Money in Politics This Week

Every Friday, the Brennan Center will be compiling the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.

CAMPAIGN FINANCE REFORM AND ETHICS NEWS

NEW YORK

Albany Can Learn a Lesson from Ed Koch’s Legacy

After former New York City Mayor Ed Koch sadly passed away this month, Frederick Schwarz, chief counsel at the Brennan Center, explained in a New York Daily News op-ed how we can honor Koch’s legacy. In 1986, when Ed Koch was Mayor, some of his top political allies had been caught using their office for personal gain in a scandal that rocked the city. Koch seized the opportunity to reform New York City’s campaign finance system. Along with the City Council, he instituted a small donor matching program with low contribution limits. In 1989, in the first election that followed, all three mayoral candidates—Koch and David Dinkins, both Democrats, and Rudy Giuliani, a Republican—praised the new system and participated in it. Today, the benefits of the system are even clearer: the number of small donors to political candidates has grown, and elections field more competitive races. Although New Yorkers are now more confident in City Hall, they lack the same faith in Albany. In state elections, contribution limits are too high and big money donors reign supreme. New York State would do well to take a lesson from Ed Koch’s legacy and enact public financing.

New Disclosure Bills Proposed in New York Legislature

Secret money spent by outside organizations has become increasingly common in American elections, including New York State and federal contests. In response, Assembly Speaker Sheldon Silver has sponsored a bill that would increase the disclosure requirements imposed on outside spenders. And State Senator Rubén Díaz has proposed a bill that would mandate elected officials to post their campaign contributions on their websites, including the source and amount of each major donation. In the Huffington Post, Ian Vandewalker, counsel at the Brennan Center, argues that it is important for the public to know who is behind the political ads they are bombarded with every election cycle. Voters should be able to make an informed decision on Election Day.

George McDonald Challenges NYC Contribution Limits in Court

A Republican candidate for mayor, George McDonald, has accepted 10 campaign contributions in excess of New York City’s $4,950 legal limit, including one for $40,000. His campaign has also obtained a $120,000 loan in violation of the City’s election laws. McDonald filed a lawsuit earlier this year to invalidate the City’s contribution limits, which he argues run afoul of state law. The case is ongoing, and McDonald and the New York City Campaign Finance Board are set to appear in court on March 12^th. McDonald would face a $57,050 fine from the New York City Campaign Finance Board if he doesn’t return the excess contributions. If his legal challenge prevails, McDonald will likely face no penalty.  The City is defending the contribution limits. Campaign Finance Board spokesman Matthew Sollars said it “reduces the influence of deep-pocketed special interests and keeps corporate money out of our elections.”

Corporations Donate $670,000 to New York State Candidates, Save $2.4 Billion in Taxes

A December report from the US Public Interest Research Group showed that America loses nearly $150 billion to corporate tax havens each year. Regional assessment of the data by the Fair Elections Coalition for New York campaign demonstrates that offshore tax havens cost New York State $2.4 billion in annual tax revenues. Seventeen multinational corporations, including Bank of America, Citigroup, PepsiCo and Pfizer, sheltered billions of dollars in these accounts. At the same time, these 17 corporations also contributed over $670,000 to New York State politicians, including individual legislators, the Republican Senate Campaign Committee and the Democratic Assembly Campaign Committee. As Karen Scharff of Citizen Action explains, “You can never tie a specific policy to a specific to campaign contribution. But you can tie the overwhelming preponderance of behavior.” At a time of dire fiscal shortages, and suggested cuts to education and healthcare, it is critical to reform the system which creates the perverse incentives for politicians to pass such inequitable tax policies. Citizen-funded elections are critically needed in New York State. The estimated cost of $25-$42 million is well worth it.

NATIONAL

Supreme Court to Hear Challenge to Aggregate Campaign Contribution Limits

On Tuesday, the Supreme Court agreed to hear a challenge to decades-old federal campaign contribution limits. The case, brought by Alabama political donor Shaun McCutcheon, seeks to challenge aggregate contribution limits—the total amount that a donor may give to candidates, parties and PACs in a cycle. If the Supreme Court strikes down these aggregate limits, it would represent a fundamental reassessment of a principle established in Buckley v. Valeo in 1976—that direct campaign contributions may be strictly regulated because of their potential for corruption. The lower court ruled against McCutcheon, reasoning that without the aggregate limits candidates could solicit enormous sums and then “know precisely where to lay the wreath of gratitude.” McCutcheon has stated that he is prepared to abide by contribution limits to individual candidates and groups, which currently stand at $2,600 per election to federal candidates, $32,400 per year to national party committees, $10,000 per year to state party committees and $5,000 per year to other political committees. However, he objects to the separate two-year aggregate limits of $46,200 for contributions to candidates and $70,800 for contributions to groups.

New ABA Resolution Urges Congress to Mandate Disclosure

The American Bar Association has adopted a resolution in support of disclosure of political and campaign spending during its Midyear Meeting in Dallas. The resolution, 110B, urges Congress to require all outside spenders to disclose the source of their funds and the amounts spent. The resolution requests that contributions “used for making electioneering communications and independent expenditures,” as well as “the amounts spent for such communications and expenditures” be publicly disclosed in reports filed with the Federal Election Commission. According to ABA President Laurel Bellows, the new policy “increases transparency and gives voters the information they need to make informed decisions.” “Making the amount spent on political communications widely available is in the public interest and will instill greater confidence in our electoral system,” she added.

McConnell Vows to Filibuster Nominee for Consumer Financial Protection Bureau

On Wednesday, President Barack Obama officially nominated Richard Cordray to head the Consumer Financial Protection Bureau. Cordray formerly served as the Attorney General of Ohio. The CFPB was established by the Dodd-Frank financial reform legislation as a watchdog agency to oversee the financial industry. Republican Senate Minority Leader Mitch McConnell has pledged to filibuster the nomination until several changes are made to weaken the Bureau’s oversight capacity. Just as outside spending played an important role in Chuck Hagel’s confirmation battle, campaign contributions from Wall Street may play a role in Cordray’s. According to FEC filings compiled by the Center for Responsive Politics, Senator McConnell recently held a fundraiser in New York City at the offices of Moore Capital Management, a large hedge fund. Additionally, he received $38,000 from Travelers Insurance donors in the fourth quarter. Travelers Insurance lobbied on the implementation of the financial reform legislation during that period. The American Bankers Association PAC donated $5,000 to McConnell’s Bluegrass Committee leadership PAC on January 1st. A thorough list of contributions is available on the Public Campaign website. McConnell’s Wall Street donors are hoping he will stifle the agency in charge of protecting consumers from the excesses of the financial industry.

Jesse Jackson Jr. Pleads Guilty to Using Campaign Funds for Personal Expenses

Jesse L. Jackson Jr., a former Democratic Congressional Representative from Illinois, pleaded guilty Wednesday to one felony fraud count for his use of $750,000 in campaign funds to pay for personal expenses. As part of a plea agreement, prosecutors recommended that Jackson receive a sentence of 46 to 57 months in prison. Robert L. Wilkins, the judge overseeing the case, is scheduled to sentence Mr. Jackson on June 28. Jackson’s wife, Sandi, pleaded guilty to falsifying income tax statements while Jackson was extracting funds from his campaign treasury. Prosecutors will seek a sentence for her of 18 to 24 months. From 2007 to 2011, Jackson purchased $10,977.74 worth of electronics at Best Buy, and spent $5,587.75 for a vacation at the Martha’s Vineyard Holistic Retreat. Other expenditures included $313.89 for stuffed animals at Build-A-Bear workshop and a $7,000 elk head from a taxidermist in Montana. “For years I lived off my campaign,” Jackson, said. “I used money I shouldn’t have used for personal purposes.”