Taking Back the Owner’s Box
We have a full-blown, Texas-size political scandal underway. Big corporate money from the Texas Association of Business (TAB) and Texans for a Republican Majority (TRM) pervaded and thoroughly corrupted our 2002 elections. The voices of average people in Texas—never heard enough at the Capitol to begin with—were completely drowned out in the 2003 session by moneyed special interests so powerful some dubbed them “the owner’s box.”
But it doesn’t have to be this way. Don’t despair and don’t believe the cynical folks who say there is nothing we can do to increase the power of average folks and reduce the leverage of special interests. Often these naysayers have a stake in the current system or they are unaware of reforms in other states that are working. It’s also easy to confuse prior piss-ant Texas reforms that didn’t change the status quo much with fundamental reforms in other states that are making a real difference.
The Clean Up Texas Politics Coalition, sponsored by Campaigns for People, supports five major reforms that are working well in other states. These changes will make elections competitive again and enhance the role of smaller donors. They will put the voter back in charge in Texas. These are five fundamental reforms that the Texas Legislature could enact next session to restore government to the people.
1. CLOSING CORPORATE SOFT-MONEY LOOPHOLES
Tightening Texas’ century-old prohibition on corporate and union cash is an essential reform. Unfortunately, it will only return us to the status quo that existed before the cheating that occurred in 2002. Special interests had way too much power at the Texas Legislature before the 2002 election, and if corporate money is allowed to further flood our state elections, the domination of special interests will get worse, much worse. Even though the current corporate prohibition ultimately may ensnare TAB and TRM, it needs to be modernized and made easier to enforce. The TAB and TRM scandals reveal that four basic corporate prohibition reforms need to be enacted:
End sham issue ads such as TAB’s corporate-funded direct mailers. At this point, we’ve all seen these so-called “issue ads” that usually attack candidates right before the election without actually saying vote for his or her opponent. A typical example is the TAB corporate-funded direct mailer sent out in late October 2002 in the East Texas state representative race near Dallas between Republican Betty Brown and Democrat Mike Head. The mailer explained how great Brown would be for the Texas economy and then said: “Texans need a legislator who will vote to keep Texas moving… Betty Brown can help get the Texas economy moving again.” (Notice there are no “magic words” saying vote for Brown, which TAB contends is the legal standard. But do you have any doubt it’s electioneering?)
The United States Supreme Court has held that corporate money can be prohibited for electioneering ads (ads intended to influence an election), but not for issue ads. What constitutes electioneering in Texas is disputed (reformers think circumstances can be considered and TAB says no, only the “magic words”), and Texas law has not been updated in 30 years. This makes stopping corporate-funded sham issue ads much more difficult and costly in Texas than it needs to be. While TAB’s 2002 activities are easier to expose than most cases—because TAB bragged in its press release that its “issue ads” helped elect candidates (which is the essence of electioneering)—few are likely to repeat that unwise mistake.
To get rid of corporate-funded sham issue ads, Texas should adopt a state version of the federal McCain-Feingold law. This law enacts a bright line, easily enforceable test. An ad is electioneering—and corporate and union money is not allowed—if the ad is broadcast 60 days before an election, refers to a candidate, and reaches significant numbers of voters in that candidate’s district. The Supreme Court upheld this test for broadcast ads in December 2003 and Texas should enact a similar ban that extends to direct mail pieces as well.
Prohibit contributions from slush funds with corporate money. Currently, PACs and party committees send corporate money to out-of-state entities, which then send supposedly legal, non-corporate money to candidates, in what can only be described as money laundering. This appears to have happened when TRM sent $190,000 to the Republican National State Elections Committee, which then sent the same amount several weeks later to seven TRM supported-candidates. While an indirect transfer of corporate funds is a contribution under Texas law, no one is likely to be as blatant as TRM in the near future. The temptation, however, will remain to launder corporate money and turn felonious funds into legal tender.
Texas should ban contributions from out-of-state PACs and parties that accept corporate funds. It is usually difficult to tell if contributions from these entities contain corporate funds because all money is fungible. The solution is to pass laws similar to those that Connecticut has for national political parties: No candidate or PAC can accept any donations from any out-of-state entity that accepts corporate or union money.
Tighten the administrative expense exception. Currently the law allows PACs to spend corporate or union money only on administrative expenses. The lack of a precise definition for “administrative expenses” has opened the door for abuses. TRM spent hundreds of thousands of corporate dollars for expenses that would not likely appear to an average person to be non-political administrative expenses: polls, phone banks, political consultants, and political fundraising. Because of the limitations of Texas’ definition, PACs likely will continue to be tempted to spend corporate money on political activities and call it administrative expenses (although probably not as egregiously as TRM). This exception needs to be tightened so that PACs may spend corporate and union funds on only a very limited number of itemized expenses, such as rent, utilities, and office equipment. In addition, the exception should be abolished for independent political committees, such as TRM, which are not sponsored by a corporation or union. This change would prevent abuses and bring our law in line with federal law.
Ensure coordinated activities are illegal. The U.S. Supreme Court has said that states may prohibit corporate expenditures on otherwise legal issue ads if the ads are coordinated with candidates. The rationale is that third-party activities that are coordinated with a candidate’s campaign are really activities of the candidate. Candidates are prohibited from spending corporate money on anything. In Texas, the coordination laws have not been updated in years, making them less inclusive than what is clearly constitutional after the Supreme Court’s McCain-Feingold decision. We need to pass comprehensive coordination laws that will cover conduct such as the same political consultant working simultaneously for a PAC and a candidate, and then claiming he is acting independently of the campaign (I kid you not).
2. SETTING REASONABLE CONTRIBUTION LIMITS
Texas is one of only eight states with no contribution limits on candidates for legislative or executive office. Without limits, Texas’ contributions come from only a few, very large donors: In 2002, $60 million of the $127 million in contributions given to Texas state candidates came from only 382 individual or PAC donors. Within those numbers, 15 individual donors gave over $500,000 each to state candidates and 3 individuals gave over $1 million each. Contributions of $1,000 or more constitute 91 percent of all funds. ( See, Texans for Public Justice, at www.tpj.org) A prime example of the influence one donor can have can be seen with homebuilder Bob Perry, who contributed in excess of $4 million in the last state election cycle. (Hope you don’t have anything go wrong with your house, because after the 2003 session you have few legal rights left against your homebuilder.)
The current limitless system gives a major advantage to incumbents and discourages competition from challengers. In the 2002 election, for example, 60 percent of state Senate and House candidates had no major party opponent in the general election. Only 15 percent had a competitive race (defined generously as one where the winning candidate wins by less than 20 percent). It is the incumbents, of both parties, who garner the big contributions that ensure little or no competition for legislative seats.
To encourage more competition, it is important to establish reasonable limits on the amount candidates may receive from an individual or PAC. Reasonable limits on individual and PAC contributions per contested election might be $1,000 for a candidate for the Texas Legislature and $2,500 for a statewide candidate. These limits are in line with other states’ limits. In addition, an aggregate limit on the total amount one super-rich person can give has worked as an effective deterrent to excessive influence by any particular individual. It seems reasonable to allow one individual in all state races to give no more than $25,000, which is just about the median annual earnings of a worker in Texas. One would think in a democracy average folks deserve some representation, too.
3. CREATING A SMALLER DONOR MATCHING PLAN THAT THE PUBLIC LIKES
Small donor matching plans in other states and cities have increased the influence of small donors and allowed candidates to run without being dependent on big donors. In Texas, where 95 percent of all contributions come from donations of $500 or greater, small donors, who give $50 or $100, have become irrelevant. Legislative candidates, not surprisingly, ignore small donors and seek the big dough from the rich and famous.
A matching plan for legislative candidates could amplify small do-nations and help level the playing field. For example, a three-to-one match for contributions up to $125 would be worth $500. This could give candidates an incentive to pay attention to smaller donors. Where would the money come from to fund such a system? There exists a perfect funding source that I am confident Texans will support: a 6-percent sales tax on state lobbyist contracts. Since Texas has so many lobbyist contracts (worth between $100 million and $200 million a year), we could raise plenty of funds to enhance the power of average folks.
4. ESTABLISHING AN INDEPENDENT REDISTRICTING COMMISSION
In a democracy, voters should be supreme and choose their elected representatives. Under most states’ redistricting practices, democracy is subverted and politicians are supreme: They choose their voters. The practice is unfair whether perpetrated by Democrats or Republicans. Texas needs a fair process, similar to those of Iowa and Arizona, which protects the voting rights of all voters to competitive districts where their votes count. A fair redistricting process would have an independent commission, evenly balanced between the political parties so that its decisions are balanced and impartial. Eligibility for serving on the commission would be restricted to ensure impartial members (no candidates, lobbyists, political consultants, etc.). The commission would be required to draw districts based only on specific fair criteria, such as compactness, protecting communities of interest, electoral competitiveness, and adhering to the Voting Rights Act.
5. ESTABLISHING AN INDEPENDENT, EFFECTIVE ENFORCEMENT AGENCY
Without enforcement, the best laws are meaningless. District attorneys can bring only a few criminal cases on campaign finance violations. We need a Texas civil enforcement agency that works. Unfortunately, our tough-on-crime legislators ensured that the Texas Ethics Commission would be toothless and clawless—and unable to enforce our campaign laws against them and their friends. The agency needs to be completely overhauled. Its enforcement process, which is essentially closed to the public, must be made open so there can be public accountability. Its board must be removed from having to approve each staff enforcement act, which boards don’t do at any other agency. We also need a state constitutional amendment that removes the agency’s budget from the control of the Legislature. This would ensure that a functioning agency still would have plenty of funds to enforce the laws that protect the power of voters.
THE MOST IMPORTANT SOLUTION: GET INVOLVED
The only real cure for the serious ills of Texas democracy is an army of engaged citizens demanding reforms. At this crucial opportunity for reform, the most important issue is whether you are going to get involved and demand changes to restore your power. If you and your friends don’t get involved and tell your legislators that you are mad as hell and won’t take it any more, nothing will happen.
Legislators, Democrats and Repub-licans, aren’t going to change the campaign finance game — since they win under the current rules without a sweat—unless you make it clear that if they don’t support reform you will throw them out on their ears. Now is the time—after the corporate corruption of the 2002 state elections and the abuses of redistricting—for you to get involved and clean up Texas politics. This is the best opportunity for fundamental reforms in Texas since the Sharpstown scandal a generation ago. Don’t miss the action.
Here is what you can do that we know works: Become informed, organized, and involved. First, go online to www.cleanuptexaspolitics.com and sign up to become part of the electronic Clean Up Texas Politics action team. This interactive site provides the latest information about Texas campaign corruption and will provide you, through e-mail, ways to become organized and to pressure the Legislature for reform. If you become part of the team, you will be kept informed of important developments and told of opportunities to influence the Legislature.
We know this action alert approach works because it worked in the 2003 Legislature. Five thousand electronic activists across Texas, part of Campaigns for People’s Show Us the Money Coalition, forced the Legislature, despite resistance, to pass House Bill 1606, which is establishing in Texas one of the nation’s best campaign disclosure systems. These organized citizens bombarded the Legislature with phone calls and faxes, with important legislators getting on average 300 faxes and 40 phone calls. Legislators started to realize that people cared and were watching. Although they did not like the idea of voters knowing more about their campaign money, they passed an excellent disclosure bill.
In the next legislative session we can enact fundamental reforms in Texas. But instead of 5,000 electronic activists, we need tens of thousands of informed and engaged supporters. Even the distant, out-of-touch Texas Legislature will satisfy the demands of an informed and engaged stampede of angry voters demanding democracy. People power is the only way to defeat money power.
Two of the three ingredients needed for fundamental reform exist today in Texas. We have a crisis and a scandal that is exposing just how serious the situation has become. There are workable solutions that other states have successfully put into practice. Now all that’s needed is a genuine people’s movement to force a reluctant legislature into action. That depends on you and your friends. The time to get involved is now.
Fred Lewis is an attorney and is president of Campaigns for People, a non-partisan, nonprofit organization that supports state campaign finance reform.