The Democratic Primary between Senator Bernie Sanders and Hillary Clinton has revealed a terrible reality: Not enough people in this country — let alone Democrats — understand what is truly wrong with our government.
Campaign finance is the meta issue; it encompasses all others because every legislative battle today, comes down to money. For example, let’s look at battle over gun control. The gun reform lobby, which includes groups like Everytown For Gun Safety, is outspent by the gun rights lobby, which includes groups like the NRA, by a ratio of 6.7 to 1. Though the majority of Americans favor universal background checks, such a law cannot gain traction in DC. Until we reform campaign finance, we will not have gun control.
This result is congruous with the findings of a recent study by professors from Princeton and Northwestern which determined that our government heavily prioritizes the wants of the top over the will and needs of the rest of us. In other words, the United States is now an oligarchy.
By now, most Democrats are somewhat familiar with the Citizens United v. FEC Supreme Court decision which determined that political spending for corporations and unions is a protected form of free speech, and thus cannot be limited. They are also somewhat aware of how money influences politics.
But, that’s about where it stops. Such is why Hillary Clinton’s supporters are placated by the front-runner’s plan to reform campaign finance. Here are the three basic elements of her proposal:
1) Increasing voter access.
2) Increasing transparency by requiring corporations to disclose their political donations by way of the Securities and Exchange Commission (SEC).
3) A pledge that overturning Citizens United is her litmus test for SCOTUS nominees, and fighting for a constitutional amendment to overturn the decision “if necessary.”
While these might sound great, they amount to very little in terms of reform — and I will explain why. But first, here’s the background.
The role of the courts:
Most people are unaware of this, but it was the 1976 decision in Buckley v. Valeo, not Citizens United, in which the court held that political spending is a protected form of speech under the First Amendment. As such, spending limits on an individual’s or group’s outside advocacy as imposed by the Federal Election Campaign Act of 1971 are unconstitutional.
There is a logic to this ruling. If a group or individual wants to run an ad for a candidate, how can the government possibly stop that without inhibiting that group’s or individual’s right to free speech? On the other hand, there are legitimate concerns as to the impact of this money on our political system. Most democratic countries around the world, including the United Kingdom and Canada, do not hold money to be speech because of its corrupting influence on politics..
Of course, Citizens United took Buckley to new levels.
The idea of corporate personhood dates back to 1886 and a case by the name of Santa Clara County v. Southern Pacific Railroad. The SCOTUS ruled that corporations are protected under the Fourteenth Amendment. Citizens United included corporations and unions under the umbrella of Buckley. Nonprofit organizations including the Heritage Foundation and the American Civil Liberties Union supported the ruling — but we’ll get to that in a little bit.
After the 5-4 ruling in Citizens United came down, the Court of Appeals for the DC Circuit enabled the creation of super PACs in Speechnow.org v. FEC. The court struck down a provision of the Federal Election Campaign Act that prohibited individuals from contributing to a common fund without it becoming a PAC which was not allowed to accept any corporate or union donations or any individual donations in excess of $5000.
I should explain: Super PACs, or independent expenditure groups, can accept and spend unlimited sums of money on politics, but they have to disclose their donors and cannot coordinate with candidates. They are subject to the FEC, unlike nonprofits which are subject to the IRS. These groups enable contributions to candidates that exceed the maximum allowable donation to campaigns. It is through a super PAC — American Bridge 21st Century — that oil tycoon Lee Fikes, can donate $75,000 to Hillary Clinton without directly giving to her campaign.
Today, super PACs, do in fact, coordinate with campaigns even though they are legally prohibited from doing so.
Roughly four years later, a third case at the SCOTUS, McCutcheon v. FEC, removed the overall spending cap for individual donations to candidates.
The role of nonprofits:
The idea that political spending is a protected form of speech creates an especially daunting problem regarding nonprofit organizations — 501c3 groups such as churches that must disclose their donors, and 501c4 groups that are not required to do so. These groups are tax exempt because they are meant to be dedicated “exclusively” to social welfare. The power to tax is often viewed as the power to destroy, and our government wants to promote the promotion of social welfare.
But what constitutes “social welfare” is confusingly malleable — especially these days.
This confusion is the result of a change in the interpretation of the rule against political activity. In 1959, regulators began to interpret “exclusively” to mean “primarily” which allowed for engagement in some political activity by 501c nonprofits. Over the years the “primarily” has been lowered. The current prevailing understanding is that “primarily” means 51 percent social welfare.
And then, of course, there is difficulty determining what qualifies as political spending. As I wrote in an article back in 2013:
According to FEC guidelines it is defined as spending on express advocacy ads, which call for direct election or defeat of a candidate. These expenditures must be reported as political activity. However, issue advocacy ads do not fall under this definition, and thus do not need to be reported unless they mention a candidate and are within a given window of time before an election, primary, caucus, or convention — a loophole which undermines the regulatory capabilities of the IRS and the FEC.
Due to this confusion regarding political activity and social welfare, and following Buckley and its progeny, there has been a scramble to establish 501c4 nonprofits. Why? Because the lack of a donor disclosure requirement allows special interests to disguise themselves while spending on politics. Sometimes these groups funnel money through super PACs. These groups are often called “dark money.” Thanks to these nonprofits, the ability to misdirect and mislead voters has never been easier.
How bad is it? Billionaire oil tycoons like the Koch Brothers can set up a 501c4 with an innocuous name like “Americans For Prosperity; (which they founded in 2004, before Citizens United), and run aggressively anti-labor or climate change denial ads with their identities hidden.
The IRS tried to crack down on the rise of political nonprofits, but was cowed by political pressures and the phony “IRS Scandal; So now, even groups like Karl Rove’s Crossroads GPS can attain tax exempt status. These groups have the ability to spend unlimited sums of money to advocate for or against issues and candidates.
Why Hillary’s plan is disturbingly inadequate:
Hillary Clinton has not made campaign finance reform a priority of her presidential campaign. When asked what she would tackle in her first hundred days in office, the former Secretary did not even mention it. Her apparent lack of concern is understandable in light of who she is as a candidate. She, herself, has not been very transparent—quite the opposite: When questioned about donations she has received from fossil fuels interests both directly and through the super PAC her campaign coordinates with (illegally), she flippantly accused young people of not doing their “research.” Clinton won’t release the transcripts of her speeches for which she made $1.8 million. Additionally, the former Secretary has taken money and assistance from Wall Street, fossil fuel industry lobbyists, the Koch Brothers, the private prison lobby, the pharmaceutical industry, former NRA lobbyists, and a host of other special interests. It is also understandable that Clinton isn’t even talking about publicly-financed elections considering that 83 percent of her direct campaign funds come from large donors.
The reality is that Clinton’s plan would barely scratch the surface of the issue. Her proposals are aimed at Citizens United, but as we established, that’s a small piece to a much larger problem. If the Democratic front-runner got her way, corporations would have to disclose their political donations. However, the heart of the matter is far more complex. Her plan doesn’t change that money is speech, nor does it involve tightening the rules of what constitutes “social welfare.” It does not do anything towards regulating 501c4 nonprofits, which would still be able to hide their donors. “Issue advocacy” would still be largely unchecked. Like in the example I gave above, wealthy individuals like the Koch Brothers, who are corporate interests, would still be able to run political “issue” ads through nonprofits with benign names, hiding their identities while pushing a corporate agenda. These individuals would not have to disclose their spending because they are not corporations, nor are they necessarily spending on politics.
The former Secretary has sought to tie campaign finance into voting rights, when in actuality it is a separate, and arguably larger issue..No matter how many people can vote, if they don’t have accurate information about who is saying what, is their vote truly free from undue influence or burdens?
Such a weak stance on campaign finance has far-reaching implications. If Hillary Clinton wins the presidency, our newly established oligarchy will remain unchallenged. The progressive left will likely continue to fight losing legislative battles, and only be able to achieve incremental progress at the cost of huge sacrifices, as we have seen since transactional Third Way politics became the Democrats’ modus operandi in the 90’s. Why? Because the money is on the other side.