Open Forum

Fixing a Hole


How do we fix the TAB mess? Texas needs two major campaign finance reforms to restore Texas democracy and to end the corporate domination of our elections. Texans should begin by demanding that the Legislature next session close the loopholes in the stateâ-˙s corporate prohibition. And long-term, we should enact full public financing of campaigns, like Arizona and Maine, and remove private money from our elections.

Closing the Corporate Spigot

The feds and 17 states, including Texas, prohibit corporate funds from being used in elections. The fedsâ-˙ ban was first passed in1907, at the urging of progressives and in response to the flood of corporate money poured into elections by robber barons. Populist Texas actually enacted its corporate ban two years earlier and it was substantially stronger than the fedsâ-˙. From the beginning, the Texas law, unlike the initial federal ban, prohibited both corporate money or “any money or thing of value” contributed from corporate sources.

The U.S. Supreme Court has repeatedly upheld the prohibitionâ-˙s constitutionality as a means to protect the democratic process from the corrupting influence of large concentrations of corporate wealth. The Court has pointed out that the ban enhances free speech rights by ensuring that contributions are voluntary and not plucked from the investment funds of stockholders who support companiesâ-˙ economic goals but not their political agenda.

Texas needs three changes to have an effective corporate prohibition:

ban the use of corporate money on pseudo-issue ads (ads during the height of the campaign that attack candidates but donâ-˙t explicitly advocate voting against the candidate); ban all the newfangled types of corporate entities (such as professional corporations and limited liability companies) from using their funds to influence elections; and >ban contributions from out-of-state political action committees and political parties that commingle corporate and non-corporate funds.

The best way for Texas to get rid of corporate funded pseudo-issue ads is to adopt a state version of McCain-Feingold campaign finance legislation. This law enacts a “bright line,” easily enforceable test: An ad is considered electioneering, and corporate money is verboten, when the ad is broadcast 60 days before an election, refers to a congressional candidate, and reaches more than 50,000 registered voters in that candidateâ-˙s district. A 2002 study by the New York University Law Schoolâ-˙s Brennan Center for Justice found that 86 percent of the public could not tell the difference between ads that used the “magic words” (vote for or against so and so) and ads that satisfied this bright line test.

Texas state Senator Rodney Ellis last session introduced a bill, SB 1616, containing provisions similar to McCain-Feingoldâ-˙s electioneering test. It would ban corporate and union funding for broadcast ads and direct-mail pieces that refer to candidates and target more than 10,000 of their constituents (to reflect the smaller state districts) within 60 days of a general election. Such legislation would effectively end corporate-funded pseudo-issue ads such as TABâ-˙s.

Some liberals criticize McCain-Feingoldâ-˙s electioneering test, because in addition to banning conservative corporate-funded pseudo-issue ads, it also will eliminate such ads by the Democratic Party, unions, and trial lawyers. The nation and Texas, however, donâ-˙t need billions of dollars in corporate funds further skewing the political agenda toward big business. And while the national Democratic Party before McCain-Feingoldâ-˙s passage attracted substantial corporate funds, it also not so coincidentally adopted more of the corporate, special interest agenda.

The corporate prohibition also should be extended to all the new and improved corporate entities. The current Texas prohibition applies only to traditional corporations; it does not apply to limited liability companies, professional companies, and limited liability partnerships (which are used by a number of big corporate entities to avoid the stateâ-˙s franchise tax). This huge loophole doesnâ-˙t make sense. Why shouldnâ-˙t the prohibition apply to all businessesâ-„whatever the nuances of their formâ-„that receive personal liability protection from the state for their investors? Big law firms, doctors with professional companies, and other businesses have opposed closing this loophole.

We should ban as well contributions from the slush funds of federal and out-of-state political parties and PACs. These slush funds, such as the Republican National State Elections Committee (and its Democratic Party counterpart), commingle corporate and individual monies. It is then often impossible to tell if their donations consist of corporate funds (because all money is fungible). The solution is to pass laws similar to those that Connecticut has for national political parties: No state candidate or PAC can accept any donations from any political committee or party account that accepts corporate money.

Investing In Democracy:

Public Financing of Campaigns

Cutting off the corporate spigot is an important step toward restoring Texas democracy, but it is not sufficient. We ultimately need to remove private money completely from our elections and adopt full public financing. Arizona and Maine have adopted full public financing for all their state elections and the results are impressive. The power of voters and turnout has increased, while the power of special interests has dwindled. The candidates actually have to spend time with and listen to the voters, rather than a few rich donors and their hired guns. More diverse folks, including more women and minorities, run for office, providing voters with real choices and competition. Candidates can run competitive races without themselves being rich or catering to wealthy special interests for contributions (unlike with our current plutocracy). (To learn more about public financing, please see

The cost for real democracy in Texas is minuscule in the grand scheme of things. Full public financing for Texas legislative races would cost, based on the experience of Maine and Arizona, 4/100ths of 1 percent of the stateâ-˙s budget ($45-$50 million). Why shouldnâ-˙t we invest in democracy and stop short-changing the voters with limited choices and with even less power? Texans pay a lot more than this amount in “special interest taxes”â-„indeed we pay billions of dollars annually in tax loopholes for businesses and in increased costs from insurance companies, utilities, and other industries that use their big bucks to skew the stateâ-˙s laws to gouge Texas consumers.

Wouldnâ-˙t you rather pay a small democracy fee than huge “special-interest taxes”? Wouldnâ-˙t you rather have voter-owned elections than special-interest owned elections? Isnâ-˙t it time that we had true democracy in Texas?

Fred Lewis is an attorney and is president of Campaigns for People, a non-partisan, nonprofit organization that supports state campaign finance reform.