Show Me the Money

This blog appears weekly on Wednesdays and at other times in response to events. In the blog I set forth my evolving insights into the damage which campaign cash has inflicted on American democracy. My posts also analyze the politics of campaign finance reform and assess the pros and cons of various reform proposals.

Donald Trump made the destructive role of money in politics central to his argument to the American people. He ridiculed his opponents as “puppets” of donors. He said that only he could serve the American people, because he (allegedly) financed his own campaign and did not depend on donors and lobbyists. Did many people vote for him because of this message? I don’t propose to say, but this idea deserves a closer look than it’s gotten. Throughout the campaign, Trump hit the theme of money in politics again and again. Pretty consistently, the media underreported this part of his message.

Trump’s remarks in the second presidential debate, and the media’s non-reaction to his message about campaign cash, support my claims.

Trump mentioned money in politics a few minutes past the halfway mark in the debate. Trump did it to change the subject from his tax returns, but it reinforced his apt observation that Clinton failed to answer a voter’s question about her sincerity. A hacked Clinton campaign email dated January 25, 2016, released two days earlier by Wiki Leaks, quoted one of her highly paid speeches, in which Clinton complained that in politics it was necessary to maintain distinct public and private positions on issues.

The voter, as quoted by the moderator Martha Raddatz, asked “is it OK for politicians to be two-faced?”

Clinton dodged the question by praising Lincoln’s tactical agility in achieving passage of the 13th Amendment. Then she changed the subject to Russia’s meddling in the American presidential campaign by giving hacked emails to Wiki Leaks, charged that the Russian government did so in order to help Trump win the election, and finished by saying we would understand Trump’s own motivations  – and his possible ties to Russia – if he would release his income tax returns.

Trump got some laughs by mocking Clinton for blaming her “lie” on Abraham Lincoln, and concluded by saying: “…I pay hundreds of millions of dollars in taxes. Many of her friends took bigger deductions. Warren Buffett took a massive deduction. Soros, who’s a friend of hers, took a massive deduction. Many of the people that are giving her all this money that she can do many more commercials than me gave her — took massive deductions.”

Trump matched Clinton’s evasion with his own, but he did put his finger on a central issue: cash buys influence in American politics because politicians need lots of money to campaign for office, for example by paying for television advertisements. Trump hammered away at this point several more times, yet Clinton never responded to this argument, nor did any of the major print media comment on it.

Anderson Cooper pivoted from Trump’s comment on Clinton’s donors by inviting an audience member to ask a question about taxes: “what specific tax provisions will you change to ensure the wealthiest Americans pay their fair share in taxes?”

Trump responded by charging that Clinton’s donors had bought her support for a tax code that suited them:

Well, one thing I’d do is get rid of carried interest. One of the greatest provisions for people like me, to be honest with you, I give up a lot when I run, because I knock out the tax code. And she could have done this years ago, by the way. She’s a United States — she was a United States senator. She complains that Donald Trump took advantage of the tax code. Well, why didn’t she change it? Why didn’t you change it when you were a senator? The reason you didn’t is that all your friends take the same advantage that I do. And I do. You have provisions in the tax code that, frankly, we could change. But you wouldn’t change it, because all of these people gave you the money so you can take negative ads on Donald Trump.

Trump is the worst kind of hypocrite. He had long since forfeited a valid claim to have self-financed his campaign, just as his “tax plan” centered on massive tax cuts for the wealthy and for corporations. He didn’t propose any reforms of campaign finance. Since his election he has shown how insincere he was about money in politics – big donors in his cabinet and huge conflicts with his business interests. But hypocritical or not, Trump did call the fatal flaw in our democracy by name.

Cooper asked Trump whether he had used a business loss of $916 million as a write off to avoid paying income tax. “Of course I do,” Trump replied. “Of course I do. And so do all of her donors, or most of her donors. I know many of her donors. Her donors took massive tax write-offs.” After Cooper rephrased his question, Trump continued in this vein:

A lot of my — excuse me, Anderson — a lot of my write- off was depreciation and other things that Hillary as a senator allowed. And she’ll always allow it, because the people that give her all this money, they want it. That’s why.

See, I understand the tax code better than anybody that’s ever run for president. Hillary Clinton — and it’s extremely complex — Hillary Clinton has friends that want all of these provisions, including they want the carried interest provision, which is very important to Wall Street people. But they really want the carried interest provision, which I believe Hillary’s leaving. Very interesting why she’s leaving carried interest.

But I will tell you that, number one, I pay tremendous numbers of taxes. I absolutely used it. And so did Warren Buffett and so did George Soros and so did many of the other people that Hillary is getting money from. Now, I won’t mention their names, because they’re rich, but they’re not famous. So we won’t make them famous.

Money in politics came up again in the final minutes of the debate. An audience member asked what would guide the candidates’ choice of Supreme Court justices. Clinton made her only comment for the evening about money in politics: the Court should overturn Citizens United and the justices should understand that big donors did not deserve an outsized influence in politics.

Trump responded:

Now, Hillary mentioned something about contributions just so you understand. So I will have in my race more than $100 million put in — of my money, meaning I’m not taking all of this big money from all of these different corporations like she’s doing. What I ask is this.

So I’m putting in more than — by the time it’s finished, I’ll have more than $100 million invested. Pretty much self-funding money. We’re raising money for the Republican Party, and we’re doing tremendously on the small donations, $61 average or so.

I ask Hillary, why doesn’t — she made $250 million by being in office. She used the power of her office to make a lot of money. Why isn’t she funding, not for $100 million, but why don’t you put $10 million or $20 million or $25 million or $30 million into your own campaign?

It’s $30 million less for special interests that will tell you exactly what to do and it would really, I think, be a nice sign to the American public. Why aren’t you putting some money in? You have a lot of it. You’ve made a lot of it because of the fact that you’ve been in office. Made a lot of it while you were secretary of state, actually. So why aren’t you putting money into your own campaign? I’m just curious.

Trump made money in politics one of his most important arguments in the debate, and only once did Clinton respond to it. And the mainstream print media hardly mentioned it at all – not the New York Times, the Wall Street Journal, or The Atlantic, while the Washington Post highlighted only two short quotes on this topic, commenting them dismissively, in its annotated version of the debate’s full transcript. But did the voters notice, and did this message from Trump motivate many to choose him over Clinton? It’s a possibility worth considering.

A hallmark of our post-Citizens United politics is that super-donors explicitly affirm their right to determine how parties and candidates act.

More than five weeks after Hillary Clinton’s defeat, Democratic politicians and operatives are still reeling from the shock. None have systematically examined why Hillary lost, and how a grotesque buffoon could have become our President. Luckily, or maybe not, the party’s donors have stepped up to the plate.

As reported yesterday in Politico,

the wealthy Democrats who helped pump over $1 billion into Clinton’s losing effort have been urging their local finance staffers, state party officials, and campaign aides to provide a more thorough explanation of what went wrong. With no dispassionate, centralized analysis of how Clinton failed so spectacularly, they insist, how can they be expected to keep contributing to the party?

On one level this is good – somebody has to do it. It is also unremarkable. Mega-donors in both parties have been asserting their influence ever more brazenly. They pay the piper so they expect to call the tune. Or as one fundraiser said about Clinton’s defeat: “A lot of people are saying, ‘I’m not putting another fucking dime in until someone tells me what just happened.’”

I don’t mean this as a criticism of politicians or of donors. Overwhelmingly, these are patriotic, well-intentioned people. They are working within the realities of a system they did not create. But is this democracy? What happened to “one-person-one-vote”? This is much more like one-person-one-million-votes.

 2016 – Year of the Super-Donor

As revealed by the Wall Street Journal, by mid-October some $370 million had been raised for super PACs in the presidential campaign. About 85% of this money was given to support Hillary Clinton. Of this $370 million, nearly three-fifths – $213 million – came from just sixty individuals. This takes the impact of big money on our politics to a new level.

In crafting strategy and making policy, politicians have had to consider the wishes of thousands of individuals who each “maxed out” their individual contribution of about $5,000 to each candidate’s campaign. They talked to their bundlers, and got some sense of what some donors were thinking. But now they hear directly from individual donors who give money not in thousands but rather in millions. Our leaders learn quite precisely what actions will please or displease their powerful patrons. Some donors are active enough – Sheldon Adelson comes most obviously to mind – to make or break a candidate.

Trump hasn’t finished choosing his cabinet and already four major donors or fundraisers have gotten the nod: Willbur Ross as Commerce Secretary, Betsy DeVos for Education, Steven Mnuchin at Treasury, and Andy Puzder as Labor Secretary. Although Trump has taken rewarding donors to a new level, the pattern is bi-partisan: Commerce Secretary Penny Pritzker was Obama’s national finance chair for the 2008 election.

Some major Democratic donors, impatient with the party, are thinking about running for office on their own account: J.B. Pritzker, for Governor of Illinois, John Morgan for Governor of Florida, and Tom Steyer for Governor of California. These are talented people with a lot to offer. But should wealth be an automatic ticket to viability as a candidate?

A Remedy: Turn Voters into Donors

No one talks much about campaign finance reform these days, and for good reasons. Republicans oppose any reform. So at least until 2018, and probably until 2020, reform is dead on arrival at the federal level.

Just as daunting, the Supreme Court’s conservative majority – soon to be resurrected by the addition of a Trump appointee – holds that money given or spent in politics is free speech, protected by the First Amendment. They’ve struck down just about every law that limits campaign cash. But there is another way.

Two Yale Law professors, Bruce Ackerman and Ian Ayres, devised a solution in their book Voting with Dollars (Yale, 2002). Simplifying their approach, it works like this. The federal government gives every registered voter a campaign cash account. Every year each voter gets, say, thirty dollars. The voters then go on line and assign their campaign cash to the parties and candidates of their choice.

This public financing mechanism, instead of limiting political speech, increases its volume and multiplies its sources. It would be a clear victory for First Amendment values. So long as no new limits are placed on private donations, even the badly politicized Roberts court would find it difficult to strike it down.

At sixty dollars per two-year cycle and 200 million registered voters, that’s $12 billion. This surpasses or nearly equals the total spending on state and federal elections in 2012. (The uncertainty comes from the lack of reliable numbers on independent spending at the state level.)

A New Campaign Issue for Democrats?

A federal law creating this mechanism will likely be impossible for the next four years. But Democratic-led states could create their own versions of it, which would be useful test cases. And Democrats could also make an issue of it in the 2018 and 2020 campaigns.

If we want to regain the ground we’ve lost during the past eight years, we need to offer the voters something more compelling than just resisting Trump, as important as that work is. Robust public financing would be real change – a big step toward restoring democracy. And if there’s one thing voters wanted above all else in 2016, it was change, including change in a political system that everyone knows is broken.

Trump Attacks, Clinton Stays Mum

Both Donald Trump and Bernie Sanders vehemently attacked Hillary Clinton for doing what pretty much every politician does: take money from big donors and serve them instead of the public. For example, Trump hit this theme hard in the second presidential debate, at 54:30 minutes and at 1 hour and 24 minutes into the program. In a later post I will argue that Trump and Sanders owed much of their success to attacking big money in politics.

Today, I suggest that Clinton should have faced this question squarely instead of avoiding it.

Hillary stayed silent because she depended on her donors.  But her silence, like that of Barack Obama, Mitt Romney, and everyone else other than Sanders and Trump, deepens the voters’ contempt for their political leaders. Is there an honest and politically useful answer to this painful question? I say yes.

An Honest Answer? She Could Have Said…

Trump claimed that he did not depend on donors and financed his own campaign. That was only partly true, but it’s almost beside the point: the Representatives and Senators he needs to support his program took the big money when they ran for office, so Trump will be just as hog-tied by special interests as Sanders or Clinton would have been had they won.

So why vote for Clinton over Trump? First, because unlike Trump she is qualified for the job.  Hillary understands the political game, and has the experience, skills and connections to get the best possible deal for the voters within the narrow limits imposed by the money-driven political system we have today.

Our Donors Are Better than Theirs

Second, the donors who give to Clinton and other Democrats are politically more liberal, or at least more centrist, than Republican donors. Unlike the Koch brothers, Democratic donors have some sympathy for Americans who are not rich. They recognize that the country cannot prosper if the needs of most Americans are ignored. It is terrible that all politicians are beholden to donors, but at least Democratic donors are more enlightened and less selfish than the G.O.P.’s donors.

Third, unlike Trump and the G.O.P., Clinton and many Democrats want to change this undemocratic system and get money out of politics. In particular, Clinton would have appointed Supreme Court justices who might reverse Citizens United and other bad decisions which block limits on campaign cash. Trump will do the opposite.

Fourth, throughout her career Hillary has shown her commitment to social justice and to improving the lot of all Americans. Working for the Children’s Defense Fund shows her sincerity, as did her attempt to establish universal health care in 1993-1994. Trump, in contrast, is an economic and sexual predator, while as a candidate he advocated more tax cuts for the wealthy.

 Honesty Was Exciting in 2016

So the honest answer Clinton could have given is also a depressing answer. It means saying that the political system is broken. One consequence of this broken system is that Hillary – like every other politician – serves two masters, the voters and the donors. This limits what she can do for the voters, and often forces her to be two-faced.

But at least Clinton dislikes this broken system and wants to fix it. And because she has the skill and experience to work the system, because her donors are better than the G.O.P.’s donors, and because her heart is in the right place, she will get the best possible result for the voters within the limits imposed by our broken system.

This bleak answer to a hard question may not strike us as inspiring, but actually it might have inspired voters, because this answer is honest. The American people, in this election year, craved honesty more than anything else. Honesty about money in politics (or the appearance of honesty in Trump’s case) helped fuel the wholly unpredicted and meteoric rise of the only candidates who generated real enthusiasm in the electorate, Bernie Sanders and Donald Trump.