With Victories like These ...

The glaring inadequacies of Shays-Meehan

by Ellen Miller

The American Prospect magazine, March 25, 2002

What a cruel twist of fate: campaign finance reform that benefits Republicans and big money.

The Shays-Meehan bill is back-to-the-future reform: legislation that takes us back to just before 1980, when there was no "soft money" but still a huge imbalance in the influence of the big contributors over the rest of the population. Under the terms of the bill that passed the House, the national parties' committees can no longer raise soft money-the unlimited and unregulated contributions that totaled $498 million in 2000. A very good thing, that. But the trade off to eliminate this most notorious campaign finance "loophole" will actually enhance the power of wealthy special interests, for it loosens a whole series of strictures on hard-money donations-and hard money has already eclipsed soft. Total hard-money contributions to candidates, political action committees (PACs), and parties in the 2000 election cycle came to $1.8 billion, over three times the soft-money total.

To ease shock to big-money politics, Shays-Meehan contains three separate increases in the amounts that individual donors can give in regulated hard money, plus a huge exemption that enables campaigns to sidestep the limits altogether. The first increase involves the aggregate contribution limit for individuals. The legislation nearly doubles it to $95,000 per two-year election cycle. The second hike is in what individuals can give to national political parties, which rises from the current $20,000 per cycle per party committee to $ s7,500. Within these limits, the bill also provides for another dramatic increase: The amount individuals can give to House and Senate candidates doubles to $2,000 per election.

But say that a self-funding multimillionaire candidate is running for office, as is frequently the case these days.

Should that happen, Shays-Meehan raises the cap on individual donations to that candidate's opponents from $2,000 to $12,000. Another limit-that imposed on the political parties for their coordinated expenditures to supplement the campaigns of party candidates within the states-is lifted altogether.

Politically, this provision could prove more unsettling for the Democrats than for the Republicans. While only five of the 19 federal legislative candidates who spent $1 million or more of their personal money in 2000 won their races, four of them were Senate Democrats- three of them newcomers (Jon Corzine of New Jersey, Mark Dayton of Minnesota, and Maria Cantwell of Washington) and one returning (Herb Kohl of Wisconsin).

So who would gain power from these fixes? To understand just how off kilter this reform is, you have to understand one primary fact: Today, less than one-tenth of 1 percent of Americans make a contribution of $1,000, but these 340,000 individuals accounted for fully $1 billion of the $2.9 billion in hard and soft money that politicians, PACs, and parties banked in 2000. Most of this money comes in large bundles from the "economically interested"-executives and business associates who've been arm-twisted into supporting a corporation's electoral favorites.

Under the new legislation, those bundles will only grow larger. Republican Senator John McCain of Arizona admitted to being embarrassed recently by the disclosure that he took $31,000 from individuals associated with the now bankrupt telecommunications firm Global Crossing as he argued their case before the Federal Communications Commission. Just how tainted would he feel if he got double that amount (allowable under the new limit) from them the next time he runs for president?

After all these years of struggle, why did reformers settle for so little?

In fact, after more than a decade of seeing their more ambitious ideas come to naught even as the amount of money in politics grew exponentially, reformers and :heir editorial-board allies felt that they desperately needed a win. According to Derek Cressman of USPIRG (the only campaign-finance-reform organization to oppose the bill), Kentucky's Republican Senator Mitch McConnell "wore down the reform movement by defeating stronger legislation year after year. Legislators kept compromising and the watchdogs let them do that." As a result, the reform package grew steadily weaker. "I can't think of any other legislation that's had a tough fight that ended up actually rolling things back," Cressman says. "This bill could have passed easily 1o years ago."

Speaking not for attribution, some reformers admit that forward movement-even if only one small step forward-became their goal. A second factor, perhaps perversely, was the Democrats' growing proficiency at raising big money themselves-a skill that may have lulled them about the political ramifications of Shays-Meehan. Buoyed by near-parity with the GOP in soft money fundraising, the Democrats generally-and party chairman Terry McAuliffe particularly-came to believe that they could compete in the hardmoney game, too. That made the bill's tradeoff between hard money and soft money acceptable.

As the proposed reforms grew steadily more modest, their appeal to the center and center-right grew. Moderate Republicans in the Senate and the House took the lead and the Democrats stood back to let them carry the fight. A seemingly enlightened segment of the business community, some of whom were executives tired of being dunned for six-figure checks, jumped on the bandwagon out of their own self-interest. The scope of reform dwindled until hardly anything remained at all.

There should be nothing surprising in the spectacle of White House Press Secretary Ari Fleischer trying to steal credit for the bill on behalf of his boss. And why shouldn't Bush sign it? Shays-Meehan favors Republicans. In the 2000 election cycle, the GOP outraised the Democrats in hard money $466 million to $275 million; and in just released figures for the current cycle, the Republicans are leading the Democrats in hard money $131 million to $60 million. Moreover, Shays-Meehan certainly favors the incumbent president in his 2004 campaign. Bush is a hard-money dynamo: In 2000 he raised $103 million in hard-money donations for the primaries alone, while sitting veep Al Gore raised a paltry $46 million in hard money. Worse yet, signing Shays-Meehan helps to inoculate Bush from the taint of Enron's political money. Nonetheless, Bush taking credit for campaign finance reform, notes Public Campaign analyst Micah Sifry, is "like Harry Truman claiming credit for sparking the nuclear disarmament movement by dropping the bomb on Hiroshima."

But this dubious victory may hold the seeds of more sweeping changes. One thing is certain: The kind of incremental reform that the House has enacted is far from the kind of dramatic change that can actually renew people's faith in our political system. But passing Shays-Meehan at least clarifies the challenge.

For years, progressives have endorsed public financing, specifically public financing that covers both primary and general elections. The AFL-CIO has long supported it, and recent converts include the NAACP, the ACLU, the Sierra Club, and the National Organization for Women. The small state experiments in Maine and Arizona have shown what a huge difference it can make. Activists on the national front are poised to move forward. The next victories are likely to come at the state level in judicial elections. Spurred by the American Bar Association's endorsement of full public financing for judicial races, activists in North Carolina, Wisconsin, and Illinois are moving to change their state laws. Public financing of campaigns for the legislature, though further down the road, is most likely in Minnesota, New Mexico, and Connecticut.

Now that soft-money reform is off the table, it's time to focus on the real deal.

Prospect senior fellow Ellen S. Miller was executive director of the Center for Responsive Politics for l2 years and is the founder and former president of Public Campaign.

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