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

Campaign Finance Reform Fails to Clear Senate by Two Votes

Last week, New York State legislators failed to pass a campaign finance reform measure that would end Albany’s dysfunction. A bill had passed the Assembly but could not get through the Senate before the end of the legislative session last Sunday. The coalition of Republicans and Independent Democrats that control the Senate refused to bring any of the campaign finance reform bills to the Senate floor for a vote, not even the one that the IDC introduced. Senators supportive of Fair Elections were left with no choice but to bring the bill to a vote through a “hostile amendment.” Senator Gustavo Rivera (D-Bronx) introduced an amendment for public financing of elections to a bill authorizing lever machines for run-off elections. The amendment failed by only two votes. Addressing the press, Senate Democratic Conference leader Andrea Stewart-Cousins asked the Senators to “reverse course, pass campaign finance reform and return government to the citizens of New York.” After the vote, Karen Scharff, Executive Director of Citizen Action of New York, said that “Unfortunately, the leadership coalition that rules the State Senate is apparently comfortable with the atrocious pattern of corruption in state government, along with the dismal public approval ratings and the lack of public trust that accompanies this corruption.”

Governor Cuomo Announces Commission to Investigate Legislative Corruption

Shortly after introducing his own bill on campaign finance reform, Governor Cuomo asked the Senate leadership to bring Fair Elections legislation to the floor for full consideration. He stated that Senators “Klein and Skelos should bring this bill, as well as the other bills that would address public corruption, to the floor for a vote of the full Senate before the session concludes this week.” Following the refusal of the Senators to bring the bill to the floor and the subsequent lack of legislation addressing corruption – a priority for Governor Cuomo – the governor announced that he would launch a Moreland Commission to investigate potential corruption in the legislature.  “I don’t believe in the concept of self-policing,” Cuomo said at a press conference. The governor insisted that the commission would review existing campaign finance laws, send corruption cases to the DA if any are discovered and make recommendations for improving the way we finance campaigns. He stated that unresolved issues including campaign finance reform, public financing and the broader anti-corruption measures would be election issues in 2014.

Strong Majority Support Public Financing and Matching Small Donations in NY

According to a June 17th poll by the Siena Research Institute, a plurality of New Yorkers—44 percent—wanted the state legislature to address corruption as a number one priority before the end of the session, including voters across every region, party and demographic group. When asked specifically whether they support creating a system of public financing in New York that would limit the size of political contributions to candidates and match smaller contributions made to candidates for state offices, 61 percent answered in the affirmative. Despite popular support for these legislative agenda items, the New York legislature adjourned without passing a single anti-corruption reform.

Post-Standard Editorial Criticizes Senate for Inaction on Corruption

Last week, the Syracuse-based Post-Standard urged Albany legislators to “do big things in the final week of the legislative session.” At the top of the list was addressing corruption in state government. The Utica Observer Dispatch echoed the sentiment on Friday. Governor Cuomo proposed a broad set of laws including stricter limits on campaign contributions and party spending on behalf of candidates, public financing of elections to match small contributions from individuals, and new public corruption crimes in an attempt to reduce the culture of corruption in Albany. Despite quickly passing bills on casino gambling and tax-free zones for startup businesses, the legislature did nothing to clean up Albany. This week the Post-Standard again editorialized, this time criticizing the legislature's failure. “Their inaction is beyond shameful, coming on the heels of the arrest of two legislators, the jailing of two more and the resignation of a third -- and that’s just this year… The IDC’s entire reason for being was to bring progressive legislation to the floor, but it never put up its own reform bill for a vote.”

Gambling Bill Passes after Millions in Campaign Contributions from the Industry

Despite New Yorkers’ clamoring for comprehensive campaign finance reform, as shown by polls, petition campaigns, and countless op-eds and editorials, the legislature did nothing to address the crisis of corruption in Albany this year. Apparently, legislators had other priorities: they passed legislation aimed at expanding casino gambling in the Empire State. One possible reason that casino legislation was favored over anti-corruption reform? Over two million dollars in campaign contributions from the gambling industry to Albany politicians in the last two years, plus $2.6 million to the pro-Cuomo Committee to Save New York. In fact, a provision that would have banned campaign contributions from casino operators was quietly removed from the bill at the last minute.

Unnecessary Tax Breaks for Real Estate Developers Were Passed in an Omnibus Bill in January

Although the New York legislature failed to enact reform legislation to target corruption in Albany this year, it had no problem passing a massive tax cut for millionaires in New York City. Five luxury high rises in Manhattan are now eligible for tax breaks — estimated to cost New York City tens of millions of dollars in property taxes. The developers of four of the projects, their relatives and affiliated companies gave $1.5 million to various state campaign committees during 2008-12. The contributions included $53,000 to the state Senate Republican campaign treasury and $34,000 to the war chest of Assembly Democrats. Nearly $150,000 was also donated to Governor Cuomo’s campaign, who signed the bill on January 30th. “The reason Albany lawmakers agreed to spend millions subsidizing luxury housing for the wealthy is clear: Developers who contributed to their campaigns . . . expected to be rewarded,” according to Jaron Benjamin, president of the Metropolitan Council on Housing. This giveaway to some of the richest downstate residents was apparently irrational as a matter of policy, since it benefitted developers who have already almost finished their buildings. As Senator Liz Krueger (D-Manhattan) pointed out, “A tax incentive given retroactively is the stupidest thing in the world.”

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

Governor Cuomo Introduces Campaign Finance Reform Legislation with a Public Financing Option

Governor Andrew Cuomo has introduced legislation that seeks to enact a system of small donor matching funds for state elections, along with a number of other provisions designed to reduce corruption and special interest influence. The Governor embraced campaign finance reform as a priority in his State of the State Address back in January, but had not introduced his own bill on the issue until Tuesday of this week. The legislation is part of a broader package of laws designed to improve enforcement of election laws, ease voter registration, strengthen anti-bribery laws, and provide district attorneys with greater power to prosecute public corruption cases. The Governor’s bill lowers contribution limits, requires disclosure of independent expenditures, prohibits using campaign money for personal expenses, and matches small donations from constituents with public funds. “I think on the merits, this is a powerful proposal. It’s long overdue. It’s needed,” the Governor said at a news conference. If Legislators fail to pass the anti-corruption measures, Governor Cuomo has threatened to appoint a special panel, a Moreland Commission, to investigate corruption in the body.

NY LEAD Sends Letter to IDC Urging Reform

On Monday, members of the New York Leadership for Accountable Government – a bipartisan coalition of business, civic, and philanthropic leaders dedicated to reforming elections laws in the state – delivered an open letter to the Senate Independent Democratic Conference. The letter asks Senate Co-President Jeffrey D. Klein and Senators David Carlucci, Diane Savino and David Valesky to ensure that campaign finance reform is brought to the floor for a vote. “We understand that you introduced a comprehensive campaign finance reform bill…However introducing a bill without working to get it passed is worth little to the people of New York,” the letter states. Prominent signatories include Chris Hughes (Facebook Co-Founder), former U.S. Senator Bill Bradley (Co-Chair of Americans for Campaign Reform and two-time NBA Champion), Cynthia DiBartolo (Chairperson of the Greater New York Chamber of Commerce), and Philip D. Radford (Greenpeace US Executive Director), among many others. The signatories reminded the Senators of their pledge earlier in the session to make Albany functional and institute major reforms. The letter was printed in the Journal News and the Staten Island Advance and was covered by the Wall Street Journal and City & State.

Journal News Editorial: IDC Should Not Hinder Reform

The Journal News put forth an excellent editorial this week in favor of comprehensive campaign finance reform, including small donor matching funds. Reform has already cleared through the New York State Assembly. However it has failed to move in the State Senate. The Independent Democratic Conference and the Senate Republicans share control over the NYS Senate’s daily agenda. Although the IDC has introduced wide-ranging reform legislation – which includes public matching funds for small donations – and held public hearings on the matter, they’ve refused to bring the bill to a vote without approval from the Senate Republicans. “That is a kind of power sharing that favors political leaders but not people,” the Journal News stated. Federal Prosecutor Preet Bharara has decried the “casualness and cockiness” of corruption in Albany. The IDC members Senator Klein and Carlucci have echoed this sentiment, stating that the “people of New York deserve nothing less” than major change. As the Journal News puts it plainly, “There’s no doubt about that. It is past time to put such rhetoric into concerted action.”

Celebrities Tell Albany Representatives, “Don’t Come Home Without it”

Several notable celebrities have joined the movement to reform elections in New York. Alec Baldwin told Legislators in a YouTube video that “It’s time to stop talking about cleaning up Albany, and start doing it.” There are videos from Liev Schreiber, Jason Alexander, Kathleen Turner, and Cynthia Nixon, and others. The actors have endorsed the Fair Elections reform package which includes a system of matching small donations with public funds, as well as lower contribution limits, restrictions on contractors and lobbyists doing business with the state, and greater enforcement and transparency. Turner put it rather bluntly: “State Legislators, patting each other down for wires, isn’t that embarrassing. It’s time Albany got cleaned up.” All of the actors had an important closing message for Legislators: “Don’t come home without it.”

Governor Cuomo Holds Events Upstate to Boost Support for Public Financing Legislation

After introducing his campaign finance reform legislation in Albany, Governor Andrew Cuomo held events in Syracuse and Buffalo to push for his public financing proposal and other anti-corruption measures. New York Leadership for Accountable Government members former U.S. Representative Mike Arcuri and Diane Cihak, Founder of WomenElect, also spoke at the events. Speaking before community members at the S.I. Newhouse School of Public Communications at Syracuse University, the Governor informed the audience that he can “receive $50,000 in contributions.” Such a high amount, he insisted, can disenfranchise those who can’t afford $1,000-per-plate fundraisers. Under Cuomo’s proposal, donations to statewide candidates would be capped at $25,000 for those not receiving public money and $12,000 for those participating in the new publicly financed system.

Congressional Candidate Explains Why we Cannot Outsource Elections to Wealthy Special Interests

In an op-ed in the Poughkeepsie Journal, 2012 Congressional candidate Julian Schreibman explained why adopting Fair Elections is so important for New York. Schreibman, a former Assistant U.S. Attorney for the Southern District of New York and Senior Assistant District Attorney for Ulster County, said he discovered shortly after campaigning that the need for multimillion-dollar fundraisers turned him away from voters. “The influx of big corporate money has turned campaigning into an arms race for cash, and it forced me to spend far too much time shaking hands with donors instead of speaking with voters.” It is no surprise then that our elected officials spend extraordinary amounts of time fundraising in office for their next election, rather than serving their constituents. With the continual gridlock in D.C., it is essential that states take the lead on passing reform legislation. Much of the stated opposition against publicly financed elections stems from the cost of such a program, which opponents of reform have falsely exaggerated. As Schreibman explains, “Public funds are already used to pay for lawmaker salaries, staffing and other expenses, including direct mail from elected officials. Our campaign finance system is the only aspect of our democracy that is not publicly funded, and it has allowed our campaigns to be captured by wealthy interests. Publicly financed elections will put our campaigns back in the hands of the people, where they belong.”

Buffalo News Editorial: Make Campaign Finance Reform a Priority before End of Session

The Buffalo News has editorialized about its priorities for what the legislature needs to accomplish before adjourning next week. Campaign finance and ethics reform were ranked as number one. As the paper put it bluntly: “Albany remains a cesspool of corruption.” This year several of our assembly members and senators were embroiled in corruption scandals. Publicly matching small donations will allow candidates without deep pockets or entrenched connections to run against financially flush and corrupt incumbents. Research from the good-government group Citizens Union confirms that the New York City elections, where public funding is already in place, allow for greater voter choice and more electoral competition, when compared with New York State races.

NATIONAL

NC Court of Appeals Judges Affirm Their Support for Publicly Financed Judicial Races

North Carolina Governor Pat McCrory and State Senate leader Philip Berger (R-Rockingham) are attempting to repeal the successful public financing program for state judicial elections. This week, the Charlotte Observer and the Fayetteville Observer both editorialized to defend the current non-partisan judicial elections program. ReformNY informed readers earlier that three former North Carolina Governors – including Republicans Jim Holshouser and Jim Martin, as well as Democrat Jim Hunt – have come out in support, along with 200 business leaders. Now 14 of the 15 judges on the North Carolina Court of Appeals have added their voice to the chorus in a letter to Senator Berger and Governor McCrory. “Despite our individual differences with respect to race, gender, political party, and judicial philosophy, we all agree that our current system of nonpartisan judicial elections supplemented by public financing is an effective and valuable tool for protecting public confidence in the impartiality and independence of the judiciary,” the judges stated. The letter emphasized that the program minimizes politics in the courtroom, reduces conflicts of interest regarding cases that would otherwise involve major campaign donors, and maintains public confidence in the impartiality of the courts. Judicial elections are funded by a $50 fee levied on members of the North Carolina State Bar and an optional check-off on state income taxes. It is supported by over 67 percent of Republicans, 69 percent of Democrats and 65 percent of unaffiliated voters in North Carolina.

Former U.S. Representative Jesse Jackson Jr., Pleads Guilty

Former Congressional Representative Jesse Jackson Jr., (D-IL) has pled guilty to criminal charges that he engaged in a scheme to spend $750,000 in campaign funds on personal items. Prosecutors recommended four years in prison for Jackson, and an 18-month sentence for Jackson’s wife, Sandra, for filing false joint federal income tax returns that understated the couple’s income. The government also recommended that Jackson pay $750,000 in restitution to the campaign and Sandra Jackson pay $168,000. In sum, according to statements filed by prosecutors in February, Jackson and Sandra spent $582,772.58 to purchase 3,100 personal items from 2005 to April, 2012, including a $43,350 gold-plated men’s Rolex watch, $9,587.64 worth of children’s furniture and $5,150 on fur capes and parkas. The investigation has also revealed that Jackson received a $25,000 check in April, 2011 to pay down the balance on a credit card from someone identified as “Person F,” now revealed to be Greg Calhoun, an Alabama businessman. During his Congressional tenure, Jackson helped set up meetings between Calhoun, executives of the for-profit Education Corporation of America and U.S. Secretary of Education Arne Duncan. Calhoun and Jackson have told officials that the check was a loan. As these examples illustrate, the constant race for campaign funds in the post-Citizens United world corrupts our elected officials and foments donor-politician relationships that can potentially lead to quid pro quo deals.  

SEC Should Issue Rules Mandating Disclosure of Corporate Political Spending

The Securities and Exchange Commission (SEC) has the issue of political spending disclosure on its regulatory agenda, after more than 600,000 public comments poured in urging the SEC to act on the matter. Corporations can donate money to “social welfare” organizations and other tax-exempt entities that can in turn spent 49 percent of their annual expenditures on political activity without disclosing their donors. Consequently, extensive networks have evolved to funnel money from corporations to Super PACs and 501(c)(4)s in order to completely shield the identity of donors behind negative political attack ads and spend ever greater sums on political activities. Secretive corporate political activity presents broad concerns to the general public and significant risks to our economy. A study conducted by the International Monetary Fund drew a link between political spending by banks and heavy involvement in risky subprime mortgages. Several business and government organizations have come forward to support the regulatory measures, including five State Treasurers writing in their fiduciary capacity, Vanguard Founder and former CEO John Bogle, the Council of Institutional Investors (with combined assets exceeding $3 trillion), and a global coalition of investors managing over $630 billion. As Lisa Gilbert, director of the Congress Watch Division at Public Citizen, explains: “Corporate political transparency is necessary for the efficient functioning of our capital markets and as a risk management tool for shareholders, corporate management and directors.”

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

The Independent Democratic Conference Should Bring Fair Elections to the Floor 
In a Times Union op-ed Frederick A.O. Schwarz, Jr., corporate counsel at the Brennan Center, and Michael Waldman, president of the Brennan Center, explained how the Senate is at a historic crossroads, with a unique opportunity to usher in an era of transparency and cleaner elections in Albany. Currently the Independent Democratic Conference (IDC) controls the chamber in a power sharing agreement with the Republicans. When forming the coalition, IDC Leader Senator Jeffrey Klein insisted that it would help end gridlock in our legislative process. However, now the IDC is saying that it will not bring its own campaign finance reform bill up for a vote despite overwhelming support for comprehensive reform from the public, a majority of Senators, and all three statewide leaders, including Governor Cuomo. After a string of corruption scandals that confirmed the corrosive role of big money on our elections and policy process, campaign finance reform with independent enforcement of the law should be part of a comprehensive remedy. “Scandal often breeds innovation, and fractured party control of the Senate could offer a rare chance for meaningful change. It still can — if the IDC members decide to let their own proposal come to the floor for a vote.”

Citizens Rally in Albany for Campaign Finance Reform
Hundreds of citizens rallied in Albany on May 29th to pressure their legislative representatives to pass comprehensive campaign finance reform with public financing. Nearly 500 people marched in the Capitol building, and met with over 100 state Assemblymen and Senators from both sides of the partisan divide. New York State Comptroller Thomas DiNapoli spoke to the crowd, criticizing the current limits on donations for the Comptroller’s race, which stand at $19,000 for the primary election and $41,100 for the general election. “That’s outrageous,” DiNapoli said. “No wonder people feel that they don’t have power.” New York State Senate Democratic Leader Andrew Stewart-Cousins was also present. Regarding reform she emphasized that “We all understand the importance of getting people back involved in the process.” Photos and videos from the event are available here.

Residents of Key Senate Districts Ask Their Senators to Pass Reform 
Voters across the state are letting their State Senators know that comprehensive campaign finance reform should be an important legislative priority before the end of the legislative session. The Fair Elections proposal is a set of reforms intended for our state’s lax campaign finance laws. New York’s current limits for gubernatorial elections are the highest of all states that restrict campaign donations. Comprehensive reform would not only to reduce these outrageous contribution limits but also provide an incentive for candidates to be responsive to their constituents, by matching donations up to $250 from district residents with public funds. A number of constituents are calling on their Senators to show true leadership and bring the Fair Elections bill, S04705A, to a vote. Constituents of Senators Mark Grisanti, Diane Savino, and David Carlucci have expressed their support for the bill.

Buffalo News Editorial: Senate Should Pass Public Financing
On Sunday, the Buffalo News editorialized in favor of campaign finance reform, and asked Senate Republicans, including Buffalo Senator Mark Grisanti, to pass a comprehensive plan that puts “state government back on the path of respectability.” With the “swamp of criminality and unethical behavior in Albany” and “voter disgust” at unprecedented heights, the time for reform is now, before the end of the legislative session on June 20th. The Buffalo News strongly endorsed public financing of elections as a key aspect of any reform package to “encourage participation by potential candidates who are now intimidated by a system that costs millions of dollars to access and that tilts dramatically toward incumbents.” The proposal follows the model in New York City, which has worked well for two decades. “Gov. Andrew M. Cuomo is pushing for reforms this year, and the Assembly is already on board. What is needed are some Senate Republicans who understand the overarching need to restore the trust of their constituents. There are many possibilities and, in Western New York, they include Sen. Mark J. Grisanti, R-Buffalo, who has already demonstrated an unusual quotient of political courage.”

NYS Attorney General Schneiderman Unveils Disclosure Regulations, Praises Public Matching Funds
At an event sponsored by the Brennan Center and New York Leadership for Accountable Government (NY LEAD) – a coalition of business, civic and philanthropic leaders who favor campaign finance reform – New York State Attorney General Eric Schneiderman unveiled new disclosure requirements for non-profits engaging in political activities. Under the new regulations, 501(c)(4) tax-exempt organizations that spend more than $10,000 on federal, state and local political activities will be required to file itemized schedules of their expenses and contributions. The regulations cover express advocacy, such as ads that call directly for the election or defeat of a candidate, as wells as issue ads broadcast close to an election. Organizations that fear reprisals or threats from donor disclosure can file exemption waivers. “By requiring nonprofits to disclose the extent and nature of their electioneering activities, we are protecting prospective donors from misleading solicitations, and giving voters more information about who is behind many of the ads they will see in this year’s elections,” Schneiderman stated. NY LEAD member David Calone, President and CEO of Jove Equity Partners, praised the Attorney General’s efforts: “Attorney General Schneiderman’s new disclosure policy offers a concrete solution to the explosive growth in secret non-profit political spending.” Attorney General Schneiderman also remained optimistic that campaign finance reform would pass this year before the end of the legislative session. He dismissed allegations that matching funds would allow corrupt incumbents to gain access to public money, arguing that it would instead expand the field of candidates running. “The bigger problem in New York State is not that we’re spending too much on elections, it’s that in many many cases, as with Mr. Lopez last year in the Assembly race, people easily win re-election no matter what their conduct,” he added.

Professor Benjamin Explains Costs of Publicly Financed Elections
Recently there has been contention about the cost of adopting a public financing system in New York State. According to Professor Michael Malbin, a leading national expert on state and local campaign finance and head of the non-partisan Campaign Finance Institute, the cost would range from $1.34 to $2.08 per New York resident per year. In sum, that amounts to between $26 million to $41 million per year. Public financing would encourage new donors to participate since their contributions up to $250 would be matched by public funds. Consequently small donors would be able to compete with big donors. The Senate Republicans have pitched several inflated and often contradictory figures for the cost. Ultimately New Yorkers must ask themselves, is $2.08 a high price to pay for clean elections? As Gerald Benjamin, Distinguished Professor of Political Science at SUNY New Paltz, points out in a Journal News op-ed; Forty-nine out of 63 New York State Senators received most of their campaign contributions from corporations or big money donors. Millions are wasted and misdirected each year because of sweetheart deals for the special interests. “We can choose to take ownership of our troubled state political system by each paying our share toward democracy’s overhead. Or we can outsource democracy, and let the big money interests continue to call the shots.”

Op-Ed by NYC Councilman Koppell Asks Senator Klein to Bring Fair Elections Legislation up for a VoteOn Friday, New York City Councilman Oliver Koppell wrote an op-ed in the Norwood News asking New York Senate Co-Leader Jeffrey Klein to bring Fair Elections legislation to the floor for a vote. Councilman Koppell, who currently represents parts of the Bronx like Klein, also served in the State Assembly in the 1980s. In 1986, he helped draft the first campaign finance reform statute to be introduced in the New York State legislature. Now, 27 years later, a comprehensive reform bill has passed the Assembly and has the support of Governor Cuomo. The fate of the bill depends on the Senate governing coalition of the Independent Democratic Conference lead by Senator Klein and Senate Republicans. Koppell asserts that once public financing is combined with drastically lower contribution limits, improved disclosure rules and stronger enforcement of election laws, it will “restore New York’s democratic integrity by making campaign finance more dependent on the people.” His judgment should carry some weight; he has been an active participant in elections in New York City, where such a system is already in place. Although we cannot eliminate corruption, we can change Albany’s culture of dialing for dollars from lobbyists and deep pocketed special interests. “The Senate is big money’s last bastion of power, and it’s up to Mr. Klein to demonstrate real leadership and get a bill to the floor.”

NATIONAL

Financial Industry Contributes Heavily to House Financial Services Committee
According to an investigation by the New York Times, lobbyists from Citibank and other financial firms helped draft 71 out of 80 lines in a new bill that seeks to water down regulations on the industry. The co-sponsors of the bill, the Swaps Regulatory Improvement Act (HR 922), include House Financial Services Committee members Randy Hultgren (R-IL),Jim Himes (D-CT), who have received $50,100 and $47,700 respectively in campaign contributions from the employees of and PACs associated with commercial banks and the securities and investment industry. HR 992 was passed by the House Financial Services Committee this month. It would exempt broad swathes of trades from the Dodd-Frank Wall Street Reform and Consumer Protection Act. The changes have been opposed by the Treasury Department. According to data from the Center for Responsive Politics, in the first quarter of 2013, members of the House Financial Services Committee received more than $1.3 million in donations to their campaigns and leadership PACs from the securities and investment firms and commercial banks. The top recipient of cash from the two industries so far this year is Representative Jeb Hensarling (R-TX), the chairman of the committee, who has picked up $140,400. The top Democrat on the committee, Representative Maxine Waters (D-CA), who has criticized the legislation in question, received only $6,000.

Texas Governor Vetoes Disclosure Bill 
A political spending disclosure bill in Texas, SB 346, has been vetoed by Governor Rick Perry. The bill, which passed both the Texas House of Representatives and Senate would have required 501(c)(4) non-profits to disclose their political spending. Any non-profit group spending more than $25,000 per year advocating for or against a political candidate would have been required to detail its expenditures and disclose the names of donors that contributed more than $1,000. The move comes as unknown politically active dark money groups have invested heavily in primaries in the state. The chief sponsor of the legislation, Senator Kel Seliger (R-Amarillo) said “This is a sad day for integrity and transparency in Texas. Gov. Perry’s veto of SB 346 legalizes money laundering in Texas elections."

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.”