The Millionaire's Amendment
The
contribution limit for the opponent of a self-financed Senate
candidate depends on the following variables:
- Personal funds of the wealthy
candidate;
- Personal funds of the opposing
candidate;
- Voting age population of the state (times
four cents);
- Gross receipts of the opposing candidate as
of June 30 of the year prior to the election;
- Gross receipts of the wealthy candidate as
of June 30 of the year prior to the election;
- Gross receipts of the opposing candidate as
of December 31 of the year prior to the election;
- Gross receipts of the wealthy candidate as
of December 31 of the year prior to the election;
- Receipts of excess funds by the opposing
candidate.
I have
two children in high school who take perverse delight in asking me
for help with multi-variate equations. Here we have eight
variables, two of which (Nos. 1 and 8) will change, probably on a
daily basis, in the course of a campaign. It will be virtually
impossible to figure out on a current basis the applicable limit
for a given day and contribution. In order to know whether and when
a campaign was actually eligible to receive excessive contributions
under this provision, the Commission would have to audit every
campaign for which the provision came into play. Currently, the
Commission has resources to audit about two Senate campaigns per
two-year election cycle. In 2000, at least five Senate candidates
spent sufficient amounts in personal funds to make it possible that
their opponents may have been eligible for increased contribution
limits. At least two of those candidates had serious primary
opponents, meaning that the Commission might need to conduct seven
or eight audits to determine whether opponents of wealthy
candidates properly accepted otherwise excessive contributions.
But
auditing is only one of our problems. Most of you will recall that
Hillary Clinton engaged in a prominent exploratory "listening tour"
before officially declaring as a candidate for the Senate in 1999.
One result of postponing her official candidacy was that she did
not have to disclose any financial activity until the end of
January 2000. There was nothing inappropriate about postponing a
final decision on a candidacy, fundraising, and consequent
disclosure. However, the example shows that candidates and
potential candidates can and do alter their behavior to accommodate
or take advantage of various features of election laws.
Due to
the complexity of the Millionaire's Amendment there are numerous
opportunities for wealthy candidates to game the system. Start with
the fact that this provision applies separately to separate
elections, and the primary and general elections are separate
elections. Wealthy candidates who have little real opposition in a
primary could spend limitless amounts attacking a probable general
election opponent with no consequence under this provision.
Furthermore, candidates are permitted to carry over funds from the
primary to the general election. A wealthy candidate might loan or
give his primary campaign $5 million, spend $3 million of it, and
start the general election with $2 million in the bank. A
straightforward reading of the millionaire provision combined with
current laws and regulations would lead to the conclusion that the
$2 million would not count as "personal funds" to trigger an
increased general election limit for the opponent (the Commission
might be able to address this by regulation, but that is not
certain). Further, a wealthy candidate has no real need to collect
funds prior to December 31 of the year before the election; thus,
by waiting to declare candidacy and commit funds, a wealthy
candidate can essentially benefit from an opponent's early
fundraising (which can amount to several million dollars in the
case of incumbent Senators).
Thus,
by careful timing of expenditures, a wealthy candidate with good
legal advice (what other kind is there?) might postpone the
triggering effects of this amendment until well into the general
election period. In states with late primaries, this might postpone
increases in contribution limits until October (three of the four
candidates who obviously breached the self-financing formula in
2000 had September primaries). Base limits under the "millionaire"
formula (voting age population [VAP] times four cents) range from
about $175,000 in Wyoming to $1.15 million in California. Increased
contribution limits are not triggered until the wealthy candidate
spends twice the base level, less any adjustments for gross
receipts. If a wealthy candidate limits spending to this adjusted
amount (about $1 million, plus the gross receipts difference, in
Illinois or Pennsylvania, for instance) for a month or so after the
primary, his opponent gets no relief. Once the limit is finally
breached (perhaps not until early October) with a deluge of
television ads, an opponent may begin attempting to raise funds
under an increased contribution limit. It takes a while, however,
to raise several million dollars, even at $6,000 a clip (more
likely an additional $4,000 from contributors who have already
given $2,000) - about 500 contributors at the maximum level to
raise $2 million. Thus, the millionaire's opponent is pulled off
the campaign trail precisely when he comes under attack on TV,
attempting to raise money to respond some weeks later. In the
meantime, the millionaire will likely spend more, probably
increasing the contribution limit a second time, forcing his
opponent to spend yet more time making a third request of his most
generous donors. The opponent is perpetually behind the spending
curve and is forced to attempt to raise funds at the worst possible
time in the campaign.
The
benefits of this too-carefully calibrated provision will come too
little, too late and at too high a cost to help most opponents of
millionaires. At the same time, as I noted, the compliance costs
(for supposedly benefiting campaigns) and the enforcement costs
(for the FEC) are ridiculously high. The Commission treats
excessive contributions as serious violations, requiring refund or
disgorgement of the excessive amount, plus a penalty representing a
significant percentage of the violation. Thus, inevitably some
candidates would find themselves after the campaign, with the money
spent, required to pay back more than they initially received
because they accepted excessive contributions a few days too early
or too late. This situation is hardly imaginary: just last year the
Commission directed Senator Charles Schumer to refund $854,000 in
contributions because he had accepted what were apparently intended
to be general election contributions in the primary period without
the requisite documentation.
Perhaps Congress does not really intend
that we enforce this provision as strictly as it is written,
perhaps it does not intend to give us enough auditors to review the
books adequately but, if so, we have a façade rather than a
law. (Perhaps we could call this "Enroning" reform.) And once
again, if this is the case, the compliant are at a distinct
disadvantage to the scofflaw.
Mark
Twain described a camel as a horse designed by a committee. The
millionaire provision is a three-hump camel because Senators wanted
to preserve contribution limits as much as possible while
attempting to level the playing field between wealthy and
non-wealthy opponents. Thus, they carefully calibrate for this and
that factor and allow a slowly graduated response. (We will
continue to ignore the fact that the Supreme Court has said that
"leveling the playing field" is not a constitutionally permissible
purpose of campaign finance regulation, and we will not ask why
$2,500 is corrupting if you are facing an opponent who does not
finance his own campaign but $12,000 is just fine if your opponent
spends his own money, or why contributions from your own political
party threaten corruption in the first situation but not in the
second.)
If we
look at actual campaign spending, however, it appears that these
careful calibrations have an effect only inside Congress but not on
the campaign trail. Of the five Senate candidates who may have
triggered the millionaire provision in 2000, one, Ed Bernstein in
Nevada, spent 4.9 times the threshold amount. We would have to do
an audit to know for sure, but given the distinction between
primary and general elections and the likely effect of the gross
receipts factor, Bernstein's general election opponent, John
Ensign, might not have been eligible for increased contributions,
and it is almost certain that Bernstein could have managed his
spending to avoid that result. The other four self-financed
candidates (Mark Dayton, John Corzine, Maria Cantwell, and Herb
Kohl) spent between 16 and 150 times the "fair" formula. In the
real world, candidates who break the bank break it big. Still, the
general election opponents of Dayton, Cantwell, and Kohl probably
could not have taken advantage of increased contribution limits
until October.
Looking at actual campaign spending, the
complex calibrations have only the effect of delaying the ultimate
result. We could easily design a workable provision setting a
relatively high threshold (say $1 million for a "millionaire") to
trigger, immediately, significantly higher contribution limits, on
the proposition that once the first million is spent more will
follow. Apply spending in the primary to the threshold for the
general election, and you have solved the September primary
problem. Such a provision would be simple to interpret and enforce,
reporting could be less frequent, there would be a single trigger,
with the only variable being a limit on "excessive" contributions
based on the opponent's aggregate self-financing.
This
provision could be drafted to be effective but, as written, it is
nearly impossible to comply with to any benefit and difficult and
costly to enforce. The Commission would be left choosing between
sporadic harsh enforcement and flaccidity, probably alternating
between the two, and getting the blame for a poorly crafted
compromise between the self-interest of incumbents and the
ideological imperative to limit contributions.
Coordination Instructions
Just
over a year ago, the FEC rewrote its regulation defining
"coordination" between campaigns and outside groups. This was the
culmination of a five-year effort required by the Supreme Court's
first decision in the Colorado Republican case, and the final rule
was based substantially on a district court ruling in the Christian
Coalition case. The Commission attempted to interpret the rather
vague statutory concept of coordination to protect fundamental
rights and to comply with judicial requirements for clarity and
evidence.
Campaign finance activists did not like the
balance struck in the new regulation and induced the sponsors to
add a provision to Shays-Meehan invalidating the new regulation and
ordering the Commission to try again. The apparent intent is for
the Commission to cast a broader net in defining "coordination."
However, when sponsors tried to draft language to do this, they
encountered the same difficulties and objections the Commission
itself had faced in its own five-year effort. Sponsors shopped
around a far-reaching definition, could not get support, and
replaced it with proposed statutory language even more vague than
the current law. Now in Shays-Meehan there is a retreat essentially
to existing statutory language while still overturning the
Commission regulation and ordering us to draft a new one.
The
problem with this provision is that the instructions directly
contradict the plain meaning of the statute. The revised statute
defines coordination most relevantly as acting "in cooperation,
consultation or concert with" a candidate or party (you cannot do
anything starting with "c"). These terms are fairly broad, and a
prime judicial and administrative rule is to define such terms in
their dictionary meaning.
Webster's defines "concert" as "to arrange
or settle by mutual understanding" or "a mutual agreement."
"Cooperation" is a "joint effort or operation," and "consultation"
an "exchange of views." Not much help.
Shays-Meehan instructs that in redrafting
regulations the Commission is not to require "formal collaboration
or agreement." Webster's says "collaboration is "to work together"
and, more specifically, "to cooperate with an enemy invader."
Thus,
we have instructions to interpret a term meaning "joint effort or
operation" as not requiring that people actually "work together."
We are to define a term meaning a "mutual agreement" as not
actually requiring "agreement." I do not see how anyone can follow
such instructions.
While
I am sure the sponsors could explain exactly what they mean by
these internally contradictory instructions, it is not clear that
Congress would approve whatever it is that they do mean, and it is,
of course, important that Congress avoids passing a facially
self-contradicting statute. Reformers need either to get the votes
for a more specifically invasive definition of coordination or to
drop the charade of issuing unparsable instructions to the FEC and
then blaming us when we fail to do whatever it is they prefer.
Speech Standards: Support/Oppose
Lastly, I would like to address briefly
some of the various new speech standards proposed. Again, these
standards may well be struck down by the courts as too vague or
overbroad, but I want to examine them from an administrative
standpoint.
At
first glance, the "electioneering" standard, addressing broadcast
advertising clearly identifying a federal candidate in specified
time periods, might appear simple to enforce (if constitutionally
permitted). However, the drafters quietly acknowledge that we may
not actually want to go so far as to ban corporate or union-funded
ads because they merely mention an incumbent candidate. We might,
for instance, want to allow a union or corporation to run an ad to
"support the Shays Amendment" at a time when significant
legislation known by the sponsor's name was under consideration,
perhaps on the condition that it not be targeted to the identified
Member's district. Thus, the proposed law allows the Commission to
issue regulations exempting some communications from the corporate
ban as long as they do not promote, support, attack, or oppose the
identified federal candidate. This is the same standard used to
distinguish federal from non-federal communications for state and
local party committees.
In the
first step, the bright line "no mention within 60 days" standard is
acknowledged to be potentially broader than the sponsors really
want. As a second step, we may have a general sense about the
meaning of a distinction between "identifying" and "supporting" a
candidate. The problem for an administrative agency, or for a
committee attempting to comply with the Act, is applying the fairly
broad terms "promote," "support," "attack," and "oppose" to actual
speech.
Let's
go back to the dictionary, this time using American Heritage, which
includes lists of synonyms for many words. Support is defined as
"to aid the cause, policy or interests of," listing "uphold, back,
advocate, champion" as synonyms, and adding that "support is the
most general." "Oppose" is "to be in contention or conflict with"
and, among the listed synonyms, "oppose has the fewest
connotations." The drafters have chosen, apparently deliberately,
the broadest terms available.
Evidently, state and local parties (and
possibly corporations and unions) are allowed to say something
about public officials who also happen to be candidates for
re-election, but it is hard to imagine what you would want to say
that might not be read as "supporting" or "opposing" the candidate.
Thus, the Commission must proceed under the vague statutory
language, reviewing individual ads and penalizing committees after
the fact, or we could issue a more specific rule and probably be
attacked by reform advocates for insufficiently vigorous
enforcement. Aside from the fairness question, if we do not issue
guidance, the Commission would be in the position of having to
review any broadcast that identified a federal candidate in order
to determine, on a case-by-case basis, whether it supported or
opposed that candidate.
Would
an ad criticizing a particular bill and urging constituents to call
Senator Jones and exhort him to oppose it constitute "opposing"
Senator Jones? Would it make a difference if the ad mentioned that
Senator Jones was a sponsor of the bill or would disclosing that
additional information be forbidden? Would it make a difference if
the organization sponsoring the ad conducted a public opinion poll
just before and just after the ad ran asking voters whether they
were inclined to vote to re-elect Senator Jones? Would it make a
difference if the ad sponsor released the results of the poll
showing a dramatic drop in Senators Jones's re-elect numbers? And
what if the ad sponsor shopped the poll around Washington,
threatening to run similar ads in the home states of other Senators
supporting the same bill? (All of this actually happened with a
union-sponsored ad criticizing Senator Conrad Burns.) You can see
that what starts out as a simple lobbying expenditure might
arguably be transformed into a campaign ad based not on the text of
the ad but on other actions the sponsor undertakes (though I am
uncertain about how viewers of the ad are to know the
difference).
Vague
standards put the Federal Election Commission in the position of
either attempting to police everything said about any Member of
Congress or of drawing up specific regulations that reformers will
complain might miss something. The former simply cannot be done
and, thus, when Congress approves vague standards, it passes
unenforceable reform. More often than not since I have been a
Member, the Commission has chosen to specify standards rather than
to proceed under vague terms. It is certainly the province of
Congress to revise the laws we enforce. But Members who are serious
about reform ought to support legislation that is administratively
enforceable, rather than approving vague standards and hoping that
we get the drift.
David M. Mason is Chairman
of the Federal Election Commission.