When Democracy is the Problem

Last week, at "at a major conference on Nonprofits in Federal Elections at the National Press Club," the Campaign Finance Institute released its latest report, under the straightforward title, "Nonprofit Interest Groups’ Election Activities and Federal Campaign Finance Policy: A Working Paper."  The Report has its good points, but ultimately, it points up the intellectual cul de sac in which the "reform" movement finds itself.

First, the good.  For one thing, the report avoids typical "reformer" rhetoric.  It does not try to claim that all Section "527" groups are already regulated as PACs under the law – indeed, it implicitly admits that so long as they avoid "express advocacy" in their solicitations or communications, they are not (p. 8).  Similarly, it refrains from describing legal, and in some cases legally encouraged, political activity as somehow "circumventing" the law.  These are little things, but they are illustrative of the type of constructive moderation that has traditionally distinguished CFI from the more extreme "reform" groups such as Democracy 21, the Campaign Legal Center, or the Center for Responsive Politics. 

More importantly, the report attempts to look at regulation from a "holistic" approach.  During the debates over McCain-Feingold, opponents of the bill noted that prohibiting political parties from raising soft money would merely result in some of that money being moved to independent "527" groups and 501(c) organizations.  Over the last two years, as Congress has considered further regulation of "527" organizations, it has been noted that there is nothing a "527" can do that a properly constructed, large 501(c) organization cannot do.  So CFI urges policymakers to lookat regulation globally, rather than trying to address the current reform horror story du jour, whether it be PACs, expenditures, contributions, "527s," 501(c) groups, or something else.  And that is a good thing.

The study proceeds by analyzing the political activities of a dozen non-profit "interest groups."  It looks not just at PAC activities, or 527 activities, or 501(c) activities, but at all the "election related" activities of these groups.  And most of these groups utilize at least two of these vehicles.  But is this really the "holistic" approach that CFI calls for?  How typical are these 12 groups?  

One suspects, in fact, that they are quite atypical, if for no other reason than that all of them are large and high profile.  How much do the giant unions AFSCME and SEIU, or the U.S. Chamber of Commerce, really have in common with most non-profits?  The Sierra Club, the National Rifle Association, MoveOn.org, Progress for America (the "Ashley" ads of 2004), Americans for Job Security, Planned Parenthood, the New Democratic Network, and the National Right to Life Committee and the Club for Growth are the other groups included in the study.  One would be hard pressed to find 12 groups less like the vast majority of non-profits in the United States.   And indeed CFI admits that the selection criteria was the very thing that sets these groups apart – large political expenditures.  A second criteria, that the groups participate over multiple elections, weeded out other groups that did make large expenditures, such as Swift Boat Veterans for Truth, but only in one election cycle (p. 2). 

The problem is, laws and regulations typically are not limited to organizations "that made significant political expenditures … across election cycles."  Any meaningful approach would include small groups or groups that make relatively few political expenditures – a group that includes the overwhelming majority of non-profits – and groups, such as Swift Boat Veterans and Americans Coming Together, which lack a permanent presence.  In other words, CFI selected groups precisely because they were unique, rather than typical, and specifically limited its discussion to exclude many types of organizations.  That is hardly the holistic approach the study calls on policymakers to adopt.  And note that the selection criteria overstates the extent to which nonprofit groups engage in political activity (by excluding from the study those that do not) and to underestimate the cost of regulation, by excluding smaller groups and start-up organizations.

Beyond that, the study doesn’t really tell us much we don’t already know.  Groups sometimes organize PACs to make direct contributions to candidates.  Other times they utilize 527 organizations to discuss issues and candidates, without specifically calling on voters to act in one way or another.  Many use 501(c) organizations to engage in public advocacy and education on issues important to their groups – issues which, for obvious reasons, usually dovetail with the issues and positions trumpeted by the political candidates the groups  support through their PACs or endorsements.  There is nothing strange, unusual, or new in any of this.

CFI claims that it merely wants to get policymakers engaged in a "debate," but it is clear in the end where CFI thinks the debate ought to go – Congress needs to expand its regulatory reach.  Tougher IRS regulation of 501(c) organizations would prevent many groups from shifting 527 activity to 501(c)s; presumably, that would make added FEC regulation of 527s more "effective." (p. 32-33).  The report specifically notes that such regulation would be "workable."  Moreover, at a minimum, more disclosure to the IRS is needed, including disclosure of member communications (p. 33); the FCC must also require more disclosure before organizations run ads (p. 33). 

And for what?  The problem, we learn, is that these groups engage in "election activites" and "influence" public life.  But what is political life in a democracy if groups, such as the multi-million member NRA or AFSCME, are not able to engage in election activities or to try to influence who is elected, or what officeholders do after election?  CFI does not suggest why any of the influence gained by these activities might be "undue," although they use that term.  To CFI, the fact of influence seems to presume a need for regulation to limit that influence.  But who is to decide whose influence is enough? 

What would democracy be without influence?  If no one had influence, what would it mean?  And why would anyone participate in "election activities" if doing so did not result in "influence?"  Democracy presumes that people have a right to influence public policy and to try to influence their fellow citizens at election time.  In modern society, it is inconceivable that one could engage seriously in public debate without organization and money.  Indeed, CFI and the rest of the "reform" movement are well-organized and well-financed, and their influence on public policy comes almost entirely from this organization and cash – most of these groups have no members and rely on large grants from a small number of foundations to operate.  Yet conspicuously among the types of groups missing from this "holistic" approach to the issue of money and political influence are groups such as CFI.  Better to regulate SEIU, the Sierra Club, MoveOn, and National Right to Life, groups that actually have hundreds of thousands of of members, than foundation funded "good government" organizations that represent… well, who?

In other words, the people, democracy, and pluralism are the enemy of campaign finance reform.

Update: Bob Bauer discusses a few other political players that have been left out of CFI’s "holistic" approach – notably, Hollywood.

Update II: John Samples of the Cato Institute offers some thoughts, and concludes,  "Not surprisingly, the CFI authors do not mention an unmistakable implication of their proposal: in the future, all spending on political advocacy sooner or later will be subject to campaign finance laws. The CFI authors do not mention how this extension of state power comports with the freedom to engage in politics promised by the U.S. Constitution."

The Center for Competitive Politics is now the Institute for Free Speech.