TOPICS > Politics

Furor Over Financing

October 18, 1996 at 12:00 AM EDT

MARGARET WARNER: Four perspectives now on the use of soft money in politics. They come from Republican Trevor Potter, a lawyer and former chairman of the Federal Election Commission, Democrat Robert Bauer, an attorney specializing in campaign finance, Ann McBride, president of Common Cause, and Bradley Smith, a scholar with the Cato Institute and a law professor at Capitol University in Columbus, Ohio. Welcome, all of you.

Trevor Potter, you have–let’s look at this Indonesian situation–try to sort out this Indonesian situation first. You have the Republicans saying it’s illegal, the Democrats say it’s not. How does it look to you?

TREVOR POTTER, Former FEC Chairman: Well, I think the Democrats have said that, as far as they can tell, the money they’ve received from Indonesia was given permissibly. The Republicans make a couple of points. First, it’s only permissible if it was those individuals’ funds, if they were in this country legally, and they were permitted under law to give. The Republicans, therefore, are saying we need to know more about what all this money was and particularly why it was given. Was it given in exchange for any quid pro quo? Was there an expectation that U.S. policy would change under it, the sorts of questions you ask when there’s a large sum of money coming from individuals who are, in fact, foreign citizens.

MARGARET WARNER: So, Robert Bauer, what makes money from a foreigner legal versus illegal? Let’s try to–

ROBERT BAUER, Campaign Finance Lawyer: Well, legal residents, even though they’re not United States citizens, may contribute, and the Republicans have now tried to establish the argument that somehow, even though they’re legal residents, if they’re out of the country for a period, and the contributions were made then, then somehow the contributions become illegal. The FEC has never interpreted the law that way, and it’s not written that way.

MARGARET WARNER: But does the money have to have been also–does it have to be there?

MR. BAUER: Yes. Well, it has to be from a lawful U.S. source, so, for example, the domestic subsidiary of a wholly owned foreign corporation or wholly owned U.S. subsidiary of a foreign corporation can give, whereas, the foreign parent cannot.

MARGARET WARNER: So Trevor Potter, back to you. Whose responsibility is it to ascertain when big contributions like this come into the party that they do, in fact, come from–they’re a legitimate U.S. subsidiary of a foreign company, or from a foreign resident here whose money it is?

MR. POTTER: Essentially, it’s a self-enforcing system. The responsibility has to be the party committees with candidates in the sense of looking at a contribution, seeing if there’s any foreign connection, and, if so, looking at it more closely to make certain that it is, in fact, permissible. Normally, when party committees are soliciting large sums of money and receive a couple of hundred thousand dollars, they’re likely to know the contributor knows something about them, and the onus really is on them to explore the background and ensure that this can be given. The Democratic National Committee just a week or two ago gave back $250,000 that it had taken and then there was a report to be published in the Los Angeles Times that said that that was, in fact, illegal corporate foreign money.

MARGARET WARNER: And that was the South Korean–

MR. POTTER: That’s right.

MARGARET WARNER: That was the South Korean company. And in your years at the FEC, did you see–I mean, I assume you’ve looked at a lot of these reports anyway–is there a lot of foreign soft money given to the parties, and has there ever been a case that you all brought or investigated involving it?

MR. POTTER: Well, as I think Bob has pointed out, if it is, in fact, foreign money, it can’t be given. So–


MR. POTTER: So one of the problems here is it’s very hard to know from the FEC’s perspective or any citizen looking at the reports whether it is foreign or domestic money. You can’t go by the type of name that’s involved, and lots of U.S. citizens who have names that are also the same as people overseas, so you look at it, and based on the report, it’s almost impossible to tell. That’s why the party committee role is so important because they’re much more likely to know where the contributor came from and if there is a foreign connection.

MARGARET WARNER: And so the FEC wouldn’t question it in and of itself, only if someone complained or–

MR. POTTER: That’s right. It would depend either on receiving a complaint or some other information that said what looked like a perfectly legal contribution, in fact, was not.

MARGARET WARNER: All right. And Bob Bauer, why was the law written this way, that a legal resident, for instance, from another country cannot vote here, and yet can give money?

MR. BAUER: Well, there’s some–Congress made that decision I think–and Trevor can comment on this–that there was some notion that if people have established themselves here and established interests here, or residence here, pay taxes here, and have all the other connections to U.S. soil and U.S. life that they ought to be permitted to make contributions and participate in the political process. That was a legislative choice. There have been discussions from time to time about changing it, but that’s the law as it’s currently written.

MARGARET WARNER: And do you think that’s a good idea?

MR. BAUER: Pardon?

MARGARET WARNER: Do you think that’s a good idea?

MR. BAUER: Well, I happen to think we’re now walking down a very dangerous road where we’re beginning to–because of the Republican attacks–worry about people’s surnames and whether there might be a foreign connection there and whatever, and it plays on some very basic fears in the American electorate, and it’s actually rather disturbing.

MARGARET WARNER: Do you think it’s a good idea?

MR. POTTER: I think the original notion of Congress, which is that people who are almost American citizens, who are living here, the language in the legislation talks about it, have immigrated to this country, uh, and are part of the community, as Bob says, in every way functioning and perhaps just waiting for their citizenship to come through, ought to be allowed to participate. That’s a call Congress can make, but it seems to me a rational one, particularly because this ban affects state and local elections as well as federal. However, what we’re seeing in the Indonesia case appears to be people who had green cards, who were permitted to reside here, but, in fact, weren’t here, went home at some stage and continued giving from Indonesia. That, I think, is certainly contrary to the spirit of what Bob has described as people who are really settled into American life.

MARGARET WARNER: You, of course, Ann McBride, you and your organization, you think the whole soft money phenomenon is a bad idea.

ANN McBRIDE, President, Common Cause: Well, certainly if you look at what’s going on in these $425,000 contributions, certainly it should be looked into, should be gotten to the bottom of. But this is not a $425,000 problem. This is millions of dollars. You have the Republicans having raised 65–75 million dollars in soft money contributions, the Democrats having raised $65 million. And these are contributions, huge contributions, hundreds of thousands each, from corporations, labor unions, from the wealthiest people in America, going in to affect federal elections. We have got a huge problem here, and the overall problem has got to be solved if we’re going to have integrity in the legislative and election process.

MARGARET WARNER: Bradley Smith, weigh in on this question of soft money, in general, whether it corrupts the process, or it’s a good idea.

BRADLEY SMITH, Capital University: (Columbus, OH) Well, it’s–soft money is the inevitable consequence of Common Cause style reform. Common Cause has sought to dry up the funds of money and the ability of candidates to raise money. The contribution limits on it so that people cannot participate in politics, the end result is people want to participate in politics, not just the rich, but labor unions. I didn’t realize until Ann just said that, that labor unions represented the wealthiest Americans. These people want to participate in politics, and when we have all this byzantine set of laws, people try to find ways around it to participate.

MARGARET WARNER: What you’re saying–let me interrupt you for one second–you’re saying that because there’s such tight limits on the money to give directly to a candidate, they want to express themselves in another way, through these huge contributions to–

MR. SMITH: We see people in a situation where you’ve given your $1,000 maximum. They want to give more money, so they give a gift to their teenage son, who gives a gift to the candidate. Uh, what we really need to do is dump some of these laws, deregulate the system, require full disclosure. Now people are trying to hide their contributions. If we open up, let people contribute, those contributions come into the open, and then if the voters think it’s important, the voters can decide. Do the voters care where Bill Clinton’s getting his money, do they care where Bob Dole’s getting his money? They can decide that.

MARGARET WARNER: All right. What’s the matter with that? Just have full disclosure.

MS. McBRIDE: First of all, we have full disclosure of soft money. We’ve had full disclosure of soft money since 1991, and what you’ve had is these huge contributions in that period tripling. I think it’s fascinating when it is said that $1,000 is just a tiny amount of money to give; for the average American, that’s quite a lot to give to a candidate, and, therefore, because those limits are low, we should be having tobacco companies giving $4.5 million at the same time there are efforts to regulate them, that you have, uh, oil and gas companies, that you have trial lawyers, that you have all the major interests that have an outcome in the election and an outcome in policy being able to pour this money in, money raised by President Clinton and Sen. Dole, money laundered through the political parties, money affecting the federal elections, but the clear thing, Margaret, is this is not going to end when the election is over.

These people who have given huge contributions are not giving money to get good government. They are getting money because they want access to influence in the political process. It’s corrupting, the American people understand it, and it has really got to be changed.

MARGARET WARNER: Bradley Smith, yes, please.

MR. SMITH: If I could cut in here, I mean, this is a fascinating view of democracy that because people are affected by government decisions, they don’t have any right to participate in it. In fact, of course, our government works on the opposite principle. We have a First Amendment right to participate in politics. And people who are subject to government regulation have a right to petition the government for redress. Ann talks about how much money this is.

You know, the amount of money that we give the major parties to run their presidential campaigns is about as much money as is spent to promote Seinfeld reruns each year. Uh, it’s just not much money. Even if we take the high estimates, the highest estimates of how much will be spent this year, we’re talking somewhere in the neighborhood of about $10 per voter for politics. Given the importance of politics to us and the importance of the electorate making an informed decision, I don’t think that’s much money at all, and I think people have a First Amendment right to participate in politics. I think it’s a good thing.

MARGARET WARNER: Let me give, Bob, the two of you back in this. Bob Bauer, what is the theory behind–obviously, the theory behind not letting people give much to individual candidates was so they couldn’t buy access. Why aren’t people who are giving hundreds of thousand dollars, why isn’t the same problem presented there? In other words, what is the theory about having this vast difference between what you can give to an individual versus what you can give to a party, and is it a good idea?

MR. BAUER: Well, I think it is a good idea. I think Mr. Smith is right, and that is that we have become so suspicious that we don’t realize this is a large and complicated country, and people are actively concerned about policy and how it’s made and want to participate. The difference simply is this. We have put much more stringent limits on the contributions made to people who later become elected officials, because when they become elected officials, presumably there’s a greater danger that those who have given them large sums of money will expect something in return.

We give much more allowance for the political parties because they are not per se corrupted by contributions that are made to them. The political parties are entities in and of themselves that play a very constructive role in American politics, they always have, and we want to encourage them to do the vast range of activities they conduct quite extensively all across the United States. If we put them on a $1,000 contribution limit, they would whither away and die, and as a matter of fact, the parties have had to struggle anyway under the post Watergate reforms. There really hasn’t been this flow that some imagine of money to the political parties, permitting them to do whatever they like. So generally speaking, I think we need to encourage giving to the political parties because they need all the help that they can get.

MARGARET WARNER: Do you agree with that?

MR. POTTER: Well, clearly, campaigns cost money. The money has to come from somewhere first. Secondly, people who are regulated, who are affected by government, are going to want to have some way to express their views, and under the First Amendment, they have every right to do that. However, where I think I differ from Bob is that I think one of the lessons of Watergate is that there is a real danger of corruption when you have the President or the incumbent party in a position where it is soliciting money and large sums of money from corporations or individuals and they are then in a position through the government to influence official actions concerning that individual, Indonesia, that company.

That, I think, is a danger of–in terms of whether there is any theory that says that says that soft money is good. There isn’t a theory here. This is an accident. Uh, the system, as it developed, the Supreme Court declared a variety of laws that Congress had passed unconstitutional. We’ve ended up with what we currently have as sort of a patchwork of laws, rather than I think any well thought out approach to how campaigns are financed.

MARGARET WARNER: You’ve been dying to get back in here. Go right ahead, Ann McBride.

MS. McBRIDE: Well, certainly the courts have said that you can limit these kinds of contributions that create corruption or the appearance of corruption. There’s no question that soft money can be ended in a constitutional way. I think it is such a sad commentary when we have to say our political parties to be viable have to be supported and funded by these huge interests in amounts that are corrupting. Political parties should represent people, should be built around building up people and small contributions and the ability to participate in the process. And what is, I believe, true when you end this, this corrupting system and you can end it, that we will revitalize the parties by having them once again be financed by people and not by the large special interests in this country.

MARGARET WARNER: Bradley Smith, you’ve also been dying to get back in on this.

MR. SMITH: I think–

MARGARET WARNER: Address that point, if you would.

MR. SMITH: –that Ann is raising a–I think that Common Cause has done some very negative things. They spread this issue constantly, innuendo, innuendo, corrupt, corrupt. I’d like to see Ann name some names. You know, Ann, we’ve got some Senators up for reelection, and I think you should name ’em if you think they’re corrupt, I would like to see that in the headlines tomorrow, Common Cause declares these Senators are corrupt. There’s this kind of guilt by innuendo here. Anybody who’s looked at the issues systematically, money’s important, it’s an issue, but legislative voting is determined primarily by a legislator’s personal ideology, by their party affiliation, and by what they perceive as the demand of their constituents based on polling, letters, telephone calls, uh, and I would like to see us focus a little bit more on issues again. We don’t need to know where Bill Clinton’s money comes from. We’ve got his track record the last four years. We can use that to decide this election.


MR. SMITH: I think Common Cause does a great disservice.

MARGARET WARNER: All right. I’m going to give you one minute–one second to respond because we’re really out of time.

MS. McBRIDE: Well, let me just tell you–all you have to listen to are the Senators that are leaving, have left in the last Congress. What they say is Alan Simpson, Bill Bradley, this is a corrupt system.

MARGARET WARNER: All right. I’ll have to leave it there. Mr. Smith, thank you very much, and the three of you, thanks.