How to Finish What Stephen Colbert Started (Politico)


TP w Colbert.jpg
“Colbert Super PAC” exposed the troubling realities of money in politics more effectively than any PSA. But the crippling flaws in our campaign finance system that it was created to highlight have not abated in the years since—in fact, they’ve worsened substantially. The massive $144 million that Democratic and Republican presidential hopefuls collectively raised in the third quarter of this year doesn’t include the untold millions funneled into their super PACs by deep-pocketed donors. When those numbers are disclosed in January, they will undoubtedly reveal that the money flowing to shifty outside groups is larger than ever. That is not even to count the funds being raised and spent in this election by candidate-allied nonprofit organizations, whose finances we will see, only in part, after the election is over.

A little over a year after the Supreme Court’s infamous decision in Citizens United v. Federal Election Commission, I appeared on national television to walk Stephen Colbert through the legal intricacies of establishing his super PAC, Americans for a Better Tomorrow, Tomorrow, and his dark money 501(c)(4), Americans for a Better Tomorrow, Tomorrow, Shhh. Though my appearances on his show were no more than a few minutes each, during our discussions Stephen demonstrated his uncanny ability to take a complex, nuanced problem and distill it down to the absurd facts at its core. For example, one particularly memorable exchange from my first appearance came after I reminded him of the applicable regulations if he chose to form a PAC.

“Do a lot of people go to jail for breaking the law with their PACs?” he asked.

“No.” I replied.

“Can you name anyone who has gone to jail for breaking the law with their PACs?”

“Not a person.”

“That’s my kind of law!” He concluded, to a burst of laughter from the studio audience.

As is so often the case, while Stephen may have been joking, he was simultaneously making a very serious point. Laws created to ensure transparency, openness and accountability in elections are only effective insofar as they are actually enforced; a legal regime which doesn’t punish past violations and deter future ones can hardly be called a regime at all.

Four years ago, when we were taping those first segments for the Colbert Report, super PACs and other byproducts of Citizens United were still relative newcomers to American elections. Looking back, it’s remarkable how prescient his super PAC’s satirical activities would prove: episodes ridiculed the almost-nonexistent regulation of coordination between candidates and PACs, the ease with which contributions can be laundered through “dark money” groups and any number of other legal loopholes that Citizens United turned into—as Stephen called them—“loop-chasms.”

Stephen’s biting satire may have increased American’s disgust with the campaign finance system, but subsequent actions by the courts and the legislature have made it much easier for the wealthiest Americans to effectively buy elections for their candidates of choice. Politicians’ ever-greater dependence on donations from the richest of the rich was made clear just last weekend by a New York Times investigation finding that “just 158 families have provided nearly half of the early money for efforts to capture the White House.”

Fixing our campaign finance system will require action from real Republicans. Not just from the talented guy who played one on TV. Each of the major Democratic presidential candidates has come forward with substantive campaign finance reform proposals. So far, though, the leading Republican candidates have an inadequate approach: effectively telling voters “the current system is terrible, but I have no suggestions for making it better.” The Republican presidential candidates and party leadership have been notably silent on the sorry state of our campaign finance system even as an amazing 87 percent of Americans—an overwhelmingly bipartisan majority—tell pollsters that they believe the campaign finance system should be reformed so “a rich person does not have more influence than a person without money.”

This silence by GOP leaders is a risky calculation that is empowering populist candidates like Donald Trump, who charges that other candidates are “puppets” of big donors. The Republican Party has historically viewed its ability to raise big-dollar contributions as a strategic advantage, and now the party is doubling down on this perceived strength in the hope of realizing victories in 2016. However, the short-term fundraising boost is not worth the disengagement this generates in the party’s political base (and which is fueling the Trump phenomenon). This voter disillusionment may be one reason the more than $100 million Jeb Bush’s super PAC has raised so far hasn’t given him a boost in the polls. It’s time for Republicans to make policy choices that reflect their constituents’ anger with the status quo.

Having served as counsel to three Republican presidential campaigns, I see opportunity here for one or more Republican Presidential candidates to harness the popular disgust at our current system of financing elections. Doing will certainly require more than soundbites and swipes at other candidates, but it is a crucial first step in restoring Americans’ faith in the fairness of our elections. The GOP could start down this path by urging enforcement of the election laws still on the books.

Since the Supreme Court handed down Citizens United in 2010, the regulations requiring independence of super PACs and full disclosure of all election funding have been—at best—seriously hindered in their enforcement, and—at worst—reduced to nothing more than a dead letter.

The Federal Election Commission (FEC), which is tasked with enforcing federal campaign finance law, has become so mired in partisan gridlock over the past several years that FEC Chair Ann Ravel has called the body “worse than dysfunctional” and conceded that, due to the Commission’s inability to act, “there is not going to be any real enforcement” of election and campaign law in the current election cycle.

In any context, comments like these would be deeply concerning, but in a post-Citizens United world, they are downright alarming.

Super PACs—their rise and increasing influence—have become the embodiment of all that is wrong with our campaign finance system. Born from Citizens United and subsequent court decisions, super PACs may accept unlimited contributions from individuals, corporations and labor unions and make unlimited independent expenditures to influence elections. The theoretical constitutional lynchpin permitting such entities is the assumption that independent expenditures are “wholly” and “totally” independent of any candidate or party.

In reality, many super PACs are creatures of candidates and parties, and the presidential candidates this year have become increasingly entwined with “their” super PACs. To take just one example, the staff of CARLY for America—Carly Fiorina’s super PAC (though one could be forgiven for confusing it with her campaign: Carly for President)—has been doing advance work for her public events, hanging bunting, distributing signs, even mobilizing supporters to (PAC-organized) rallies where the candidate has graciously “accepted” the super PAC’s “invitation” to speak.

As a result of this coordination between candidates and super PACs, the 2016 election cycle effectively marks the end of federal contribution limits. Those limits are still in place when giving directly to a candidate, but wealthy contributors may give unlimited amounts to a candidate’s super PAC and enjoy the access and influence a million dollar plus contribution provides them.

The parties are also happily accepting million dollar contributions as a result of the Supreme Court’s decision in McCutcheon v. FEC (which struck down the aggregate limit on what an individual may contribute to candidates and party committees) and because of Congress’s dramatic increase of the party contribution limit.

Ironically, during oral argument in McCutcheon, when Solicitor General Don Verrilli cautioned the Justices that striking down aggregate limits could open the door to unprecedentedly massive contributions through the mechanism of joint fundraising committees, Justice Alito scoffed at this “wild hypothetical” that “had no basis in reality.” But with the much higher party contribution limit Congress enacted in December, not even 18 months after McCutcheon was handed down, both the Democratic and Republican parties began raking in $1 million-plus contributions under the new rules, proving the Solicitor General’s warning wasn’t so “wild” after all. As a result the parties are looking more like super PACs—just one more conduit for six and seven figure contributions—forgoing their traditional role as a big tent for party members and contributors across the economic spectrum.

Often the underlying source of these large contributions is never disclosed to voters. If big-dollar contributors want to remain nameless, they have the option of funneling their money through non-profit organizations linked to the candidate, which do not disclose their donors to the public. Millions of dollars could be coming from one or two individuals, corporations, foreign nationals or governments—it’s impossible for us to know (although nothing prevents donors from making sure the candidates do).

The FEC, rather than carrying out its legal duties, has exacerbated the problem. The current FEC’s repeated deadlocks on important enforcement cases—including cases presenting evidence of coordination between candidates and supposedly “independent” groups—mean that political operatives may violate the law with little fear of penalty. A recent study by the watchdog group Public Citizen warned that “the FEC is showing a dramatic and uncharacteristic inability to perform its duties more or less in all categories.” It noted that, between 2003 and 2013, the number of Commission votes on whether to enforce election law declined by a stunning 80 percent, while the percentage of those votes that ended in a 3-3 deadlock was at an all-time high.

Unfortunately, it’s not only the FEC that has failed to enforce the law—the IRS has hardly done better. Most dark money groups like Crossroads GPS claim tax-exempt status under section 501(c)(4) of the Internal Revenue Code, a provision governing nonprofit groups “operated exclusively for the promotion of social welfare.” Despite this seemingly-clear language, IRS regulationstotally disregard the law’s wording (not to mention Webster’s Dictionary), declaring that an “organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare” (emphasis added). Even worse, the IRS now seems to accept the argument that a group can spend up to 49 percent of its funds on campaign activity (potentially totaling tens of millions of dollars) without being considered a political organization. This odd interpretation of section 501(c)(4) has allowed donors and corporations to skirt political disclosure requirements and secretly funnel billions to their candidates of choice.

Admittedly, the backing of wealthy donors is not an absolute guarantor of success: when every candidate has a super PAC, by definition only one will be successful. Millions in super PAC donations from pipeline magnate Kelcy Warren weren’t enough to keep Rick Perry’s campaign afloat, nor were comparably lavish donations from Wisconsin billionaire Diane Hendricks effective at sustaining Scott Walker’s Presidential ambitions. The lesson to take away from the failure of the Perry and Walker campaigns isn’t that super PACs are inconsequential, but rather that PACs cannot do everything by themselves: they still need a candidate voters like. And the candidates voters like most (with the exception of insurgent candidates Trump and Sanders) are all bolstering their campaigns with truckloads of super PAC money from their wealthy benefactors.

While billionaires who want to buy politicians may appreciate this facilitation of electoral corruption, the vast majority of the American people strongly disagree. A recent poll by the New York Times produced some sobering numbers: 84 percent of Americans felt that money had too much influence in politics, 85 percent supported “fundamental changes” to or “completely rebuilding” the current campaign finance system, and a mere 13 percent believed that politicians “rarely” or “never” promote policies to benefit their donors.

Public opinion surveys have repeatedly shown that this isn’t a partisan issue. One recent poll by Bloomberg Politics confirmed an almost unheard of bipartisan consensus: 80 percent of Republicans and 83 percent of Democrats agreed that Citizens United ought to be overturned. And groups like the newly-created Take Back Our Republic, headed by conservative grassroots activist John Pudner, recognize that there is major discontent among conservative voters on these issues. Such widespread pessimism about the state of American democracy casts even further doubt on the Supreme Court’s baseless claim in Citizens United that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”

One reason for such broad support is that these practices are changing the nature of our elections at all levels of government. In the 2014 midterms, in the hotly contested North Carolina, Colorado and Iowa Senate races, outside groups accounted for the single greatest share of electoral spending—more than the candidates’ own campaignsState and local races are also feeling the damaging effects of Citizens United and have reported an increase in the amount of outside money spent in elections. Maryland’s campaign finance agency reported it fielded a call about setting up a super PAC to support a sixteen-year-old candidate for the student slot on the Maryland School Board. Because of the smaller size of many of these races, money spent on local media ad buys and ground game activities can have an enormous impact.

The innumerable examples of our campaign finance system gone awry testify to a disconcerting truth: The trampling of American election law knows no limits on party, candidate or side of the political spectrum. Regardless of whether one looks at Republicans or Democrats, conservatives or liberals, “Red America” or “Blue America,” one can discern the same troubling patterns of behavior among candidates, campaigns and donors. As a result, the challenge of how to restore openness, integrity and fairness to our elections is a daunting one. However, because this problem transcends party lines and risks silencing voters of all political perspectives, reforms are more achievable than many think.

Some candidates for president, like Bernie SandersHillary Clinton and Lindsay Graham have called for a constitutional amendment to overturn Citizens United, echoing what some 60 percent of voters say they support—including majorities among both Republicans and Democrats. But a sound constitutional amendment, which alters the First Amendment just enough to negate the damage of Citizens United but not so much as to undo the crucial protections the Constitution affords free speech, is not easily crafted. And even if a well-drafted amendment were offered, it would be extremely difficult to obtain the necessary support of two-thirds of each house of Congress and three-fourths of the state legislatures. These potentially insurmountable political obstacles allow candidates to carry on as they have been: voicing support for “reform” while avoiding taking positions on more readily achievable solutions.

Congress itself could far more easily make important changes to our campaign finance system through the legislative process. I’ve written extensively about this issue and even drafted model legislation in the American Anti-Corruption Act (AACA). The legislative changes that would have the most profound impact include: changing the way campaigns are funded, ensuring the activity of independent groups is actually independent of candidates and parties, disclosing the underlying sources of dark money flowing into elections and restructuring the broken FEC.

The most urgent need is finding alternative ways for campaigns to be funded. It takes money to run campaigns—money to pay for advertising, collect polling data and hire staff. Money will always be a part of the process, but we can provide alternative ways for candidates to raise money and create incentives for them to pursue small dollar contributions rather than rely on a handful of wealthy super PAC supporters.

Several states and large cities—including New York City—have matching fund programs that multiply the value of contributions (New York City’s system provides $6 for every $1 received in small contributions) to make them more appealing to candidates and create an incentive for more people to invest in the democratic process. Other methods to increase the number of small dollar contributors include Minnesota’s contribution refunds for small political donations and the AACA’s proposal to create $100 tax rebates that any registered voter could contribute to a candidate or party. Professor Richard Painter, Associate White House Counsel in charge of ethics under George W. Bush, has suggested a $200 “taxpayer rebate”: every registered voter gets the first $200 of their tax dollars back (the “first fruits of their labors”) in vouchers that they can use only to give to their favored political parties and candidates.

Measures like these matter because they show that the system can be fixed. The Presidential Public Financing System worked well on the federal level for more than 20 years. It is now out of date but experiences at the state and local level show innovations are possible. The key with any of the systems is to create an incentive for candidate’s to raise small dollar donations and give average Americans a stake in the process.

Second, we need measures to ensure independent groups’ activities are actually independent of candidates and parties. That independence, the Supreme Court has said, is absolutely essential to prevent corruption and the appearance of corruption. There is legislation pending in Congress that would provide such accountability: the Stop Super PAC Candidate Coordination Act (H.R. 425). It would expand the statutory definition of “coordination” to close loopholes currently abused by campaigns and allegedly “independent” PACs, thus breaking the wink-and-nod relationship between candidates and super PACs and reinforce candidate contribution limits.

Third, we need disclosure measures that would provide the transparency and accountability the Court claimed we would have when it decided Citizens United. This includes corporations disclosing their political spending to their shareholders. In the non-profit sector, this means ensuring that the IRS enforces the “exclusive purpose” test in a manner consistent with the law when considering applications for nonprofit status, preventing dark money groups from taking advantage of tax benefits created for organizations dedicated to public service. An alternative would be to require non-profits that spend amounts greater than either 10 percent of their revenue or $1,000,000 on election activities to publicly disclose their donors in real-time, online.

Finally, the success of any of these reforms hinges on a functioning agency to administer and enforce the law. The FEC, as currently constituted, has proven that it cannot do the job. We need an agency that is not paralyzed by partisan gridlock. The bipartisan Restoring Integrity to America’s Election Act (H.R. 2931) would change the FEC to a five-member body with a stronger Chair and not more than two commissioners from any party. This bill would establish a Blue-Ribbon Panel to make recommendations to the President for the appointment of FEC Commissioners, which would help ensure the appointment of qualified Commissioners with a demonstrated commitment to fulfilling the agency’s statutory duties. This bill is the product of discussions of the Bipartisan Working Group in the House, an informal group of Representatives from both sides of the aisle committed to finding common ground on important issues.

To be sure, none of these solutions is perfect, and none by itself will fully undo the damage done to our democratic institutions by recent court decisions and the new campaign practices that have followed in their wakeEven so, there is a strategic opportunity for candidates from both parties to take voters’ concerns about moneyed interests seriously and engage voters in developing a comprehensive set of solutions. The actions of a tiny number of enormously wealthy individuals and interests should never dictate the outcome of our political process: that idea is contrary to everything our founders and 225 years of American history stand for.

It’s time for Republicans to recognize that Americans of both parties want to change the way we finance our elections. In a race where candidates appear to only have ears for wealthy donors, it’s time to start listening to voters. This race is ripe for any candidate who can capture a way to translate campaign rhetoric about how to make our democracy work again into specific proposals that allow average Americans to play a dominant role in the financing of our elections. Those candidates could become powerful messengers—messengers who will gain support of millions of voters excited by a chance to change the way Washington works. Democrats seem to understand this, but the way is open for Republicans to seize on this immensely important issue.

Trevor Potter, a Republican, is a former chairman of the Federal Election Commission, and served as Counsel to the presidential campaigns of George H W Bush and John McCain. He is president of the Campaign Legal Center and a senior adviser to Issue One. This opinion piece was originally published by Politico Magazine on October 19, 2015. To read it there, click here.