Max Yoder

This is an excerpt from a book that I wrote in college. My reason for writing the book was to try to break down—in clear and understandable terms—the core problems facing America, so that my friends and I could do something about it. Two years later, I agree with most of the book, but some of my viewpoints have changed with time and information. One part that I still strongly support is the following section on campaign finance and the need for its reform.

Based on Congressional records, one could thought-provokingly argue that money does not just talk—it screams. Empirically speaking, the more fundraising dollars candidates have to spend; the more votes they tend to get.[5] While the candidates with the most money are not guaranteed any victories, outspending the lot puts the odds staggeringly in their favor. Recent elections have only reinforced this trend: November 5, 2008 found 93 percent of the victories in the House of Representatives and 94 percent of the victories in the Senate went to those candidates who had outspent their competition throughout their campaigns.[6]

In this world of high-cost, high-stakes politicking, fundraising is, necessarily, first priority. And even if the candidates are fortunate enough to win their seat of choice, this priority does not disappear: “[T]he congressional money chase,” writes National Journal, “has become an unending marathon” that finds candidates and incumbents constantly looking for that next donation in preparation for the fast-paced election cycles that face them.[7]

It is during this race to outspend and financially dominate one’s current or prospective opponents that the legislator’s priorities become compromised. The bulk of their donations, in reality, do not come from the people they represent. In fact, most of the general public doesn’t even donate to federal elections; a stupendously low percentage of our population—one-fourth of one percent—gives more than $200 to federal candidates and their parties.[8] So who, or what, gives?

In truth, the overwhelming majority of donations come from Political Action Committees (PACs) and large contributors, such as national or multinational corporations and their well-to-do owners.[9] These PACs, corporations, and owners often “have a direct material interest in what the government does or does not do. Their contributions, most of them made directly or indirectly by business, provide certain people a form of leverage and ‘access’ not available to the rest of us.”[10] This access and leverage is used to promote the personal interests of the donor or donors. Here, a PAC chairman explains why his corporation has a PAC:

The PAC gives you access. It makes you a player. These congressmen, in particular, are constantly fundraising. Their elections are very expensive, and getting increasingly expensive each year. So they have an ongoing need for funds… . It profits us in a sense to be able to provide some funds because in the provision of it you get to know people, you help them out. There’s no real quid pro quo. There is nobody whose vote you can count on, not with the kind of money we are talking about here. But the PAC gives you access. Puts you in the game … You know, some congressman has got X number of ergs of energy, and here’s a person or a company who wants to come see him and give him a thousand dollars, and here’s another one who wants to just stop by and say hello. And he only has time to see one. Which one? So the PAC’s an attention getter.[11]

Some attention getting is more effective than others. When it works, a legislator might craft a loophole, undermine legislation, or subvert enforcement as an expression of gratitude to his financers.[12] Regrettably, though, this victory for special interests often equates to a defeat for the general public. In their book, Dollars & Votes, Don Clawson, Alan Neustadtl, and Mark Weller detail what happens when a politician’s need for dollars meets a corporation’s desire to generate favorable government legislation. Clawson et al. observe that “[c]orporations have done exceptionally well politically, given the problem they face: The interests of business are diametrically opposed to those of the public.”[13] This reality puts legislators in an uncomfortable position. It is the people who vote and elect them; it is the private interests, with their PACs, large corporations, and owners, however, that bankroll their route to office. Each time new legislation is on the table, the legislator must decide which translation of constituent (i.e., the general public or the financers) he or she will promote. Unfortunately, it is not always easy to see—and, therefore, scrutinize—which path he or she takes.

This truth is evidenced well by the legislative history of corporate pollution control. As we discussed, pollution can be good for business. It allows corporations to pump their waste into the atmosphere without penalty or, for that matter, regard. Generally, though, pollution does not treat those who share the air with the corporation so favorably. It is the general public who pays the price for the pollution by way of compromised air quality and any number of health complications. If their incentives are not curbed, corporations will, likely, not hesitate to pollute even more if doing so benefits the bottom line. Again, it is the job of the legislator to make sure that this negative externality does not go uncorrected. The Clean Air Act of 1970 attempted to make large leaps toward doing just that. It was not the first act of its kind, but it did promise new regulatory measures that would benefit the countless Americans dealing with the adverse affects of corporate pollution.[14] The Clean Air Act is discussed, at length, in Dollars & Votes, where Clawson et al. detail just how much impairment a PAC can have on something that, seemingly, “everybody wants”: clean air legislation.[15]

“I spent seven years of my life trying to stop the Clean Air Act,” writes one vice-president of a heavily polluting corporation.[16] As Clawson et al. note, however, this executive still contributed money to legislators in favor of the act. The executive defends this choice convincingly: “How a person votes on the final piece of legislation often is not representative of what they have done … [D]uring the process some of [the legislators who voted in favor of the act] were very sympathetic to our concerns.”[17] This realization makes the breakdown of the election system even more worrisome. When legislation arrives that a legislator could hardly vote against without raising serious public scorn (e.g., clean air laws), they can get the best of both worlds—“[reassuring] both their constituents and their corporate contributors: constituents, that they voted for the final bill; corporations, that they helped weaken it in private.”[18] Clawson et al. assert that “[m]embers of Congress all want to vote for clean air, but they also want to get campaign contributions from corporations, and they want to pass a law that business will accept as ‘reasonable.’ The compromise solution is to gut the bill by crafting dozens of loopholes. These are inserted in private meetings or in subcommittee hearings that don’t get much (if any) attention in the press. Then the public vote on the final bill can be nearly unanimous.”[19] And everybody, except the general public, that is, wins.

Even more discouraging is the fact that, as Clawson et al. point out, this was just one front that powerful lobbyists fought on in order to stop clean air legislation. From court orders to non-stop phone calls, by virtue of sheer annoyance, they stalled, dodged, and delayed rulings—fighting legislation in any way possible, seemingly, with the hopes of wearing their opponents (i.e., America) out.[20] From a financial standpoint, this strategy made sense. That is, to spend tens of thousands of dollars to fight legislation that, if enacted, might hurt profits to a much greater extent is “good business.” Alas, good business, in this sense, means utter disregard for the public’s wellbeing.

Clearly, this system of business-government relations is a cause for concern. And the horror stories that result from it keep rolling in. Recently, legislators put publicly desirable accounting regulations on the backburner—ostensibly due to their lucrative campaign ties with the “Big Five” auditing firms that, at the time, dominated the accounting industry. (Between the years of 1989 and 2001, these firms gave a grand total of $29 million to federal candidates and their political parties.)[21] Legislators later found that these absent regulations may have stopped the disastrous event that was the fall of Enron.

Enron’s auditors were employees of Arthur Anderson LLP, a member of the previously mentioned, oh-so-charitable “Big Five”, and they played a crucial role in the cataclysmic crime that Enron executives carried out. Only with this ruinous realization and the social uproar that followed it did legislators create the regulations that are now commonly known as Sarbanes-Oxley. Sadly, it took a disaster to necessitate the necessary.[22] Enron devastated the lives of countless workers and investors, losing approximately $32 billion as a result of its underhanded operations.[23] To really comprehend this figure, we can compare Enron’s losses to the total cost of property crime in America during the entirety of 2002. This loss came in at about $15 billion and was the result of countless, mostly isolated incidents.[24] Enron’s caper, on the other hand, was perpetrated, fundamentally, by a politically-favored few. Here, one columnist further discusses the large sums of money that played such an integral part in this fallout:

Enron [had] donated $6 million to members of Congress. The recipients included half the members of the House and three quarters of the Senate. Republicans collected 74 percent of the money. No one has yet shown that Enron gave money in return for a direct favor or change in the law—a bribe. The company, nevertheless, won key changes in federal rules that allowed it to expand its operations. One of several major changes came in 1997, when the SEC granted Enron an exception to a Depression-era law written to prohibit companies from hiding losses in offshore firms—precisely what Enron then did.[25]

Charles Bowsher, former Comptroller General of the United States, echoed similar sentiments shortly after the collapse:

Money allowed the Enron leadership to come to town… . Everyone says they didn’t get anything… . But if you look back over the last five years, what they did get was no oversight.[26]

In short, not only are those legislators who position corporate interests ahead of the public interests usurping democracy, they are also playing with very expensive fire—putting the whole of America at a greater risk of getting burned.

Look no further than our recent recessionary collapse for another example of this unfortunate truth. Regulators, as Nobel Prize-winner Joseph Stiglitz puts it, became “captured” by those banks and bankers they were supposed to be policing.[27] Consequently, they ignored perverse incentive systems that were “designed to encourage shortsighted behaviour and excessive risk taking” and, by way of their silent support, gave banks the ability to engage in proprietary trading that “distort[ed] financial markets.”[28] When this distorted house of cards inevitably collapsed, the biggest losers were not the banks, but, rather, the general public. This fiasco catapulted the United States into a tailspin that resulted in what can only be described as the worst economic decline since the Great Depression.[29] Today, we find ourselves in an era of economic stimulus bills, job purgings, home foreclosures, and corporate bailouts. It is not clear whether regulation would have stopped today’s recession; it is clear, however, that truly proactive action could have dramatically minimized its longevity and economic influence. With so many legislators busy thanking current donors and looking for new, profitable partnerships, it is no wonder that these things go conveniently unnoticed until it is too late.

PAC money is about power, and Clawson et al. do a wonderful job of articulating the type of power that it creates. They assert that, primarily, we deal with two types of power in our society. The first is the traditional, one-dimensional form that involves a primary entity forcing a secondary entity into action against the secondary entity’s will. The second, two-dimensional form deals with one entity’s ability to create nondecisions in a given arena; that is, to create an atmosphere where “a potential issue never gets articulated or, if articulated by someone somewhere, never receives serious consideration.”[30] Clawson et al., however, consider both of these forms to be too restrictive to describe the power that represents business-government relations. They suggest a “field theory” of power as an alternative form:

[A] “field theory” of power … analyzes social power as a force similar to a magnetic field. A magnetic field alters the motion of objects susceptible to magnetism. Similarly, the mere presence of a powerful social agent alters the social space for others and causes them to orient themselves toward the powerful agent … the very act of accepting a campaign contribution changes the way a member relates to a PAC, creating a sense of obligation, a need to reciprocate. The PAC contribution has altered the member’s social space, his awareness of the company and wish to help it, even if no explicit commitments have been made.[31]

One finds it difficult to ignore or dispute that such magnetic power does, indeed, permeate and weaken the representative democracy that we have in place. The system that was crafted to promote the wellbeing of our country and its individuals has, somewhere down the line, lost its way—letting special interests noticeably complicate its raison d’être. Still, the political system is not completely corrupt, and saying as much would put me very far from the truth. There are, even now, legislators who have kept their focus under the extreme, politically-systemic pressures to raise money and please financiers. There are also many corporations that take no part in the practices I have outlined thus far. Even so, with the constraints and complications that plague our political system today, it is not surprising to find such an overwhelming majority of the public viewing it as untrustworthy and in need of reform.[32]

As we have learned, a capitalist free market economy cannot function efficiently and effectively if individuals and firms are immune from the costs of their actions. The Invisible Hand has several benefits, but it also has several faults. The unfeasibility of its perfect competition, risk, and information leave much to be desired when its underlying theory becomes practice. In light of this, our legislators are appointed to guide and ease the struggles that may result from any of the Invisible Hand’s deficiencies. Clearly, this fix is not without its own need for remedy. The legislators that are appointed to help the general public are, too often, closely tied with the creators of the market failures they are elected to regulate. This conflict of interest, while not always a problem, can oftentimes find the general public’s wellbeing taking a back seat to corporate interests.

REFERENCES

1. Basham, Patrick. “Bigger Government Leads to Bigger Campaign Spending.” Cato Institute (2004): Web. 21 Mar 2010.

2. Center for Responsive Politics. “Money Wins Presidency and 9 of 10 Congressional Races in Priciest U.S. Election Ever.” OpenSecrets.org (2008): Web. 21 Mar 2010.

3. Teller-Elsberg, Jonathan, Nancy Folbre, James Heintz, and Center (U.S.). Field guide to the U.S. economy. Rev. Ed. New York City: New Press, The, 2006. 12. Print.

4. “Candidate (P80003338) Summary Reports - 2007-2008 Cycle.” Federal Election Commission. 12/31/2008. Web. 21 Mar 2010. <http://herndon1.sdrdc.com/cgi-bin/cancomsrs/?_08+P80003338>.

“Candidate (P80002801) Summary Reports - 2007-2008 Cycle.” Federal Election Commission. N.p., 12/31/2008. Web. 21 Mar 2010. <http://herndon1.sdrdc.com/cgi-bin/cancomsrs/?_08+P80002801>.

5. Center for Responsive Politics.

6. Ibid.

7. Ferguson, Susan. Mapping the Social Landscape: Readings in Sociology. 3rd ed. McGraw-Hill Humanities/Social

Sciences/Languages, 2002. 430. Print.8. Ibid., pg. 431 9–11. Ibid.

12. Ferguson., pg. 437

13. Ibid., pg. 433

14. Ibid., pg. 432

15–19.  Ibid.

20. Ibid., pgs. 433–434, 436

21. Stiglitz, Joseph E. Making Globalization Work. New York City: W.W. Norton & Company, 2006. 191–192. Print.

22. Ibid., p. 192, 204

23. Teller-Elsberg., pg. 14

24. Ibid.

25. Vilbig, Peter. “The Great Enron Disappearing Act.” New York Times Upfront 11 Mar. 2002: 1. Web. 21 Mar 2010.

26. Ibid., pg. 2

27. Stiglitz, Joseph E. “Too Big to Succeed.” guardian.co.uk 13 Dec. 2009: Web. 21 Mar 2010.

28. Ibid.

29. CNN, “World Bank: Economy Worst Since Depression”. CNNMoney.com 09 Mar. 2009: Web. 21 Mar 2010.

30. Ferguson., pg. 438

31. Ibid.

32. CNN, “Poll Finds Trust of Federal Government Runs Low”. CNNPolitics 25 Feb. 2010: Web. 21 Mar 2010. Lydia, Saad. “Honesty and Ethics Poll Finds Congress’ Image Tarnished.” Gallup. Gallup, Inc., 28 Mar. 2010. Web. 28 Mar 2010.