Money and Democracy

Published — August 20, 2008 Updated — May 19, 2014 at 12:19 pm ET

Commentary: The broken campaign finance system: An American political tradition


When Mark Hanna stepped in as a fundraiser for William McKinley’s 1896 reelection campaign, he took the unprecedented, if notorious, approach of tapping into a network of wealthy business leaders and “assessing” how much they owed the campaign. For that reason Hanna is often credited with being the first to incorporate big money into American politics – a legacy that would define presidential politics into our own day, especially now amid the nation’s first multi-billion-dollar presidential election campaign.

Since Hanna, the bullying and bundling of donors continue to be prevalent. Recent news reports have focused on the questionable fundraising activities of one Harry Sargeant III, a bundler of campaign contributions for the McCain campaign. Sargeant, and his associates, were somehow able to report maximum individual donations of $2,300 from people with seemingly zero interest in the political process. The campaign has now returned $50,000-worth of these questionable contributions. Bundling is legal, but lining up phony campaign contributions to be repaid by bigger, hidden donors, or coercing contributions, is not. This is just one more way our campaign finance system continues to be abused by those trying to gain political influence without playing by the rules.

While the focus of the Obama campaign has been on small donors giving $200 or less, they represent only half of the story — about 48% of the Obama campaign’s war chest, or $160 million, according to the Center for Responsive Politics. That leaves another $175 million from large donors, including at least $63 million from Obama’s more than 509 bundlers. Meanwhile, the McCain campaign has slightly more bundlers so far than Obama, some 535, pulling in at least $75 million. Does anyone believe these bundlers are not seeking influence and special access in the next administration?

During the Democratic primary campaign last year, a group of Maryland students — some age 8 and even younger — reportedly contributed more than $45,000 to the Clinton and Obama campaigns. The Federal Election Commission has actually declared it legal for first graders to knowingly and voluntarily contribute to a presidential race. Companies and unions are also known to find ways to have their employees and members contribute “voluntarily.” For example, take the business executive who reported he was pressured to contribute to Mitt Romney’s campaign by his company CEO, and then lost his job when he refused. Other companies have fully reimbursed their employees for their bundled contributions, making these nothing less than illegal corporate gifts.

Campaigns have been forced to give back hundreds of thousands of dollars in such contributions when they have been uncovered, and bundlers have paid millions of dollars in fines — fines levied after the election. Clearly, careful vetting and full disclosure is required by the campaigns in real time. But new laws will be needed to make that a reality. If money is going to dictate so much of our electoral process, we need that money to be entirely transparent, showing exactly who these individual bundlers are and what interests they represent.

Of course, the current campaign finance system is broken in other ways, as well. Once again, new spending records will be set this year by political activities coming from largely unregulated “independent” groups, named by their tax code numbers as 527s, as well as 501(c)3s and 501(c)4s. The newest “Swift Boat” outrage and the damage it may cause will be talked about for years — again after the election, when such analyses do little good.

The central issue is that campaigns cost too much, and the public financing system that would enforce a level playing field and limit contributions has not kept pace with what is required to win an election today. It is important not to discourage political involvement, but the system we have now, with all of its incentives to reward special interests, is not working. As of now, Mark Hanna would likely be welcomed as a top bundler for either campaign.

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