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Campaign Finance Reform -- Now More Than Ever

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Campaign finance in this country is in a very bleak place after decades of direct attacks and equally sad unintended consequences. The Supreme Court's 2010 landmark decision in Citizens United v. FEC was the final straw in the corporate hijacking of our political system which began fully thirty years ago.

In Citizens United, the Court, after determining that corporations are in effect "people", concluded that the First Amendment prohibits the government from censoring political broadcasts in candidate elections when those broadcasts are funded by corporations or unions. Specifically, Citizens United struck down provisions of the McCain-Feingold "Bipartisan Campaign Reform Act of 2002" which prohibited all corporations -- both for-profit and not-for-profit -- and unions from broadcasting "electioneering communications": i.e., advertisements or other communications that mention a candidate within 60 days of a general election or 30 days of a primary.

While Citizens United did not strike down the ban on direct contributions from corporations or unions to candidate campaigns or political parties in races for federal office -- such contributions remain illegal -- by giving back to corporations and unions the unlimited ability to fund political ads specifically mentioning candidates in newspapers, magazines and all forms of television, it handed to a relatively small group of CEOs near-unlimited powers of persuasion in what the Founding Fathers intended as the quintessential democratic process of the Republic.

Perhaps worse, in an electioneering system in which, as former California State Assembly Speaker and Treasurer Jesse Unruh famously said, "Money is the mother's milk of politics," it makes almost inevitable the accommodation, if not the sponsorship, of corporate interests by a relatively small number of sitting elected officials, never mind by aspiring candidates.

Individual citizens, who are mostly limited to roughly $5,000 per candidate per cycle, must now come together in staggering numbers for their contributions to have the same effect in a campaign that the spending of just one determined, large corporation could have. For example, President Obama raised $748 million for his 2008 campaign (through year-end 2008). Of that, more than $659 million was raised from individuals, a staggering, never-before achieved level of democratized campaign capitalization. Is it so hard to imagine, however, Big Oil, Big Pharma and the Big Banks funding their own $1 billion in an all-out bid to elect a Presidential candidate, never mind certain Senators and Members of Congress. And the self-interested involvement of such companies on a smaller -- but still relatively massive -- scale is all but assured in coming elections.

Another ruling in 2010, by the District of Columbia Court of Appeals, expressly applied the Citizens United ruling to say that SpeechNOW.org, a not-for-profit organization, was entitled to accept unlimited contributions from individuals for independent expenditures. Thus, "Super PACs" were born.

Super PACs -- technically, "independent-expenditure only committees" -- can raise unlimited amounts for specific candidates or causes from corporations, unions and individuals. And while these PACs can't directly "coordinate" with campaigns, the candidates can themselves help raise money, which of course makes for a paper-thin Chinese Wall. Super PACs must disclose corporate contributions, but issue groups connected to them do not have to, so corporations now simply anonymously funnel many of their political dollars through issue groups -- which really don't have issues at hand as much as they do candidates and Party politics which they seek to advance.

Despite the sense/hope which many of us had, after passage of McCain-Feingold, for a later Congress to enact truly comprehensive campaign finance reform, this now seems as unlikely as Congress soon getting smart (and non-partisan) and adopting a meaningful "jobs policy".

However, there are some bright spots for those of us who believe the fight for campaign finance reform must continue. And somewhat amazingly many of these "spots" are found in my home state of New York, which is not usually thought of as a leader in political reform.

Not long ago, the esteemed (non-partisan) Brennan Center for Justice, with plenty of justification, listed New York State last in terms of governance. Our State's record on campaign finance has not been much better. Here, an individual can give $50,000 to a candidate; there are few restraints on corporate contributions and plenty of loopholes; campaign finance scandals are a regular occurrence; and in my home city the current New York City mayor essentially purchased his third term for $105 million, after first using his unlimited personal monies to overturn term limits which the vast majority of voters put in place years earlier.

But there are three initiatives worth noting and emulating across the country.

First, as a quasi-model for all manner of campaign finance reform efforts, we in New York City already have a pretty good municipal campaign finance effort underway. It's not perfect, as shown by the amount of money Michael Bloomberg has been able to spend in his three campaigns and the ongoing scandal of Comptroller John Liu's bundling practices. Yet, despite many legal challenges over the last twenty years, all campaigns are required to disclose both contributions (i.e., who donated, the amount and their occupation and employer) and expenditures (i.e., how money was spent), which are also capped; candidates can't accept contributions from corporations, LLCs or partnerships; and, very important, campaigns are limited in how much they can accept from entities which have business dealings with the City's government. Much of these requirements could, as I said, be the underpinning of meaningful federal campaign finance reform.

Second, a very serious bipartisan group has established "New York Leadership for Accountable Government" -- or NYLEAD -- to encourage Governor Andrew Cuomo to advance public financing legislation dedicated to advancing small-donor driven public financing. Working alongside the Brennan Center, Americans for Campaign Reform, and Citizen Action of New York, NYLEAD is modeled on the successful program in New York City. Its leadership of prominent civic, labor and business leaders have as their goal a system of public financing which would provide for 'multiple-match' public financing, reasonable qualifying criteria and highly transparent voluntary spending limits. Governor Cuomo appears supportive of this effort, which appears to be gaining real momentum.

Lastly, we in New York have the "Coalition for Accountability in Political Spending" (or CAPS). CAPS was largely formed by City Public Advocate Bill de Blasio after the Citizens United decision, and the stated goal of its public official supporters is to curb the role of corporations in elections.

This particular goal of limiting the role of corporations should be, I believe, the primary goal of any campaign finance reform effort. It is, after all, at the end of the day the anonymous unleashing of corporations and their millions -- if not hundreds of millions -- of dollars which is the most pernicious aspect of the Citizens United decision. Even the singular efforts of super wealthy individuals (like the Koch Brothers) to commandeer elections do not begin to equal the damage done to our democratic process by corporations which Citizens United has wrought.

Working with institutional investors, policy makers and voters to encourage policies that limit corporate political spending, CAPS has already begun to ignite the public pension fund activism around this issue, which I have advocated for years. Yet even though some very prominent national companies and banks have, to their credit, already indicated that they support the principals espoused by CAPS, there are still two very important steps to take.

First, the SEC, working in conjunction with the FEC, must demand full disclosure, by recipient, of all public company political contributions and lobbying, whether or not it is "material" to the profitability of the companies.

• And second, where the recipient is a "bundler" or an intermediary, such as the U.S. Chamber of Commerce or the Business Roundtable, then the bundler itself, as a precondition to receiving corporate contributions, must agree to specifically disclose all of its 'downstream recipients' who are either in or are running for Congress.

The best voice by far to advance these outcomes would seem to be the nation's public pension funds, which Congress would (or at least should) be hard-pressed to ignore.

Now is one of those genuine turning points in electoral politics, and this time we as a nation will decide just how much influence we're going to let corporations have over our political system. I hope the amount is de minimus, for if we don't largely eliminate corporate money and increase overall transparency, then for the middle class the analogy of bringing a pocket knife to a gunfight will stand true. We will never see our economy fairly recover, we will never eliminate the unprecedented income inequality which now plagues our society, and we will never again be at real full employment.

Leo Hindery Jr. is chair of the US Economy/Smart Globalization Initiative at the New America Foundation, co-chair (with Leo Gerard) of The Task Force on Jobs Creation, founder of Jobs First 2012, and a member of the Council on Foreign Relations. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media, and is currently an investor in media companies.

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