Financing the 1996 Election

John Clifford Green

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781315501833
• Topic: Politics & International Relations
• Subtopic: Political Process
• Index: Politics & International Relations

First Published in 1999. The 1996 elections revealed that unmistakeable, dramatic changes have occurred in the way federal campaigns are paid for. Through soft money donations, issue advocacy campaigns and other stratagems, parties and candidates have been able to circumvent the regulations put in place after the Watergate scandal. Despite rhetorical condemnations, there is every reason to expect these trends to continue in the future. This study of the 1996 election- the latest in a highly praised series sponsored by the Citizens' Research Foundation- systematically examines the new campaign finance practices and their consequences.

1

JOHN C. GREEN

The End of an Era: Introduction and Overview

Whatever its political significance, the 1996 election revealed dramatic changes in the way for which federal campaigns are paid. These changes mark the end of one era of the campaign finance regulation and herald the start of a new one. Although still substantially in place, the campaign finance system enacted after the Watergate scandal in the 1970s has been seriously undermined by newly prominent practices, often sanctioned by regulatory and judicial rulings. These changes threaten to erode the contribution limitations, disclosure requirements, and public financing provisions that define the hard money (federally regulated) relationships between federal candidates and contributors (Wilcox and Joe 1998). As a result, features once common in federal campaigns reappeared in 1996 to the dismay of many observers: very large donations by individuals and institutions, unlimited and undisclosed spending by organized interests, and the systematic flouting of campaign finance laws by presidential campaigns and the major political parties (Wilcox 1999). There is every reason to expect these trends to continue in the 2000 election.

Chief among the newly prominent practices are soft money donations and issue advocacy spending. Soft money is raised outside of the federal campaign finance regulations, principally through the state affiliates of the Democratic and Republican parties (Corrado et al. 1997, ch. 6). Issue advocacy is spending to influence the outcome of federal elections, but that does not expressly advocate the election of a specific candidate (Corrado et al. 1997, ch. 7). Issue advocacy gives political parties a new way to expend funds, especially soft money. It also allows interest groups to raise and spend money entirely outside of the federal campaign finance system. These new practices have revitalized the debate over campaign finance reform, although as of this writing, no reform legislation has been enacted.

This book catalogues the new finance practices in 1996 and their consequences for the future, and the end of an era of campaign finance regulation is a persistent theme in the chapters that follow. This theme arises in the context of a detailed description of campaign finance in 1996, work that continues a series of research reports on the subject dating back to the 1950s (Alexander and Corrado 1995; Alexander and Bauer 1991; Alexander and Haggerty 1987, 1983; Alexander 1979, 1971, 1966, and 1962; Alexander et al. 1976; Heard 1960). Unlike its predecessor studies, however, this book is a collective effort, drawing on the expertise of a dozen scholars, some well established and others new to the field. This collaboration is warranted by the sea change in federal campaign finance evident in 1996. Federal campaign finance has become increasingly complex, and the authors offer a number of different perspectives, assessments, and measures of financial activity in 1996.

The organization of the book reflects new issues as well as traditional patterns of analysis. The book begins with an overview of spending in the 1996 election (chapter 2), followed by three chapters on the finances of presidential and congressional candidate committees (chapters 3, 4, and 5). The next three chapters cover important kinds of campaign contributors: individual donors, political parties, and interest groups (chapters 6, 7, and 8). The book concludes with a consideration of campaign finance reform (chapter 9).

The Costs of Democracy in 1996

Chapter 2, the first substantive chapter in the book, offers a detailed overview of spending in the 1996 election by Herbert Alexander, the dean of campaign finance scholars. Alexander uses categories employed by the Citizens’ Research Foundation for more than forty years, thus allowing for comparison over time. By these measures, democracy was quite expensive in 1996, with the total bill estimated at about $4.2 billion, an increase of nearly one-third over a comparable estimate in 1992 (see Table 2.1). These figures represent real growth in the cost of democracy in recent times. If presidential spending is taken as a guide, then real spending has increased some 440 percent since 1952 (see Table 2.5). To put the 1996 figures in perspective, political actors expended approximately $21 per person in the voting-age population; because of the low voter turnout, the cost per vote cast was $43 (using presidential turnout as the standard).

A large portion of the 1996 expenditure was directly associated with federal candidates, with roughly one-sixth spent on the presidential campaigns ($700 million) and one-fifth on congressional races ($838 million). Other political organizations spent slightly less, with political parties accounting for one-fifth ($834 million for national, state, local, and soft money funds) and interest groups one-eighth ($505 million) of the total. The remaining funds, almost one-third of the total, were accounted for by state, local, and ballot-issue campaigns ($1.3 million). Alexander also reviews the rate of participation in the finance system generally (about one-eighth of the citizenry reported making a contribution of some sort in 1996; see Table 2.9) and utilization of the income tax check-off to support public financing (about one-eighth of all federal income tax returns in 1996; see Table 2.10).

Interestingly, soft money (6 percent overall) and issue advocacy (some 13 percent of total presidential spending) made up a relatively small percentage of total expenditures. But these practices have a great capacity to expand in the future. Indeed, Alexander concludes that the Federal Election Campaign Act (FECA) was shown to be outdated by the 1996 election. One aspect, expenditure limitations associated with the public financing of presidential campaigns, was especially ineffective. Such limitations failed to control spending in any phase of the presidential selection process in 1996.

Candidate Spending in 1996

The next three chapters describe the 1996 finances of federal candidate committees. Wesley Joe and Clyde Wilcox describe spending in the presidential prenomination campaigns (chapter 3), followed by Anthony Corrado’s account of the general election (chapter 4), and Paul Herrnson’s review of congressional campaigns (chapter 5).

Joe and Wilcox put the primary campaign in historical context, noting that, in political terms, 1996 most closely resembled 1984, when a popular incumbent president (Ronald Reagan) was unopposed for renomination, and the party out of power (the Democrats) experienced a tight contest. In both years, the leading out-party candidate (Walter Mondale in 1994, Bob Dole in 1996) won the nomination in a bruising battle that exhausted his legal spending limit. Indeed, once the GOP nomination was secured, Dole was unable to counter Clinton’s “primary” spending against him. This problem was remedied by millions of dollars of issue advocacy by the Republican National Committee, in partial imitation of the issue advocacy spending by the Democratic National Committee on behalf of President Clinton. Indeed, the Clinton effort broke new ground with a multimillion-dollar issue advocacy campaign in 1995 and 1996, mostly paid for with soft money. Given these and other forms of “creative campaigning,” Joe and Wilcox conclude that 1996 may well be the “last regulated” campaign under FECA (chapter 3).

Anthony Corrado surveys the 1996 presidential general election finances (chapter 4). He, too, notes the similarity between 1996 and 1984: a popular incumbent buoyed by a strong economy was reelected over a prominent challenger regarded as out of touch with the mood of the country. But as in the prenomination campaign, the general election finances marked a departure from the past. This departure produced an unusual result: For the first time under FECA, campaign finance was an issue in the presidential campaign. Leaving aside soft money and issue advocacy (covered in chapters 7 and 8), Corrado notes three important innovations within the context of FECA. The first involved “general election legal and accounting compliance” (GELAC) funds, private contributions allowed for the purpose of paying for compliance with the campaign finance regulations. The clever use of GELAC funds allowed the presidential campaigns to stretch their spending. Second, the major parties did not spend the legal limit in “coordinated expenditures” on behalf of their presidential nominees, opting instead to engage in unlimited issue advocacy spending. A third innovation was the public financing of the Reform Party and Ross Perot’s presidential campaign. This chapter also covers innovations in presidential campaign advertising in 1996. Corrado concludes that the 1996 campaign revealed the flaws in the current campaign finance system and that FECA has been rendered nearly meaningless by constant abuses.

Next, Paul Herrnson describes the finances of the 1996 campaigns for the Senate and House of Representatives (chapter 5). Unlike the presidential campaign, the congressional elections were extremely competitive, being the first held after the Republicans’ historic takeover of the Congress in 1994. With control of the legislative branch at stake, congressional campaign finance reflected both continuity and change. On the first count, congressional finances once again set new records, and funding remained tilted toward incumbents. On the second count, Republicans took advantage of their position to outspend their Democratic opponents for the first time under FECA. In addition, there was an unprecedented increase in independent and issue advocacy spending on behalf of congressional candidates. This last change paralleled the use of soft money and issue advocacy in the presidential campaign. Responding to court decisions, the major party committees deployed millions of dollars in marginal Senate and House races, and interest groups engaged in high levels of issue advocacy spending for candidates they favored. Herrnson notes that these new vehicles for campaign spending may well undermine FECA further.

Sources of Campaign Funds in 1996

The next three chapters report on the major sources of campaign funds in 1996. Peter Francia, Rachel Goldberg, John Green, Paul Herrnson, and Clyde Wilcox discuss individual campaign contributors (chapter 6), followed by Robert Biersack and Melanie Haskell’s account of party finance (chapter 7), and then Diana Dwyre’s report on interest-group spending (chapter 8).

Francia, Goldberg, Green, Herrnson, and Wilcox describe the characteristics of individual donors in 1996. Individual contributors were the single largest source of campaign funds, providing the bulk of the money for candidate, party, and political action committees. The authors first compare the major donors to the presidential and congressional campaigns with the population at large. They found major donors to differ substantially from ordinary citizens. Major donors were mostly wealthy, well-educated white men, who tended to be Republican and conservative, and were very active in other aspects of politics. Despite these characteristics, major donors were not monolithic. Important differences existed between Democratic and Republican donors as well as significant factional divisions within each party’s financial base. Such divisions were especially prominent among Republican presidential primary donors in 1996. These findings are a reminder of what is at stake in campaign finance regulation: Money can give some people a louder voice in the political process (chapter 6).

Robert Biersack and Melanie Haskell describe the financial activities of the major political parties in the 1996 election (chapter 7). Party committees were granted a prominent role by the FECA, and over the past two decades they have become an increasingly significant source of campaign funds. Biersack and Haskell identify two sides of this activity: first, hard money raised and spent under FECA, and then soft money raised under state law, but coordinated and spent with national direction. Hard money still dominated party finance in 1996, with the parties raising $638 million. But 1996 was a “break-out” year for soft money, which grew to $252 million, equaling almost two-fifths of party hard money. Soft money was attractive to the parties because it could be raised in amounts vastly larger than the FECA limits (the top ten soft money donors gave in excess of $500,000 each) and from sources that were otherwise prohibited from contributing to federal campaigns (such as the treasuries of business corporations and labor unions). The development of issue advocacy spending made soft money even more attractive because soft money could be used directly in campaigns. Biersack and Haskell detail the complex web of party finance in 1996, supporting the conclusion of other chapters that soft money and issue advocacy have eroded the FECA. They find the attitudes of the major parties toward the Federal Election Commission (FEC) akin to “spitting on the umpire.”

Diana Dwyre completes the picture with a review of the financial activities of interest groups in 1996 (chapter 8). Interest groups were also given a role in campaign finance by the FECA, principally via political action committees (PACs). Recently, interest-group financial activity has expanded beyond the FECA. Hard money activities still dominated interest-group involvement in 1996, with PACs spending $430 million. Issue advocacy spending was at least $70 million, however, and interest groups were the prime source of party soft money. These kinds of funds may have equaled three-quarters of PAC hard money. The imprecision of these numbers reflects a very serious problem, namely, the lack of full and accurate disclosure of these new practices. Dwyre describes the variety of activities paid for under these arrangements and the complex set of transactions they entail. She argues explicitly that the volume of interest-group activity outside of the FECA has inaugurated a “postreform era” in federal campaign finance.

The Prospects for Reform

In the final chapter of the book, Robert Mutch considers the debate over campaign finance reform since the 1992 election (chapter 9). This debate was influenced by both the 1994 elections, when the Republicans gained control of Congress, and the 1996 campaign, when the new finance practices became an issue. The 1996 elections reinvigorated the debate because Republicans and reformers each had incentives to respond to the campaign finance scandals. Mutch explains in detail the issues, actors, and reform proposals prominent before and during the “window of opportunity” for reform afforded by the 1996 campaign. His account helps explain the failure of the reform efforts, which fell victim to partisan wrangling and disagreements among reformers.

Mutch argues that reformers and their opponents could agree on two things: There was no strong demand for federal campaign finance reform from the public, and in the absence of such a demand, the Congress was unlikely to enact reform legislation. He suggests that the “scandal-reform” cycle critical to past legislation, including the post-Watergate reforms, may be a thing of the past. Ironically, the culprit could be the disclosure provisions of the FECA: A steady stream of information on campaign finance may have left the public so jaded that it cannot summon the outrage necessary for reform.

In sum, the United States is likely to enter the 2000 election with a system of campaign finance regulation that is increasingly irrelevant. The new practices so prominent in 1996, especially soft money donations and issue advocacy spending, are likely to become more common. Although the future of campaign finance regulation is far from clear, a new era is upon us.

2

HERBERT E. ALEXANDER

Spending in the 1996 Elections

The 1996 elections cost more than any previous elections, yet produced the lowest voter turnout since 1924. During the 1995–96 election cycle, political candidates, committees, and other organizations and individuals spent a total of $4.2 bill...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• About the Editor and Contributors
• Tables and Figures
• Acknowledgments
• 1. The End of an Era: Introduction and Overview
• 2. Spending in the 1996 Elections
• 3. Financing the 1996 Presidential Nominations: The Last Regulated Campaign?
• 4. Financing the 1996 Presidential General Election
• 5. Financing the 1996 Congressional Elections
• 6. Individual Donors in the 1996 Federal Elections
• 7. Spitting on the Umpire: Political Parties, the Federal Election Campaign Act, and the 1996 Campaigns
• 8. Interest Groups and Issue Advocacy in 1996
• 9. The Reinvigorated Reform Debate
• References
• Index