The Campaign-Finance Struggle

Kill corporate welfare, not constitutionally protected speech

Mr. Kopel is research director of the Independence Institute.

National Review Online, March 21, 2001 12:20 p.m. Also by Kopel: Ineffective Reform. Campaign Finance Laws Keep Missing Target. Rocky Mountain News. June 16, 1996.

Campaign-spending limitations are like the amusement-arcade game of whack-a-mole. The faster you hammer one mole into the ground, the sooner another pops up from a different hole. Thus, limits on contributions to individual candidates simply divert "soft money" into contributions to political parties. Other reforms also spawn unintended consequences; the much-derided Political Action Committees (PACs) were created by the 1974 federal-election reform law, with the intention of reducing political corruption.

To the extent that campaign-finance laws are effective, they harm the political process even more. Establishment candidates with hefty rolodexes can amass huge treasure chests by raising $1,000 each from scores of other insiders. In contrast, mavericks need deeper support from their narrower base.

Without the very generous support of a few very wealthy individuals, Eugene McCarthy never would have been able to mount his 1968 challenge to President Lyndon Johnson. In the March 12, 1968, New Hampshire primary, McCarthy took 42% of the vote, while President Johnson could not muster majority support from within his own party, winning just 49.6%. The next primary was scheduled for April 2 in Wisconsin. Two days before the Wisconsin primary, President Johnson announced that he would not seek reelection. History was changed because McCarthy could raise scads from millionaires in order to take on the establishment's candidate.

Political speech is the core of the twin liberties of freedom of speech and freedom of the press. But campaign-finance laws directly limit political speech, either by preventing an individual from choosing how much of his own money to give to support political speech he likes, or by limiting the total amount a candidate may spend to get his message out.

As the whack-a-mole game proceeds, the speech controllers have to restrict more and more political activity in order to tighten up the "loopholes." Thus, current "reform" proposals in Congress would actually make it illegal for groups like the Sierra Club or the National Rifle Association to inform their members about how elected officials voted on issues of concern to their respective memberships.

There is a better, simpler path to election reform. Article XI, section 2, of the Colorado Constitution states: "Neither the state nor any county, city, town, township, or school district shall make any donation or grant to, or in aid of ... any person, company, or corporation, public or private in or out of the state." Colorado's 1876 Constitutional Convention, reacting to the common practice of railroad companies extracting huge subsidies from municipalities, totally outlawed corporate welfare, in five separate provisions of the state constitution. Many other states have similar bans on corporate welfare.

Besides upholding the fundamental principle that private interests should not receive public subsidies, the Colorado provision also protects the political process from corruption. If wealthy private interests aren't allowed to enrich themselves from the public till, then the private interests have much less motivation to give campaign contributions to the legislators who man the till.

This nineteenth-century intuition was confirmed by Yale Law School's John Lott. Comparing state-spending levels and political spending rates in all fifty states, Lott found a direct correlation. The greater a state government's per-capita spending rate, the more money that was spent on state legislative elections. The title of his paper says it all: "A Simple Explanation for Why Campaign Expenditures are Increasing: The Government is Getting Bigger."

Lott explains: "The bottom line is, even when you control for all the other possible effects, between 60 and 80 percent of the growth across time in campaign expenditures can be linked with increased government spending." He notes: "The irony is that many of the same people complaining about campaign spending also tend to want larger government."

For the first half-century of Colorado statehood, Colorado courts generally enforced the constitutional ban on welfare for private interests. But during the Depression, the Colorado Supreme Court invented a "public-purpose" exception to Article XI. Corporate welfare is now okay, so long as there is some alleged "public purpose." Since 1930, the Colorado Supreme Court has never found a single instance of corporate welfare without some supposed "public purpose" Thus, the court upheld a 1991 legislative plan to grant millions of dollars to United Airlines.

In addition to the Article XI ban on corporate welfare, the Colorado Constitution also outlaws the legislative creation of special privileges for corporations or individuals (Art. V, sect. 25); and forbids giving taxpayer money to private persons or organizations (Art. V, sect. 34).

These provisions too have been emasculated by specious decisions from the lawless Colorado Supreme Court. In Colorado, as across the nation, grants of public funds to private interests are now routine. Appalachian School of Law professor Dale F. Rubin has detailed how these state constitutional anti-corruption measures have been judicially nullified in Colorado, Oregon, Utah, Florida, and Washington State.

Many advocates of restrictions on spending for political speech, such as Ralph Nader and his Green Party, are faced with an insoluble dilemma: They like to point out how big government bestows unfair advantages on big corporations, yet the proposed solution will make government ever more powerful.

Willie Sutton explained that he robbed banks "because that's where the money is." As long as government remains in the welfare business, especially the corporate-welfare business, people will "invest" in campaigns in order to receive taxpayer-funded boodle after the election. The election becomes, as one wit cleverly observed, an auction in advance for stolen goods.

The solution isn't to cripple the First Amendment. The most important campaign reform is to replace the boodle-tolerant state court judges who refuse to enforce the anti-corruption provisions of their respective constitutions. At the federal level, imagine that all the energy currently being wasted on McCain-Feingold were instead devoted to welfare reform for corporations. Since 1996, single mothers have faced time limits and other restrictions on their receipt of welfare money; why shouldn't corporate-welfare recipients face equally tough restrictions?

If public funds were no longer a source of private revenue, then the "special-interest spending" problem would go away on its own. No one's freedom of speech would have to be limited. And perhaps if Congress spent less time doling out corporate welfare, it might do a better job of performing its truly constitutional duties.

 

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