Laws for Sale

by George Pillsbury

Dollars and Sense magazine, July / August 2000


Say you're a corporate entity and you want new legislation that will boost your profits -a tax cut, the repeal of "burdensome" regulation, or labor law "reform." The old-fashioned way is to buy access by making campaign contributions to incumbent politicians and hiring professional lobbyists to help them craft the desired legislation. This can be expensive and time-consuming. And the results are not guaranteed. Today there's a better way. A wealthy interest such as a corporation or individual millionaire can circumvent those same elected officials and-in 24 states-use the thriving marketplace of ballot initiatives to buy special-interest laws directly.

Ironically, they are exploiting hard-won democratizing reforms of an earlier era. Citizens' organizations fought alongside political leaders such as populist Democrat William Jennings Bryan and socialist Eugene Debs for the initiative and referendum (or "I&R") during the populist era of the 1 890s. The goal was to provide a way for ordinary citizens-in "emergency" situations-to circumvent state legislatures when a popular reform was blocked either by the undue influence of big economic interests or the narrow self-interest of the legislators themselves. Eastern and Southern political establishments largely resisted the initiative and referendum. However, citizens' groups won the reform in more populist Midwestern and Western states. Voters in these states used ballot initiatives to regulate businesses, legislate working conditions, and expand women's rights.

Now the law in 24 states, the initiative and referendum gives about half the U.S. population the opportunity to exercise a limited measure of direct democracy. Initiatives give citizens the right to create and vote on laws directly. Referenda allow voters to repeal by popular vote any state law. There is also a method for citizens to initiate constitutional amendments.

However, as in campaigns for public office, big money has distorted the process. Wealthy interests-whose spending on ballot questions is not limited by law-have long used their financial advantage to defeat grassroots initiatives. More recently, large corporations and newly minted millionaires have begun to use initiatives and referenda proactively. Sometimes they use the ballot to promote their special financial interests, sometimes to push personal political agendas. Either way, private money ends up making public policy.


A wealthy special interest will start by crafting a ballot question on which the potential opposition is not very well organized, lacks the resources to put up an effective resistance, or is vulnerable and easily scapegoated. Ideally, the initiative poses an issue on which the public is ambivalent or lacks basic knowledge. This is often true for the narrowly tailored economic concerns the big-money interests pursue through the ballot. Then the corporation or individual spends anywhere from $1 million to $10 million (or more) to hire:

* a lobbying firm to plot and manage the initiative campaign,

* a firm to pay signature gatherers to secure placement on the ballot,

* a polling firm to target voters,

* a media firm to run the ad campaign, and

* a top law firm to defend the law every step of the way.

This process has become all too familiar to residents of ballot-initiative states across the country. In Massachusetts, one of the few Eastern states with the initiative and referendum, local landlords and large realtors drafted a 1994 statewide ballot initiative to ban rent control throughout the state. Rent control then only existed in three of the state's 351 cities, including Boston. Real-estate companies poured in more than $ l million to pay the costs of signature collection, public-opinion polling, and a media campaign. In the three rent-control cities, voters rejected the measure by a wide margin. Statewide, however, landlords won their question with a narrow 51% majority. Today rents have skyrocketed and all three former rent control cities are beset by an affordable housing crisis.

Big-money interests also used the ballot initiative to bring riverboat gambling to Missouri. In the early 1990s the Missouri legislature authorized, and the majority of voters approved, gambling on casino boats. After opponents won a court case halting the measure's implementation, a second vote rejected the gambling initiative. Las Vegas casinos and other gambling interests upped the ante by hiring one of the nation's top ballot-initiative firms, the California-based Winner, Wagner, and Mandabach. With more money and better polling, they forced the issue back on the ballot and won. With the same firm's help, the gambling industry won again in 1998, when further court action forced them to seek a voter initiative for a constitutional amendment.

Across the country in California, Silicon Valley millionaire Timothy Draper spent $2 million of his personal fortune to qualify a school-voucher ballot initiative for this November. Opposed by most public-school advocates, his effort doesn't even have the backing of many local school voucher proponents. Draper's wealth, however, has bought enough signatures to make California voters consider his personal plan for free-market schooling. All this without the benefit of any citizen mobilization or legislative debate.

The main issue is not whether any of these are good or bad public policy, but the transformation of citizen initiatives into a marketplace where laws can be bought and sold as commodities. Two basic factors are at work:

The first is the exploding use of paid signature gathering -and the emerging signature-collection industry. Large national firms hire itinerant signature collectors and send them to ballot-question states. The gatherers typically get paid per signature. They have only cursory knowledge of the issues and little commitment to the outcome beyond the paycheck. Setting up at shopping malls or in front of supermarkets, they will often gather signatures for two different petitions at once.

Paid signature gathering has long been recognized as a threat to the honest and democratic use of the initiative and referendum. Over a century ago, both supporters and opponents of the reform noted that petitioning for "ten cents a signature," the going rate at the time, would defeat the whole purpose of signature requirements-to demonstrate widespread public interest in the proposed initiative.

It is true that in some initiative-and-referendum states the signature requirements are too high for even legitimate citizen efforts. However, in most, popular causes with bona fide grassroots support can collect signatures using volunteers. Initiative backers may still use funds to pay organizers to recruit the volunteers. However, it is still local volunteers at shopping centers, post offices, and community meetings that are the collectors-people who know and care about the issue at hand. Recruiting volunteers requires education and movement-building-and is as important to the initiative process as the final vote itself.

The other particularly troubling feature of ballot questions is the absence of contribution limits. Corporations or wealthy individuals can spend as much as they want to

purchase an outcome-whether to defeat a public interest initiative or buy their own law. The advantage of money has become far more significant since the advent of mass media, especially television. Back when government took seriously its role to protect the integrity of the ballot process, a 1960s reform - called the "Fairness Doctrine" muted this advantage. If, for example, one side of an initiative campaign spent $3 million on a media buy, the Federal Communications Commission (FCC) required broadcasters to provide either equal time or a ratio of time to the other side to respond. This policy also served to discourage unbridled spending, since this would trigger matching ads for the . other side. Under the Reagan administration, however, the FCC did away with the Fairness Doctrine, eliminating this important leveler between those with and without large financial resources.

Until recently, the courts have not helped. In last year's Buckley v American Constitutional Law Foundation case, the Colorado Supreme Court turned back attempts to restrict paid signature gathering or limit contributions, citing the "free speech" rights of money. In their reluctance to challenge the so-called "rights" of big money, the courts devalue the speech and rights of those without money. "Free speech" in the realm of politics and public policy loses its meaning when money buys access to speech through ads, polls, phone banks, and signature collectors. Here speech is actually rarely "free" but comes at an increasingly high price for media buys and the like. In a positive turn, the Supreme Court may have begun to recognize the gravity of the problem with this year's Missouri u Shrink decision. By a 6-3 majority, the high court upheld the power of the states to place contribution limits in state election campaigns.

There are those who would throw the ballot-initiative baby out with the big-money bath water. Columnist and pundit David Broder argues, in his Democracy Derailed, that big money has terminally corrupted the initiative process. He concludes - with other economic and governmental elites who dislike any form of direct democracy - that the public should never have the right to vote directly on the laws that govern it. As corrupting as money has been, however, ballot questions can remain a positive component of democracy. They provide voters with a valuable tool, under special circumstances, to advance political and economic reforms stymied by either the self-interest of legislators (such as reforming campaign-finance laws that favor incumbents) or the power of wealthy lobbies (who can unduly sway legislators with campaign money, prestige, and perks for their districts, and jobs when they leave L office). Environmentalists have used ballot questions to block nuclear power plants, clean up ,~ toxic wastes, promote recycling, and create conservation land trusts. Recently, proponents of campaign finance reform have used ballot initiatives to get around the resistance of entrenched politicians.

Like any part of our democracy, however, ballot initiatives are only as democratic as their process. Reform and regulation are necessary, just as in election campaigns, to keep them fair and true to their original purpose. Comprehensive reform must:

1. Curtail paid signature gathering: The signature-gathering process is central to the democratic, educational, and mobilizing value of ballot initiatives. Volunteers committed to a cause should be the primary gatherers. At the same time, prohibitively high signature requirements in some states, like Nevada, should be reduced.

2. Restrict or ban donations from for-profit corporations: Current federal and state laws already ban corporations from making direct campaign contributions. While ballot questions are considered "lobbying," not electioneering, for-profit corporations already have more than enough influence through lobbyists and other means.

3. Restore the "Fairness Doctrine" This levels the playing field-enhancing rather than limiting speech. It also can discourage the overuse of paid media and provide incentives to rely more on direct voter education at meetings, from organizations, over the Internet, or through earned media generated by the campaign itself.

If the role of money goes unchecked, ballot questions will continue to be bought and sold like cars, appliances, or any other consumer good. With common-sense regulation and reform, however, ballot questions can be saved from this corrupting influence and restored to their original purpose. They can embody the noble ideal of democracy. As the Constitution of the State of California puts it, "All political power is inherent in the people. Government is instituted for their protection, security and benefit, and they have the right to alter or reform it when the public good may require."


George Pillsbury is Director of the Massachusetts Money and Politics Project, which does research and education on the role of money in state elections. He is also Development Director of Boston VOTE, a new coalition working to increase electoral turnout and promote electoral reform.

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