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 Katherine Munyan and Syed Zaidi. 

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

NEW YORK

Moreland Commission Investigations Should Continue

In a City and State opinion piece, Morgan Pehme, editor-in-chief of the publication, praised the Moreland Commission to Investigate Public Corruption for a thorough assessment of Albany’s troublesome campaign finance culture. He cautioned that the investigations should not pause during the new legislative session starting in January, arguing that this is the best time to examine some of the questionable practices and ensure transparency for citizens while legislation is being introduced. “Serious investigations take time. The Commission’s charge is not just to expose activity that is illegal but also to bring to light that which is currently permissible but probably shouldn’t be,” Pehme wrote.

Journal News Compares Commissions’ Recommendations, Decades Apart

Recent Journal News articles and blogs have compared the recommendations of former and present state commissions examining campaign finance laws in New York. The present Moreland Commission to Investigate Public Corruption was established by Gov. Andrew Cuomo this July following a series of legislative corruption scandals. The Feerick Commission, also a Moreland Act panel, was initiated by Gov. Mario Cuomo in the late 1980s. The findings and recommendations of the two commissions are strikingly similar: both encourage the adoption of public financing to foster greater civic participation, and both critique high campaign contribution limits and loopholes and the lackadaisical enforcement of state campaign finance laws by the Board of Elections. Up to 90 percent of the complaints the board has received since 2008 have not been investigated. This echoes the Feerick Commission’s finding from 1990, when it stated that the Board of Elections is under-resourced and its “makeup of two members from each major political party inevitably results in either logrolling or frequent deadlocks.” Andrew Cuomo’s Moreland Commission, this December, recommended that election law enforcers “be insulated from partisan control, and should be given the autonomy and authority to aggressively pursue violations and enforce our laws."

NATIONAL

Arizona Supreme Court Upholds Higher Contribution Limits

This week, the Arizona Supreme Court ruled that higher campaign contribution limits passed by the legislature this year do not violate the state’s constitution. The Citizens Clean Election Commission, one of the groups challenging the higher contributions in court, argued that the new limits amended the public funding system approved by voters in 1998.  Arizona’s Voter Protection Act requires changes to voter-backed initiatives to be approved by a statewide vote or with three-quarters of the legislature’s support. The higher limits did not pass with either.  The Arizona Supreme Court’s ruling overturns the October Court of Appeals decision that the increased limits violated the Voter Protection Act, and lifts the injunction barring the law’s enactment. The court announced it will release a formal opinion explaining its reasoning later.

Appellate Court Bars New Mexico from Limiting PAC Contributions

The 10th Circuit Court of Appeals in Denver ruled that New Mexico cannot limit contributions to political action committees (PACs) to be used for independent expenditures. New Mexico’s legislature passed the contribution caps concerned in 2009, to take effect after the 2010 election. The caps barred political parties and PACs from accepting or making contributions greater than $5,000 in a primary or general election. The legal challenge, filed by the state Republican party and several GOP state lawmakers, objected to the limits that applied to parties and PACs making independent expenditures as a violation of the First Amendment right to free speech.  The lawsuit did not challenge limits on direct contributions to candidates.  This week’s appellate court decision upholds the lower court’s injunction prohibiting the limits from taking effect. The court reasoned that the result was required by the Supreme Court’s Citizens United decision.

New Obama Senior Advisor Brings Strong Corporate Connections

John D. Podesta is joining the White House as a senior advisor to President Obama. Podesta has strong Democratic Party credentials, serving as President Clinton’s chief of staff through the impeachment proceedings as well as on the Clinton cabinet. However, public attention is focusing on the corporate, as well as the political, associations Podesta will bring to the White House. Podesta founded the Center for American Progress, a think tank with major corporate donors including Bank of America, Goldman Sachs, Google, Blue Cross Blue Shield, and drug maker Eli Lilly. Separate from his work at the Center, Podesta has also served on the boards of two clean energy companies and Gryphon Technologies, a contractor that has worked for the Defense Department and the Department of Homeland Security.  Because of concerns over his clean energy company associations, the White House has announced that Podesta will not work directly on the Keystone Pipeline XL issue, which he has previously publically opposed.

Outside Spending Surges in Senate Re-election Races

With the 2014 Senate midterm elections a little less than a year away, outside spending has already passed the $2 million mark in four Senate races.  North Carolina currently leads in outside spending on early campaign ads. Democratic Senator Kay Hagan does not yet have a Republican challenger to her bid for re-election, but Republican outside groups have already spent $5.7 million on ads criticizing her support for President Obama and the Affordable Care Act. Democratic-leaning outside groups have spent $2.6 million on early ads. Senate Minority Leader Mitch McConnell (R-Ky.) is facing re-election, and with outside spending is surging in support of McConnell and both Republican and Democratic challengers. The re-election races of Sens. Mark Pryor (D-Ark.) and Mary L. Landrieu (D-La.) have also passed the $2 million mark in outside spending. The relatively inexpensive media markets in these states make it more financially possible for outside groups to launch extended ad campaigns.

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 Katherine Munyan and Syed Zaidi.

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

NEW YORK

Business Tax Credits Have Increased, Remain Unevenly Distributed

A new report prepared for the New York State Tax Reform and Fairness Commission has found that the amount of business tax-credits have increased over the years. The report finds that business-friendly tax “incentives” have grown from 33 credits worth $673 million in 2005 to 50 credits valued at $1.7 billion in 2013. Based on 2009 data, less than 2 percent of corporations and partnerships have claimed one or more business tax credits. “I think it demonstrates the attractiveness to elected officials of spending money through the tax code that you don’t need to appropriate every single year,” said Donald Boyd, a senior fellow at the Rockefeller Institute and one of the report’s authors. Earlier this year, the Brennan Center called attention to 14 tax credits that were repeatedly extended over the last several years and asked the state Moreland Commission to Investigate Public Corruption to review any connections between the scheduled pattern of expiration and extension and campaign contributions to lawmakers by affected industries. The report came out just before recommendations made by the New York State Tax Reform and Fairness Commission, which Governor Cuomo set up to consider potential tax policy reforms for the next legislative session.

Investigation Sheds Light on Potential Pay-to-Play Scheme in Albany

The Daily News claims to have put names and faces to an anonymous story the Moreland Commission cited as an example of potential corruption in its 98 page report. The Daily News says the report’s account matches details concerning Coventry First, a “life settlement” business that purchases life insurance policies and converts them into tradable securities for Wall Street. As the state Insurance Department was considering regulations on the industry, the legislature passed a bill that allowed the industry to remain in business but established some guidelines. In aggregate, state lawmakers received $76,000 from the company during the year the legislation was being considered and the year following—with $25,000 going to the ruling Senate Republican Campaign Committee, $25,000 to the Democratic Assembly Campaign Committee, and the rest to the relevant legislative committee chairs in each house. A Moreland Commission spokeswoman has declined to specify whether Coventry was the company in question.

Fracking Industry Vastly Outspends Opponents in Lobbying

Recent disclosure records examined by Capital New York reveal that the oil and gas industry has outspent environmental activists on lobbying in the state. At issue is the controversial practice of fracking to drill for oil and gas buried deep underground. The American Petroleum Institute spent $ 503,903 on lobbying activities and educational outreach in the first half of 2013, while Constellation Energy, Exxon Mobil and Shell spent $71,089, $62,167 and $30,000 respectively. Anti-fracking activists, led by environmental organizations such as Environmental Advocates and Frack Action spent only $29,277 and $13,817 respectively by comparison. Polls show that New Yorkers are increasingly in favor of banning fracking.

In New York, Imprisoned and Deceased Politicians Can Still Collect Campaign Contributions

New York’s campaign laws allow imprisoned and deceased politicians to continue collecting campaign donations. Senator Carl Kruger (D-Brooklyn), who is serving time in federal prison for bribery related charges, has spent more than $200,000 from his campaign account for legal fees since starting his sentence. As of the latest disclosure filing in July of this year, his campaign account had a balance of $415,753. In its preliminary report released last week, the Moreland Commission found nearly $3.5 million worth of expenses incurred after the election by 40 former candidates. The loose regulations surrounding campaign expenditures allow candidates wide leeway to spend campaign funds on arguably personal outlays like legal fees, travel, meals, pets and parties. Active regulation and independent enforcement are necessary to ensure that candidates don’t spend funds on non-campaign related expenses.

NATIONAL

Michigan Legislature Approves Doubling Contribution Limits

This week, the Michigan legislature passed a bill doubling campaign contribution limits. Senate Bill 661 would double campaign contribution limits for state and local candidates. Current law limits individual contributions to $3,400 for a candidate for statewide office, $500 for state Senate and House candidates, and between $500 and $3,400 for local candidates, depending on the municipality’s size.  Political action committees, which can give ten times what an individual can, would also see their contribution limits double. The move comes on the heels of action to raise contribution limits in Washington State. Michigan’s SB 661 also protects the anonymity of donors who pay for “issue ads,” which may attack candidates but do not explicitly endorse a candidate.  The Senate added this amendment to stymie Secretary of State Ruth Johnson’s push for greater disclosure of these donors through administrative rule changes. The bill now heads to Gov. Rick Snyder, who has signaled support for higher contribution limits in the past.

Regulators Approve Strong Volcker Rule Despite Heavy Lobbying

On Tuesday, five federal agencies approved a new regulation, known as the Volcker Rule, that restricts banks with federally insured deposits from engaging in risky investments for their own profit. The final rule is more restrictive than earlier drafts, narrowing loopholes that would have allowed banks to make short-term bets with their own money. The strong regulation passed despite avid lobbying by Wall Street to shape the rules in its favor. Regulators received more than 18,000 comment letters on the proposed Volcker Rule. Financial institutions and representatives penned 93% of these comments. Financial industry representatives met with federal agencies 347 times between the enactment of the Dodd-Frank law that required the rulemaking and the release of the Volcker Rule draft in October – that’s 93.3 percent of all their visits.

New Jersey State Senator Working with State-Focused Super PAC

Voters in New Jersey might be surprised to see who’s spending in elections for local offices like board of education in the Garden State:  a super PAC registered to a PO Box in Washington, D.C. called the Committee for Social Growth and Economic Justice.  The PAC’s local involvement traces back to its close association with New Jersey State Senator Raymond Lesniak (D-Union).  Lesniak’s campaign consultant, Sean Caddle, runs the PAC, which has promoted Lesniak-backed candidates in local school board elections and various mayoral races. He describes his efforts as a counterweight to conservative independent spending: “I’m not going to stand by while the Koch brothers and Sheldon Adelson pour money into campaigns that I don’t agree with.” However, detractors question the relationship between Lesniak’s local campaign influence and the local political interests of his law firm, Weiner Lesniak, which benefits from valuable public contracts. Lesniak claims he will avoid conflicts of interests.

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 Katherine Munyan and Syed Zaidi.

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

NEW YORK

Moreland Commission Endorses Public Financing of Elections

On Monday, the Moreland Commission to Investigate Public Corruption released a preliminary report on its findings and recommendations regarding the state’s election, campaign finance, corruption, and transparency laws. Governor Andrew Cuomo appointed the commission in July following corruption scandals involving several legislators in Albany and the failure of the legislature to pass comprehensive reform. The preliminary report includes strong recommendations for lowering sky-high campaign contribution limits, closing loopholes, restricting the personal use of campaign funds, disclosing independent expenditures, and creating an independent enforcement agency. The commission also singled out matching small private donations with public funds for election campaigns as an effective strategy to generate greater citizen participation. “Small donor matching also allows those without access to well-heeled interests and without the support of large independent expenditures to nevertheless compete in elections,” the report stated.

Editorials Praise Moreland Recommendations

The New York Times praised the Moreland Commission’s recent report on Wednesday. Criticizing the “engrained corruption” in Albany, the editorial urged Governor Cuomo to “push for a new system of campaign financing that provides public matching grants for small campaign donations.” The editorial pointed out that the cost of $41 million per year for public financing could easily be covered by one fewer tax break for a big developer.  

The Buffalo News wrote, “the effort to establish a voluntary system of public financing of elections in New York is a critical component to change in Albany’s pay-to-play culture.”

The Rochester Democrat and Chronicle demanded legislative action on public financing and the rest of the campaign finance reforms in the Moreland report.

The Albany Times Union called public financing as recommended by the commission “a bargain for cleaner elections and government.”

National

IRS Proposes New Guidelines on Social Welfare Groups’ Political Activity

Last week, the Internal Revenue Service (IRS) proposed new regulations that would aid enforcement of the limitations on political activity by tax-exempt social welfare organizations set up under section 501(c)(4) of the tax code.  The section was originally intended for civic groups and homeowners associations, but, in recent years, politically-active nonprofits have used the social welfare designation to spend on election-related activities while evading the disclosure requirements imposed on political committees.   The 501(c)(4) political groups, which include Crossroads GPS and the League of Conservation Voters, spent hundreds of millions of dollars in 2012. Current rules say that 501(c)(4) organizations cannot exist “primarily” to influence elections, but offer little guidance on what this means. The proposed IRS guidelines define what activities are considered political, including voter registration drives and voter guides.  The IRS is also considering clearly defining the proportion of money that 501(c)(4) organizations can spend on political activities.

SEC Removes Corporate Political Spending Disclosure from Its Regulatory Agenda

The Securities and Exchange Commission (SEC) has released its list of regulatory priorities for 2014, and a rule strongly supported by investors is missing. Last year’s priority list included a proposed rule requiring public companies to disclose political spending, but disclosure is conspicuously absent from the new agenda. The public push for corporate disclosure began in 2011, when a group of law professors filed a petition with the SEC to establish mandatory disclosure. Their arguments resonated with the broader public; more than 600,000 comments, virtually all of them favorable, have been filed in response to the petition.  The SEC did not offer an explanation for not listing corporate disclosure on its agenda. In response to widespread outcry over the move, SEC Chair Mary Jo White downplayed its significance, saying the agenda is merely an estimate of what the agency can get done in the next year. Robert Jackson, a professor involved in the original petition, suggested that the agenda focuses on Congressional mandates, but does not limit the agency’s actions. Advocates have pledged to continue pushing the SEC for transparency around political spending, and Jackson states he “remain[s] hopeful that the SEC will eventually take up the rule.”

DC Council Approves Campaign Finance Reform Bill

The DC Council unanimously passed a campaign finance reform bill introduced by Councilman Kenyan McDuffie (D-Ward 5). The bill closes loopholes and increases transparency, including by requiring all campaigns to report fundraising data online to the Office of Campaign Finance for publication. Online publication must occur within 24 hours. The bill mandates additional training for candidates on campaign finance rules and increases penalties for violations.  Lobbyists would be required to disclose any contributions bundled for a campaign. If Mayor Vincent Gray signs the bill, it will go into effect in 2015.

Moreland Update: Preliminary Report Endorses Public Financing

The Brennan Center thanks the co-chairs, commissioners, and staff of the Moreland Commission for their service to the people of the great state of New York. The commission’s diligent research to investigate corruption resulted in strong recommendations that show Albany the way to change its pay-to-play culture. The Brennan Center looks forward to continuing to work with the commission. We call on the legislature to act on the report’s recommendations immediately upon their return to session in January. 

 

The preliminary report paints a disturbing picture of the role that big money plays in state politics. Legislators get the vast majority of their campaign contributions from big donors, and that money flows to the party in control of a chamber or committee. Lobbyists see contributions as a tool to influence policy, and incumbents’ fundraising advantage protects them from facing the voters.

But the report also powerfully makes the case that the way forward is clear. Our campaign finance system needs comprehensive reform. We need lower contribution limits with fewer loopholes, robust disclosure requirements covering independent spending, independent and effective enforcement, and public financing. The commission explained that these reforms are interconnected — each depends on the others.

Public financing, the centerpiece of reform, allows candidates to run without support from special interests. Public funding systems in New York City and Connecticut have expanded participation, made elections more competitive, and reduced the influence of lobbyists. The commission’s report endorses the approach taken in New York City and bills proposed in Albany this year: matching small donations from New York residents at a rate of 6-to-1 for candidates who qualify by showing broad support.

The report suggests that public funding would save the state money in the long run, as the cost is offset by the money saved when the voices of average New Yorkers rise to the same level as the special interests that try to secure sweetheart deals for themselves.

Finally, the commission explains that public financing is all the more needed post-Citizens United. The threat of unlimited and unaccountable independent expenditures looms over every election, and public funding protects candidates from being drowned out by outside spending. Studies show that the candidate with the most money doesn’t always win, but candidates need enough money to make voters familiar with their names and messages in order to be competitive. A public financing system provides that for qualified candidates, and the report notes examples of New York City candidates who won with public financing despite being outspent several times over by outside spending.

The governor appointed an independent, bipartisan commission to show the way out of our crisis of corruption. The commission has delivered with strong recommendations on how to clean up Albany. It’s time for the legislature and governor to enact and implement these powerful ideas, and return control of Albany to the people of New York.

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The Brennan Center for Justice at NYU School of Law will send regular updates to this list of Friends of Reform in New York State on efforts to secure comprehensive campaign finance reform centered on public financing of elections. These updates will be sent to good government advocates, allies of the Fair Elections New York campaign, legislative and opinion leaders, scholars and engaged students, reporters, and other advocates for reform. They will also be posted on the Brennan Center’s New York blog at ReformNY.blogspot.com.