Fred Wertheimer: “Who Shot John: The Story of How $777,600 Contribution “Limits” Ended up in The Omnibus Bill”
Who Shot John: The Story of How $777,600 Contribution “Limits” Ended up in The Omnibus Bill
By Fred Wertheimer | HuffPost | 12/15/14
Campaign finance laws are generally enacted to solve problems and deal with corruption scandals.
The Federal Election Campaign Act Amendments of 1974 (FECA) followed the Watergate scandals of the 1970s. The Bipartisan Campaign Reform Act of 2002 (BCRA) followed the soft money scandals of the 1990s.
Last week, just the opposite occurred.
Campaign finance provisions that create problems were snuck into the Omnibus Appropriations bill and they will inevitably result in corruption scandals.
The provisions increased the statutory federal limits on the amount that a single individual can give to the committees of a national party from $97,200 to $777,600 per year – an incredible eight fold increase in the federal statutory contribution “limits.”
For politicians, this was their own Great Train Robbery.
The only individuals who can give these enormous amounts are multimillionaires and billionaires. The new contribution limits will allow federal officeholders to solicit huge donations and will allow donors to receive government influence in return for their contributions.
During the next two years, for example, the President, the Senate Majority Leader, the House Speaker and other congressional leaders and powerful members of Congress will be able to solicit contributions of up to $1,555,200 from an individual donor and $3,110,400 from a couple for their respective national parties.
These increases in the party contribution limits never could have withstood public scrutiny and they never could have passed Congress if there had been any kind of normal legislative process. That of course is why the provisions were hidden from the public until the very last minute and then buried in a massive, must-pass bill – beginning on page 1,599 of the 1,603 page Omnibus bill.
It took just a little while to determine who was responsible for this extraordinary rip off of the American people. But thanks to the excellent work of campaign finance reporters who dug out the story, the fog is now lifted on who did the dirty work.
According to published reports, Speaker John Boehner and Senate Majority Leader Harry Reid were the driving forces behind the major changes contained in the campaign finance provisions, which were negotiated by Boehner, Reid and their staffs.
According to an article in The New York Times by Nick Confessore (December 13, 2014):
The secret negotiations that led to one of the most significant expansions of campaign contributions in recent years began with what Republican leaders regarded as an urgent problem: How would they pay for their presidential nominating convention in Cleveland in two years?
The talks ended with a bipartisan agreement between Senate Democrats, led by the majority leader, Harry Reid of Nevada, and House Republicans, led by Speaker John A. Boehner of Ohio, that would allow wealthy donors to begin giving more than $1 million every election cycle to each party’s national committees.
The campaign finance provisions never could have gotten into the Omnibus bill without the support and approval of Senate Republican Leader Mitch McConnell, the nation’s leading opponent of the campaign finance laws. Earlier, Senator McConnell had pressed for a different campaign finance provision being placed in the Omnibus bill that was not accepted and that was far less damaging then the provisions that ended up being inserted in the bill.
Thus, an unholy “bipartisan” alliance of Speaker Boehner, Majority Leader Reid and Republican Leader McConnell resulted in the most destructive and corrupting campaign finance legislative provisions ever passed by Congress.
These three congressional “leaders” entered into a Faustian bargain that will have the future result of big donors buying corrupting influence and federal officeholders engaging in political extortion to raise massive contributions. Reluctant donors should be on notice: they are coming after you.
According to an article in The Washington Post by Matea Gold and Tom Hamburger (December 10, 2014):
House Democratic leaders knew that budget negotiators were considering lifting party contribution caps, but the final limits ended up much higher than anticipated, said Rep. Steve Israel (D-N.Y.). When House Democrats saw the final text early Wednesday, “it caused considerable consternation,” he said.
Reid’s campaign finance adviser, Marc Elias, also played an important role regarding the campaign finance revisions that ended up in the Omnibus bill.
According to an article in POLITICO by Ken Vogel (December 12, 2014):
A powerful Democratic lawyer helped craft a provision that was slipped into a year-end spending bill allowing political parties to raise huge new pools of cash – including some for legal fees that are likely going to be collected by his own firm.
Marc Elias, partner at the Seattle-based law firm Perkins Coie, was called in to advise outgoing Senate Majority Leader Harry Reid’s aides on the campaign finance proposal on Tuesday, as they negotiated it with representatives from House Speaker John Boehner’s office, multiple sources confirm.
In addition to being a campaign finance adviser to Senate Majority Leader Reid and to Senator Charles Schumer, Elias is the lawyer for the Senate Democrats’ fundraising arm, the Democratic Senatorial Campaign Committee (DSCC).
The structure of the campaign finance provisions in the Omnibus bill indicates the role played by Majority Leader Reid in their development.
When Speaker Boehner described the provisions last week, he emphasized the need for additional contributions to pay for party conventions, but Boehner did not focus on the two other honeypot provisions in the legislation, which reportedly were the focus of Majority Leader Reid.
According to the POLITICO article:
A senior Democratic congressional aide told POLITICO that Reid’s chief of staff, David Krone, oversaw the negotiations for Reid’s team, but that the office called in Elias as an adviser “to try to get our side something as well.” Elias, who represents the senator and his leadership PAC, was tasked with figuring out: “If Republicans want limit increases, how could we structure that provision to help some of our priorities?”
According to The New York Times article:
Democrats demanded that the added provision also allow all party committees, including the House and Senate campaign committees, to solicit additional large contributions to cover the costs of buying, renting or renovating real estate. The Democrats’ campaign committee and its leaders were not consulted about the request, a spokesman said.
“The D.S.C.C. was not involved,” said Justin Barasky, a spokesman for the committee.
Democrats also asked for a provision that would allow triple the normal amount for contributions earmarked for legal costs.
[Note that the lawyer for the DSCC was involved in negotiating the campaign finance provisions for Majority Leader Reid.]
The campaign finance provisions create three new “separate” committees to receive additional contributions for the DNC (Democratic National Committee) and RNC (Republican National Committee), and two new “separate” committees to receive additional contributions for the DSCC and DCCC (Democratic Congressional Campaign Committee), and the NRSC (National Republican Senatorial Committee) and NRCC (National Republican Congressional Committee).
The new committees are:
- a separate convention funds committee for the DNC and the RNC to pay for the national conventions;
- a separate building funds committee for each of the three existing committees of each a national party to pay for buildings and related expenses; and,
- a separate legal funds committee for each of the three existing committees of each party to pay for the costs of recounts and “other legal proceedings.”
Each new “separate” committee can receive contributions of up to $97,200 per year from an individual donor. Additionally, each of the existing three committees of a national party can accept individual contributions of $32,400 per donor, per year that are already authorized.
The total: $777,600 per donor, per year for the committees of a national party.
According to a Huffington Post article by Paul Blumenthal (December 11, 2014):
Aides on the Hill said that the proposal did, indeed, come during negotiations between House Republicans and Senate Democrats, who tapped election lawyer Marc Elias to handle the discussions. But it was initially presented as a “small increase in the caps for the convention,” according to one lawmaker.
That was “something we could have lived with,” said the lawmaker, who requested anonymity to speak freely about the drafting of the must-pass bill. But when the bill’s final language came out, “it became not just a small increase in the caps for conventions but a large increase in caps for many other things.” (Emphasis added)
“It was not just a surprise but a shock to House Democratic leaders,” said the lawmaker.
The argument has been made that the campaign finance provisions will strengthen the ability of the parties to compete with spending by outside groups. But, the reality is you cannot strengthen political parties by allowing the parties to receive massive contributions that corrupt our government and our democracy.
The argument also has been made that the increased party limits will reduce anonymous giving. This is an illusion. The reality is that any donor who wants to be anonymous can continue to be anonymous by giving their “dark money” contributions to 501(c) nonprofit groups who are spending money on elections.
The Building Fund
The building funds provision came out of nowhere – a bolt out of the blue. The provision serves the immediate needs of the DSCC and was produced out of negotiations that involved the Majority Leader Reid and the DSCC’s lawyer.
Building funds were used as a way to circumvent party contribution limits prior to the enactment of BCRA in 2002 which shut down this major loophole.
According to The Huffington Post article:
Facing a tough election landscape this year, the Democratic Senatorial Campaign Committee had to go deep in the red, ending the [2014] electoral cycle with roughly $20 million of debt. But not all that money has to be paid off now. And a rider on the omnibus spending bill for 2015 — a rider otherwise deplored by many Democrats — could mean help is on the way.
About $5.2 million of the DSCC’s debt wasn’t spent to sponsor more advertising or get out the vote. Rather, it went to purchase a new building to house the committee’s activities in the future.
Thus, in deep debt, the DSCC can now use the building funds provision to pay off its debt incurred in purchasing a new building earlier this year with $97,200 per donor contributions.
The language in the building funds provision indicates that the provision was written with the DSCC debt in mind, as it explicitly authorizes the use of the new contributions to pay for “expenses for obligations incurred during the 2-year period which ends on the date of the enactment of this paragraph.”
The building fund provision helps to bail out the DSCC at the expense of the interests of the American people.
Legal Expenses
The legal expenses provision will allow each of the six national party committees – three Democratic Party and three Republican Party committees – to raise checks of $97,200 per donor, per year to cover various legal expenses.
According to the POLITICO article:
Elias’ firm could benefit from a section of the new provision that codifies a new fund with higher contribution limits for legal and other fees within the Democratic National Committee, the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee. Perkins Coie represents all three committees. It helps them — and many of their candidates — navigate complicated federal and state election and tax laws, which is lucrative work.
The provision authorizes the funds to be used for recounts and “other legal proceedings.” This leaves room for broad interpretations about the “legal” expenses that can be covered.
The language of both the building funds and the legal expenses provisions create the opportunity for misuse of the new $97,200 contributions. According to The Washington Post article:
Some of the language in the bill could also give the parties broad leeway in how to use the new funds, depending on how the FEC interprets the measure.
The bill says that donations to recount committees could be used for “other legal proceedings,” a generic phrase that could encompass many activities. The creation of separate building-fund committees could give parties an opportunity to spend contributions on a variety of infrastructure-related purposes, as they did before McCain-Feingold.
Convention Funds
Speaker Boehner last week stated that the campaign finance provisions placed in the Omnibus bill were necessary to provide private funding for the conventions after the parties lost public funding for the conventions.
However, the parties lost the public funds for conventions after Speaker Boehner and House Republicans repealed the convention funding – ostensibly to provide additional funds for pediatric cancer research. (The Republican and Democratic parties had no problem accepting public funds to finance their past 10 presidential elections, as they voluntarily applied for and used public funds for this purpose.)
At the time of the House vote, members of Congress and reform groups opposing the repeal provision challenged the claim that the convention funds would actually be used for pediatric cancer research. Reform groups stated that this was being used as cover by House Republicans to get rid of public funding for conventions.
Opponents of the repeal pointed out that the legislation as written did not appropriate any additional funds for the research. They also pointed out that the convention public funds could not reach pediatric cancer research unless the statutory caps adopted by Congress to limit government spending were increased, which was not about to happen.
Speaker Boehner and his House Republican colleagues created the vacuum in convention funding that the Speaker is now claiming as justification for the additional contributions.
However, you cannot justify allowing federal office holders and party officials to solicit corrupting contributions of as much as $194,400 per donor over the next two years to pay for the 2016 national conventions on the grounds stated by Speaker Boehner, or on any grounds.
The case made by Speaker Boehner for the convention funding is the politician’s equivalent of the defendant who killed his parents and then pled for mercy on the grounds he was now an orphan.
House Speaker Boehner, Majority Leader Reid and Republican Leader McConnell have done a grave disservice to the American people.
By inserting the campaign finance provisions into the Omnibus Appropriations bill, they have created a new system of legalized bribery in which massive contributions to the parties can be used by very wealthy donors to buy influence with and results from federal officeholders.
When President Obama signs the Omnibus Appropriations bill into law he will join the three congressional “leaders” who inserted the provisions into the bill in this grave disservice to the American people.
