Senate Committee on Rules and Administration

Campaign Finance Reform

I am pleased to have the opportunity to testify before you on the important and difficult issue of campaign finance reform. While I have been asked to share my ideas for new approaches to reform, I first want to take this opportunity to tell you about a new experimental effort we have launched to conduct a deliberative exercise on the Internet over the next several months designed to improve the quality of debate on campaign finance reform. Sixteen well-known experts on campaign finance reform, including scholars and activists representing a range of perspectives on the issue, have agreed to participate in a conversation moderated by me, communicated by E-mail, and made available to all interested public officials and private citizens on the World Wide Web.

Initial rounds of conversation are focusing on the legislation introduced by Senators Feingold and McCain, since it has attracted bipartisan co-sponsorship in both the House and Senate. The purpose of the exercise is neither to praise this particular approach to campaign finance reform nor to bury it, but rather to ensure that those engaged in the debate have thought through the implications of the proposed reforms, calculated as best as possible the benefits and costs, considered possible unintended consequences, weighed alternative approaches and, more generally, clearly explicated the desired objectives and the means for achieving them. Past debates on campaign finance reform have suffered from a failure to move beyond long-held, sharply polarized views on various approaches to reform. We hope to overcome this problem by conducting a serious deliberative exercise that operates in tandem with legislative efforts on Capitol Hill.

The first two rounds of conversation by the Brookings Working Group on Campaign Finance Reform are posted on our Web site at:

http://www.brook.edu/gs/cf/workgrp.htm

We will be discussing other aspects of the proposed legislation as well as alternative measures in the weeks ahead. I hope you will consider our Working Group a resource to draw upon as you schedule additional hearings and begin to mark up legislation.

Now let me turn to the substance of the issue before your Committee. I will begin by summarizing my own view of the problems with the present system of campaign finance. Then I will briefly evaluate the approach taken in the legislation introduced by Senators Feingold and McCain. Finally, I will suggest some alternative approaches to reform that merit your attention.

The present system of congressional campaign finance has three serious deficiencies. The high cost of running a serious campaign for the House and Senate shrinks the pool of able individuals willing to become candidates, limiting the field to those with personal wealth or the stomach for nonstop fundraising. Expensive campaigns also lead members of Congress to become consumed (if not obsessed) with raising money. Fundraising has become a way of life for members, adding to the frenetic quality of their schedules, distorting how they would otherwise allocate their time, and diminishing opportunities for face-to-face deliberation on serious problems confronting the country. The money chase has added to the tendency of members to commit to positions early, often eliminating the prospect of debate and deliberation changing minds or shaping outcomes.

A second problem with the system is the conflict of interest, real and perceived, that results when members seek and receive campaign contributions from individuals and organizations with direct interest in matters pending in Congress. The populist version of this critique, drawing its strength from the regular diet of stories on PAC contributions, national party soft money, and Washington fundraisers, is that politicians are routinely bought and sold by special interests. But one needn't be a complete cynic to sympathize with those who argue that monied interests are more likely to attract the attention and energy of members of Congress than ordinary constituents. Indeed, one of the most distasteful aspects of the present system is the brazenness with which some politicians pressure lobbyists for campaign contributions, a practice it is not unreasonable to label "legal extortion."

A third deficiency with the present system of financing congressional campaigns is its failure to generate adequate information about the choice of candidates in House and Senate races across the country. Most Americans know precious little about their representatives in Congress; they know even less about the men and women who challenge these elected officials. While some inequality in resources between incumbents and challengers is inevitable, campaigns have no hope of fulfilling their proper role in our democracy if the means are not present to convey to the electorate the most basic information about the candidates and their platforms.

Identifying the problems with the campaign finance system is infinitely easier than fashioning effective and acceptable solutions. There are clear limits to what is permissible under the prevailing constitutional ruling that equates campaign spending with speech. No measure regulating money in campaigns can (or should) fully compensate for the other sources of inequality between incumbents and challengers and among individuals and groups in society. Banish every private dollar from campaigns and those inequalities would persist. Slowing the money chase and reducing the amount of "interested money" in congressional campaigns requires identifying new, acceptable sources of funds that candidates can more easily tap. But what other than public financing—about which the public has some serious reservations—fits the bill?

These complications (and they are only the beginning) suggest that those who believe a simple solution to campaign finance reform is at hand are badly mistaken. To (mis)quote Ross Perot, "It's definitely not that simple." On the other hand, those who see only virtues in the present system and direct all their energies toward protecting the status quo are equally misguided. I have enormous respect for those who are making good-faith efforts to deal with the complexities of this issue, even when I believe their solution falls well short of the mark.

Such is the case with the legislation proposed by Senators Feingold and McCain and, in the House, Representatives Smith, Shays, and Meehan. I am sympathetic with their goals but skeptical of the means identified for achieving them. My concerns are based on the questionable constitutionality of some of the provisions (most importantly, the abolition of PACs); the inadequacy of the incentives for enticing candidates to comply with voluntary limits on overall and personal spending; the ease with which some of the limits (e.g., on spending and on out-of-state and special interest contributions) can be evaded; the extent to which new limits on contributions will intensify the money chase, increase the leverage of savvy contributors, and further diminish the prospects of challengers; the inadequacy of a single spending limit for a highly diverse set of House districts; and the difficulty of administering a system of congressional spending limits, especially given the structure and resources of the FEC.

It is possible to deal with some of these concerns but in most cases it requires an expenditure of substantial public funds not anticipated in this legislation. Given the political as well as substantive obstacles, it is worthwhile considering some alternative approaches, less comprehensive in character, that might begin to improve the way in which congressional campaigns are financed and conducted. Here are a few ideas:

1. Increase the role of political parties in congressional campaign finance. Simplify, increase, and index the limits on direct contributions and coordinated spending by political parties on behalf of congressional candidates. But at the same time change the mix of funds available to parties by bringing all soft money under federal contribution limits. Parties ought to play a more central role in allocating resources to shaky incumbents and promising challengers, but to earn the necessary legitimacy with the public they must end their dependency on very large donations from corporations, unions, and wealthy individuals. Public funds, in the form of cash or credits with broadcasting outlets, might also usefully be distributed through the political parties.

2. Use the congressional frank to distribute information from all major candidates during election years. Efforts are underway in both houses to prohibit franked mass mailings during election years. Instead, the resources should be used to finance one or two joint mailings by major general election candidates in every House and Senate contest. Rather than reducing the amount of information about incumbents available to voters, reformers should seek ways of increasing what citizens know about all candidates.

3. Institute a 100% tax credit for small in-state contributors to congressional candidates. Congressional candidates should be encouraged to expand the base of small donors in their constituencies. A tax credit would maintain market discipline for candidates but greatly increase the number and diversity of potential contributors.

4. Provide broadcast vouchers for purchase of television or radio time to qualifying candidates. As new digital channels are distributed to broadcasters, commitments should be secured to provide television and radio time to candidates for Congress. These commitments can be distributed in the form of vouchers to candidates who qualify by raising a minimum amount ($25,000, $50,000?) in small, in-state contributions.

5. Ease the raising of seed money by challengers through higher individual contribution limits. Individual contributions limits of $1,000 (already devalued 75% by inflation over the two decades since they were set in law) should be raised to $10,000 for the first $100,000 raised by congressional candidates. This would lower the barrier to entry for potential challengers who could persuade ten well-to-do donors to give them a chance.

6. Adopt provisions, in law and congressional rules where appropriate, that explicitly separate fundraising from lawmaking. Members of Congress should be prohibited from requesting campaign contributions from registered lobbyists or from discussing with them contributions from their parent organizations or clients. If constitutional, lobbyists should be prohibited from contributing to any member of Congress. (There is some precedent for treating registered lobbyists differently in new gift rules.) No fundraising activities of any kind should be permitted in public facilities (including the use of congressional office phones) and congressional staff members should be prohibited from engaging in fundraising for their employer, even in their off hours. Other means should be sought for dealing with conflicts of interest that arise when contributors seek legislative remedies and when legislators seek contributions from those with direct interest in legislation.

I am fully aware of the controversial and problematic nature of many of these ideas, especially the last, but I believe it is important to put them on the table for your serious consideration.