Money in Politics This Week

The Brennan Center regularly compiles 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.

NEW YORK

Op-ed by Susan Lerner Asks NYC Council to Support Disclosure

An op-ed by Susan Lerner, the executive director of Common Cause/NY, appeared in the Daily News this Wednesday asking the New York City Council to bring greater transparency to the city elections process. New York City voters this year are facing a plethora of advertisements and mailings from outside special interests hoping to swing the upcoming elections in their favor. Following the U.S. Supreme Court’s Citizen United decision, corporations and unions are free to spend unlimited amounts of funds garnered from mega donations to boost their preferred candidates. For example, Jobs for New York, a group representing real estate interests, has spent $167,341 in support of Sara Gonzalez’s run for the 38th City Council district – an amount two times greater than what Gonzalez has spent herself. Jobs for New York has received more than $6 million from 116 limited-liability corporations – which were in turn used to funnel money from just 22 backers. Common Cause/NY is urging the City Council to pass legislation introduced by City Councilman Brad Lander which would require city campaign ads paid for by independent expenditures to list the top five contributors on the ad itself. “Independent expenditures unfairly color the campaign process by dominating the conversation with the point of view of a particular interest… First and foremost, voters need to know who is sponsoring the advertising they receive,” Lerner said.

Hedge Fund Donations to NYC Elections Pale in Comparison to State Contributions

Hedge funds have donated $500,000 to New York City races thus far. A significant portion, $170,336 has gone to City Council Speaker Christine Quinn’s mayoral campaign. The next closest recipient, Republican candidate Joseph Lhota, has received $47,625 from hedge funds. The $500,000 figure is small in comprasion New York State elections, where hedge funds – donating upwards of $7 million in the 2010 election cycle – are now the second-largest contributors after the real estate industry. The difference is largely due to New York City’s contribution limits, which are far lower than the state’s. James S. Chanos, founder of Kynikos Associates, who has not made any contributions in 2013 New York City races, explains that “limits are a big aspect to it, and I think people would give more if the limits were higher. At the federal and state level, we are constantly being called [about donations].” No one calls for contributions at the city level, he added.

Thompson’s Campaign Strategist Alleges Campaign Finance Misconduct by Rival de Blasio

New York City mayoral candidate Bill Thompson’s campaign strategist, Jonathan Prince, has filed a complaint with the city Campaign Finance Board seeking an investigation into fundraising events held for Democratic rival Bill de Blasio. De Blasio held fundraisers at the Villa Pacri restaurant in the Meatpacking district last year. The restaurant charged the de Blasio campaign $4,349.53 for drinks and appetizers for 75 people at the two events last year. The per-person per-hour rate amounts to $22.50, but a different group of the same size was charged $58.33 per-person per-hour just two days later. The complaint alleges that the difference between the “fair market value and the $22.50-per-person cost” is an in-kind campaign contribution. The campaign finance law iterates that candidates must pay fair market prices for campaign goods and services. De Blasio’s campaign dismisses the charge, saying that the price difference was due to differences in what the groups were served.

NATIONAL

Ben and Jerry’s Co-Founder: Education Costs Linked to Flood of Money in Politics

As the new school year approaches, President Obama has been traveling around the nation to discuss ways to address the high cost of education. Ben Cohen, co-founder of Ben and Jerry’s Ice Cream, and Edward Erikson, senior associate at MacWilliams Sanders Communications, write in a CNN op-ed that if the President is serious about tackling the issue of affordable education and student debt, then “we need to strike at the root of the problem – the influence of money in politics.” Cohen and Erikson write that Sallie Mae benefits from cheap loans from the government and have an interest in protecting the status quo regarding student debt. Sallie Mae has donated over $1.26 million to federal candidates and parties in the last four election cycles, and bankrolled $1.93 million into lobbying Congress in 2013. During that time period, Congress drafted and the President signed a student loan bill tying interest rates to financial markets. Although in the short term the bill prevents interest rates from doubling, now students are vulnerable to adjustable interest rates that could top 8.5 percent. Meanwhile Sallie Mae borrows at subsidized interest rates below %0.5 percent from the Federal Home Loan banks. In 2012, Sallie Mae earned $2.5 billion in interest payments from student loans. Cohen and Erikson call on citizens to stamp currency with messages to get the word out about reform and support referendums calling on Congress to redefine the Constitutional line between money and free speech.

Watchdog Groups Urge FCC to Expand Spending Disclosure

A broad coalition of transparency groups, dubbed the Public Interest Public Airwaves Coalition, have submitted comments to the Federal Communications Commission (FCC), regarding the agency’s rules mandating broadcasters to post political files online. In April, 2012, the FCC started requiring broadcasters in the top 50 U.S. markets, affiliated with the four major national networks, to post files online containing information on political advertisements; specifically the group’s purchasing ads, prices paid and the times aired. The FCC has proposed expanding the ruling to all stations by July, 2014. This could have a big impact on transparency in next year's elections. Of the 10 races that will determine control of the Senate in 2014, more than half will take place in states that have no online ad disclosure under the current FCC order. Groups have called for improvements to the system including uniform data and reporting standards, adoption of machine-readable data, and a more user-friendly database that can assist with reducing reporting errors, monitoring compliance, and analyzing data. The Sunlight Foundation’s Political Ad Sleuth provides a searchable database of the FCC files, a project that would be strengthened by an improved disclosure regime.

New Investigation Reveals Donors behind Voter ID in North Carolina

A new investigation by the Institute for Southern Studies has revealed several connections between Republican mega-donor Art Pope and the push for restrictive voting legislation in North Carolina. North Carolina House Bill 589 (now State Law 2013-381) raised significant outcry from civil rights advocates when it was signed by Republican Governor Pat McCrory this month. The bill mandates photographic identification, cuts the early voting period from 17 days to 10, ends same-day voter registration and eliminates rules encouraging youth to sign up to vote. The prime sponsors of the bill, including N.C. Representatives Harry Warren and Tom Murry, have received generous support from Art Pope and organizations that garner significant funds from the donor. In 2010, Warren narrowly defeated a five-term Democratic incumbent by fewer than 200 votes. His campaign benefited from over $109,000 in independent spending from Real Jobs N.C., a 527 committee co-founded by Pope. Murry also got significant funds, including $12,000 in campaign contributions from the Pope family, as well as over $92,000 in favorable independent spending from outside groups, such as Real Jobs N.C. and Civitas Action. Governor McCrory received $20,000 in contributions from Pope and his family, and benefited from independent expenditures from Pope-funded groups including $380,000 by Real Jobs N.C. and $130,000 by Americans for Prosperity.

Rise of “Obamacare Lobbyists” on K Street

The Affordable Care Act has boosted the demand for lobbyists and consultants who helped shape the law, as new regulations are being fine-tuned and implemented. More than 30 former Obama administration officials, lawmakers and Congressional staffers who worked on the healthcare law have become lobbyists since 2010. They’ve found clients like Delta Air Lines, UPS, BP America and Coca-Cola, as well as healthcare companies including GlaxoSmithKline, UnitedHealth Group and the Blue Cross Blue Shield Association. Watchdog groups have criticized the rise of “Obamacare lobbyists” as another example of the revolving door that turns public service into private enrichment. Craig Holman of Public Citizen says, “It raises questions about the [bill’s] integrity.” The firm Avenue Solutions has recently hired Yvette Fontenot, a former staffer for both a Senate committee that wrote Obamacare’s tax provisions and the Health and Human Services Office of Health Reform, one of the bill’s implementers. Since April, the firm has picked up the Health Care Service Corporation as a client and is on pace to earn $1.8 million in the first half of 2013. Healthcare lobbying will remain a bright field of work as the reform law’s requirements continue to roll out over the coming decade.

Money in Politics This Week

The Brennan Center regularly compiles 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.

NEW YORK         

Lobbying Groups Seek Exemption from Donor Disclosure Rules

The New York State Joint Commission on Public Ethics recently granted an exemption to Naral Pro-Choice New York from regulations requiring tax-exempt organizations that participate in political activities to disclose their major donors. The law allows exemptions for groups whose donors might face “harm, threats, harassment or reprisals.” Naral Pro-Choice points to past threats as evidence of the danger that disclosure would create: disturbing handwritten letters and Facebook posts by a man who was later convicted of participating what he thought was a plot to bomb an abortion clinic. Many groups from across the political spectrum are now seeking the same exemption, arguing that publicly disclosing their donors could endanger them. New York’s broad definition of lobbying includes spending on advertisements for or against legislation. Groups that devote a substantial amount of their resources to lobbying have to disclose all donors that contribute more than $5,000. According to Kelly Williams, corporate general counsel at the Brennan Center, exemption from disclosure should only be granted in instances of credible threats or harassment, not for fear of economic harm, such as boycotts. The New York Times concurs, stating in a Wednesday editorial that “Otherwise, big-money partisan lobbying via hidden backers will only proliferate as the public heads deeper into the dark, and the ethics law itself will begin to unravel, thread by thread.”

Super PACs Active in New York City Elections

Super PACs, independent political action committees with no restrictions on campaign spending, are shelling out cash for flyers, robocalls and TV ads in New York City elections. Forward NY is one of six Super PACs active in the city. It recently sent thousands of emails attacking the former governor Elliot Spitzer for his attempted comeback into politics. Jobs for New York, a group backed by the Real Estate Board of New York, has spent $314,000 on City Council races. Three former aids to Rudy Giuliani are also forming a Super PAC to support Republican mayoral candidate Joe Lhota. Government watchdog groups have criticized the independent expenditures because they undermine the city’s public financing system, which imposes contribution and spending caps on candidates. “Skewing by big donors is a serious matter,” according to Eric Lane, the dean of Hofstra University Law School, who helped write the city’s campaign finance law. The only check on Super PACs in the city is a state election law barring an individual from making more than $150,000 in annual contributions to all state and local campaigns combined.

City Comptroller Candidates Discuss Campaign Finance

The candidates for New York City Comptroller traded shots at each other over how their campaigns are financed in a debate last week. The debate was the first in a series administered by the New York City Campaign Finance Board (CFB). Manhattan Borough President Scott Stringer is participating in the CFB matching funds program, which provides him with a $6-to-$1 match for every donation he raises up to $175. Consequently Stringer also has to abide by strict contribution limits and a spending cap of $6 million. Spitzer joined the race after the CFB deadline and is self-financing his campaign. Stringer accused Spitzer of “trying to destroy one of the best campaign finance systems in the country” at the debate. Spitzer fired back saying that Stringer had benefited from independent expenditures from a coalition of women’s advocates, business and labor leaders.

NATIONAL

Rep. Van Hollen Files Suit Against IRS

Representative Chris Van Hollen (D-MD) has filed suit in Federal District Court to overturn an Internal Revenue Service ruling on tax-exempt “social welfare” organizations that engage in overtly political activities. Three government watchdog groups, Democracy 21, Public Citizen and the Campaign Legal Center, are joining the suit. The tax statute confers 501(c)(4) tax-exempt status only to groups that “exclusively” engage in non-political social welfare work. For decades, however, the IRS has only required 501(c)(4)s to make social welfare their “primary” purpose, allowing significant political activity. “The point here is that the law is clear,” Representative Van Hollen said. “What do you want us to do — put an exclamation point after exclusively?” As opposed to traditional PACs and Super PACs which fall under Section 527 of the IRS Code, the concern arises over the ability of the 501(c)(4)s to spend on politics without disclosing their major donors. Following the Supreme Court’s Citizen United decision, $256 million was pumped into political ads in the 2012 presidential election cycle, three times more than the amount spent in 2008.

In August Recess, Congressmen Globe-trot on Privately Financed Trips

While many Americans are concerned about making ends meet this summer amid oncoming sequestration cuts, Congressmen are using the summer recess to travel around the globe on privately financed tours, some paid for by lobbyists. Congress clamped down on such travel in 2007 when a scandal involving lobbyist Jack Abramoff and free trips was exposed. Abramoff was later sentenced to prison on corruption charges, which also engulfed former Representative Bob Ney (R-OH) and some Congressional aides. But the trips haven’t stopped; expeditions to Turkey and Israel, paid by private groups and foreign government have been especially popular. Four House Republicans and a Democrat who are members of the “Friends of Scotland Congressional Caucus” are headed to Scotland this month, on the Scottish government’s tab. Bill Allison, editorial director of the Sunlight Foundation, is concerned that the trips may make lawmakers feel indebted to the sponsors, especially when they include free food, hotels, tours and transportation. There have been 1,363 trips at a cost of $3.2 million to hosts so far this year.

Race for Governor in Virginia Invites Super PACs

The race for governor in Virginia is heating up as the candidates attract massive contributions. In the month of July, DGA Action, a Super PAC of the Democratic Governors Association, contributed $1.2 million to Terry McAuliffe, a Democratic candidate for governor, one of the largest single political donations for the office in recent history. Virginia has no limits on contributions for candidates to state offices.  McAuliffe’s Republican opponent, Virginia Attorney General Kenneth T. Cuccinelli II has received several large donations including $5.6 million from the Republican Governors Association. And the race has turned extremely partisan and bitter with each candidate accusing the other of ethical lapses. McAuliffe has attacked Cuccinelli in a television ad criticizing $18,000 in gifts Cuccinelli received from a prominent GOP donor, Star Scientific CEO Jonnie R. Williams, Sr. Cuccinelli has penned an op-ed accusing GreenTech Automotive, an electric car company founded by McAuliffe, of dubious practices to attract foreign investors.

Small Business Leaders Ask SEC to Adopt Disclosure Rule

Aimee McQuilkin, a leader in the Montana Small Business Alliance, and Freddy Castiblanco, a leader of Small Business United New York, have authored an op-ed in The Hill arguing for the Securities and Exchange Commission to establish a rule regarding disclosure of political spending by corporations. Currently public companies that spend money on politics are not obligated to report such spending to investors or the government. Several small business trade groups have signed onto a letter urging the SEC to adopt the proposed disclosure rule, in an effort to generate greater transparency. “Under current rules, money from the general treasury of a public company can be disbursed to fund political activities without the owners (the shareholders) having any way to know about it.” Hardworking small business owners understand that success in the marketplace should be determined by innovation and healthy competition, not pay-to-play politics or secret back-room politicking.

Money in Politics This Week

The Brennan Center regularly compiles 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.

NEW YORK

Former Charity Leader Facing Inquiry into Political Donations

The former head of the Metropolitan Council on Jewish Poverty, William E. Rapfogel, is under investigation by an anticorruption task force formed by the state’s attorney general and comptroller. Rapfogel has been accused of overpaying the Met Council’s insurance company, Century Coverage, and asking the insurer to contribute to certain political candidates. On Monday, he was removed from his position at the charity after an investigation by outside counsel. Rapfogel has long been a power player in the Jewish community and both city and state politics, and his wife has served as chief of staff to Assembly Speaker Sheldon Silver for many years. Rapfogel’s lawyer said that neither his wife nor Speaker Silver were aware of his actions. As the investigations unfold, New York City has suspended all funding to the Met Council, and several mayoral candidates have returned contributions from Century Coverage.   

Democrat and Chronicle Calls on Moreland Commission to Investigate Fracking Contributions

The Rochester-based Democrat and Chronicle editorialized in favor of comprehensive campaign finance reform this month, saying “The longer state lawmakers wait to act on meaningful campaign finance reform, the more examples advocates can point to for why it is so badly needed.” The editorial decried the Empire State’s loose campaign finance laws and “casual” enforcement. Common Cause/New York and Fair Elections New York released reports indicating that backers of hydrofracking have funneled $14 million to Western and Southern Tier New York lawmakers, in an attempt to tilt decisions regarding the controversial practice. The editorial urged the Moreland Commission to Investigate Public Corruption to look thoroughly into the matter.

NATIONAL

House Financial Services Committee Members Reaping Big Donations from Financial Industry

Some freshmen in the U.S. House of Representatives are seeing a flood of donations due to their position on the Financial Services Committee. The panel is sometimes called “the cash committee” because of its members’ ability to attract big contributions; for example, PACs have donated more than $10 million to Financial Services Committee members, more than any other committee. Seven freshmen Democrats on the committee have raised more PAC money from the financial industry than minority committee chair Representative Maxine Waters (D-CA). One lobbyist made the financial industry’s intention clear: “It is almost like investing in a first-round draft pick for the N.B.A. or N.F.L. There is potential there. So we make an investment, and we are hopeful that investment produces a return.” These freshman also joined with Republicans earlier this year, over the objection of Representative Waters and the Obama administration, to roll back some of the strictest provisions of Dodd-Frank financial reform. Freshman Representative Andy Barr (R-KY), who has received $150,000 from the financial industry in only six months, has also been a vocal critic of financial regulations. Last month, he introduced legislation to eliminate a new federal rule intended to prevent banks from issuing mortgages to customers who could not afford to repay the debt – a measure that was backed by bank lobbyists that had visited his office. Former Representative Brad Miller (D-NC) explains, “It’s only natural that it has got to be on your mind that a vote one way or other is going to affect the ability to raise money.”

Thirty-One Percent of Former Governors Now Work As Lobbyists or Consultants

A review of post-government employment for 32 former governors by USA Today, shows that 31 percent of them now work for trade associations, consulting businesses or lobbying firms. The revolving door between Congress and K Street has been widely discussed in the press: two-thirds of former Congressmen from the 112th Congress now work for lobbying firms or industries that lobby the federal government. Now “Governors are seeing that it’s lucrative to trade in on their public service” as well, according to Danielle Brian, executive director of the Project on Government Oversight. Earlier this year, former Pennsylvania Democratic governor Ed Rendell wrote an op-ed urging New York state officials to allow hydraulic fracturing. He also worked as a paid consultant for a private equity firm with investments in the gas industry, a fact he failed to disclose at the time of publication. Former Mississippi governor Haley Barbour, a Republican, now runs a lobbying shop in D.C. that hosts multinational clients including Chevron, Toyota and Motorola. Former Kansas governor Mark Parkinson, a Democrat, is now president and CEO of American Health Care Association, which spent $2 million on lobbying Congress on legislation related to assisted-living facilities and nursing homes.

Former Rep. Kennedy: Elections Need Transparency

Former Congressman Joseph P. Kennedy II (D-MA) urges the IRS, in a Boston Globe op-ed, to bring transparency for citizens to the election process. In accordance with the current interpretation of the law, groups organized under section 501(c)(4) of the tax code are allowed to spend up to 49 percent of their funds on politics. Although legitimate 501(c)(4)s spend over $40 billion annually on social welfare projects, the law allows political groups to collect and spend exorbitant sums on narrow political goals without having to disclose their donors, as they would if they were organized as political committees.  In the 2012 election cycle, politically active 501(c)(4)s spent nearly $300 million. Yet many of these same groups checked “no” on their tax forms when asked if they plan to engage in campaign activity. “No one should be able to spend tax-free dollars — or be able to deduct donations as a business expense — to elect candidates” Kennedy argues. Unfortunately, the IRS has been relying on key word searches such as “tea party” and “occupy” to examine 501(c)(4)s that may be using tax-free money for political activities. What is ultimately needed, Kennedy argues, is federal legislation to close the loophole, but he suggests the IRS improve transparency by requiring political contributions of $250 by 501(c)(4)s to be publicly reported, and codifying regulations for what constitutes political speech.

NYC Public Advocate: 28 States Already Possess Power to Mandate Disclosure

Federal laws and regulations are one avenue for enhancing transparency in our elections. Enacting strong disclosure regimes in states is another. In a new report, “Building a Frontline Defense to Stop Secret Political Spending,” New York City Public Advocate Bill de Blasio outlines that 28 states already have the ability to tighten rules around independent expenditures. These states can use legal or regulatory authority vested in the Attorney General or the Secretary of State to help unmask major donors to 501(c)(4) groups – organizations that seek to sway local and state elections without disclosing who bankrolls their efforts. This summer, New York Attorney General Eric Schneiderman led the way when he crafted new regulations requiring groups that spent more than $10,000 on New York elections to file itemized lists of expenditures above $50 and donors that gave over $1,000. This type of rule has the potential to bring massive amounts of political spending into the sunlight. IRS applications for non-profit 501(c)(4) status more than doubled during the presidential election – from 1,735 in 2010 to 3,357 in 2012, and spending shot up from $92.2 million to $256.3 million.

Fundraising Now Increasingly Important in Congress

With growing partisanship and excessive demands for fundraising, many former Congressmen are glad they are no longer on Capitol Hill. Representative Rodney Alexander (R-LA) announced this week that he would retire after serving 10 years in the U.S. House, citing frustrations with continual gridlock on important issues. “Rather than producing tangible solutions to better this nation, partisan posturing has created a legislative standstill.” Former Representative Brad Miller (D-NC) also expressed dissatisfaction with Congress, noting the consistent demand for raising money. Following the Citizens United decision, independent expenditures have flooded elections, and members must raise more and more money to keep their jobs. Recent live tweets about a freshman Congressmen’s attempt to raise money are illustrative of the broader problem. Miller reflected, “It’s hard to imagine that that's really what democracy should really be about. It means that members of Congress have to spend their time in a little room with a phone, calling up lobbyists and asking them to contribute from their PACs, then rushing to the floor to vote on a lot of issues that very few members have had time to think about and certainly not to shape in any important way.” Sunlight Foundation’s Party Time app reveals that there were 12 political fundraising events this week, and 55 this month, despite the August Congressional recess. 

Money in Politics This Week

The Brennan Center regularly compiles 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.

NEW YORK

Common Cause/NY and Fair Elections Ask Moreland Commission to Investigate Real Estate Contributions and 421-a Tax Break

 A “Moreland Monday” analysis by Common Cause/NY is raising serious questions about millions of dollars in campaign contributions from real estate and development interests in New York City. Between 2011 and July, 2013 the Real Estate Board of New York (REBNY), a trade group of 37 real estate companies, contributed over $1.7 million to Senate Republicans, $478,000 to Senate Democrats, and $249,000 to Senate Independent Democrats. In the Assembly, the Democrats received $305,000 from the group, while Republicans accepted $67,000. REBNY also takes full advantage of New York’s LLC loophole – which allows each LLC controlled by a single corporation to be treated as an individual subject to a $150,000 aggregate contribution limit. Of REBNY’s political contributions, over 73 percent have gone to state candidates outside of New York City. The return on REBNY’s political investment in Albany is clear: the 421-a property tax abatement for new residential construction continues to balloon. The cost of foregone taxes from 421-a has increased from $130 million in 2002 to $1.1 billion in fiscal year 2013 – greater than the entire annual budget for New York City’s House Preservation and Development Agency. Susan Lerner, executive director of Common Cause/NY, urged “the Moreland Commission to use the full scope of their investigatory powers to fully examine this situation and recommend policies to end this exploitation.”

Moreland Commission Subpoenas Real Estate Developers for Documents

The Moreland Commission to Investigate Public Corruption has issued subpoenas to three high profile real estate developers in an apparent effort to examine whether there is any link between their campaign donations and huge tax breaks that were granted for several luxury apartments in New York City. A state law passed this session singled out five buildings in Manhattan for lower taxes. Moreland Commission Co-Chair Kathleen Rice has stated that the commission is committed to investigating loose campaign finance laws and their relationship with the epidemic of corruption scandals that rocked Albany earlier this year. “You can say 'it's just a couple of bad apples.’ Is it the political system itself that is the problem?,” Rice posed. The subpoenas have all been for documents thus far. No individual has been compelled to testify at this point. The New York State Board of Elections and the Joint Commission on Public Ethics have also both been asked to preserve all documents.

NYC Campaign Finance Board Disburses Public Funds for Primary Races

The New York City Campaign Finance Board (CFB) has approved the first round of public funds for 75 qualifying candidates running in citywide and city council races. As part of the matching funds program, NYC provides candidates that can raise enough small donations from constituents in their district with $6 for every $1 raised per donation up to $175. In the mayoral race, City Council Speaker Christine Quinn received $3.4 million in public funds, reflecting her large haul of small donations. Quinn was followed by Public Advocate Bill De Blasio who got $2.2 million. On the Republican side Joe Lhota, former MTA chairman, received $1.44 million. His spending limit was also increased from $6.42 million to $9.63 million reflecting heavy election spending by his primary competitor John Catsimatidis, who is self-financing his campaign. The board also denied public funds to City Comptroller John Liu’s mayoral campaign, citing “evidence of substantial non-compliance” with the law. A 139 page CFB report, to which Liu has released this response, details evidence of reporting discrepancies, insufficient documentation, and irregular means of attaining contributions by the campaign. Two former Liu campaign operatives have been convicted of scheming to route contributions through straw donors – people who contribute under their own name and get illegally reimbursed later. The CFB’s tough approach on compliance has helped prevent abuse of the City’s public funds.

NATIONAL

Secret Tax Reform

The U.S. Senate is seeking to reform the notoriously long and convoluted federal tax code by starting with a blank slate; eliminating all tax credits and breaks. The Senate Finance Committee, chaired by Senator Max Baucus (D-MT) and Senator Orrin Hatch (R-UT), is asking Senators to submit proposals for tax breaks they wish to keep in the code. Senators, fearful that their proposals will reveal their pet special interests, have been promised by the committee that their request will remain private until 2064. Each digital proposal will receive an ID and special encryption, prior to storage on password-protected servers. Printed copies will be kept in locked safes. Only a few privileged Senators and their aides will have access to the proposals. The lack of transparency over a process intended to bring about reform is symptomatic of a larger problem on Capitol Hill – the vast and omnipresent influence of lobbyists and campaign donors. Behind every tax break, which collectively cost the government more than $1 trillion annually, is an army of Congressmen, special interest lobbyists or powerful corporate donors. As long as our campaign finance laws remain broken, the prospect of real tax reform is likely to remain elusive.

Americans Think Corruption has Increased

The 2013 Global Corruption Barometer, a global survey of more than 114,000 people in 107 countries, by Transparency International reveals that Americans are increasingly concerned about corruption in government. Transparency International annually publishes statistics regarding citizens’ perception of corruption and bribery. Sixty percent of the respondents in the U.S. said that corruption has increased over the past two years, while only 10 percent said that it has decreased. Sixty-four percent of Americans think their government is run by a few big interests, compared to 54 percent of Canadians and 52 percent of Australians. Of the public institutions in the U.S., three-quarters of Americans regard political parties as the most corrupt, followed by the legislature, the media, and public officials. Citizens view the military, non-governmental organizations and education services as the least corrupt. Huguette Labelle, chair of Transparency International, recommends that governments should “respond with concrete action to elevate transparency and accountability.”

Fareed Zakaria: Money is Root of Problems in Washington, D.C.

Last week, Fareed Zakaria, host of CNN’s Fareed Zakaria GPS and editor-at-large for Time Magazine, reviewed the latest summer book on Washington’s ruling elite, This Town by Mark Leibovich. Zakaria argues in the Washington Post that the United States government is no longer defined by three branches but by a permanent class of lobbyists and campaign contributors. According to an Atlantic magazine report, 42 percent of retiring House members and 50 percent of Senators go on to work as lobbyists. Compare that to 1974, when only 3 percent of retiring members of Congress became lobbyists after their public careers. According to Zakaria, politicians today are not particularly greedy or venal as compared to earlier generations, but the system in which they operate has dramatically changed. The total cost of the 2010 national elections in Britain was $86 million. In the U.S. the cost was 75 times greater — $6.3 billion – for the 2012 national elections even though our population is only 5 times bigger. Harvard professor Lawrence Lessig points out that members of Congress spend an inordinate amount of time raising money, while in office. It comes as no surprise then that they also vote with keen attention to their donors’ concerns. And if we fail to change, Zakaria warns that we may soon meet the same fate as Rome.

Former State Supreme Court Justice Asks Montanans to Fight for Fair Courts

Citizens United is poised to destroy judicial impartiality, writes John C. Nelson, a retired Montana State Supreme Court Justice, in the Missoulian. Montana has a unique system of non-partisan judicial elections, an effort to maintain the impartiality and independence of the court. In June of last year, the U.S. Supreme Court struck down Montana’s Corrupt Practices Act, which banned corporate contributions to candidates and independent campaign committees. Then in September, the Ninth U.S. Circuit Court of Appeals declared Montana’s statutory ban on partisan endorsements and expenditures in judicial elections unconstitutional. A nation-wide study by the American Constitution Society for Law and Policy demonstrates that there is a significant relationship between business group expenditures on state Supreme Court races and the votes of state justices on business matters. Whether Democratic or Republican, the more campaign expenditures a justice received from business interests, the greater the likelihood that he or she would favor business interests in court cases. Nelson asks Montanans to “fight for the fundamental right to settle our legal differences in impartial courts.”

NC Successful Judicial Public Financing Program Gutted by Legislature

This year, the North Carolina legislature passed sweeping electoral changes to gut the judicial public financing program. Since 2004, the state has offered public financing to candidates running for seats on the state’s Appellate Court. To qualify for public funds, judicial candidates have to raise between $10 to $500 from at least 350 different registered voters, for a sum totaling at least $39,450. The program is financed through an optional $3 state tax check-off and a $50 surcharge on attorney’s fees to the N.C. Bar Association. The intent of the program is to ensure greater impartiality in the court’s decisions, and it is popular with North Carolinians: 68 percent of state voters favor the program, including 67 percent of Republicans. As N.C. State University professors Michael Cobb and James Zink explain in a News Observer op-ed, “An electoral system in which judges routinely court moneyed interests to fund their campaigns sends a message to the public that justice is for sale."

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.

NEW YORK

Common Cause/NY Examines Fracking Contributions

A new analysis by Common Cause/NY illustrates that millions of dollars have flowed from fracking interests in New York to state and local campaigns. The investigation reveals that from January, 2007, to March, 2013, these interests – totaling 183 entities –contributed over $14 million to state and local campaigns. The money seems to follow the party in power. In the Senate, the ruling coalition of Republican and Independent Democratic Conference candidates received $2.22 million, while Senate Democratic candidates received $496,063. Assembly Democratic candidates got $784,942, compared to $439,617 for Assembly Republican candidates. The Fair Elections for New York coalition has called on Gov. Cuomo’s Commission to Investigate Public Corruption to subpoena information related to contributions in order to explore the transactions involved.

NYC Campaign Finance Board Releases New Database

The New York City Campaign Finance Board (CFB) has released new versions of its searchable campaign finance database as well as summaries of campaign expenditures and contributions. New rules adopted by the Campaign Finance Board require independent spenders to disclose expenditures above $100 and certain contributions above $1,000 to the CFB. The searchable database allows users to search through individual contributions, campaign expenditures and independent expenditures via filters such as recipient, contributor and transaction type. In addition, a summary page enables users to access an overview of campaign spending, independent expenditures, and public funds received for all citywide, borough president, and city council races.  Amy Loprest, executive director of the CFB, stated that “With the elections just around the corner, we hope these improved online disclosure tolls will help make more New Yorkers into better informed voters.”

Public Matching Funds in NYC Amplify Voices of Small Donors

New York City’s public financing program provides matching funds for candidates who can raise a certain number of small-dollar contributions from constituents in their district. Data from the latest disclosure filings show the effectiveness of the program during this election cycle. Thus far in 2013, candidates have collected more than $8.7 million from small donors – those contributing less than $250. This accounts for a 51 percent increase in small donations compared to the last election cycle in 2009. Donors giving less than $250 constituted 74 percent of all contributors in this year’s elections. Much of the credit for the extensive participation of small donors can be attributed to the 6-to-1 match New York City provides for the first $175 donated.

NATIONAL

New Poll Demonstrates that Vast Majority of Business Leaders Support Comprehensive Campaign Finance Reform

According to a survey conducted by polling firms Hart Research and American Viewpoint on behalf of the Committee for Economic Development, 87 percent of business leaders say that our campaign finance laws need a complete overhaul. The poll of 302 business executives across a diverse set of industries also found bipartisan support for a number of reform initiatives. Ninety-five percent of business leaders that consider themselves Democrats favor disclosure of all individual, corporate and labor contributions to political campaigns, as do 88 percent of Republican business leaders. Steve Odland, president and CEO of the Committee for Economic Development and a former CEO of Office Depot Inc., explains that “There’s an impression that there is money being used to buy politicians, and that therefore they are not beholden to the electorate but to donors.” Eighty percent of the business leaders who responded support reducing aggregate contribution limits: restricting the total amount an individual can contribute to all candidates, political action committees, and party committees.

Banks Meet With Regulators to Water Down Wall Street Reform

Three years after the passage of Dodd-Frank Wall Street Reform and Consumer Protection Act, an examination by USA Today reveals that 32.2 percent, or 128, of the 398 rules required by the act have yet to be proposed. Analysis by the Sunlight Foundation offers a possible reason. Big banks and financial institutions have held 2,118 meetings with federal regulators – that is 14 times more than consumer-oriented and pro-reform groups. Sunlight’s analysis is based on the logs of the Commodities Futures Trading Commission (CFTC), the Department of the Treasury and the Federal Reserve Board, accessible through the Dodd-Frank Meetings Tracker. Financial sector corporations and trade groups were present at 90 percent of meetings at the Federal Reserve Board, 82.7 percent of the meetings at Treasury, and 74.8 percent of the meetings at the CFTC. Compare that to the attendance of pro-reform groups: 3.3 percent at the Fed, 13.7 percent at Treasury, and 4.4 percent at CFTC. CFTC Commissioner Bart Chilton sums up the problem well: “Lobbying, litigation and lawmakers who have tried to defund and defang Dodd-Frank have all brought rule-writing to a crawl. Regulators themselves have become overly concerned about finalizing rules. Over-analysis paralysis, fears of litigation risks, and the lack of people-power have all contributed to the slowdown."

Brennan Center Submits Brief for McCutcheon v. FEC

This week, the Brennan Center for Justice submitted an amicus curiae brief to the Supreme Court in support of the FEC in McCutcheon v. Federal Election Commission. Federal law restricts the amount of money a candidate can receive per donor, as well as the total amount that any one person can donate to all candidates, political parties and committees combined in an election cycle. Individuals are restricted to contributing $5,200 to a federal candidate per election cycle. Furthermore, under the current aggregate limit, one person cannot donate more than $123,200 combined to all federal candidates, parties and political committees per cycle. Eliminating aggregate limits would essentially allow donors to circumvent the $5,200 base contribution limit because large donations to political parties and other committees would become easily transferable to specific political candidates. The Brennan Center brief argues that the Court should examine aggregate contribution limits in light of the fundamental interest in maintaining integrity and public confidence in our elected institutions.

Tumblr Blog Explores the Founding Fathers’ Views on Corruption

It is unclear how the founding fathers would feel about Tumblr. However, recent research does attempt to explain how they would feel about the avalanche of money in politics. A Tumblr blog by Harvard Law professor Lawrence Lessig examines the writings of the founding fathers to contextually evaluate how they used the term “corruption.” In Citizens United v. FEC, the Supreme Court ruled that corporations and unions can spend money independently without limits because independent expenditures cannot corrupt candidates. As the Supreme Court considers McCutcheon v. FEC, a case that challenges the aggregate limit on each person’s contributions over a two-year election cycle, it will determine whether restricting the total amount one person can contribute to political candidates poses a risk of corruption. In recent decisions, the Supreme Court has adopted a very narrow view of corruption, limited to individual quid pro quo exchanges where campaign contributions are traded for policy outcomes. Professor Lessig’s examination of corruption shows that the founders understood it to include institutional in addition to individual corruption. Institutional corruption occurs when elected bodies become dependent on special interests or on public or private money – anything other than voters. Out of the 325 instances that the term “corruption” is encountered in the founding documents, 57 percent refer to an institution, not the individual. Furthermore, out of the instances where the founders were discussing “improper dependence” as a kind of corruption, they were more likely to be referring to institutions (67 percent) than individuals (33 percent). And what about the “individual quid pro quo” corruption that the Supreme Court has characterized as the only legitimate target of campaign finance regulation? A mere 1.5 percent of the founding documents use “corruption” in such a context.

Maine Voters Organize to Protect State Clean Elections Program

Citizens in Maine are working to repair a popular campaign finance reform program, after $1.2 million was cut from the state’s Clean Elections system. The public financing program awards funds to state candidates if they can raise a qualifying number of $5-$100 contributions from registered voters in their district. Now organizers of Maine Citizens for Clean Elections are knocking on doors across the state to gather signatures for an initiative petition that would increase public funding disbursements for house, senate and gubernatorial races. Taxpayer funding would be replaced by a 15 percent surcharge on all civil and criminal fines and penalties ordered by Maine courts. The initiative would also prohibit registered candidates from participating in political action committees and bar ballot question committees from spending money on candidate campaigns. Historically, the public funding program has been very popular. A Portland Press Herald editorial called it “a success on most counts” and the last election saw 80 percent of legislators participating.