Di Thao, Politics, and the Problem of Political Corruption

A thin line distinguishes legitimate political contributions and solicitations from bribery and
extortion.  Assuming all the allegations are true, St Paul Council member Dai Thao and his campaign manager crossed that line when they tended votes for money.  Yet even if they did nothing illegal,  this incident should not blind us to the bigger problem of how money corrupts politics and how political influence is leveraged, and, how contrary to what the Republicans are currently doing in the State Legislature, why we need more restrictions on the use of money for political purposes.
The Dai Thao example is what is called quid pro quo corruption–the offer or exchange of money for the performance of an official governmental act such as a vote on legislation.  This is what most people think of as political bribery or extortion and it is illegal under the federal bribery and gratuity statute, 18 U.S.C. § 201, or Minnesota Statutes § 609.42.    Some will contend that the offer or exchange of money for political influence is really what all political fund raising is about, so why should not all that be illegal?  The answer is yes...and no.
First, the critical legal line possibly crossed in the Thao incident is the explicit or implied exchange of money for the performance of an official act.  Bribery laws require a showing of criminal intent, and thanks to a recent Supreme Court decision, it must be an exchange of money for an official government act.  Smart politicians correctly and legally avoid bribery by never promising to alter a vote or perform an official act conditioned upon the payment or receipt of money.  They may tell supporters that they need their money so that they can continue to do their job or protect their interests but there is not an explicit promise to change a vote.  Moreover, elected officials generally also build fire walls that separate campaign from government staff to further make sure lines are not crossed.  All these are subtle but important distinctions that at least in theory contrast bribery or extortion from legitimate fund raising.
Yet quid pro quo corruption is the thinnest and perhaps most rare example of political corruption.  Many believe that corruption is more than bribery; it also has a more structural  aspect.  The issue is not just the explicit exchange of money for an official government act, it is how money is used to by not just access but repeated access.  In theory elected officials should return all phone calls or meet with all their constituents.  However, the names of big donors are recognized and are called back first or seen  more readily.
Corruption is when some interest groups can spend large sums of money in order to lobby and gain access to decision makers.  It is when lobbyists or big donors also serve as fund raisers to help solicit money for incumbents and candidates and then are rewarded for their efforts.  It is when, as in Minnesota, the legislative caucuses and political parties and their subunits are allowed to solicit and accept in the aggregate  unlimited amounts of money from individuals, political action committees, and lobbyists.  This is a problem because the parties set the political platforms and the caucuses the legislative agenda.  Money thus influences what parties believe and what legislation is heard.
The real issue is that money should not be the mechanism that determines how political power and influence are allocated.  Money might be a great way to allocate sailboats but it should not be the medium for handing out political influence and making political decisions.  Years ago Justice Rehnquist declared in  First National Bank of Boston v. Bellotti, “It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere.”  Similarly, in  Federal Election Commission v. National Right to Work Committee the Court declared that it was legitimate to worry that “substantial aggregations of wealth amassed by the special advantages which go with the corporate form of organization should not be converted into political ‘war chests.’” At one time the Court aligned with public opinion, recognizing a broader sense of corruption tht extended far beyond what one sees in the Thao situation, suggesting that even if what he and is campaign manager did was not actually illegal, it was still inappropriate political behavior.
Yet under Chief Justice Roberts, the Supreme Court has all but gutted political corruption laws.  In McDonnell v. United States the Court overturned the former Virginia’s bribery conviction, ruling that official acts did not extend to an exchange of gifts and money in return for arranging meetings and calling other public officials to discuss a donor’s business.  And in  McCutcheon v. Federal Election Commission, Roberts seemed to endorse the idea that purchasing influence is permissible when he declared:

Spending large sums of money in connection with elections, but not in connection with an effort to control the exercise of an officeholder’s official duties, does not give rise to such quid pro quo corruption. Nor does the possibility that an individual who spends large sums may garner “influence over or access to” elected officials or political parties.

Contrary to Roberts, many of us do think that seeking access or influence is political corruption, and the current ways that we finance our campaigns and elections is a legal form of bribery and corruption.  The solution in part is to make candidates and parties less dependent on large donations, and to encourage more disclosure.  Unfortunately, the Republican majorities in the Minnesota legislature are eliminating the system for public financing of elections in the state, and are trying to restrict the power of the state to regulate money in politics.  Such an effort if successful, will only  fuel more behavior such as what we see with Dai Thao.

Candidate Wealth and the Buying of Presidential Elections

Clinton 'Had No Choice' But To Come To My Wedding Because I Gave Her Donations
–Donald Trump

American’s say that like to identify with presidential candidates, that they could sit down and have a cup of coffee with them.  They also want candidates whom they think will understand them, that share their concerns.  If that is the case then most Americans must be millionaires, at least that would have to be the conclusion based on the personal wealth of many of the leading presidential candidates.
Personal Capital has produced a terrific chart of the personal wealth of the leading 2016 presidential candidates, pointing out that the Republican and Democrat frontrunners Donald Trump and Hilary Clinton are billionaires and millionaires, respectively.  At a time when according to CNN Money, the medium net wealth of Americans was $44,900 (down $77,300 in 2010), Trump is estimated to be worth $4.1 billion and Clinton $59 million.  One wonders both why Americans see these two candidates as capable of empathizing with their plight or serving as the champions of their causes.  In fact, in the case of Trump, his land speculation and penchant for telling others “You’re fired!” makes one wonder why his support is so strong, especially among those hardest hit by the types of behavior he engaged in.
Personal Capital has also pointed out the cost of elections, showing too that it is the game of millionaires and billionaires.  In 2012 $7 billion was spent on all US elections with $2.6 of that just on the presidential election.  And that may be a low ball estimate Alone in 2012 Obama raised $1.1 billion and Romney $1 billion.  My estimate is that Republican and GOP party nominees will each need to raise $1.5 billion for their presidential runs.  Throw in SuperPAC and third party spending, I easily see a presidential race costing $4-5 billion.  Most of this money will come from one to two percent of the population, meaning that the super rich will be contributing money to run a presidential election where the contest might be among the super rich.  An election by the rich, for the rich, and of the rich, especially when we consider the economic bias and class stratification in terms of who votes.
There are a lot of problems with this scenario; the cost of elections, the huge gap between the rich and poor, and the failure of public policy over the last 30 years to address the problems of how to build wealth for all, not just the rich.
Perhaps Donald Trump was correct about one thing–maybe contributions do buy elections and politicians and given who gives and runs, that might tell us something about the bias in our political system.

Acknowledgments: Graphic courtesy of  Personal Capital.

Campaign Financing and the Price of Democracy

All indications are that the Supreme Court will soon declare yet another campaign finance reform measure unconstitutional, chipping away yet another piece of the Post-Watergate reforms that sought to limit the corrupting influence of money in politics.  At least this is the indication based on the oral arguments in the recently argued McCutcheon v. Federal Election Commission case.  The Roberts Court will do this by arguing that the First Amendment protects the right of individual donors to expend unlimited amounts of money to influence elections.  The basis of the reasoning will be that aggregate spending limits by individuals does not corrupt or lend to the appearance of corruption of the political process.
    In reaching this likely conclusion, the Court will once again come close to saying money is speech.  But in doing that the Court will yet again be making a fatal assumption shared widely by many–that money is a legitimate tool to allocate political power and influence in America.  The fundamental flaw with the way the Supreme Court and many others have approached the issue of the regulation of money in politics is a  willingness to accept the assumption that economic resources should convert over into political influence. This is the core problem that the Supreme Court has failed to address.
    Think about it.  Economic markets may be great mechanisms to allocate sail boats and luxury items, but not political influence and democratic values.  Money is great in its place, but there are limits to what money should buy. No one thinks that school admissions or grades, jobs, or justice in court should be allocated on the basis of ability to pay or by money.  Nor do most of us support the idea that money should be used to allocate organ transplants or basic medical care.  The size
    Money has its place and it should just not be able to buy everything.  There needs to be a wall of separation between money and many things we hold important.  Ardent free marketers just do not seem to understand this.  In their push to privatize and deregulate they somehow think free markets are omniscient and always just.  But even Adam Smith recognized that for free markets to work there needed to be an independent concept of justice and virtue to regulate it.  Economists also talk of market failure and recognize that left to themselves, free markets are not self-regulating, self-regulating, or always fair.  In effect, there are some things money should just not buy, and that includes policy influence in a democracy.
    Democracies are not about one dollar, one vote.  Allocation of political power and influence should be distributed according to non-market criteria. Sociologist  Daniel Bell once pointed out that market logic and concepts were increasingly coming to encroach or infringe upon other parts of American culture including, the political process. Others such as Michael Sandel have argued that the danger now is that the United States is turning from a market economy to a market society where increasingly all types of social intercourse are being reduced to a cash nexus. Robert Kuttner makes a similar point. To a large extent American political power is being subjected to a marketization of its operations.
    The issue here is not one of efficacy or money. By that, the primary issue is not whether money makes a difference in terms of who is elected or who has political influence. One could debate forever whether money buys influence or corrupts and this is where the legal debate on campaign finance is centered. This is the wrong way to look at it. The issue should be whether money should be the criteria by which political power or influence is allocated. The issue instead is one about justice and fairness. It is about whether money is the appropriate criterion to use to determine who has political influence or authority. It is about setting boundaries or, as political theorist Michael Walzer would argue, demarcating distinctions between the market economy and the political system. While the field of political economy may be a legitimate academic discipline, the American political system is not a market democracy—the economic marketplace and the political forum or agora should be distinct. The allocative criterion for a political democracy is not the same as that for market capitalism.
    Even though American democracy has grown along with capitalism, the two should not be conflated. Many of the founding American political values opposed the impact that economic inequalities could have.  James Madison too, in Federalist 10 feared the problems associated with “various and unequal distribution of property.” Additionally, one can occasionally point to some dicta in Supreme Court decisions suggesting a broader understanding regarding a democratic theory of election law that would wall off impermissible uses of money in the political process.
    For example, Justice Rehnquist in First National Bank of Boston v. Bellotti, recognized the illegitimate drive of corporations to want to convert their economic resources into political power.  He declared:  “It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere.”  And in  Federal Election Commission v. National Right to Work Committee the Court stated that the purpose of limiting money in politics was “to ensure that substantial aggregations of wealth amassed by the special advantages which go with the corporate form of organization should not be converted into political ‘war chests’ which could be used to incur political debts from legislators who are aided by the contributions.”
    What these comments from the Supreme Court suggest is a recognition that money used for political purposes needs to be limited. Politics in general, and campaigns and elections in particular, may be expensive and money may be necessary to run campaigns and elections, but their costs or funding sources should not undermine democratic values. The problem of the Court’s decisions on money in politics is that the Justices failed to understand how a democratic system derives its legitimacy from political equality. Allowing the allocative criteria of the economy to substitute for equality in the political arena gives money and wealth a role that it just should not have in American democracy.

The End of Ethics Reform in Minnesota (or how the governor and legislature just weakened campaign finance reform and made it easier for special interests to buy influence)

Minnesota's 2013 legislative session will forever be known as the one that legalized  same-sex marriages.  Yet while many were celebrating this act the governor and the legislature are on the verge of adopting legislation that takes a giant step toward undoing political reform in the state and significantly increasing the chances that special interest money will further damage the Minnesota elections and law making process. The result is more money out of the taxpayer wallet funding special interest projects while legislators get free meals and gifts from lobbyists.

            Stories about campaign finance reform, lobbyist disclosure, and gift ban legislation are not sexy.  They are inside baseball stories that the media generally does not cover anymore, especially at the end of the legislative session where stories about the budget taxes, paying for the Vikings' stadium, or addressing unionization for daycare workers or spending  on education dominate.  But there is a common thread connecting all these stories.  There is a reason why the Vikings got their way, why powerful businesses were able to kill off B2B taxes, why energy companies watered down laws that would have required more power come from renewable sources, and why  day care unionization was pressed so hard.  It is all about money in politics.

            Archibald Cox, former president of Common Cause and the special prosecutor fired by Richard Nixon in the famous 1973 Saturday Night Massacre, described the laws about money in politics as the rules that determine the rules of the game.  Who is allowed to give, how much, and whether the public knows about it, go a long way toward determining the winners and losers in the game of politics.  The rules about money and politics are outcome determinative. 

            Up until the early 1990s Minnesota was a national leader when it came to political ethics.  Its public funding for campaigns was a model for encouraging small donors and mitigating special interests.  The gift ban law was a progressive instrument to break lobbyist-legislator connections.  And state laws mandating economic disclosure for legislators and reporting by lobbyists and the interests they represent were powerful tools of transparency.  But by 1995 it all ended after what has come to be called the Marty reforms (name after DFL Senator John Marty) were adopted in 1994.  Since this many of the old time legislators have remained resentful of the fact that they can no longer accept gifts and goodies from lobbyists and party again like it was 1993.  New legislators do not remember the old days when lobbyist roamed the halls with gifts, and lobbyists themselves are distraught that they cannot schmooze legislators at a party over a glass of beer.  Overall, many forces have come to conspire to thwart new reforms. Minnesota has rested on its laurels and since the 1990s it has done next to nothing, resulting in it now no longer leading the pack but pulling up the rear in terms of ethics in government.  But now thanks to bills sponsored by Ann Rest in the Senate and Ryan Winkler in the House, it will only get worse.

            The House and Senate have passed bills that will dramatically increase contribution limits to candidates.  For example, individual contribution limits to gubernatorial candidates would increase to $6,000 per election cycle, and it would be $4,000 for the other constitutional officers.  For the House and Senate, current law caps contributions to $500 in an election year and $100 in off years, the new law calls for the Senate election cycle limit to be raised to $3,000 and the House to $1,500.  Expenditure limits for the gubernatorial and legislative races would approximately double.

            Governor Dayton along with Rest and Winkler contend that these increases are needed for two reasons.  First, contribution and expenditure limit have not increased in years.  Second, candidates need to raise and spend more money to offset third party spending.  However, there are problems with these arguments.

            First, few of the legislative races exceeded the current expenditure limits and there is no indication that the vast majority of candidates had any difficulty raising the money they needed to run an effective campaign.  Supports of the new limit point to how expensive the Downey-Franzen race was last year, but it was an exception.

            Second, the  new contribution limits dramatically open up candidates to the potential influence of big contributors, undoing one of the long-standing goals of Minnesota's campaign finance system.  Imagine how much more money Zygi Wilf can pump into the Minnesota political process on top of the millions he already spent lobbying.

            Third, there is no evidence from other states that raising contribution and spending limits decreases third party spending or encourages third parties to shift from outside spending to candidate contributions.

            Fourth, the net result of the increased contribution and spending limits will simply be to put more money into the political system.   Special interests already can give unlimited amounts of money to the political parties and party units and to the legislative caucuses, and they can spend unlimited amounts on their own.  The Rest-Winkler legislation simply opens the door to more spending without getting any reforms out of it.

            Were that not bad enough two other proposals in the Rest-Winkler bills are even worse.  One would raise the disclosure level for individual contributions from the current $100 to $200.  This means that no one--not even lobbyists--would have to disclose contributions under $200.  This is a major step back in terms of transparency.  With 1,300 lobbyists paid to influence legislation in Minnesota, think about how they and other special interests will exploit the law and public will never know who is giving legislators money.  Finally, the bills would allow lobbyists to give gifts (meals and drinks for example) to legislators if given to all legislators. Terrific, bribery is ok so long as everyone in the legislature gets their fair share.

            Minnesota does not need more special interest money and gifts but less.  It does not need less transparency but more.  The best accounting of the current sorry state of Minnesota’s political ethics laws comes from the non-partisan and well respected Center for Public Integrity.  In  two  recent reports Minnesota comes off badly compared to other states.  In its 2009 study on legislative financial disclosure laws, Minnesota receives an F grade, coming in 40^th among the 50 states.   In 1999 the same study ranked Minnesota 35^th and in 2006 39^th.  A steady fall.  Minnesota is deficient in the range of disclosure it asks of legislators and also in terms of them updating that information.

            A second 2012 study by the Center measured political accountability and risk of corruption in the state.  Minnesota received a D+ grade, finishing 25^th among states.  Notable in this study, Minnesota receives a D- when it comes to effective conflict of interest laws, a D on political financing, and an F on lobbyist disclosure.  Minnesota simply failed to make the grade when it comes to political ethics before the Rest-Winkler bills, and now it will fall even further back.

            The hidden story of the 2013 legislative session is how the governor and the legislature took a major step back in terms of political reform.  While the media and the public was covering same-sex marriage, the budget, and the Vikings funding package, the story about undoing reform got away. Think about that next year when campaigns get even more expensive and the next time another special interests goes to the legislature and get their way.

Protecting Shareholder Rights: The case for the Minnesota Shareholder Freedom of Choice Amendment

 

Minnesota voters might see their November 6, 2012 ballot crowded with constitutional amendments. Among their choices could be the Minnesota Freedom of Employment ("Right to Work") Amendment. As presently worded, the Amendment would ask Minnesotans:

     Shall the Minnesota Constitution be amended to guarantee all citizens the individual freedom to decide to join or not join a labor union; to remain with or leave a labor union; or to pay or not pay dues, fees, assessments, or other charges of any kind to a labor union or any affiliated third party or charity, without having it affect their employment status?

Proponents of the amendment contend that its purpose is no more than to give individual workers the right to decide whether they wish to join or support a union. As a backup supporters also argue, as did Governor Scott Walker in Wisconsin or Mitch Daniels in Indiana, that such an amendment or legislation will facilitate a business-friendly environment that will help the economy and produce jobs.

Conversely, opponents contend–and some proponents secretly or not so secretly concede–that the real purpose of the amendment is partisan. It is an effort by Republicans to break the financial back and political power of the unions which have historically supported Democrats in elections or in lobbying for specific types of legislation such as minimum wage laws and workplace safety regulation.

But the power of labor unions politically is dwarfed in comparison to corporations and their treasuries. The 2010 Supreme Court decision Citizens United v. Federal Election Commission has unleashed corporations to spend tens if not hundreds of millions of new dollars in politics, with its impact already well documented in this and the last election cycle. This money, plus the millions if not billions of shareholder dollars spent by corporations for lobbying, gives them a significant advantage in the political process. As former chief Justice Rehnquist once stated in First National Bank of Boston v. Bellotti: “A State grants to a business corporation the blessings of potentially perpetual life and limited liability to enhance its efficiency as an economic entity. It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere. . . Indeed, the States might reasonably fear that the corporation would use its economic power to obtain further benefits beyond those already bestowed.”

The corporate form gives some business unique advantages economically. But as Rehnquist aptly observed, these advantages need to be regulated to prevent corporations from using the resources they acquired in the economic marketplace to benefit themselves unfairly in the political marketplace.

So what is to be done? If an amendment is going to be offered to the Minnesota Constitution to give workers freedom of choice and to reign in the power of unions, fairness only suggests a similar measure be introduced to apply to corporations. Thus, Republicans and Democrats should join together and support the Minnesota Shareholder Freedom of Choice (“The Right to Personal Profit”) Amendment. The amendment would ask Minnesota voters:

     Shall the Minnesota Constitution be amended to guarantee all shareholders in publicly-traded       corporations incorporated or registered to do business in the state, the individual freedom on an annual basis to decide if any of money of the corporation shall be expended, given, donated, or otherwise used for any political purposes directly or through a third party, without having it affect their dividends or rights to profits in that corporation?

Freedom of choice is a beautiful concept. It is the essence of the American ethos and a powerful moving force in politics. Shareholders should be given the same rights within corporations that workers enjoy if the Right to Work amendment is adopted. If we are so worried about the political clout of unions, one should similarly fear corporate clout.