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

Big Donors Sign Letter Asking Gov. Cuomo and Legislature to Reform Campaign Finance

Nearly 140 major political donors, including more than 50 fund-raisers for President Obama, have signed a letter to support the public financing of campaigns in New York. In the wake of a series of corruption scandals that have tarnished Albany, the signatories are calling for immediate action by Governor Andrew Cuomo and the New York State Legislature. The donors support the popular New York City small donor matching system as a solution to many of the problems that ail state politics. In New York City, contributions up to $175 are matched with public funds by a factor of six. The signatories include hedge fund manager S. Donald Sussman, venture capitalist Alan Patricof, movie director Rob Reiner and Espirit clothing company founder Susie Buell, among others. All told, the donors have raised or contributed at least $50 million for federal candidates and parties in recent years. The irony of the situation was not lost on anyone. As Ellen Chesler, senior fellow at the Roosevelt Institute explained, “We know how the system works from the inside, and we know it needs change.”

Comptroller DiNapoli Addresses Business and Civic Leaders in Buffalo

Last week, New York State Comptroller Thomas DiNapoli was in Buffalo to speak to a group of business, civic and philanthropic leaders about the need for reforming our state’s campaign finance laws. The event – co-sponsored  by the Brennan Center for Justice, NY LEAD, American for Campaign Reform, SUNY Buffalo Law School, Common Cause and Housh Law Offices – also featured Brittany L. Stalsburg, an analyst at Lake Research Partners. In December of 2012, Lake Research released an extensive poll illustrating broad support, at 79 percent, for a comprehensive overhaul of the state’s campaign finance system. Also speaking was Larry Norden, deputy director of the Democracy Program at the Brennan Center. Norden emphasized that matching small donations with public funds in New York City has made candidacies independent of political machines and unbeholden to special interest donors possible. Only 7 percent of the contributions to New York City candidates for the 2013 election came from special interests compared to 69 percent of contributions to New York State Legislative candidates in the 2012 election. Comptroller DiNapoli said, “The bottom line is we need more good and honest people who want to make themselves available to serve in public office. The reality is the way our system is currently set up, the reliance on private donation—and big donations—is a deterrent to people getting involved.”

Siena Poll: 57 Percent of New Yorkers Favor Public Financing

A new research poll by Siena shows that New York residents across the state express strong support for the public financing of elections.  Approximately 57 percent of survey respondents indicated that they support creating a system that would limit the size of political contributions to state candidates and match small donations to public funds.  This is the twelfth poll conducted since 2010 that demonstrates strong voter demand for the idea. Support cuts across ideological lines and geographic regions, with 64 percent of liberal, 57 percent of moderate, and 52 percent of conservative voters, as well as 60 percent of New York City dwellers and 55 percent of both Upstate and suburban residents standing behind reform.

Former U.S. Senator Bill Bradley to NY Legislature: Reform will Reverse Mistrust Among Voters

On Wednesday, former U.S. Senator from New Jersey and NY LEAD member Bill Bradley wrote an op-ed in the Daily News urging the New York Legislature to adopt reforms that will improve our democracy. The current mistrust and cynicism among voters can be reversed by adopting public financing of elections with a small donor match.  These ideas will put voters in the driver’s seat of democracy as candidates are able to rely on a broad base of small donations from their constituents rather than large donors and special interests. “Three states — Connecticut, Arizona and Maine — offer candidates for public office the opportunity to compete in roughly the same way” Bradley stated. “The result, more often than not, is that qualified people from all walks of life are able to serve, and the relationship between money and politics is greatly reduced.  All voters have the opportunity to be in control of their government, not just the connected few.”

NYPIRG Report: Over 100,000 Campaign Law Violations in Last Cycle

A report by the New York Public Interest Research Group found that there were 103,805 violations of New York State’s campaign finance laws between January 2011 and January 2013. The New York Board of Elections sent violators warning letters but did little to follow-up. Over 2,300 campaign committees filed late disclosure reports, 224 political clubs failed to register with the state, and 346 corporations donated more than the state’s annual limit of $5,000 without any fines or legal repercussions. Currently, the Board of Elections is severely under-staffed with no investigators and only four auditors. By contrast, in New York City, where profound reforms were implemented in 1989, the Campaign Finance Board imposed 128 penalties on 31 candidates that accepted contributions above the legal limit. Governor Cuomo issued a statement immediately following the release of the report: “The buildup of over 100,000 campaign finance violations over the last two years is unacceptable and a clear sign that the current self-policing system at the Board of Elections does not work.”

Brennan Center Responds to Senator Skelos’s False Claims

Last week, Senate Republican Conference leader Dean Skelos published an op-ed in the Albany Times-Union arguing against public financing of state elections. This week, Ian Vandewalker, counsel at the Brennan Center, responded to Skelos in a letter to the paper. Skelos asserted that “real world job creators” are opposed to reform. In reality however, 72 percent of New York business leaders support campaign finance reform, including matching small donations with public funds. They understand that clean elections will allow their business to compete freely in the marketplace rather than on the political stage. Skelos and the Senate Republicans have also quoted exaggerated, unsubstantiated and contradictory numbers pertaining to the cost of publicly funding elections, ranging anywhere from $143 to $286 million per year. A reasoned estimate by the nonpartisan Campaign Finance Institute sets the figure at $26 to $41 million per year. Lastly Skelos argues that public financing has “been a recipe for corruption.” This could not be further from the truth. Since the passage of reform, New York City has not seen corruption scandals like those of the pre-reform era. In neighboring Connecticut, federal corruption convictions reached a record low four years following the adoption of public financing.

NATIONAL

Corporations Earn Big Returns on Investment from Lobbying

Commentary in the New York Times by Thomas Edsall explores the relationship between lobbying, campaign contributions and “returns on investment” for several major American corporations. According to an investigation by the Sunlight Foundation, nearly 200 corporations that spent heavily on lobbying paid lower federal tax rates in subsequent years. Seven out of the eight companies that invested the most in lobbying between 2007 and 2009 saw their tax rates lowered, and six of the eight saw rate declines of at least seven percentage points. Compare that to the median tax rate decline among all 200 companies, which was 0.6 percentage points. For example, General Electric spent $73.17 million in lobbying between 2007 to 2009. Its tax rate declined by 7.6 percent or $1.08 billion in that same time period. According to United Republic, a campaign finance reform advocacy organization, the prescription drug industry spent $116 million lobbying for legislation to prevent Medicare from bargaining down drug prices. The industry was successful in the endeavor allowing them to make an additional $90 billion annually – an astonishing 77,500 percent return on investment. These quantitative studies demonstrate that our open campaign finance system allows politicians to pick winners and losers in the marketplace, and empowers narrow special interests above the concerns of consumers.

Advocates in NC Defend Successful Judicial Public Financing Program

In North Carolina, advocates for public financing of judicial races are ramping up efforts to defend the program. Republican leaders in the North Carolina Senate and Governor Pat McCrory are both opposed to the program. Public financing offers candidates for the North Carolina Supreme Court and Court of Appeals state funds for campaigning. The goal is to reduce reliance on private donations, some which come from parties that frequently appear before state courts. Last year, all eight statewide judicial candidates accepted public funds, which come from voluntary tax check-offs and annual fees on attorneys. Several prominent North Carolinians have voiced support for the program, including former Governors Jim Holshouser and Jim Martin, both Republicans, and Democrat Jim Hunt. Even visitors from nearby West Virginia, which recently adopted a similar program, have advocated for North Carolina to retain their successful system. Former West Virginia Supreme Court Justice John F. McCuskey and Delegate John B. McCuskey from the state legislature were both in North Carolina this week to support public financing. John F. McCuskey said that they started the program in West Virginia because: “The perception of judges being bought, rather than acting impartially created a great distrust among the populous. Everyone agreed, Democrat and Republican, that something needed to be done.”

Brennan Center Expresses Approval of the Substantial Baisis Investigation Report

 By Kelly Williams

The Brennan Center for Justice expresses its approval of today’s release by New York State Legislative Ethics Commission (LEC) of the Substantial Basis Investigation Report that was unanimously approved by the Joint Commission on Public Ethics (JCOPE) in February.  We note that release of the report is the clear obligation of the LEC as provided by reforms included in the 2011 Public Integrity Reform Act (PIRA).  Today’s release of the Substantial Basis Investigation Report by LEC demonstrates that this part of the new ethics oversight process established under PIRA can work – now it is up to the LEC to decide what the proper course of action will be.  We congratulate the JCOPE Commissioners and their staff on today’s important development and hope the remainder of this process will be handled fairly and expeditiously.

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

Jerome Kohlberg Explains Why Business Leaders are Standing Behind Campaign Finance Reform

In a Crain’s New York Business op-ed, New York LEAD member Jerome Kohlberg explains why the business community supports campaign finance reform. New York was recently reminded how rampant corruption is in the state after the arrest of two state lawmakers in separate bribery scandals. Business leaders understand that honest and open government is necessary for a prosperous business climate to thrive. Public policy decisions and electoral outcomes should not be decided by who gave the biggest check. Dysfunction, backroom deals, and influence peddling are far too often the norm in Albany. This is why 72 percent of business leaders support creating a system that matches small donations with public funds, along with other comprehensive reforms that can empower average citizens to participate in state government. In New York City, these reforms have already allowed a more diverse range of candidates to run competitive campaigns and involved more constituents in the electoral process. It is time for New York State to follow through.

Rochester Democrat and Chronicle Editorial Asks Cuomo to Propose Reform Legislation or Endorse Assembly Speaker Silver’s Bill

In a Monday editorial, the Rochester Democrat and Chronicle encouraged Governor Andrew Cuomo to propose new laws that ensure greater accountability from our elected officials. The governor has endorsed campaign contribution limits and matching campaign donations less than $250 with state funds as key reforms for the future of New York. These measures can go far to help regenerate public confidence in our state institutions. Cuomo should propose his own legislation or endorse Assembly Speaker Sheldon Silver’s bill for campaign finance reform. Campaign finance reform and early voting can help reduce the influence of well-heeled special interests and increase grassroots participation.

Daily News Editorial: Enforcement of Law is Key Component of Reducing Corruption

In late April, Governor Andrew Cuomo called for a new watchdog to enforce New York’s campaign finance laws. The indictments of former State Senator Malcolm Smith and Assemblyman Eric Stevenson for bribery led the Governor to propose new ideas to combat corruption including harsher punishments for corruption, giving prosecutors greater investigative powers and cracking down on campaign finance violations. The Daily News editorialized in favor of enforcement this week. The Fair Elections campaign has consistently called for enforcement as one of four key reforms, along with public financing, lower contribution limits, and disclosure. Currently, the State Board of Elections has no staff committed to conducting investigations. With such lax enforcement, former Bronx State Senator Pedro Espada got away with failing to disclose his finances for 15 years. Politicians and donors routinely violate contribution limits and disclosure rules without any consequences. The Daily News advised Governor Cuomo and the Legislature to create an enforcement agency that is (a) independent of the State Board of Elections, (b) has investigative authority, (c) is equipped with subpoena power, (d) can prosecute offenders in civil and criminal courts and (e) receives adequate funds and staff.

Richard Davis: Matching Small Donations Can Change Albany’s Culture of Corruption
Richard J. Davis, a former Watergate prosecutor and a member of the New York City Campaign Finance Board and New York LEAD, wrote an op-ed in Long Island Newsday advocating for the adoption of public financing in New York State. Although Governor Andrew Cuomo has unveiled legislation that will give prosecutors greater authority to punish corrupt politicians, without systematic changes to our campaign finance laws, Albany still remains the Wild West of money in politics. As a former prosecutor, Davis sees a connection between porous campaign finance laws and corruption. At a time when we should be enfranchising citizens so they can hold elected officials accountable, repeat scandals are tuning voters out of the political process. In the New York City small-donor matching-funds system, candidates can rely on their constituents for campaign expenses rather than a few wealthy special interests. By contrast, at the state level, sky-high contribution limits and a myriad of loopholes allow State legislators to fundraise outside of their home districts from lobbyists and special interests. A report last year showed that only three out of 575 donors to former State Senator Pedro Espada Jr.’s campaign – who faced federal and state corruption investigations – were residents of his district.

Public Financing Bill Introduced by NY Senate Independent Democratic Conference

The New York Senate Independent Democratic Conference introduced a campaign finance reform bill this week with Senate Co-Leader Jeffrey Klein as the chief sponsor. The bill includes public matching funds for small donations, restrictions on fund transfers between candidate campaign committees and political party committees, dramatically lower limits on contributions to campaigns and parties, ceilings on contributions by those doing business with the state, and greater disclosure of outside spending. The bill, S04897, would utilize unique sources of financing for the public matching component including transfers from the abandoned property fund to a campaign finance fund, an optional tax return check-off and a surcharge on securities fines that Speaker Silver’s bill also includes.

Hearings on Senate IDC Reform Bill

Hearings on the Independent Democratic Conference’s bill for campaign finance reform were held on Wednesday in New York City. A series of additional hearings are scheduled over the next month across the state. Before the hearing, the Fair Elections for New York coalition held a press conference with supporters to encourage Legislators to bring a bill to the floor for a vote. David Donnelly, Executive Director of the Public Campaign Action Fund, stated that “New Yorkers know that reforming the pay-to-play system in a way that lifts up the voices of everyday people is the best answer to the corruption scandals of the past months and years.” Susan Lerner, Executive Director of Common Cause New York, also present at the conference said that “One too many corruption scandals have finally tipped the scales of decency, and the voters are crying out for campaign finance reform built around a system of public matching funds.” Representatives from more than 10 groups testified at the hearing that followed. Ian Vandewalker, counsel at the Brennan Center, informed the lawmakers about the benefits of public funding systems as evinced by clean elections in states such as Arizona, Maine and Connecticut, as well as New York City. “At bottom, opponents of comprehensive reform are defenders of the status quo, champions of a system that works for lobbyists and special interests, but not every day New Yorkers,” Vandewalker stated.

NATIONAL

Senators Introduce Follow the Money Act to Disclose Political Spending

Senators Ron Wyden (D-OR) and Lisa Murkowski (R-AK) have introduced S 791, the Follow the Money Act, aimed at disclosing political spending. The bill would require groups spending $10,000 or more on election-related activities to disclose all contributions above $1,000. As Jonathan Backer, research associate at the Brennan Center, explains in The Hill, the 2012 election demonstrated the dire need for such a law: following Citizens United, spending by outside groups increased by more than 255 percent between 2008 and 2012. Fifty-nine percent of the $1 billion spent on television and radio advertisements by independent groups during the 2012 election cycle remains undisclosed, meaning we still have no idea who the donors behind all of those negative ads were. The Follow the Money Act has elements similar to the DISCLOSE Act proposed earlier this year, with a few exceptions. Under the new legislation, the floor for the disclosure of individual donations has been raised from $200 to $1,000. In addition, the FEC is required to set up a real-time reporting system for all independent groups and candidates, so that voters are informed about political donations and expenditures on a daily basis rather than every three months.

Lack of Transparency in Campaign Finance Laws Threatens National Security

Potentially serious consequences of our nation’s free-for-all campaign finance system are exemplified in K Street’s relationship with a Chinese telecommunications firm closely tied to the People’s Liberation Army. The Shenzhen-based Huawei Technologies has spent $1.2 million to build an in-house lobbying shop stocked with former members of Congress, and Congressional and White House staff, in an effort to gain prominence among tech and intelligence circles in the capital. Federal records illustrate that Huawei paid another $1 million to APCO Worldwide, a powerhouse Washington-headquartered public relations and lobbying giant. The excessive political spending comes after the U.S. House Intelligence Committee charged that Huawei was implicated in corporate espionage activities, including the insertion of malicious hardware and software into U.S. telecommunications networks that are critical to the American defense system. “Huawei, in particular, provided evasive, nonresponsive, or incomplete answers to questions at the heart of the security issues posed,” the committee said in its unclassified report on the issue. Charles Fried, a Harvard law professor and former U.S. Solicitor General said “I think it stinks… Everybody is entitled to a lawyer. I didn't know that everybody is entitled to a lobbyist.”

Special Election in South Carolina Attracts Mega-Donors

The May 7 special election for South Carolina’s 1^st District for Congress is drawing in several big money donors. Former South Carolina Governor Mark Stanford is the Republican candidate, with $284,000 in his campaign account. The Democratic nominee Elizabeth Colbert Busch has $254,000 on hand. Stanford’s disappearance from office during his governorship and Busch’s quasi-celebrity status due to her brother, Stephen Colbert, have attracted national attention, not only from late night comedians but also wealthy donors and PACs. The National Republican Congressional Committee has disowned Sanford’s candidacy after accusations that he trespassed on his ex-wife, Jenny Sanford’s property. Subsequently, the Democratic Congressional Campaign Committee has picked up steam and invested $458,000 in the election via independent expenditures, while House Majority PAC, a Super PAC that supports Congressional Democrats, has spent $90,000 already on television advertising and direct mail. Despite his trouble with the RNCC, Stanford is still receiving donations from prominent out-of-district contributors including $2,600 from Patrick Byrne, CEO of Overstock.com, $5,200 from Howard Rich, a major backer of the conservative 501(c)(4) Club for Growth and $5,200 from Richard Chilton, a Connecticut investor. Busch’s benefactors include Hollywood activist Peg Yorkin, who gave $1,000, the Teamsters PAC, which donated $2,500 and the American Federation of State, County and Municipal Employees PAC, which provided $5,000.