How McCain-Feingold Empowered the Kochs

March 11th, 2011 at 12:00 am | 20 Comments |

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For weeks now, Democrats have lamented the power of the Koch brothers, and their ability to largely fund without public disclosure. But it’s worth remembering who incentivized the Kochs to do this: the 47 Democrats, 11 Republicans and 1 independent in the Senate who voted in favor of the McCain-Feingold law of 2002.

“Before McCain-Feingold, the RNC could take soft money [unregulated, unlimited donations] if they were going to use it for state elections,” something they can no longer do, explains Hans von Spakovsky, a former member of the Federal Election Commission and a Senior Legal Fellow at the Heritage Foundation.

David Koch gave hundreds of thousands of dollars in soft money to the Republican National Committee in the 1990s. Nowadays, prevented from donating such large sums to the RNC, David Koch has shifted much of his effort and contributions to his organization, Americans for Prosperity, a non-profit which focuses on issue advocacy.

While the intention of McCain-Feingold was to try and limit the influence of money in politics, the effect was merely to shift money from one area to another – weakening the national parties in favor of outside groups.

“The authors would say that the overarching goal was to limit the corruption of money being involved in politics, but… it just changed around the flow of money in politics, and didn’t limit [it],” notes Jeff Patch, the Communications Director for the Center for Competitive Politics.

And outside groups are less transparent: 501(c)4s, for example, don’t require public disclosure of donors.

As outside organizations flourish, traditional party structures atrophy.

The Republican National Committee is $22 million in debt. A decade ago, large soft-money contributions could have cushioned that debt. Today the RNC is limited to retiring its debt by collecting a maximum of $30,800 from each individual donor, and corporations are prohibited from making such donations.

Prevented from making the kind of impact they could once make at the RNC, large conservative donors have found other ways to aid their causes without federal contribution limits. “The money in the past that would have gone to the political party is now going to independent [organizations],” says von Spakovsky. For example, conservative businessman Karl Rove’s 527 organization, American Crossroads, is likewise another beneficiary of McCain-Feingold.

A weakened Republican National Committee is one that will have less of an effect on the kinds of candidates the Republican Party runs. Already stifled by statutory limits on the amount it can transfer to individual campaigns the RNC will be further limited by its debt from giving to individual campaigns.

As such, Republicans will be far more interested in finding candidates who can fundraise or self-fundraise for their campaigns, rather than focusing on finding candidates who would make good legislators and agree broadly with the Republican Party’s objectives.

Indeed, the RNC being less able to give money to campaigns also means that they will be less effective in preventing their candidates from ‘going rogue’.

“Let’s assume for example that Republicans wanted to address social security, and said, ‘if you elect us, we will solve the social security problem’… they can’t even be sure that this promise is carried out even if they were elected, because each candidate is making promises to his or her constituencies [which might conflict], and doing that because of where the money is coming from,” Peter Wallison, an American Enterprise Institute scholar and author of Better Parties, Better Government, told FrumForum.

The Wild West in which Republican candidates now operate is a function of a system in which the RNC is limited from transferring large amounts to candidates – or even effectively discharging its own indebtedness.

It is worth asking: To what extent is the campaign finance structure since McCain-Feingold responsible for the tea party movement that we see today?

Recent Posts by Tim Mak

20 Comments so far ↓

  • balconesfault

    You’re assuming that with the RNC not doing exactly what he wanted, at some point David Koch wasn’t going to take his money and spend it on those (eg – Wright) who would.

    Well before McCain Feingold was passed, when the big money men on the right pulled their money from Bush 41 in retribution for him having the audacity to raise taxes and support environmental legislation, the trend was in place.

  • Russnet

    Is Frumforum a cosmic wormhole to something? anything? $3 gas?

  • hisgirlfriday

    How can you write this piece without mentioning FEC v. Wisconsin Right to Life , Davis v. FEC AND OF COURSE Citizens United v. FEC? Thanks to activist judges in the Roberts Supreme Court, the BCRA that was passed by Congress and signed by George W. Bush in 2002 is a shell of its former self (much like its coauthor who still remains in the Senate).

    For example, it was the activist Roberts Court last year overturning Austin v. Michigan Chamber of Commerce regarding limits on corporate treasury being used on campaigns and going a step further to strike down a provision in BCRA regarding independent corporate expenditures on campaigns (NOT EVEN AN ISSUE BROUGHT BY THE LITIGANTS IN THE CASE!) that prompted Karl Rove to create American Crossroads. It was not BCRA having been signed by his boss 8 years earlier.

    Also, I would note that it’s not like the Koch Brothers only got involved in politics in the 2004 election. People are just paying attention to them now because of how Internet discussion of politics and campaign funding has become more sophisticated the same way Soros was involved with politics for a long time before he became Beck’s worst person in the world.

    Now all that said, I don’t dispute that BCRA did weaken the Republican National Committee by capping the soft money that could go to the parties and that the cap makes it more difficult now to fix the debt that the RNC needs to retire. I’m just not sure that BCRA weakened the Republican National Committee more than the dismal ending to the George W. Bush presidency and the RNC leadership of Michael Steele. I would be curious to know whether the RNC is seeing the same number of donors it did before the cap and just not as big of donations, or their huge debt is more a result of their reliable donors voting with their feet against RNC’s management and shifting their giving not just to 527s but also things like the Congressional committees or Republican Governors Associations.

    p.s. Anyone conservative or liberal interested in campaign finance who wants a good laugh and an easy read, I’d highly recommend taking a blast to the past to the crown jewel of the Maverick McCain myth by giving “Citizen McCain” by Elizabeth Drew a read. The over-the-top fangurl fawning shines through in a way I find even more cynically amusing in light of her renouncing her McCainiac status in 2008.

    • footfault

      Absolutely right. A major part of BCRA was to prevent outside groups from making advocacy ads in the 30-60 days before elections. Given the restrictions on contributions to parties and candidates, that was the only way of stopping the 527s and 501(c) groups from coming in. If the courts had enforced these provisions, you would see considerably less of the Koch-style activity. So for the author to say “the effect of McCain-Feingold was X” without mentioning WRTL and Citizens United is really silly.

  • Elvis Elvisberg

    Thanks for this post, a neat look at how fundraising is done. The interesting thing is that concurrent with a relative weakening of party institutions, our legislators are more polarized on party lines than perhaps any other time in the history of the country.

    Was there a similar relative weakening of the DNC? Or was the shift in power described here unique to the GOP, because the wealthiest donors didn’t like Michael Steele, and/or preferred to donate to groups over which they had a larger say?

    Also, congratulations to Hans von Spakovsky for avoiding prison time.

    • hisgirlfriday

      Was there a similar relative weakening of the DNC? Or was the shift in power described here unique to the GOP, because the wealthiest donors didn’t like Michael Steele, and/or preferred to donate to groups over which they had a larger say?

      The DNC also has a big debt load ($17 million), but it raised more money in January than the RNC (about $1.5 million more) and has more cash on hand (about $5 million more).

      As for the DNC-RNC post-BCRA…

      (please someone correct me if I’m wrong about this)

      My understanding of campaign finance was that pre-BCRA it was thought that the legislation could actually hurt the Democratic Party more than the Republican Party. During the Clinton years, it was only Clinton’s ability to raise ungodly sums for the DNC (soft money) that allowed the party to stay financially competitive with the Republicans and their larger base of wealthy donors able to make direct limited (hard money) contributions to candidates. But Democrats at that time were also tarnished by Clinton-Gore’s unseemly fundraising activities in the 90s so atoning for that and trying to score good government political points was part of the tradeoff from their viewpoint.

      In some respects BCRA did hurt the Dems. It probably brought down Tom Daschle for instance, which is ironic because if it wasn’t for him McCain wouldn’t have accomplished squat when it came to BCRA. They were certainly caught flatfooted by 527s like the Swift Boat group in 2004, but they seemed to figure them out just fine for 2006 to retake Congress. BTW, another quirk of BCRA is that Barack Obama might not have won the Illinois Senate nomination in 2004 had he not benefited then from a BCRA provision increasing the amount of money he and other primary candidates could raise in direct hard money contributions thanks to one of his opponents (Blair Hull) triggering the self-funded millionaires provision of BCRA that has since been struck down.

      • Elvis Elvisberg

        Thanks, hgf, that’s good stuff. It’s an area I don’t know much about, so thanks for your explanations & links.

  • ottovbvs

    The entire US political process functions as a system of legalized bribery. All democratic political systems have a little corruption floating around in them because the practise of politics is very expensive but by and large most societies manage to contain it within reasonable bounds. The great exception of course is here in the US where political corruption is a widely known and even regulated business. Everyone has heard of K street, the political wheel greasing equivalent of Wall Street, where a lot of grease originates from. Everyone knows that the first thing an out of work pol does is go into lobbying (aka influence peddling). If you’re really good at political manipulation you can find sponsors to set you up in business (Armey, Rove) and provide you with a nice salary, car, bennies, and the opportunity for TV appearances. For better or worse this is how the process works and I don’t believe it can be changed. Of course every so often the bribers over reach and the public (as is going to happen in WI) push back or the FBI nail you (Abrahams) but these are just blips on the enormous wheel of corruption we call US politics.

    • hisgirlfriday

      All democratic political systems have a little corruption floating around in them because the practise of politics is very expensive but by and large most societies manage to contain it within reasonable bounds.

      Not to pick on you but… how many democratic political systems do you consider to exist in the world for the by and large of most of them to contain their corruption within reasonable bounds? What are reasonable bounds of government corruption? And are you just sorting out the countries that claim they’re democracies but you find to be closer to kleptocracies to reach this assessment?

      I disagree with the notion that the US is part of some unique group of corrupt democratic countries. Maybe we have some unique hypocrisy going for us when it comes to our government system. I’ll give you that.

      • ottovbvs

        how many democratic political systems do you consider to exist in the world for the by and large of most of them to contain their corruption within reasonable bounds?

        I think most of the Western Europeans do. They all have a bit of political corruption but it’s on a very small scale and there’s nothing remotely like the PAC system or K street operations going on in most European capitals. I’m quite sure it would be illegal in most European countries for a politician to set up a campaign committee and start soliciting donations in return for access and influence. Parties can solicit contributions but it’s very open and tightly controlled. Occasionally some small scandal erupts but overall tolerance for political corruption is very low. In Britain in the last six months two MP’s have gone to jail for fiddling their expenses. I think the sums involved were under twenty thousand bucks. Even in Japan which has something of a reputation for influence peddling the Foreign Minister resigned on Monday for taking a $3000 illegal campaign contribution. Yes there’s some political corruption in these places (you might as well try to legislate against sex) but it’s tiny and certainly not an accepted part of the system as it is here.

  • forkboy1965

    Neither can nor will I speak to the variety of issues brought forth by this piece, but am I the only one who isn’t surprised the Heritage Foundation would blame McCain/Feingold?

  • Otto

    I know it’s pie-in-the-sky, but it sure would be nice if we could get bribery completely out of our political system.

    I was talking it over with a former co-worker. He and I came up with a few overly-simplistic changes that sounded good at first blush, but would never happen for a variety of reasons.

    1. No More Donations – People (and of course the newly minted corporation-person) would not be allowed to donate money to politicians. Nor would they be able to spend money on commercials that mention a candidate. This applies accross the board. No getting around it with special organizations or non-profits or whatever. Someone wants to run for office, go ahead. But he’s not being bought and paid for by special interests, whether they be gazillionaire conservatives or a coallition of liberals.

    2. Common Pool – Anyone can donate money to the political discourse in America. In fact, they can donate as much money as they want. It all goes into a gigantic fund and every candidate on the ballot pulls money equally from the fund. The idea was this would make the candidate succeed or fail based on the message. If candidate (R)’s message is the strongest, she’ll win. If candidate (D)’s message is the strongest, he’ll win. And, miracle of miracles, if a candidate’s message from one of the current non-player parties is strongest, she’ll win.

    One problem with this is it still allows candidates to lie their way into office. We may need to couple this with something forbidding candidates from lying. Imagine a world where politicians were not allowed to lie. Scratch that. I can’t imagine one, so why should I try to get you to do so?

    I know, I know. “Not going to happen,” “Unrealistic,” and all that jazz. For starters it would require those directly benefiting from the current system to agree to limit the benefits they receive from the current system. In general I feel that people are too selfish to entertain that sort of self-sacrifice. And politicians are even more selfish than people are in general.

    • ottovbvs

      The only way you largely eliminate it is by public funding and then strict enforcement rules which is the general pattern in most western democracies. The problem with public funding from the point of view of those with the money (ie. usually but not always the Republican supporters) is that it levels the playing field. There’s also another fundamental issue. At bottom the US system is driven by interest while most other other western systems are driven by principle. I’m not saying all these guys are principled humans but it’s much easier for them because the differences of principle are in practise fairly small. It’s an argument about whether the health system gets 9.5 billion or 10 billion. In the US you have corporations who are hugely invested in how the economic system actually works on matters from weapons procurement to food regulations and drug pricing. There’s also the fact that the most liberal internationalist Democrat is suddenly to the right of Dick Cheney if a nuclear sub manufacturer in his district is threatened with losing an order. Another example of interest driving the system. Interest is present in all political systems but it’s institutionalized in the US. These are the reasons it’s never going to happen.

      • Otto

        Exactly. Those with the most interest in maintaining the stutus quo are the people in power to actually affect real change. And they won’t due to the bennies they get from maintaining the status quo.

        It’s enough to make someone a sad panda.

    • Churl

      “For starters it would require those directly benefiting from the current system to agree to limit the benefits they receive from the current system.”

      Government employee labor unions, for example.

  • sublime33

    “how many democratic political systems do you consider to exist in the world for the by and large of most of them to contain their corruption within reasonable bounds? . . I think most of the Western Europeans do.”

    Most Western European systems have a parliamentary system where the voters vote for the party, not the individual. And the party selects the representatives without a primary. As a result, you have much more party discipline because the party will replace rogue members without the voters having a direct say. Or potential bribers.

    The upside is that if there are only two parties, it probably is a less corrupt system. The downside is that if there are significant minority parties, it forces coalition governments, and these minorities are probably better bribery targets than anyone in the current US system. A briber only has to hit a few Socialist or Green Party members to throw a vote one direction or another.

    Another downside is that you cannot primary out a representative of your own party. You have to defeat him first with a rival party, then hope your own party puts a new face in the re-election.

    • ottovbvs

      “The upside is that if there are only two parties, it probably is a less corrupt system.”

      Most European systems have multiple parties with systems of proportional representation. I don’t think it’s the number of parties so much much as the parties by and large represent a certain set of principles which on the whole they tend to adhere to and are able to maintain cohesion and discipline in the way you indicate. The presence of public funding makes this easier of course. The other factors at play over here of course are the fragmentation of the political and legal system, and its sheer size.


    The groundwork for the rise of the Tea Party movement was probably, in part laid down by various efforts to regulate political speech, not just the BCRA, but with other pieces of legislation signed in the past. I think vague visions of populist or populist-lite movements were laced throughout the flowery language of McCain-Fiengold’s supporters. The problem, if you want to call it that, is that the populist movement showed up all right and it has been a fierce beast indeed. The visions of “the people” rising up and becoming involved in the political process to advocate for universal health care, cap and trade and the like have been superseded by populist protests of universal health care, government stimulus and the like. To borrow a phrase “reality, aint it a b*tch?”

  • footfault

    Oh, and where does the article disclose that the author is a former “Koch Fellow” at AEI?

  • Brad Smith

    A lot of people commenting here – balconesfault, hisgirlfriday, footfault – who don’t know much about campaign finance law or the campaign finance system in particular. Tim’s basically got it right, and I apologize for not having time to write more. As some will recognize from the name, I am former Chairman of the Federal Election Commission.