Out Of The Finance Pan, Into The Fire

27 February 2003

By Stentor Danielson

As the country begins to gear up for the 2004 elections, many members of Congress are reviewing the requirements of the new McCain-Feingold campaign finance reform law, and they're shocked at what they're finding. The new rules seem to cut off many of a candidate's usual sources of money to a greater degree than any of them anticipated. And the penalties for infringement are so high -- a felony carrying a jail term of up to five years -- that nobody wants to risk crossing the line. Pundits have had a good chuckle at the spectacle of legislators shocked to learn what they voted on.

Post-reform shock is strongest among Democrats, who were the main sponsors of the law. It is widely recognized now that the soft money ban instituted by McCain-Feingold hurts the Democratic Party more than the GOP. The law limits the use of soft money -- unlimited donations intended for "party building" -- thus forcing campaigns to rely on hard money -- donations directly to the candidate, which are capped at $2000 per donor. The Republicans have a larger number of donors capable of giving the full legal amount (which is higher under the new law), and Democrats will no longer be able to make up the difference with a few big soft money contributions.

Internal critics have pounced on this fact, telling liberal legislators "I told you so" and worrying about how the party -- which is already reeling from a resurgence of Republicans in Congress and a lack of any leader who can pose a credible challenge to President Bush -- will deal with this setback.

The situation leaves many wondering why the Democrats chose such a financially disastrous course. We expect politicians to be devious, putting their own tactical interests above any commitment to principle. And while the nature of the restrictions has come as a surprise to the law's backers, the disproportionate impact on Democratic revenue was well-known -- so ignorance is no excuse, at least for party leaders. Indeed, Democrats initially hesitated over supporting reform (which they had supported in previous years), because the decreased power of the GOP in Congress could no longer be counted on to defeat the bill. Could it be that Congressional Democrats put principles (ignore for the moment whether those principles are right or not) above political advantage?

In reality, there was a fair amount of strategizing going into Democrats' decision to support campaign finance reform. Foremost is the billís sponsorship by Sen. John McCain (R-Ariz.). McCain built his nearly-successful challenge to Bush in the 2000 primaries around finance reform. Given McCain's penchant for working across the aisle and the national attention his reform efforts gained during the campaign, this seemed to be a good issue on which to show up Bush. It worked, too -- Bush, who had vehemently opposed McCain-Feingold, was cowed into signing it and changing his tune to "bad reform is better than no reform at all."

McCain was also wildly popular among Democrats and independent moderates. Many have voiced hopes that he would run for president as an independent (ignoring his loyalty to the GOP and generally conservative voting behavior) or follow Sen. Jim Jeffords' (I-Vt.) lead in leaving the Republicans' Senatorial caucus. These voters arenít swayed by partisan strategic calculus -- particularly the independents, who tend to be disillusioned by the machinations of modern politics. Yet their votes are vital.

The rhetoric in favor of campaign finance reform fit well with Democratic talking points. Reform carries with it the idea of "cleaning up" the way power works in Washington. This image appealed to Democrats, who were attempting to shake off the legacy of Bill Clinton's sleaziness and the Buddhist temple fundraising scandal that haunted Al Gore.

Further, the source of campaign cash is often the group that Democrats most like to link Republicans unfavorably to: big business. Democratic voters are especially likely to distrust business's influence on politics, so it was easy to make Republican opposition to campaign finance reform look like evidence that the GOP had been bought off by corporations and was unwilling to give up its sponsorship by the very wealthy.

Nevertheless, cash remains crucial in winning political office. Democrats may have put aside the problems of financiers' influence only to find themselves in the hotter water of impoverished bank accounts. It's too late to repeal McCain-Feingold, at least for the 2004 election. But it's not too late to make the most of support for the law.

The economy is likely to be a salient issue in the election if the recession continues, especially since the fighting in Iraq will be largely over by fall 2004. Bush's plan for the economy consists of a three-pronged strategy of tax cuts, tax cuts, and tax cuts. Because the tax cuts proposed by the president generally tilt toward the wealthy, he will face much criticism on this count. Expect to see frequent attempts to portray Bush and his Congressional supporters as puppets of big business. Reminders of Bush's opposition to campaign finance reform can help to cement this image of a party bought and sold by the wealthy.

Democrats may come to regret the strategic considerations that led them to support McCain-Feingold if the loss of soft money handicaps their ability to compete against better-funded Republican candidates. But taking advantage of the situation thatís available -- not regretting the existence of the situation -- is what wins elections.

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