There is another old
saying: “money talks.” If money talks then it must have a voice and if it has a
voice then somewhere someone is going to listen to that voice. If money is
power, and has a voice, then those who possess that money also have that power
and that voice. As the influence of those with that money increases so does
their representation. It’s their interests that are served because they have
the loudest voice. So what happens to
those without that money; the low wage server, the factory worker, the cashier,
the poor, sick, elderly, what happens to their voices? Wages for those groups
of people have stagnated, and in many sectors declined over the last forty
years. (Greenhouse, 2013) How do these stats and others tie into
the idea that money is corrupting our political system? In order to really
understand the effect that money plays in the political system and how
everything ultimately leads back to it one must understand first what it has
done in the past. Money corrupting the political system is not a new thing.
It’s not even a new thing in America; in fact America has had a history of
moneyed interests paying politicians to do their bidding. All of human society
can be looked at as going through cycles, such the same with political campaign
spending, and to understand where we are, we have to look at where we have
been.
The earliest use of money
in politics in America comes as early as an election which in involved a young
Colonel George Washington in the year 1758. Washington’s campaign for the House
of Burgesses paid for votes in a sum equal in today’s dollars of $8,000 worth
of booze and food. (Weaver) This of course led
to a rule to be passed by the House of Burgesses which “provides that no
one should be qualified to hold a seat in that house, who should, before his
election, either himself or by any other person or persons on his behalf and at
his charge, directly or indirectly give, present or allow any person or persons
having voice or vote in such election any money, meat, drink, entertainment or
provision, or make any present, gift, reward, or entertainment, &c.,
&c., in order to be elected." (Weaver) So we already have a
good demonstration of vote buying and the first rules against it, however there
are a lot more examples of political corruption leading up to the current
situation we find ourselves in today.
Going forward into the 19th
century and to a time that was fondly known as the “gilded age” there were many
occurrences of political corruption related to both money and power. The 1800’s
were a time of corporate domination, political scandal, and corruption. It’s
started with the spoils system advocated by President Andrew Jackson that
rewarded political allies with positions in office and stated “to the victor go
the spoils of the enemy.” (Asawin Suebsaeng, 2012) Such a system of
rewarding political allies was not just wrong, but further allowed for the use
of cronyism in our political system. The issue with the spoils system is that
it allowed those with deep pockets that were able to finance political
campaigns to get a return on investment in those campaigns, often leading those
donors into positions of power that allowed them to be able to crush their
competition, enact legislation to further their own interests, and shut out the
voices of regular people.
Nonetheless the spoils system
remained for over 50 years from 1829-1883. (Asawin Suebsaeng, 2012) During that time
large donations from railroad magnates like Jay Cooke were funneled into the
Republican Party in the year 1872 to the tune of $50,000. At the time that
equaled a quarter of the entire budget of the Republican Party and was used to
help secure the win of President Ulysses S. Grant. An unnamed historian was
quoted as saying “Never before was a candidate placed under such great
obligation to men of wealth.” (Asawin Suebsaeng, 2012) Obligated they are.
When money is given to a candidate for elections the donors expect something in
return. Grant’s presidency was marred with scandal after scandal from corrupt
political appointees and even the vice President. These scandals included Black
Friday, Credit Mobilier, Whiskey Ring, and the Indian Ring. (Grant
Administration Scandals) Credit Mobilier was one of the greatest
scandals of the 19th century because of how it was set up to benefit
congress as well as the leader of the company Congressman Oakes Ames. It begins
when the Union Pacific Railroad was hired to build the first transcontinental
railroad in America. Two men, one named Thomas Durant, and George Train set up
a new company called Credit Mobilier to basically be the one to build the
railroad while being able to profit from government money related to its
construction. It’s important to note that Thomas Durant was also the vice
president of the Union Pacific Railroad. The fraud was simple, Union Pacific
made contracts with Credit Mobilier to build the railway, paid through check.
Credit Mobilier used those checks to buy stock in Union Pacific. While this
practice was technically legal it was still using taxpayer funds in order to
line the pockets of wealthy individuals by doing things like inflating the
prices of actual construction in order to create more profit and adding nine
extra miles of track onto the project in order to reap extra profits without
the risk. The government corruption angle came into play when Thomas Durant was
replaced by Congressman Oakes Ames in 1867. Ames offered members of congress
shares of its stock at a discount under market value. Those members of congress
were able to sell those shares for enormous profit, and as they were
congressmen, they were also able to vote for more appropriations to the
corporation in which they owned shares. (Kennedy, 2001) It was a great
example of a grand larceny of taxpayer money going right back into the pockets
of our politicians.
This is the core of what happened in the
gilded age. Another example of the depths of corruption in the halls of
congress was the Salary Grab of 1863. This scandal which was once again legal
had congressmen many of whom we’re voted out already and finishing up the lame
duck session of congress voted themselves a retroactive pay raise of 50% back
to the first day of the congress! (Lee J. Alston, 2006) The majority of
congressmen participating in this salary grab were some of the same ones that
were a part of the Credit Mobilier scandal that had a massive public backlash
during the elections. It was this scandal and many others like it that led to
progressive reforms in subsequent years. One of these reforms is was that
signed by president Chester A. Arthur that ended the spoils system. However
there were many more problems that needed to be addressed for truly progressive
reform. Although civil servants could no longer be solicited for campaign
contributions, that didn’t stop corporations from being able to dig into their
massive profit margins to prop up business friendly candidates. An example of
this was a campaign manager named Mark Hanna that was able to successfully
solicit campaign contributions from many of the nations’ largest corporations
for William McKinley’s’ presidential campaign. Those donations he added would
be "according to [their] stake in the general prosperity of the
country." (Asawin Suebsaeng, 2012) There has been
speculation on how much was raised by Mark Hanna for the McKinley campaign;
some studies cite it somewhere around $3,000,000 to $16,000,000 (Chandler, 1998) either way this
shows a massive amount of money spent on McKinley’s political campaign. No one
is really sure how much of that came from corporate spending, but one can
safely assume that at least a fairly large amount came in the form of corporate
donations to the Republican Party. Not so long after the McKinley campaign did
another scandal erupt involving a very large political donation from the New
York Life Insurance company, this secret donation was equivalent to $1.25 Million
in todays’ dollars and went straight into the pockets of the Republican Party
because as the Vice President of New York Life Mr. George Perkins put it “We
felt that the assets of the New York Life Insurance Co. would be jeopardized by
Democratic success.” (Asawin Suebsaeng, 2012) Reformers were even
more determined after the revelation of the secret donations and the rampant
corruption of the last few administrations and the oversized representation
that was given to those donors.
Remember all of this took place
during the gilded age, where massive wealth inequality existed. The average
American workers wages did not compare at all to the excesses of corporate
privilege. In fact workers’ wages were not enough to even support their
families, they worked in terrible unsafe conditions, and no longer worked
beside their employers as it was in times past but were separated. (The War Between Capital and Labor, 2011) Worker protections
were near non-existent, and child labor was rampant. Injuries and deaths
related to work in the factories were incredibly high “around 1900 25-35,000
deaths and 1 million injuries per year occurred on industrial jobs.” (The War Between Capital and Labor, 2011) Injured workers or
families of deceased workers were unable to hold factory owners accountable and
because of the massive corporate and business campaign donations to Congress as
well as presidential races and bought courts, those workers were not represented
by the government. Strikes were often met with violence, often from state
governments sending militias out to deal with strikers and even the National
Guard. (The War Between Capital and Labor, 2011) It was the rampant
inequality and lack of representation for the worker that led to the progressive
reforms of the 20th century.
While the 19th century
was filled with scandal, inequality, corporate donation, and wage slavery, the
first half of the 20th century made a lot of progressive reforms
especially when it came to campaign contributions and voter representation.
Starting in 1904 in response to accusations of fundraising impropriety (Asawin Suebsaeng, 2012) President Theodore
Roosevelt called for a ban on all corporate contributions for all political
purposes. Called the Tillman act it prohibited corporate campaign contributions
but did not require disclosure of any campaign records. (Primer on Disclosure and Electronic Filings, 2010) Further limits on
campaign spending were enacted in 1910 with the Federal Corrupt Practices Act
that created limits on individual campaign spending, however its limit on House
and Senate candidate spending was overturned by the Supreme Court. (Asawin Suebsaeng, 2012) The legislation
itself was not strong nor was it was really enforced until its revisit in 1925.
Despite the strong new limits placed on corporate and individual contributions
there was a strong interest in the ability by these organizations to be able to
make political donations in return for endorsing favorable legislation. That
led the creation in 1940 of the first Political Action Committee, or PAC. PAC’s
were able to skirt past the rules on political campaign spending because it
collected campaign money outside of standard dues. It’s interesting to note
here that this PAC, called the Congress of Industrial Organizations was
actually a labor advocacy PAC created to get around the fact that unions were
also unable to by law contribute to political campaigns. (Encyclopedia.com, 2005)
Even these limits on campaign
financing from unions, corporations and individuals were not enough to stop
corruption of the political system. PAC’s were able to do an end run around the
laws and still contribute to political campaigns in secret. Senator Richard
Nixon famously had to defend $18,000 in secret campaign gifts as well as a dog
given to him in which his daughter named “Checkers.” (Asawin Suebsaeng, 2012) Later on then
President Nixon also ran into more trouble by collecting over $20 Million in
secret campaign donations for his reelection bid, some of that is speculated to
have went to fund the Watergate break-in. (Asawin Suebsaeng, 2012) It also estimated
that $700,000 of that money was in cash, and all of it was collected before a
law that would require discloser statements be issued from campaigns would take
effect. The Watergate Scandal was indeed a turning point in campaign finance
law that led to two important changes. One important change was to update the
Federal Election Campaign Act or FECA, those changes become the modern bedrock
of campaign finance law, and the other change was that the Federal Election
Commission was created to oversee campaign spending. These changes really
represent the last truly progressive step in campaign finance laws. The issues
that came after the era of progressive reform ends up leading into some of our
modern campaign spending and corruption problems.
It’s important to note that during
the time of the all progressive reform when it came to limits on campaign
financing, a large number of very progressive policies were enacted, and that economic
growth had soared. The New Deal policies during that time period ensured that
workers had representation in the workplace and the limits on campaign spending
made sure that voters had representation in congress. Taxation was progressive
and income inequality was at a lower level than it is even today. (Krugman, 2007) The social safety
net provisions in the New Deal would not have been possible without the limits
on corporate contributions. Corporations are by their very nature profit making
machines, and lower taxes increase profit margins. So that in order to maximize
profits, it only makes sense to influence those that have control over passing
tax policy.
However with the laws that were in
place during the 1970’s it was very difficult to get past those hurtles
especially with FECA the law of the land. In 1975 Senator James Buckley
challenged the constitutionality of FECA in a landmark court case. In fact the
very next day the amendments to FECA were signed into law is when Senator
Buckley along with Presidential candidate Eugene McCarthy and the New York
Civil Liberties Union filed suit against Francis R. Valeo, the Ex Officio
member of the FEC. (Court Case
Abstracts)
This suit essentially maintained that the limits on campaign contributions were
unconstitutional under the first amendment. The plaintiffs argued that
“limiting the use of money for political purposes constituted a restriction on
communication violative of the first amendment, since virtually all meaningful
political communications in the modern setting involve the expenditure of
money.” (Mares, 1996)
The outcome of this case that was decided in 1976 by the Supreme Court was that
some of the rules put in place by FECA were upheld, for example the limits on
individual and committee contributions to candidates were kept in place. The
limits in a candidate spending his or her own money, as well as independent
expenditures, and limits on total campaign spending were overturned by the
Supreme Court. Those rules were considered violations of free speech and
therefore protected under the first amendment. Money now equaled speech. However a rule that that did limit campaign
spending was put into place that was dependent on if the candidate voluntarily
accepted public financing of his or her campaign. The decision of Buckley v.
Valeo is still the law of the land and is still disputed by various groups
today as perpetuating a climate of inequality. It also begs the question, if
money is speech, and by law it is. Do people with more money have more speech
rights than those with less money? Another important question to ask is in an
age of growing income inequality, with more and more money flowing to the top,
has the political power of the poor been overtaken by the wealthiest
individuals and corporations that are able to exercise more “political speech”?
Despite this monumental success for
those who wanted more influence in the political system using money to “buy their
way in” it didn’t seem to be enough. The 1980’s saw the increased use of “soft
money”. Soft money is unregulated,
undisclosed, and unlimited campaign contributions. (Asawin Suebsaeng, 2012) Both the Democrats
and Republicans raised $45 Million in soft money in 1988. It didn’t get better
in the 1990’s. Campaign contributions caused senators to back a failing savings
and loan company run by Charles Keating. In a senate investigation several senators
including still serving Senator John McCain received $1.3Million in
contributions. McCain advocated to the senate on behalf of Keating, one can
safely assume why. (Asawin Suebsaeng, 2012) The following year
the use of soft money saw a 91% increase since 1988. Both Democrats and
Republicans raised $86 Million that year alone. The reason that soft-money was
legal is because it wasn’t given to a specific candidate, and often went to
expenditures such as buildings as well as going out to the states for local
get-out-the-vote drives. (Jasperse, 1992) A Vice President of common cause in
1992, Susan Marnes was quoted saying “we basically have a Federal Election
Commission which has written regulations which allow this money to come in
through the back door.” “Common Cause estimates that Republicans and Democrats
each raised $25 million in soft money during the 1988 presidential campaign.
The group says Republicans have raised $45.5 million and Democrats $15.7
million in soft money since then.” (Jasperse, 1992) At the time
Republicans on average tended to raise more in soft money than Democrats.
Despite the advantage, Bill Clinton was elected in 1996, it wasn’t so much the
funding, but it’s how that money was used, and Bill Clinton used his
$122Million in soft money to purchase “issue ads” to great effect over the
Republican contenders $144Million in soft money. (Asawin Suebsaeng, 2012) However those
donations came at a price, rides on Air force 1, coffee with the President, and
sleepovers at the White House were just several of the perks given to those
donors who gave to the DNC. (Kroll, 2012)
Not only that, but it was later found that the DNC also illegally received
$65,000 from wealthy donors through an L.A. area Buddhist Temple.
Those events caused a political
upheaval of the senate in 1994, and the Republicans took control. However an
unlikely pair of bipartisan senators, Democrat Russ Feingold, and Republican
John McCain, who decided to become a reformist after the Keating scandal, teamed
up in order to reform the system. (Kroll, 2012)
The McCain-Feingold bill banned soft money; it also banned the use of union and
corporate funds to be able to make ads about a candidate. Earlier drafts of the
bill also attempted to ban PACs; however it was dropped in order to focus on
soft money. It took nearly seven years to be able to get McCain-Feingold passed.
The two senators faced many amendments that would’ve handicapped the bill, and
a House that narrowly let the bill go through by a 51 vote margin, however with
much luck and little ceremony the final bill was signed on March 27, 2002. The
day McCain-Feingold was passed it was immediately challenged. The National Rifle
Association had already drawn up the paperwork to challenge the new bills’
constitutionality and had a staffer from a law firm waiting for the courthouse
to open. (Kroll, 2012)
However the NRA wasn’t the first challenger to the McCain-Feingold bill.
Senator Mitch McConnell, who serves now as a Senate Minority leader for
Alabama, ended up filing his case McConnell vs. FEC in a deal with the NRA to
team up while swapping his name with the organizations. (Kroll, 2012)
His entire argument against the banning of soft money was based on the premise
that: “[It] constitutes the most threatening frontal assault on core First
Amendment values in a generation." As Buckley v. Valeo had established
years earlier, political money was speech, protected under the first amendment,
and so according to McConnell and his lawyers, any limits on campaign financing
are unconstitutional under the precedent set by the Buckley decision. McConnell
had a history of trying to eliminate campaign finance laws; however he focused
on the FEC, while he couldn’t challenge the laws themselves, he could defund
the agency and therefore make them unable to enforce that regulation. Another
tactic used by McConnell to fight campaign finance regulation was to influence
nominations to the agency so that the agency would be filled with “ideologues
hostile to campaign finance law.” One such appointee, Donald McGahn literally
told a group of student that he would just not enforce the laws he was hired to
enforce. He just wouldn’t do his job. In the real world, if someone wouldn’t do
their job, they would be fired. If someone had an ideological opposition to
what he/she was supposed to do for a living, they would not be there long.
However government does not work that way, and in within the last six years the
McConnell strategy severely crippled the FEC’s effectiveness. Almost half of
all groups that were supposed to disclose donors did not do so during the span
of 2004-2010. (Kroll, 2012)
However much to the dismay of Mitch McConnell, all of McCain-Feingold was
upheld in the 2003 by the Supreme Court with a 5-4 decision.
However even with the victory of
McCain-Feingold that was seen a great victory for campaign finance reformers,
opponents of campaign finance reform, and proponents of legalized bribery
through campaign donations finally achieved their greatest victory yet. Citizens
United vs. FEC. A great deal of reform was eliminated with this decision handed
down by the Supreme Court. In 2008 during the Democratic Primaries, a
conservative non-profit group named “Citizens United” produced a movie called
“Hillary: The Movie”. It was a critical documentary on candidate Hillary Clinton.
Due to its political nature, and the fact that they planned on airing it using
an on-demand video service on cable TV, the video ended up being subject to the
rules governed by the FEC involving “electioneering communication” as well as
limits on who can fund these types of ads. (Money in
politics) Citizens
United sued the FEC first in federal court, and lost, and then appealed that
decision with the Supreme Court. In a 5-4 decision Citizens United had won its
case, and also won far more. The decision allows corporations, unions, and
other special interest groups to be able to spend unlimited money to advocate
for the election or defeat of electoral candidates. The decision essentially
gives corporations and unions individual first amendment speech rights
protected under the constitution. That protected speech comes in the form of
political campaign spending. An important part of the dissenting opinion of the
court is as follows: “In the context of election to
public office, the distinction between corporate and human speakers is
significant. Although they make enormous contributions to our society,
corporations are not actually members of it. They cannot vote or run for
office. Because they may be managed and controlled by nonresidents, their
interests may conflict in fundamental respects with the interests of eligible
voters. The financial resources, legal structure, and instrumental orientation
of corporations raise legitimate concerns about their role in the electoral
process. Our lawmakers have a compelling constitutional basis, if not also a
democratic duty, to take measures designed to guard against the potentially
deleterious effects of corporate spending in local and national races.
The
majority’s approach to corporate electioneering marks a dramatic break from our
past. Congress has placed special limitations on campaign spending by
corporations ever since the passage of the Tillman Act in 1907.” (Legal
Information Institute, 2010) Citizens United removed many of those
limitations, and increased the influence of corporations and special interest
groups on elected officials. After the Citizens United decision was rendered,
America saw the formation of something called a Super-PAC. Recall that a PAC,
or Political Action Committee, was created to skirt existing campaign finance
laws and provide funding for advocacy for or against a candidate. Super-PACs
take this idea to an extreme. They’re known as independent expenditure groups
that are able to raise and spend unlimited amounts of money from corporations
and wealthy donors. Unlike PACs, Super-PACs are unable to donate directly to a
candidate. However they can run issue ads for or against candidates. (Politics, 2013) There are also groups
known as 501c4 nonprofit “social welfare groups” that are able to raise and
spend unlimited money on political ads so long as they were “primarily engaged in
enhancing social welfare.” (Barker, 2012) The rules governing
the use of 501c4 nonprofit organizations are extremely unclear, although they
are supposed to promote social welfare through advertising, there are no clear
rules on what counts as social welfare. 501c4 groups are also not required to
disclose donors to the FEC, effectively concealing the identities of those who
fund these groups. The rise of the Super-PAC also coincided with the rise of
election costs during the 2012 election. In total Super-PACs alone spent nearly
half a billion dollars on presidential, and congressional elections. (Vine) Keeping true with
historical trends, the Republican Party ended up raising and spending more
money on congressional races than their Democratic opponents. Restore our
Future; the Super-PAC that supported Mitt Romney outspent Barack Obama’s
Super-PAC Priorities USA Action by at least two-to-one. (Vine) $142,097,462 spent
to support Mitt Romney, compared to just $64,799,242 spent to support Barack
Obama.
The 2012
election was the most expensive election in our nations’ history, totaling
somewhere around $6 Billion, (Hudson, 2012) most of that was
spent by, PACs, Super-PACs, 501c4 “social welfare groups” and independent
organizations. With that said, the questions posed earlier in this paper can
now be answered. With all of the money now being spent, by corporations and
wealthy donors in the political system, and with money being treated as free
speech, and corporations being treated as individuals possessing free speech,
it’s safe to assume that corporations have more speech rights (money) than the
cashier, the factory worker, and the elderly person on a fixed social security
income. Since those corporations and wealthy donors possess more speech, they
are heard more loudly than others with little speech. This has led to a
situation where our congress now represents the wealthy and special interests
instead of the American people. Also with all of the money being spent on
elections, the price of being able to win an election has also increased. The
average cost of winning a House seat, is $1.4Million, whereas the average cost
to win a Senate seat, is $8.5Million. (Gilson, 2010) A recent study also shows that on
average at least four hours of the day of a typical Congressman is spent
raising money. (Grim & Saddiqui, 2013) That’s at least
twenty hours a week on the phone soliciting for campaign money, and that
doesn’t count time spent at fundraisers. The easiest way to get that money is
to reach out to wealthy donors, corporations and special interests, which then
expect a return on investment if the congressman wins his or her election. So
this is where America is at, wealthy donors now control the high cost of
running for office, and demand returns on their investments, those returns
include lucrative government contracts, relaxed regulation, and lower taxes on
their businesses, and personal incomes. Tax rates for the wealthiest Americans
are at the lowest point they’ve ever been. (Gilson, Plutocracy Now, 2013) While corporate
profits have soared. (Schwartz, 2013) However workers have seen almost none
of the gain, because the politicians no longer represent the workers.
There is
hope however, throughout our history reformers have fought the corrupting
influence of money in politics and have won stunning regulatory victories.
There are groups of reformers at this moment working within the system to stop
the corruption. There are even Super PACs out there that have been created to
fight Citizens United by raising money, raising awareness and bypassing the
bought and sold congress and going directly to the states. To what end? To
fight for a constitutional amendment that bans corporate personhood, reverses
citizens united, and overturns the Buckley decision. These groups include the
“Get Money Out Campaign” “Wolf PAC”, and “Represent US.” Already some states
have introduced resolutions that will call for a constitutional convention to
amend the constitution with these new provisions. Enshrining the ban on money
in politics is certainly a difficult endeavor, however with the help of
volunteers and local representatives alike, they may be able to finally end the
corrupting influence of money in our political system and take the government
back from the wealthy corporations, and back to the people.
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