Please forgive these rambling reflections on a windy Friday morning.
I would think those seeking reforms in our campaign finance system would be happy about HB 539, introduced by House Speaker Calvin Say and Judiciary Chair Jon Riki Karamatsu.
The bill would prohibit corporations and companies from making free use of their own funds for campaign contributions and other political expenses. The House Judiciary Committee held a public hearing on the bill yesterday.
Under the terms of the bill, corporations would be prohibited from contributing directly to candidates. Corporations would be allowed to transfer up to $25,000 during a 2-year election cycle to one noncandidate political committee it sets up, which in turn could make campaign contributions to candidates or other political committees (such as committees urging passage or defeat of ballot issues).
Unlike federal campaign law, which sets a higher contribution limit for political action committees than for individuals, the bill would apply the same contribution limits to corporate committees as to all other contributors.
During some past elections, it wouldn’t have been unusual for large corporations to distribute upwards of $100,000 in campaign contributions, so restricting the largest interest groups to $25,000 in total contributions to all candidates statewide during a two-year election cycle would be a substantive reform.
When you think about it, with the governor, Lt. governor, four mayors, candidates for four county councils, and candidates for 76 seats in the legislature all looking for resources to fund their campaigns, corporations and other groups can’t get much of an advantage even if they spend the full $25,000. If the corporation, through its noncandidate committee, contributed the maximum allowed by law to the governor, the Senate President and House Speaker, that would take up $12,000 of the total. The rest, spread among the remaining 74 members of the legislature, works out to a token $175 each. You can work the numbers a lot of different ways, but in the end it just isn’t possible to buy a lot of influence with this amount of cash.
But instead of seeing this as a golden opportunity to work with key legislators to substantially restrict the role of corporate money in politics, my progressive friends came into yesterday afternoon’s House Judiciary Committee hearing and used the occasion to blast the bill for failing to prohibit all contributions using corporate funds.
They rightly point out that corporations are already prohibited from using their treasury funds for campaign contributions in more than 20 states as well as in federal elections.
Good point. Has that put an end to the ability of corporations to influence politics in those states? Obviously not. So the choice between a total ban on corporate contributions and a substantial limit such as the one proposed by HB 539 is really more symbolic than real if your ultimate goal is returning political power to regular people by limiting corporate influence.
And while I view the $25,000 cap as a meaningful “limit” on corporate spending, they view it as a substantial increase, pointing to a provision against transfers between noncandidate committees which the Campaign Spending Commission has interpreted to mean that corporations can’t use more than $1,000 of their own treasury funds to make campaign contributions. Period.
The problem with that view is that the commission’s interpretation was overturned by a Maui court and, while an appeal to the Hawaii Supreme Court is pending, it doesn’t appear likely that the commission will prevail. I’ve written at length about this previously here and here.
The history is complicated, going back to the Campaign Spending Commission’s interpretation of a 2005 amendment which apparently opened some ambiguity in a provision regarding contributions to political committees that are not formed by candidates. The commission’s extremely restictive intepretation virtually eliminated campaign contributions by corporations but was struck down in the Maui court decision, currently on appeal to the Hawaii Supreme Court.
The debate continued during last year’s legislative session, ultimately ending in no action being taken.
If those opposing HB 539 asked my advice, I would suggest they weigh the risks and rewards.
The risk in opposing the bill is that the legislature will again take no action, key legislative friends of reform will end up feeling “burned”, corporations will be free to use as much of their own money as they wish because of the Maui court’s decision, and the Supreme Court will make that situation permanent by upholding the decision. The director of the Campaign Spending Commission noted the additional risk that corporate contributors will be able to evade disclosure requirements, meaning that the public will have a difficult time tracing corporate influence. The reward, absent success in pressing a total ban, is being seen by the public as opponents of corporate power and as advocates of the rest of us.
What are the risks and rewards of supporting HB 539? Rewards seem clear. Use of corporate money for campaign contributions, and by implication as a source of political power, is limited. The law is no longer ambiguous, something every should appreciate. Both legislators and reformers can share credit for making progress in the right direction. The principle that corporate influence needs to be limited and controlled is recognized and embraced.
The risks? I suppose there’s a risk that the goal of banning all corporate contributions becomes harder to reach. But since no real progress in that direction has been achieved anyway, it’s a risk in theory only. Perhaps others can fill in other parts of this equation that I’m missing.
All in all, it seems to me to make neither political nor practical sense for progressives to assume a posture so totally opposed to this bill.
And there’s at least one other complicating factor which hasn’t been discussed. Look up the provision limiting contributions to noncandidate political committees and you’ll see an annotation indicating that prior court cases have found contribution limits unconstitutional when applied to committees taking positions for and against ballot measures. But that’s something to consider another day.
The House Judiciary Committee will take up HB 539 again next Tuesday, February 17.
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no feline friday?
It is true that $25,000 spread out among all races would amount to a paltry donation were a corporate PAC to donate to all candidates. However this postulates a false scenario, corporate PACs target their donations, and $25,000 is enough to buy 5-10 influential candidates. So if I were a corporate PAC, I wouldn’t spend my money trying to give to all candidates, but focus on spending it on those cmte chairs that deal with my issues, and then some for the Speaker and President, and maybe some for the Governor so that I get timely signatures/vetoes. Anyway as the law stands officers and employees are entitled to contribute the same $1000 every other flesh and blood person is, so why is it that a corporate person should be entitled to contribute 25 times that? This isn’t the first time that a good idea (better reporting and transparency) has been paired with an awful one (raising the corp PAC contribution limit from $1,000 to $25,000), especially in this context (see the previous THREE years of this bill’s history).
All that being said I understand where you are coming from, and I agree that better reporting and transparency is a good thing, I just wish that taking the good medicine didn’t come with a requirement to swallow cyanide at the same time.
Just to keep things straight here.
The $1,000 contribution limit is not what applies to contributions to candidates.
The $1,000 contribution limit is for contributions to noncandidate committees such as ballot issue committees. Supporters of Stop Rail Now could not give more than $1,000, whether as indivduals or corporations.
The $25,000 limit would only be for money that a corporation or business transfers from its general bank account to its own political committee for campaign/election purposes.
The corporation could make $25,000 available to its own political committee, and that can be done only once every two years, and it could only give $1,000 to a pro-rail group, for example.
That committee, in turn, can’t actually contribute more than anyone else. Limits to candidates are $6,000 for four-year statewide offices (gov/lt.gov), $4,000 for 4-year non-statewide offices, and $2,000 to candidates for offices with 2-year terms. Those limits apply across the board.
Thanks for breaking that down, I understand all that, but I doubt many other people had all the math at their fingertips. The inequality remains since, as a private citizen, if I were to start my own PAC then I can only contribute $1000. Yet if I incorporate suddenly I can pump in up to $25,000 from my corporate treasury? Now on top of the contribution limits that apply to me personally, I have effectively doubled the amount I can spend on buying political influence since I have another $25,000 waiting in the wings that can be spent as if I never contributed a dime.
But as an individual, you don’t have to start a PAC to make contributions. You can do it as an individual.
And an individual’s total contributions are not subject to the $25,000 limit. Or any limit, for that matter, although I think there is an upper limit for federal elections.
So a rich person would, under the terms of this bill, be able to spend far more than a corporation as long as they were using their own money.
I’m not at all sure that this bill makes enough improvement to be worth supporting. Specifically, there is not only one corporation in Hawaii–there are thousands of corporate entities to which this bill applies. Although they have separate interests, most also have common ones–and those are often not things in the interest of the general public (like this year’s bills to limit employers’ requirements to provide health care for their employees). Even with a $25,000 PAC limit, this bill can release huge amounts of money into the election process, helping to ice out good candidates who don’t happen to take a “pro-business” viewpoint.
The greatest danger of corporate money, from my point of view, is not the ability to buy specific favors (although Pacific Business News’s report that the Superferry was the highest contributor to political campaigns has to make one wonder), but that it allows businesses to choose our candidates. No collusion is necessary among businesses. Each non-candidate committee is legitimately set up to support candidates that think like it’s sponsors do. Most of the rest of us don’t have enough money to off-set that influence. Once enough businesses, acting separately, use their $25,000 in that way, they don’t have to buy votes, since those who are elected already lean toward their outlook.
A second problem is that it results in popular political apathy. We have the lowest (or nearly the lowest) voter turn-out in the nation; people have little faith in government; few are willing to donate to candidates or work for them; people who spend a year or two testifyiing at the legislature most often retreat again into apathy. The amount of money this bill would allow into the political system would do little to allieviate these problems
The only real solution, of course, is publicly funded elections—but the legislature seems poised to slow down even the experiment on the Big Island that they voted for last year!
I’d also like to point out that although one may think that $25,000 is “not meaningful,” it would make Hawaii among the 16 states in the union who allow the most corporate money into their elections! While 21 states ban corporate money completely, thirteen others limit corporate PAC contributions to between $500 and $10,000 in a two-year cycle. Hawaii is definitely in the minority on this.
Finally, the federal government banned corporate treasury contributions for these reasons:
The States provide special advantages to corporations to allow them to do business. The profits from that advantage are not properly used to influence elections.
The ban “was and is intended to prevent corruption or the appearance of corruption.”
The ban prevents the use of corporate treasury funded PACs from becoming “conduits for circumvention of valid contributions limits.”
[See Federal Election Commission v. Beaumont, 539 U.S. 146 (2003)]
Is a little corruption really OK?