Il modello americano di finanziamento alla politica contrapposto a quello italiano, l’importanza della trasparenza e il ruolo del lobbying. Una “lezione di democrazia” di Tony Podesta, keynote speaker dell’incontro organizzato da Ferpi in occasione dell’Assemblea romana.
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Thank you for inviting me here at this extraordinary time for Italy and for Europe. Italy has a new government. Of course, Italy has had about a government a year since 1948.
But this time is different. The Renzi government’s mandate can be summed up in one word: “change”. Remembering that President Obama’s campaign slogan in 2008 was “Hope and Change,” I know how powerful that word can be.
Change isn’t easy. Not in the United States. And not in Italy.
As you know, this isn’t the first time that the Italian people have demanded change, and the political system has tried to respond.
In the early ‘90s, the “Clean Hands” inquiries triggered a political upheaval. Traditional parties disappeared. The electoral system was overhauled. New leaders emerged. The “Second Republic” was born.
Since then, governments have lasted somewhat longer, and governance became more important than ideology.
While the political earthquake of the ‘90s was triggered by corruption, the central issue today is how effectively public money is spent. Inevitably, public financing of political campaigns is coming under fire. Why should the taxpayers be subsidizing political campaigns? But, if these campaigns depend completely on private donors, how can we keep the special interests from controlling politics and policymaking?
Americans have been struggling with these questions for four decades or more. I can’t offer easy answers. But I can share our experience with campaign finance reform.
The American experience was summed up by two Justices of the US Supreme Court — Sandra Day O’Connor and John Paul Stevens. As they wrote in a decision upholding a campaign finance reform law: “Money, like water, will always find an outlet.”
In a modern, democratic country such as the United States – or Italy – the government makes important decisions. People and organizations of all kinds will try to spend money to elect the officials who make these decisions. And their money, like water, will always find an outlet.
Looking back over the last four decades, campaign finance reform has followed the same pattern, over and over again. When the American people believe that campaign funding and spending has become an intolerable scandal, reforms are enacted.
But then these reforms are, if you’ll forgive my using that word again, watered down. And then, there are new reasons for Congress to enact new reforms.
In short, campaign finance reform laws end up exemplifying another law: “the law of unintended consequences.” No initiative ever turns out as originally planned. This is something you should remember as you reform your political system. Good intentions do not necessarily translate into good results, especially when money meets politics.
Watergate and Reform
For most of American history, campaign finance was like the Wild West – without a sheriff. As recently as the 1960s and 70s, Herman Talmadge, a Democratic Senator from Georgia used to collect cash contributions from his supporters and keep the money in a large inside pocket of his overcoat. In 1979, the Senate Ethics Committee investigated his use of campaign money. In his memoirs, published in 1987, Talmadge wrote, “I wish I’d burned that damned overcoat.”
And then came Watergate. Watergate wasn’t just a burglary and a cover-up. It was a financing scandal. “Deep Throat” — the FBI official who gave the journalist Bob Woodward important tips to uncover the scandal – famously advised him, “Follow the money.” The money trail showed that the Watergate break-in and, later, the “hush money” were financed with secret campaign contributions.
In 1974, in the wake of Watergate, Congress passed amendments to bolster a relatively weak law enacted two years earlier.
The 1974 amendments were the strongest and widest-ranging campaign finance reforms in American history to that point. These amendments restricted the influence of wealthy individuals by limiting the dollar amounts for individual donations to candidates for President and Congress. And they provided public financing of presidential campaigns, together with spending limits for candidates accepting public financing;
Unintended Consequences: The Growth of PACs
But political money, like water, will find an outlet. By restricting the amount of money individuals could contribute directly to congressional campaigns, the campaign finance reform had an unintended consequence: the growth of the Political Action Committees. PACs pool campaign contributions from their members and donate these funds to campaigns.
Most PACs are sponsored by corporations, trade associations, and labor unions. Because PACs have higher contribution limits than individual donors, political money went to the PACs, not directly to the candidates.
Currently, about 4,000 PACs contribute money to campaigns for federal office and they account for about 23 percent of all contributions to candidates for the US House and Senate.
Equating Campaign Spending with Free Speech
Almost as soon as campaign finance reforms were put in place, they were challenged from the political right and left. New York Senator James Buckley, a conservative Republican, and former Minnesota Senator Eugene McCarthy, a liberal Democrat, filed a lawsuit claiming the law was unconstitutional.
In its decision, the Supreme Court ruled that limiting spending by candidates, their committees and independent expenditures imposed “direct and substantial restraints on the quantity of political speech.”
This ruling established the idea that money equals speech, protected under our First Amendment. That idea that has since been used to weaken other restrictions on campaign contributions and spending.
Another Unintended Consequence: Soft Money = More Spending
After 1976, political campaigns became increasingly dependent on “soft money”: money without a specific purpose given to political parties. Because this money wasn’t directly used to support a specific federal candidate, it wasn’t regulated.
Overall, total presidential campaign spending increased from $66.9 million in 1976 to $343.1 million in 2000.
A New Campaign Finance Reform: McCain-Feingold
Once again, there was a growing public demand for campaign finance reform. The next major law co-sponsored by Sen. Russ Feingold, a Wisconsin Democrat, and Sen. John McCain, an Arizona Republican, was enacted in 2002.
The law, known as McCain-Feingold:
- Banned national political party committees from soliciting or spending “soft money”; and
- Barred issue ads mentioning a candidate’s name — known as electioneering — that were financed by corporate or union money within 60 days of a general election.
Once again, political money, like water, found an outlet. Activity in tax-exempt nonprofit groups outside the parties increased, because their spending wasn’t regulated.
Weakening Campaign Finance Reform: Citizens United and other Court Decisions
And, once again, the Supreme Court watered down campaign finance reform. In 2007, the Supreme Court struck down McCain-Feingold’s ban on issue ads that did not expressly support election or defeat of a candidate.
In 2010, in Citizens United v. FEC, the Supreme Court ruled that the First Amendment protected independent expenditures of corporations and unions and allowed them to advocate for or against candidates, such as funding political ads within 60 days of an election.
While still not allowed to contribute directly to federal candidates and national party committees, corporations can now fund political activity and advocacy from their treasuries.
Russ Feingold lost his Senate seat in 2010 to Republican Ron Johnson, who did not bind himself to the limits on campaign spending that Feingold imposed on himself. And John McCain lost the Republican presidential nomination in 2000 to George W. Bush and the presidency in 2008 to Barack Obama. Unlike McCain, Bush and Obama refused public financing and spending limits.
Unintended Consequence: The Growth of Super PACs
The Citizens United ruling gave rise to Super PACs. Super PACs can raise unlimited money from individuals, corporations or unions and can expressly advocate for a candidate.
While Super PACs aren’t supposed to coordinate with candidates or their campaigns, former campaign staff frequently run PACs that generally support that candidate.
Partly because of Super PACs, campaign spending in the 2012 presidential election reached unprecedented levels. Super PACs also extended the Republican primary season by keeping candidates such as former Speaker Newt Gingrich and former Pennsylvania Senator Rick Santorum in the race long after Mitt Romney had become the clear frontrunner.
Weakening Campaign Finance Reform: Wealthy Donors Can Give More Money
Meanwhile, it’s harder and harder to build barriers against political money.
On April 2, 2014, the Supreme Court struck down aggregate limits on how much an individual can contribute in a two-year period to all federal candidates, parties, and political action committees, combined.
While individuals are still limited in how much they can give to any single candidate or party directly for each election, now an individual can give the maximum allowed contribution amount to each and every candidate.
This decision was widely reported as benefiting large donors who can give more money than before. But some of us may not appreciate that we can no longer tell fundraisers, “Sorry, but I’m maxed out.”
Public Financing Declines
In the US as in Italy, public financing of political parties is declining. 2012 was the first presidential election since President Nixon’s re-election in 1972 when neither major party candidate accepted public financing and the spending limits that come with it. Instead, spending by the presidential campaigns topped $2 billion (Obama, $1.123 billion; Romney $1.019 billion). On top of that, Super PACS supporting Romney spent $292 million, and Super PACS supporting Obama spent $258 million.
With the growth of Super PACs – and with President Obama creating an independent apparatus — the formal party organizations are relatively less important. Instead, independent organizations are setting the agenda for the national debate.
Disclosure Requirements for Lobbyists
Now you may be wondering, what about lobbyists?
Unlike campaign finance, where the water has to find a new outlet, there are no limits on the amount spent on lobbying. Corporations, organizations, and individuals can spend as much—or as little, unfortunately — as they want on lobbying activities.
Total spending on lobbying has more than doubled in the past 15 years, from $1.46 billion in 1998 to $3.23 billion in 2013—-and that’s down from $3.55 billion in 2010.
Lobbying Disclosure Act
As with campaign finance, lobbyists must register and must disclose their spending and activities. For many years, lobbying registration was lax and infrequently observed. In 1995, Congress passed the Lobbying Disclosure Act, requiring lobbyists to file reports twice a year to be disclosed publicly and with the Congress. These include:
- Estimates of their income and spending;
- The names of individuals, agencies and houses of Congress lobbied;
- And issues lobbied to be disclosed publicly with the Congress.
As we’ve seen before, scandal begets reform. After the Jack Abramoff lobbying scandals of 2006, Congress strengthened the Lobbying Disclosure Act to require disclosure every three months, also including:
- Previous government positions;
- Federal campaign contributions and donations benefiting government officials
- And more stringent criminal penalties for noncompliance.
Foreign Agents Registration Act
For lobbyists representing foreign governments, the disclosure requirements are even more stringent.
Enacted in 1937 to combat Nazi sympathizers, the Foreign Agents Registration Act requires private individuals advising or representing a foreign government or political party before the US government or public to register with the US Department of Justice.
“Agents” must disclose their home address, year of birth, country of citizenship, all political contributions, the US officials or media they contacted and the topics they discussed, as well as how much they earned and how much they spent on behalf of a foreign client. Also, any “informational materials” disseminated broadly must be submitted to the Department of Justice within 2 days.
Lessons for Italy
So what does this all mean for Italy? Here in Italy, the strongest demand for change comes from the people themselves. The combination of top-down awareness and bottom-up expectations creates a rare opportunity.
The inevitable nexus between politics and money – which Rome has known for 2,500 years – is coming under strict scrutiny. People want to know: where the money comes from; who gets the money; and how they spend it.
Regulation of campaign financing should be clear, understandable and, above all, enforceable. It should create a system of transparency and accountability, not rigid limitations that would not be respected anyway.
Otherwise – and this is the lesson to be drawn from the American experience – the law of unintended consequences will inexorably kick in.
Political money, like water, will find an outlet. But we need to regulate the flow of funds so they do not drown our democracies.