process. Contrary to what many reformers claim, private campaign finance does not have nearly as severe a corrupting effect on elections as they say it does.

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 IS CAMPAIGN SPENDING EXCESSIVE?

Although it is true that politicians devote an enormous amount of time to fundraising, most of the money problems have resulted from the 1974 campaign finance reform laws. (14) Analysts believe that by imposing tight limits on contributions, legitimate campaign fundraising is hampered.

The purchasing power of the 1974 contribution restriction laws has been reduced over 25 years of inflation by two-thirds. This has resulted in politicians seeking out other sources of money such as "soft money" donations of any size to a party or committee that are not technically federal election activities. Every "reform" inspires new evasions note critics of campaign finance reform.

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CAMPAIGN SPENDING AND GOVERNMENT MISTRUST

What most reformers want people to believe is that a major cause of the public's repugnance for politics is campaign finance. There is no doubt campaign spending has increased rapidly and the public’s trust in government is low but it cannot be all attributed to campaign finance.

Historical records will show that citizens lost faith in the government before excessive spending began on political campaigns. Therefore, the increase in spending could have not been the cause for the resulting mistrust in government. (15)

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PUBLIC CYNICISM AND MISTRUST OF GOVERNMENT

According to Senator John McCain and other proponents of campaign finance reform, excessive spending on campaigns by candidates has caused public cynicism about and mistrust of the United States (U.S.) government. In fact, the reformers claim that Congress should move immediately to pass new campaign finance laws because of the public’s outcry over this issue.

However, according to statistics on public opinion, the cynicism about politics was the result of events occurring in American's history that the government was responsible for, not the issue of campaign contributions to candidates. During a period that included the Vietnam War, Watergate, and the economic mistakes of the Carter administration (1964-1980) public trust declined steadily. (See Money and Politics: People's Chief Concerns; http://www.publicagenda.org/issues/ pcc_detail.cfm?issue_type=campaign_finance&list=16). Also, other clear examples of chicanery, corruption, deceit and incompetence, occurring during this time, caused people to become cynical and to mistrust government. The citizens of this nation were responding to actual events that politicians created, not a general sense that the electoral process had failed.

It is Senator McCain's belief that the public supports his efforts in reforming campaign finance laws: "I believe that the country wants this reform. There is no doubt about the explosion of soft money. There is no doubt that it has grid-locked us here in Washington and the message of the last election is that Americas do not want that." (16)

However, the senator's perception is refuted in many polls. For example, Hart and Teeter Research Companies conducted a telephone interview poll of 1,010 adults between January 25-26, 2000, that was sponsored by NBC News and the Wall Street Journal. (See http://www.public.../pcc_ detail2.cfm?issue_type=campaign_finance& concern_graphic=pcc5.gi)

Individuals were asked the following question: "As you may know, several Presidential candidates are making campaign finance reform a major part of their platform. How important is the issue of campaign finance reform to you-very important, fairly important, just somewhat important, or not that important? Only thirty-one percent of the respondents indicated that campaign finance reform was very important. Similar results were observed by an ABC News/Washington Post Poll conducted between September 4-6, 2000, that polled nationwide 1,065 registered voters. (See Election Issues, page three of PollingReport.com at http://www.pollingreport.com/prioriti. htm ) The surveyed individuals were asked "How important will...holding taxes down/ protecting the Social Security system/ reforming election campaign finance laws/ improving education and the schools/ improving the health care system/ handling the national economy/ handling the issue of gun control/ handling foreign affairs/ encouraging high moral standards and values/ managing the federal budget/ handling crime/ protecting the environment/ handling the abortion issue/ handling the issues of prescription drug benefits for the elderly/ handling national defense and the military budget/ helping the middle class/ reducing the political partisanship in Washington..be to you in deciding how to vote in the 2000 Presidential election in November: very important, somewhat important, not too important, or not important at all?" Only thirty-two percent responded that campaign finance reform (ranked overall at the bottom of the poll) is very important while education (77 percent), the economy (72 percent), Social Security (71 percent), Health care (69 percent) and Moral/Values (69 percent) were the top five issues that respondents believed to be very important.

Furthermore, several polls have indicated that campaign finance reform should not be top priority for the government to address. For example, a Newsweek poll conducted by the Princeton Survey Research Associates from December 14-15, 2000, that surveyed nationwide 1,001 adults, asked the following question: "As George W. Bush begins his Presidency, which ONE of the following do you think should be his top priority: education, Social Security reform, prescription drugs for seniors, tax relief, upgrading the military, or campaign finance reform?" Twenty-nine percent responded education, followed by Social Security (18 percent), drugs for senior (17 percent), tax relief (16 percent), upgrade of the military (10 percent) and campaign reform (6 percent). (See Election Issues, page three of PollingReport.com at http://www.pollingreport.com/prioriti. htm ) A CBS News/New York Time Poll conducted between March 8-12, 2001, that surveyed nationwide 1,105 adults, asked the following question: "What do you think is the single most important problem for the government--that is, the President and Congress--to address in the coming year?" The top eight issues were taxes/IRS (18 percent), followed by education (10 percent),economy (9 percent),. Social Security/Medicare (8 percent), health care (6 percent), budget deficit/national debt (6 percent), defense/military (3 percent), and youth crime/violence (3 percent). Campaign finance reform did not even make the "Top 8" list. (17)

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SOFT MONEY

For more than a decade, soft-money (money that has been raised and spent outside the regulatory structure for a federal election campaign) has played a growing and increasing controversial role in politics.

Constitutional limits on government power, the relative ease with which political activists avoid targeted regulations that are constitutionally valid and difficulties in defining targeted activities complicate efforts to ban, limit, or regulate soft money and other types of similar spending like issue advertising.

The Supreme Court has already approved as an exercise of First Amendment rights most soft-money activities. Although some authority to regulate national political parties is given to Congress, this regulation must be narrowly focused on preventing corruption and fraud. Subject to both the strictest constitutional scrutiny and nearly always unconstitutional is the regulation of soft-money activities of non-party groups and individuals. Also unconstitutional is the regulation of advertising which includes the name or likeness of a public official. (18)

Clearly, incumbents benefit from campaign laws and regulations. (19) Their proposed legislation to limit soft-money issue advertising may also be interpreted as an effort to suppress criticism of their actions and decisions on past and current legislation and to reduce the number of citizens participating in the political process.

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THE CAUSE OF THE SOFT MONEY PROBLEM

The result of the size of certain soft money donations, certain practices involved in the raising of soft money, and the growing use of soft money by labor unions, political parties and other groups, has resulted in today’s controversy over campaign finance reform. The source and size of donations to federal election campaigns were first limited by a series of laws passed in the 1970s.(The Federal Election Campaign Act of 1971, which was amended in 1974, 1976, and 1979, and the Presidential campaign funding provisions of the Tax Act of 1971.) These regulations caused extensive reporting and disclosure of campaign expenditures. Contributions made directly by individuals and political action committees (PAC) to candidates became known as hard money which is based on limited, reportable funding. Exempt from most regulatory requirements was certain spending, like internal communication by corporations and labor unions and spending on headquarters space by political parties. Federal statutes did not address other activities like spending on state campaigns.

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SOFT MONEY AND REGULATION

Today’s efforts by politicians to skirt the rules of campaign finance reform are direct responses to previous attempts at regulating political activity and should be considered by reformers in any limited steps now taken against soft money. Tactics for raising money were simply modified by activists when "hard money" or direct expenditures on campaigns were limited and regulated. Lesson from history — minimizing not expanding government controls is the real solution to the problem of soft money.

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THE CONTROVERSY OVER CAMPAIGN FINANCE REFORM

The Bipartisan Campaign Finance Reform Act of 2001 (S. 27), commonly called McCain-Feingold, would weigh heavily against soft-money contributions. According to citizen action groups like Common Cause, Public Citizen and Campaign for America, this legislation is an important first step toward the real goal — the full public financing of elections. (20)

Tragically, reformers believe that campaign finance reform is a necessary measure to end the dominant role money plays in politics. According to this tenacious group of activists, there are two fundamental tenets in the view of money and politics:

    1. Special interest groups use soft-money to buy favors from politicians
    2. Incumbent politicians then use this dirty money to buy re-election with massive campaign expenditures

Tragically, the mainstream press treats these claims as self-evident more often than not. Lists of contributor names and dollar amounts are offered alone apart from rational argument or explanation. Such analysis can be found by visiting the Web sites of the Center for Responsive Politics (http://www.crp.org), Common Cause (http://www.commoncause.org), or Public Citizen (http://www.citizen.org). The gaudy spending advantage enjoyed by congressional incumbents, the absence of able challengers, the well-known correlation of contributor interests with the committee assignments, voting records of incumbents and the ever-increasing amount of money spent on elections comprise many arguments made by these activists for campaign finance reform.

There is no doubt that total campaign spending has increased faster than the rate of inflation over the past two decades. In addition, the turnover rate in Congress during this time (defeats plus retirements divided by the number of seats) was quite low – less than 10 percent in 1984, 1988, and 1990. (21) In fact, it was actually more common for an incumbent to be unopposed than to be defeated. Furthermore, more races were one-sided even when incumbents were challenged. This election trend allowed many incumbents to take advantage of the lack of competition and build up large reserves of campaign cash for use in future elections. Unfortunately, the resulting statistics showed many incumbents in a very unfavorable light because of their accumulated campaign funds, allowing many campaign finance reformers to jump at the inflated statistics to prove their point for needed reform.

A closer examination of the same statistics would reveal that the inferences drawn by campaign finance reformers were not always accurate. For example, the increase in real campaign spending in the House and Senate has not caused a decrease in turnover. On the contrary, the highest turnover rate in more than 40 years has occurred since 1992 (about 20 percent).

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ELECTIONS ARE NOT DECIDED BY MONEY

In deciding the outcome of November general elections, campaign contributions were not as important a consideration as other factors according to findings by researchers at the Center for Voting and Democracy. (22)

Presidential Races are a Factor

Their analysis was based on the results of the 1996 election in the House of Representatives. Compared to campaign spending, the way the district voted in the Presidential race was a much stronger predictor of the public’s congressional choice in a review of contests in districts with open seats. Nearly one-third of Republican winners in open-seat races were outspent by Democratic contenders. However, from districts where former President Clinton received less than 50 percent of the vote, Republican candidates were the winners. Republicans consistently won easily where the President ran poorly, and Democrats won easily where he ran well. And most races were close in districts where the former President ran poorly.

Redistricting is a Factor

When the redistricting process takes place every decade — when the political map is re-drawn to create "safe districts and protect incumbents" — most elections are already decided by the changes. As a result, "swing" districts where the vote is still undecided become prime targets for spending disproportionate amounts of money on election races.

According to researchers at the Center for Voting and Democracy, the whole process of redistricting should be taken out of the hands of the politicians and vested in an independent nonpartisan commission which would use nonpolitical criteria to draw district boundaries.

Each Candidate is a Factor

In any given election year, there is no doubt that winning candidates spend more than losing candidates, despite the fact that social scientists are unable to establish a cause-effect relationship between these two factors. (23) Common sense says that contributors are more apt to give money to candidates with a greater probability of winning. Unfortunately, this principle cannot be measured to determine the electoral effects of campaign spending.

Furthermore, attributes among candidates, like leadership, integrity, and perseverance, are important determinants of both fundraising and electoral success and are equally difficult to quantify. Biased estimates of spending that exaggerate the impact of candidate spending on elections are produced by studies that ignore these unobserved factors. For example, candidates in election fare better who spend more money, but how much did money alone actually cause the victory? Is it not true that part of this association is a result of the winning candidate’s ability to be articulate, hard-working and intelligent. Part of the correlation promoted by campaign finance reformers is deceptive because those qualities help both fundraising and vote getting.

Examining changes in candidates’ share of the votes in association with changes in candidates’ spending is the most promising approach to deciphering how large a role money plays in electoral success. (24) To the extent that the other factors that affect elections are constant over time, they will not affect changes in vote getting or fundraising. What does matter are the factors that do change. For example, all else constant, House incumbents who transfer onto powerful committees or are promoted to leadership positions receive an extra $50,000 in campaign contributions. (25) This does not result to any significant increase in vote share but it does translate into higher campaign spending. Therefore, marginal spending is unimportant, at least for incumbents. However, it might appear very differently to candidate challengers.

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CASE STUDIES OF CAMPAIGN SPENDING

The effects of challenger spending are provided by a unique case study of the Second Congressional District in Utah. (26) In 1992 in a race for an open seat, Democrat Karen Shepard beat Republican Enid Greene.

In a 1994 rematch, the incumbent Shepard was defeated by Enid (Greene) Waldholtz. After the election, it was found that the Waldholtz campaign had spent almost $2 million in stolen funds. In 1996, Waldholtz declined to run for re-election as a result of the scandal. Since the infusion of illegal funds was not caused by Waldholtz's political acumen, but by the activities of her then-campaign manger and husband Joe Waldholtz, this case provides an ideal experiment.

The final question concerning the two election cycles is the effect money had in determining their outcome. Only 36 percent of the vote was obtained by Waldholtz in 1992. She won with 56 percent in 1994. If money had been the only factor to change the outcome of the election, then each percentage point she increased would have cost her $100,000, if all of the 20 percentage point increase in Waldholtz's vote were due to this ill-gotten windfall. However, other factors also contributed to the Waldholtz victory. Many voters were alienated by Shepard's surprisingly liberal voting record. Also, overall, 1994 was a good year for Republicans. (27) For example, six percentage points was the average electoral swing to Republicans challenging Democratic freshman.

From 1978 to 1990, all repeat meetings of House candidates (such as Waldholtz-Shepard) were examined by Steven Levitt, a Harvard University economist. An extra $100,000 in candidate spending (whether spent by an incumbent or challenger) led to an increase in the candidate's vote share of almost 0.2 percentage points according to Levitt’s findings.

Still more evidence was found in a 1996 study. In House races, stockpiles of unspent contributions, or incumbent war chests, had no deterrent effect on challengers. (Included on the agenda of many reformers is a ban of personal war chests and self-financing.) It is often assumed that potential challengers would shy away from taking on well-financed incumbents. However, there is no evidence that an incumbent’s personal wealth affects either the presence or quality of challengers. Since money simply is not that important in congressional races, challengers are not deterred by incumbents’ war-chests or personal fortunes.

Therefore, why are there so few good challengers in congressional races if challengers are not deterred by personal wealth and war-chests. The answer is quite obvious that even good challengers will lose. Most survey respondents indicated that they would vote to re-elect their own representatives and senators even when congressional approval ratings were at an all-time low.

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REGULATING SOFT MONEY

As evident by the wide variety of activities to which the term is applied, the problems in regulating soft money started with its definition. Soft money is a donation which is outside the limits established by the Federal Election Campaign Act (FECA), either because it is above specified dollar limits ($20,000 annually for an individual) or because it comes from a "prohibited source." (a corporation or labor unions) Literally anything other than donations to or spending on behalf of federal election campaigns is soft money, in terms of spending.

It has long been made clear that the right to spend unlimited amounts for politically oriented issue advertising is possessed by political parties, or any other group of Americans. For such purposes, the Supreme Court has clarified that contributions may not be regulated. Spending by political committees and unlimited campaign contributions to committees that may be subject to limits are distinguishable through Buckley v. Valeo (Buckley v. Valeo, 424, U.S. 1, 14-15 [1976])

In 1996, the Court stated very clearly that the "FECA permits unregulated 'soft money' contributions to a party for certain activities," in the court case, Colorado Republican Committee v. FEC (28) Even when those contributions are made by, to, or through national political parties, Congress has no authority to regulate contributions for or spending on state elections according to implications from the Colorado Republican Committee v. FEC

Efforts to regulate anything other than campaign funds and "express advocacy" for or against a candidate has consistently been denied by the Supreme Court. Also, under Colorado Republican Committee v. FEC, if groups other than political parties can collect unlimited donations for soft money activities arguably political parties have that same right. To demonstrate a potential for corruption (which is required to justify donation limits) through donations to political parties, Colorado Republican Committee v. FEC suggests that it will be difficult.

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BUCKLEY v. VALEO

The U.S. Supreme Court struck down significant portions of the FECA in the 1976 case, Buckley v. Valeo (29) Because of their ruling, strict limits were place on the government’s ability to regulate certain political activity. Various activities by parties and other groups were also declared exempt from the FECA and other government regulation by subsequent decisions expanding on Buckley v. Valeo.

Today, donation limits of $1,000 (for individuals) and $5,000 (for political action committees), bans on union and corporate donations, and requirements for disclosure of donors and spending do not apply to activities exempt from the FECA including soft money donations which have increased as parties and other groups took advantage of these exemptions and adjusted their tactics.

The term "soft money" was first applied to labor union spending on political advocacy among union members. Union dues from the general treasury could be used to fund internal activities. Voluntary contributions could be used to finance political communications with the general public and were reported to the FEC. Legislative prohibition on union donations to, or spending on elections going back to 1943 and 1947, was where the distinction between "hard" and "soft" union activity originate.

The term "soft" was applied to unregulated party activities, including voter registration, headquarter construction and state and local political activity after passage of the FECA, as political parties explored the distinction between regulated, federal campaign activities and other party functions.

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EXPRESS ADVOCACY

Because of the Supreme Court’s landmark decision in Buckley v. Valeo in 1976, the courts have insisted that congress be limited to regulate only direct campaign spending that calls explicitly for the election or defeat of a particular politician: what the Supreme Court called "express advocacy." The right to free speech would be lost if Congress had the ability to regulate all forms of campaign spending. If citizens or organizations had to wonder whether every statement was or was not permissible, open political debate would be impossible. Regulation on political discussion would therefore require a "bright line" test, with specific words like "elect," "defeat" or "vote for" to trigger regulation.

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ISSUE ADVOCACY

Under the "express advocacy" exemption specified in the Buckley v. Valeo ruling, politically active groups started to provide voter score cards and other printed material. Starting in 1994 when independent term-limits, tax reform and conservative religious groups ran ads to alert voters on candidates' positions on various issues, a significant factor in campaigns became issue-related television and radio advertising. Extensive use of such issue advertising was made by unions and environmental organizations in 1996. Responding in kind were business and independent conservative organizations.

Seen, for the first time, as a major factor by organizations independent of candidates and political parties in many 1996 races was "issue advocacy." In 1994, only a few races were affected by this form of advertising. Before 1994, issue advocacy was rare.

Without expressly advocating a candidate's election or defeat, issue advocacy is the discussion of issues and candidates' position on issues in debate during an election cycle. Issue advocacy is capable of influencing an election or the defeat of particular candidate, a factor the Supreme Court recognizes. However, that does not convert it into express advocacy. In fact, no matter what the effect it has on an election, issue advocacy is absolutely protected by the First Amendment and cannot be subjected to regulation.

Politicians do not want to contend with citizens bringing up issues they would rather ignore and try to limit issue advocacy as a result. Many of their colleagues "feel threatened by negative advertisement and want to control what is said during a campaign" remark some politicians. (30) Some would also like simply to reduce the level of spending devoted to political campaigns. (31)

House Minority leader Richard Gephardt, (Democratic-Missouri) said in 1997 that, "What we have is two important values in conflict: freedom of speech and or desire for healthy campaigns in a healthy democracy. You can't have both." (32) Contrary to what Representative Gephardt wants people to believe, these values are not in conflict. Designed to ensure a healthy republic is the First Amendment's guarantee of freedom of speech. And without one, there can not be the other.

From the standpoint of Americans who want a greater say in who is elected and which policies public officials will pursue, the supposed problems with the current campaign finance system that have been identified by "reformers" and echoed by the media are not problems. In fact, during political campaigns, too little money is actually spent considering the enormous power and influence of government. (33) ("as the level of government benefits increases, competition for government transfers of wealth will naturally tend to increase campaign expenditures").

Reforms pursued by Congress must be constitutional, and any law that attempts to limit citizens' freedom of speech and association must be avoided.

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IF MCCAIN-FEINGOLD BECOME LAW

If it becomes law, the McCain-Feingold bill poses fundamental free-speech questions and faces inevitable court challenges. (34) The Supreme Court will probably have to resolve the restrictions imposed by the measure.

Lawrence Noble, a former general counsel of the Federal Election Commission who is executive director of the pro-reform Center for Responsive Politics said, "Everyone recognizes that there are constitutional issues in McCain-Feingold, and everyone assumes it will end up at the Supreme Court if it passes and is signed." (35)

A section that bars unions and corporations from purchasing "issue advertising" on any television and radio stations that mentions federal candidates during a specified period prior to elections is the most vulnerable provision in the McCain-Feingold legislation. The same section would also subject other interest groups that purchase ads to new funding disclosure rules.

However, since the Supreme Court has said issue ads are a form of political expression a loophole exists that must be left untouched by federal regulation.

The Constitution permits the government to regulate the flow of money in politics to prevent actual or apparent corruption in the ruling of the Supreme Court in Buckley v. Valeo in 1976. However, this regulation is subject to "strict scrutiny" by the court to ensure that they do not unduly impede the free expression of the political ideas for which the money was spent.

The court upheld limits on contributions as disclosure requirements by applying that balancing test to a 1974 campaign reform law. However, on political communications "relative" to federal elections it struck down limitations. Part of the statute was so vague it could stifle too much political speech according to findings by the court.

Only limits on "express advocacy" political communications that specifically tells voters to cast their ballots for or against a candidate-have been upheld since Buckley v. Valeo. As long as they do not urge a vote for particular candidates, parties, unions, corporations and interest groups, they have been able to purchase issue ads freely.

However, based on the view that the court would accept an alternative to the "express advocacy" standard as long as it is not as vague as the one the justices struck down in the Buckley v. Valeo case is McCain-Feingold's issue-ad provision.

By creating a new category "electioneering communications," defined as broadcast ads that refer to clearly identified candidates and appear within 30 days of a primary or 60 days of a general election the bill seeks to provide such an alternative.

However, by creating artificial definitions, Congress cannot convert a category of constitutionally protected speech into speech subject to regulation. Electioneering communications and federal election activity are two terms adopted by the McCain-Feingold bill. " Federal election activity" is defined to include any "communication that refers to a clearly identified candidate...and is made for the purpose of influencing a Federal election regardless of whether the communication is express advocacy" and "electioneering communications," which is defined as any television or radio broadcasts that merely "refers to a clearly identified candidate for federal office" within 60 days of a general election or 30 days before a primary election, and is broadcast to an audience that includes the electorate for such election.

The freedom Americans have enjoyed to engage in unregulated issue advocacy would be eliminated by the McCain-Feingold bill's restriction on "electioneering communications." Subject to strict reporting requirements would be non-corporate and labor organizations that spent more than $10,000 in total on issue advocacy during the pre-election period specified in the bill. Regarded as contributions to candidates and thus becoming subject to the FECA's contribution limits would be expenditures on issue advocacy during the pre-election periods that were deemed "coordinated" with a candidate (under a new expansive and unconstitutional definition). During the pre-election periods corporations and labor unions alike would be banned from engaging in issue advocacy.

Becoming subject to the same reporting requirements currently imposed on PACs would be any person that expended more then $50,000 total with respect to "federal election activity." Reported within 24 hours of making the expenditure on issue advocacy would be these disbursements made within 20 days of an election.

McCain-Feingold is in direct opposition of the First Amendment's broad protection of issue advocacy. Impermissibly broad under the First Amendment are campaign finance statutes regulating more than explicit words of advocacy of the election or defeat of clearly identified candidates. Therefore, unconstitutional would be the McCain-Feingold bill.

Unions and corporations would be barred from spending their own funds on such ads under the measure. Airing of such ads would be allowed by interest groups however they would have to use individual contributions to pay for them and disclose where the money came from.

Joel Gora, a professor at Brooklyn Law School who represented the plaintiffs in Buckley v. Valeo and is working with the American Civil Liberties Union to defeat McCain-Feingold said, "To the extent the bill would... make illegal or burdensome the funding of speech that has been protected up till now, it is vulnerable to challenge." (36)

A group that opposed McCain-Feinold (if it was law) however had no position on whether McCain should be a senator would be subject to regulations if it wanted to run an ad attacking it in Arizona within 60 days of a Senate election involving McCain said Gora. (37)

The same kinds of constitutional questions would not be raised by the only alternative to the McCain-Feingold bill, a reform proposal by Senator Chuck Hagel that does not include restrictions on issue ads by corporations and unions.

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REAL CAMPAIGN FINANCE REFORM

If Senator McCain and his supporters were serious about campaign finance reform, they would consider repealing the limits on individual and PAC contributions to candidates and parties as well as party contributions to candidates, and making them all constitutional. (38) For Presidential election campaigns, taxpayer financing would be eliminated. Unless specific disclosure requirements were met, bar acceptance of contributions. Campaign reports would be required to be filed electronically and during the three months preceding an election they would be required to be filed every 24 hours. The Federal Election Commission (FEC) would be required to post campaign reports on the Internet. Each state party would be required to file with the FEC a copy of the same disclosure form as it files with the state and parties would be required to distinguish between federal and non-federal funds.

The playing field between challengers and incumbents would tend to be leveled by repealing contribution limits because of the built-in advantages that incumbents possess. The problems with the current system could be addressed by the reforms stated above. The influence of outside fundraisers would be lessened by such reforms and the need for candidates and public officials to engage in constant fundraising would decline. Also, the overtly complex regulatory process would be simplified and intrusive FEC investigations that last for years would be lessened. The transparency and political accountability of the electoral process would be improved but most importantly would not infringe on the freedom of speech afforded to by the First Amendment.

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(1) David Espo, "Lott OK's Campaign Finance Debate, The Associated Press, January 26, 2001

(2) Ibid

(3) Ibid

(4) Tom Squitieri, "Bush back's new 'soft money' reform, USA Today, March 13, 2001

(5) Dan Balz and Ruth Marcus," Bush to Offer Campaign Finance Guidelines. Aides Signal White House Desire to Fashion Reform Legislation the President Can Sign," The Washington Post, March 15, 2001

(6) Ruth Marcus and Dan Balz," Democrats Have Fresh Doubts on 'Soft Money' Ban," The Washington Post, March 5, 2001

(7) Ibid

(8) Ibid

(9) Dan Balz and Helen Dewar, "Bush Outlines Ideas On Campaign Finance. Plan Differs From McCain-Feingold Bill," The Washington Post, March 16, 2001

(10) Bill Sammon. "McCain bill likely to fail unless Bush gets his way," The Washington Times, March 20, 2001

(11) Alison Mitchell, "McCain Sees Amendments Playing Big Role in Campaign Bill," The New York Times, March 19, 2001

(12) Kenneth D. Smith, "Campaign finance lies," The Washington Times, March 20, 2001

(13) Jeff Milyo, "Money walks: why campaign contributions aren't as corrupting as you think," Reason, July 1997 v29 n3 p47(3)

(14) Robert Samuelson, "Is Campaign Finance 'Reform' Needed?," Dallas Morning News, October 8, 1999

(15) David M. Primo, "Public Opinion and Campaign Finance: A Skeptical Look at Senator McCain's Claims," CATO Institute Briefing Papers No. 60, January 31, 2001

(16) "McCain, Feingold Plan to Introduce Campaign Finance Bill," January 4, 2001, http://www.cnn.com/2001/ALLPOLITICS/stories/01/04/mccain. campfinance /index.html

(17) Ibid

(18) David M. Mason, "Why Congress Can't Ban Soft Money," Heritage Foundation Backgrounder N0. 1130, July 21, 1997

(19) David M. Mason and Steven Schwalm, "Advantage Incumbents: Clinton's Campaign Finance Proposal, " Heritage Foundation Backgrounder N0. 945, June 11, 1993 and Bradley A. Smith, "Campaign Finance Regulation," Cato Institute Policy Analysis No. 238, September 3, 1995

(20) Jeff Milyo, "Money walks: why campaign contributions aren't as corrupting as you think," Reason, July 1997 v29 n3 p47(3)

(21) Ibid

(22) Rob Richie and Steven Hill, "In Politics, Money Isn't the Root of All Evil," The Wall Street Journal, January 19, 1998

(23) Jeff Milyo, "Money walks: why campaign contributions aren't as corrupting as you think," Reason, July 1997 v29 n3 p47(3)

(24) Ibid

(25) Ibid

(26) Ibid

(27) Ibid

(28) Colorado Republican Federal Campaign Committee v. Federal Election Commission, No. 95-489, 135 L. Ed. 2nd 795

(29) Buckley v. Valeo, 424 U.S. 1, 14-15 (1976)

(30) Comments of House Majority Whip Tom Delay (Republican-Texas), Money & Politics Report, Bureau of National Affairs, Inc., May 26, 1999, p.1

(31) See statement of Senator Russel Feingold (Democrat-Wisconsin) on the introduction of S. 26: "The prevalence-no-the dominance of money in our system of elections and our legislatures will in the end cause them to crumble." Cong. Rec. S422, 423 (daily ed. January 19, 1999)

(32) Michael Lewis," A Question of Honors. The Subversive," The New York Times Magazine, May 25, 1997, p.32

(33) See James Bopp, Jr., Constitutional Limits on Campaign Contribution Limits, 11 Regent U.L. Rev 235, 284-85 (1998-1999)

(34) Charles Lane, "Court Challenge Likely if McCain-Feingold Bill Passes. Foes Cite Free-Speech Issues as Debate On Campaign Finance Reform Begins," The Washington Post, March 19, 2001

(35) Ibid

(36) Ibid

(37) Ibid

(38) James Bopp Jr., "Campaign Finance "Reform": The Good, The Bad And The Unconstitutional," Heritage Foundation Backgrounder, No. 1308, July 19, 1999