PAC by Popular Demand

Critics Say ALLC's Reforms Won't Stem the Tide of Big Money



illustration by Doug Potter

Many voters, asked to identify the source of the special-interest money that stinks up American politics, would likely point first to corporate-sponsored political action committees (PACs) -- whose unabashed uses of cash for political access are well-known. Not so long ago, PAC lobbyists could be found in the offices of Austin city councilmembers, voicing the opinions of their clients, and dropping off checks for the politician's campaign fund while they were in the neighborhood. City ordinances now bar lobbyists from approaching the mayor and councilmembers in the halls of government, but the perception remains that PAC contributions give corporations much more political influence than rank-and-file voters.

The campaign finance reform proposed by the group called Austinites for a Little Less Corruption (ALLC), which is the city charter amendment listed as Proposition One on the Nov. 4 municipal ballot, is designed to address this political inequity by curtailing PACs' fundraising and spending power in Austin elections (see box). The idea, as ALLC member and Texans for Public Justice spokesperson Craig McDonald explains it, is to "put the janitor on the same level with the CEO of Texas Commerce Bank."

Critics of the reform measure, however, say that as odious as it may seem for PACs to stuff politicians' wallets with corporate money, tying the PACs' hands will have far worse consequences on the political system. If you dam the river of corporate money flowing into politics through PACs, they say, it will only burst into dozens of unregulated streams which no one, including candidates, will be able to control. There's a loophole, they say, and it lies in the PACs' ability to shoot their money through other avenues (by such means as re-organizing as a non-profit) to avoid any campaign finance reform road block.

Political consultants even hint that corporations are secretly pleased at the reform. "How come, if this is supposed to eliminate special interests from politics, they haven't mounted a big campaign against it?" asks local consultant Dean Rindy.

Indeed, PAC administrators contacted for this article were not exactly shaking in their boots over the proposed reform. Most had not even bothered to read the provisions of the amendment because they didn't believe a city charter could seriously affect the way they do business.

"Austin's pretty damn strong," said Brown Maroney and Oaks Hartline (BM&OH) Electo PAC treasurer Ace Pickens when first interviewed by this paper, "but I don't think they can override state law that permits us to collect statewide contributions."

Currently, general purpose PACs such as BM&OH Electo are organized under state statute and report their contributions and expenditures to the Texas Ethics Commission. But according to McDonald, the author of the proposed amendment, Austin could force these PACs to organize smaller committees that accept contributions of no more than $100, preventing large, statewide PACs from funneling their powerful resources into political advertising campaigns in Austin.

"They're [PACs] going to say, `We're playing under state rules,'" says McDonald, "but they would have to start a new committee... if they want to play in Austin politics."

When informed of this potential new regulation, Pickens said that the purpose of the Texas statute organizing general purpose PACs is to protect those PACs from the "nightmare" of complying with thousands of individual city campaign finance ordinances. Pickens said he doubts that the courts will allow a city ordinance to supersede state law.

"I do not believe the City of Austin can limit the spending of PACs that are not associated with a particular candidate," said Pickens, meaning that city interference in PACs' fundraising methods would represent a de facto infringement on PACs' constitutionally protected right to promote candidates or issues through advertisements.

Howard Falkenberg, president of the executive committee for the Real Estate Council of Austin's (RECA) Business M/PAC, had to send out for a copy of the proposed amendment when contacted for this story. He said that as a "measures" PAC, or one which campaigns more in support of issues than for particular candidates, the RECA Business M/PAC was not likely to be strongly affected by limits on candidate contributions. He then discovered, however, the provision which prohibits "expenditures by corporations, associations, and labor unions for the purpose of supporting or opposing a ballot item or placing an item on the ballot by petition...." It was explained to Falkenberg that, according to McDonald, a PAC would have to show that any money it spent on a public question did not come from the above-mentioned sources, and furthermore that any money spent on indirect advertising for candidates during campaigns would have to be raised in $100 increments.

"He [McDonald] knows what he intends," said Falkenberg, "but this will take some court interpretation -- it's quite complex in its implications.... We have not considered what the implications for passage will be, and I don't think they are necessarily self-evident. We'll have to follow the interpretation of attorneys and the courts."

Karen Lundquist, general counsel for the Texas Ethics Commission, says that her agency issued an opinion last year which said that state law only preempts city political campaign ordinances if both the city and state law (Title 15 of the election code) cannot be complied with. The courts will likely use this decision as criteria for deciding the legality of the ALLC amendment, Lundquist said, as well as whether undue burdens are being placed on free speech. Since PACs would be able to meet the new Austin regulations by filing local contribution and expenditure reports, the ALLC amendment can probably pass muster on the first question, but no one knows for sure how the courts would rule on the free-speech issue.

The Supreme Court ruled in 1978 that corporations could not be barred from advertising their views on referenda items, which the ALLC amendment seeks to do. But more recently, the court upheld a Michigan statute which prohibits corporations from advertising on behalf of political candidates, and, as the ALLC amendment proposes, prohibits PACs from spending any corporate money not raised under contributor limits on political advertisements. The court acknowledged in the Michigan case that the statute "burdens corporate freedom of expression," but said the state has a compelling interest to prevent corporations' amassed resources from having "an unfair advantage in the political marketplace."

"The availability of these resources may make a corporation a formidable political presence, even though the power of the corporation may be no reflection of the power of its ideas," the court said.

A PAC by Any Other Name

Legal questions aside, is it helpful, or even wise, to limit PAC contributions in Austin elections? Campaign and expenditure reports from previous municipal elections show that only a small percentage of campaign money came from PACs. Local political consultants say that while they don't have exact numbers, they estimate PAC contributions to candidates at less than 20% of the total, possibly between 10 and 15%. However, PAC contributions do tend to come in large chunks of $1,000 or more, and are spent, or "invested," with particular business ends in mind.

Opponents of the ALLC amendment say that corporate political expenditures are a longstanding business practice that won't stop with campaign finance reform, and that PACs are not the worst way for the money to enter the system. For one thing, PAC contributions and expenditures are a matter of public record, consultants say, and for another they allow a candidate, not his supporters, to define the campaign message.

If PAC contributions are limited, Rindy says, the alternative outlets for corporate campaign expenditures will be "third-party" or "individual" PACs, which, while forbidden to officially sponsor candidates, can circulate campaign "information" directly to voters.

"Rather than having open, honest PACs which are subject to regulation, you will get quasi-PACs, organized as nonprofits under IRS 501(c)3, that are thinly disguised political entities organized for the purpose of waging propaganda campaigns in the guise of educating the public on an issue," says Rindy.

A perfect example of this political tactic is the so-called "voter's guide" produced by the Christian Coalition, Rindy points out, which as a "public service" publishes information about how well candidates' records have served the Christian political agenda. Rindy believes that the campaign finance reform proposed in the ALLC amendment invites a proliferation of this type of propaganda. In Austin, PACs sponsored by nonprofit coalitions such as RECA would be limited to giving $100 to individual candidates, but RECA itself, because it is not an official political organization, could still spend unlimited amounts on advertising, so long as it did not do so in conjunction with any candidate.

"It's going to diminish the role the candidate plays, and increase the role of third-party expenditures," agrees consultant David Butts, who says that consortiums of wealthy individuals like Jim Bob Moffett could become the vehicle by which campaigns are financed under the reform proposal. Businesses "will find a way to bring their money to bear on elections, directly or indirectly.... I think it is more important that the candidates be the primary focus of their message," Butts says.

Mayor Kirk Watson, who, like Councilmember Gus Garcia opposes the ALLC amendment in favor of single-member district reform, says that widespread media coverage is fundamental to winning elections in Austin, and if candidates are hamstrung financially by contribution limits, their views will be drowned out by the advertisements of corporate sponsors. Consultant Alfred Stanley concurs, offering his client Jackie Goodman as an example of a worthy politician who under $100 contribution limits would have been unable to respond to negative campaigning launched against her by local nonprofit groups.

PAC officials hesitate to say that their committees would crank up the media mills if the reform measure passes, but all hinted of a potential rise in individual and "third-party" campaigning. Within their comments lurks the shared sentiment that although the intent of reform is to take away "ghetto blaster" politicking, amplified speech rouses voters, and businesses will continue their efforts to be heard. Corporate and business speech may merely be transformed from a knowing wink and whisper in a candidate's ear to a din of partisan billboard and TV ads over which candidates have no control.

For example, Small, Craig, and Werkenthin PAC treasurer Thomas Sedberry said that if his PAC is restricted from giving to candidates directly, its members will be encouraged to participate individually in municipal elections. "It might be the healthiest thing that ever happened to local politics," says Sedberry, but he cautions that "a more democratic system is not necessarily efficient," a point Falkenberg elaborates on more specifically: "We could create a cacophony of voices, instead of allowing candidates to focus their message."

"If people want to support a particular candidate, and they feel strongly about their views, they can always exercise their freedom of speech," says Pickens, who, like RECA's Falkenberg, admits that a "proliferation of individual expenditures" would not be the ideal way to promote campaign messages, but says there is no denying that "the net effect cannot be erased."

Supporters of the ALLC amendment contend that naysayers are overestimating the appeal and efficacy of indirect, third-party expenditures in Austin elections. Businesses will not favor such "soft money" donations because they do not represent solid political investments, McDonald says.

"People are trying to give doomsday scenarios that I don't think are going to happen. We think we've found a way that corporations can't influence elections efficiently or effectively.... We're not saying that we've stopped all the evil money in the world, but we've definitely knocked a leg out from under them [corporations]," says McDonald.

McDonald argues that it is illegal under Texas' election law for advertisements sponsored by incorporated, non-political entities to name candidates which the groups oppose or support, thereby reducing the potency of their propaganda machines. However, the Texas Ethics Commission's Sarah Woelk points out that at the national level, litigation to prevent "right-to-life" groups and labor unions from implicitly endorsing candidates has repeatedly failed in court. "Educational" campaign material that lists candidates favorable or unfavorable to a group's point of view can be said to violate the "spirit" of the law, says Woelk, but in the absence of key phrases such as "vote for" or "re-elect," the Supreme Court has allowed such advertisements to be considered "non-political" speech.

However, Austin lawyer Ed Shack, who consults on campaign finance issues for corporate PACs, notes that even though the national election law has been challenged successfully, the Texas statute itself has not. That means that, under current state law, political chairpersons in Texas who name candidates in ads in either a positive or negative manner would risk being convicted of a felony and serving jail time.

"No one I know in the business world wants to take a chance on a felony," Shack says. Shack concedes that following reform, corporate interests will inevitably begin testing the law, but says that this would be "a couple of steps down the road," not an automatic response to limits on PAC expenditures.

Proponents of reform also point out that third-party campaigning has always been an option for wealthy constituents, but that big-money contributors prefer to utilize PACs for a reason: They are more directly linked to a candidate and more effective. Doug Mitchell, a political observer in Montana who has run campaigns in that state, says he doesn't buy the argument that "one door is going to open wider just because you've closed another one."

"If they can do it [use third-party campaigning] today, I don't know why they'd do it more after reform," says Mitchell. "It's a vehicle they've always had."

A Little Less Big Money

Among the leaders of the smaller, local PACs which traditionally line up against big business, reaction to the ALLC amendment is a mixture of hope, uncertainty, and skepticism. Save Our Springs (S.O.S.) Alliance activist Mark Yznaga says he believes grassroots and environmental groups have little to lose through the reform, even if its results are still unproven.

"I'm more afraid of what I know than what I don't know," says Yznaga. "The situation now doesn't work, so we're up for change."

Yznaga's opinion is echoed by Mark Lewis, a staff director for the national environmental organization Clean Water Action, who fought for the successful passage of $100 contributor limits in Colorado last year. "No campaign finance reform is perfect," says Lewis, "but anything is better than the current system."

However, Austin Sierra Club political chairperson George Avery is less optimistic. "I think it's a feel-good thing," Avery says of the reform. "If I was a major corporation, I'd probably circulate one of these things every 10 years or so."

Debating the relative merits of the measure as he talked, Avery first pointed out that business PACs would probably be glad to see contributors like himself, who typically give $250-$350 to environmentally friendly candidates, restricted in their giving. But then Avery envisioned those local enviros pooling their resources into one big "E-PAC" (which would actually be a nonprofit group), and said that such a consolidation might be healthy for the environmental lobby.

Asked if he thought environmental dollars could match up with those of his corporate adversaries, Avery said that now "things are a pretty even balance," and probably would remain so under the proposed new rules, if the enviros pulled together. Making reference to the maxim, "If it ain't broke, don't fix it," Avery concluded by saying, "If they're going to risk breaking it, I guess we'll adjust."

Consultant Butts, whose clients include many candidates who have run on environmental platforms, predicts the movement will be in worse shape under the reform than Avery thinks. "Socially and politically conscious dollars cannot match up with those who feel that the city council should be taking care of business," says Butts. "We are handicapping ourselves, making the playing field uneven, and it's not in our favor."

"Elections will be by and for rich people," predicts Carol Guthrie of AFSCME's PEOPLE PAC. "For the little folks, it's goodbye; they've been stamped out."

But proponents of similar campaign finance reforms in other states say they have been encouraged by the results. In Montana, where PAC contributions to statewide campaigns were capped in 1994, analyses performed by the University of Montana clearly show that PAC contributions to candidates were cut in half by the new restrictions. Unfortunately, such a conclusion is tautological, proving only that PACs are complying with the law. It does not examine whether special-interest money is affecting elections in other ways, although the finding that the total number of PAC contributions has not declined may indicate that special interests are continuing to work within the system and not quickly resorting to third-party campaigning. The study also found that PAC contributions to the two political parties jumped after contributor caps were imposed, leading the researchers to the optimistic conclusion that contributions were dispersed "in more equal fashion, lessening special interest."

"The change has been very positive in Montana," reports C.B. Pearson, the state Common Cause director in that state. "We're seeing a better separation between the private dollars and the elected official." Pearson adds that politicians who initially opposed the reform are actually beginning to like the new rules.

"If candidates for legislative office in Montana don't go out and knock on doors, they ain't going to win. Period," says Mitchell.

Still, as Rindy points out, the cost of financing a state legislative race is smaller than running a city council race in Austin, and doesn't make for a good comparison. The key to reforming campaign finance in Austin, say Rindy, Mayor Watson, and other ALLC amendment opponents, is to first bring the costs of campaigning down.

Further complicating the picture is the view held by many experts that Austin politics simply aren't that dirty, and there is no compelling reason to experiment with unproven reform of a system that is electing good leaders to office. Avery, along with Falkenberg and RECA executive director Amy Barbee, say that politically, Austin is still a small town, and money isn't vital to gaining a councilmember's ear.

ALLC member Brian Rodgers definitely disagrees with that. Pointing to highlighted passages from newspaper articles he keeps in a binder, Rodgers shows where political consultants have admitted that corporate interests are looking to buy access through campaign contributions. And C.B. Pearson adds that it's better "to put a face on" big-money interests by forcing them to show their hand through political advertisements than let them quietly cozy up to candidates.

"The best we can do as reformers is to make the official process as fair as we can, and that includes giving ordinary citizens an equal voice," says Pearson.

The unfortunate reality, respond the consultants, is that the voting public is not inclined to regularly seek out opportunities to speak to their elected representatives, nor are they likely to notice candidates who cannot speak to them through the mass media. If noisy, simplified campaign messages are what it takes to get voters to the polls, they say, someone will find the money and the means to deliver the goods.

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