to.. ELA Web Portal§POLITICS§ to.. ELA Notes

ELA CAMPAIGN FINANCE REFORM NOTES
Contents
Timeline | Selling Out | Glossary

 

 

 

 

 

 

 

 

 

 

 


^ Politcal notes

TimeLine

References: CampaignFinanceSite.org, OpenSecrets.org

1867: Naval Appropriations Bill
The first federal attempt to regulate campaign finance · Prohibited officers and employees of the government from soliciting money from naval yardworkers

1873: Pendleton Act

1883: Civil Service Reform Act
Extended the Naval Appropriations Bill to all federal civil service workers · Previously, government workers were expected to make campaign contributions in order to keep their jobs.

1905: Theodore Roosevelt's Message to Congress
Proposed that "contributions by corporations to any political committee or for any political purpose should be forbidden by law." The proposal, however, included no restrictions on campaign contributions from the people who owned and ran corporations. Roosevelt also called for public financing of federal candidates via their political parties. He also later endorsed the National Publicity Law Association's movement for a national law to require disclosure of campaign expenditures, which was delayed by Congress for a decade.

1907: Tillman Act
Prohibited corporations and nationally chartered (interstate) banks from making direct financial contributions to federal candidates · However, weak enforcement mechanisms made the Act unenforceable.

1910: Publicity Act (Federal Corrupt Practices Act)
In response to Progressive legislatos pushing for disclosure of campaign funding and expeditures, established disclosure requirements for U.S. House candidates · Legislation in 1911 extended requirements to cover U.S. Senate candidates and established expenditure limits for House and Senate campaigns. Lacking mechanisms for verification and enforcement, these measures proved meaningless.

1925: Federal Corrupt Practices Act (Revised)
Codified and revised previous campaign reform legislation regarding expenditure limits and disclosure · Served as basic federal campaign finance law until 1971 · However, with power of enforcement vested in Congress, the Act was routinely ignored.

1940: Hatch Act Amendments
Set limit of $5,000 per year on individual contributions to a federal candidate or political committee (but it didn't prevent contributors from giving that amount to multiple committees, each working for the same candidate) · Made campaign finance regulations applicable to primaries as well as general elections · Barred contributions to federal candidates from individuals and businesses working for the federal government

1943: Smith-Connally Act
Extended to unions the prohibition on contributions to federal candidates from corporations and interstate banks (following major increase, beginning in 1936, in labor's use of union dues to support federal candidates)

1944: Formation of First PAC
First political action committee (PAC) was formed by Congress of Industrial Organizations (CIO) in 1944 to raise money for re-election of President Franklin D. Roosevelt. Because PAC money came from voluntary contributions from union members, rather than from union treasuries (i.e., union dues), it was not prohibited by the Smith-Connally Act.

1947: Taft-Hartley Act
Made permanent the ban on contributions to federal candidates from unions, corporations, and interstate banks, and extended the prohibition to include primaries as well as general elections

1967: House Campaign Finance Reports Collected for First Time
Former Congressman W. Pat Jennings was first Clerk of the House of Representatives to perform his duty under 1925 Corrupt Practices Act to collect campaign finance reports and to report violators · However, the Justice Department ignored his list of violators.

1971: Federal Election Campaign Act (FECA)
Repealed Corrupt Practices Act and created comprehensive framework for regulation of federal campaign financing of primaries, runoffs, general elections, and conventions · Required full and timely disclosure · Set ceilings on media advertising · Established limits on contributions from candidates and their families · Permitted unions and corporations to solicit voluntary contributions from members, employees, and stockholders, and allowed union and corporate treasury money to be used for overhead in operating PACs

1971: Revenue Act
Companion legislation to FECA · Created public campaign fund for eligible presidential candidates (starting with 1976 election) through provision of voluntary one-dollar check-off on federal income tax returns · Provided option of $50 tax deduction (for individual filers) for contributions to local, state, or federal candidates (provision eliminated in 1978) or $12.50 tax credit (amount raised to $50 in 1978, provision eliminated in 1986)

1974: FECA Amendments (Post-Watergate)
Provided option of full public financing for presidential general elections, matching funds for presidential primaries, and public funds for presidential nominating conventions · Set spending limits for presidential primaries and general elections, and for House and Senate primaries · Revised (previously unenforced) spending limits for House and Senate general elections · Created individual contribution limit of $1,000 to a candidate per election and PAC contribution limit of $5,000 to a candidate per election (triggering PAC boom of late '70s) · Limited aggregate individual contributions to $25,000 per year · Limited candidates' personal contributions to their own campaigns · Limited independent expenditures on behalf of a candidate to $1,000 per election · Ended 1940 ban on contributions from individuals and groups working on government contracts · Abolished limits on media advertising · Created Federal Election Commission (FEC) to administer campaign law, with Congress to appoint four of six commissioners

1976: Buckley v. Valeo
Restrictions in FECA (as amended in 1974) challenged as unconstitutional violations of free speech · Supreme Court upheld disclosure requirements, limits on individual contributions, and voluntary public financing, and affirmed President's authority to appoint all six FEC commissioners · Court struck down, as infringement on free speech, limits on candidate expenditures (unless candidate accepts public financing), limits on contributions by candidates and their families to their own campaigns, and limits on "independent expenditures" (election spending not coordinated with candidates or their committees).

1976: FECA Amendments (following Buckley )
Brought FECA into conformity with Buckley decision · Limited individual contributions to national parties to $20,000 per year, and individual contributions to a PAC to $5,000 per year

1979: FECA Amendments
Increased amount volunteers could contribute in-kind (use of home, food, vehicle) from $500 to $1,000 · Raised threshold for reporting contributions from $100 to $200 · Effectively prohibited FEC from conducting random audits · Allowed state and local parties to promote federal candidates by spending unlimited amounts on campaign materials (signs, bumper stickers, etc.) used by volunteers and on voter registration and get-out-the-vote drives

2002: Bipartisan Campaign Reform Act
(McCain-Feingold law) bans parties from using "soft money," the previously unregulated and unlimited donations from corporations, unions and others. Doubles "hard money" limits to $2,000 per election.

2003: Supreme Court upholds the Bipartisan Campaign Reform Act
sharply divided court, challenged by representatives of the political right and left preserves the soft money ban and restrictions on political ads, which were the most significant parts of the vast new law.


^ Politcal notes

NOTES ON SELLING OUT...
including.. George W. Bush & Enron


Selling Out
How Big Corporate Money Buys Elections,
Rams through Legislation,
and Betrays Our Democracy
by Mark Green,
Copyright © Mark Green, 2002, for information address Harper Collins Publishers, Inc.

under construction, stay tuned for more...
Money has been a associated with elections since the inception of the electoral process in the United States. In the beginning the system may be viewed as a plutocracy, as seen from present perspective. Only white male property owners had access. Out of the four million citizens during the Revolution, only 800,000 were enfranchised.

When George Washington ran for the Virginia House of Burgesses in 1758, his election managers provided just under 1/2 gallon of alcoholic beverages per voter at a treat for Freeholders on election day. These lavish parties were part of the process. Men such as James Madison, objected. In 1777, he lost a race for the Virginia legislature, which he claimed was due to his refusal to provide alcohol. Aaron Burr persuaded the New York state assembly to create an anti-Federalist state bank for the purpose of helping citizens buy land in order to gain votes.

By the time of the presidential election of 1828, twenty two of the twenty four states chose electors through the popular vote and most had abandoned any property requirement. Some politicians had been known to buy votes and pay repeat voters. In 1823 the price of a vote in New York City was $5 and for repeat voters, went as high as $30.

In order to gain votes from the recently enfranchised, common white man, Andrew Jackson started his campaign in 1825 and established a reelection committee enabling support from a network of partisan newspapers across the nation. After his victory, Jackson began a political patronage system that rewarded political operatives, which had a profound effect on future elections. Eventually, appointees were expected to contribute portions of their pay back to the political machine. During the Jacksonian era, some of the first attempts were made by corporations to influence politicians. Jackson claimed that his recharter battle against the Second Bank of the United States was one of the great struggles between democracy and the money power.

Simeon Cameron in the 1850's through 1870's was responsible for the "Pennsylvania Idea" of applying the wealth of corporations to help maintain Republican control of the legislature, to include regularly purchasing votes and other vehicles of power. Political machines across the country used squeeze or strike bills to force corporate interests into paying for the defeat of these measures. U.S. Senators of the time were elected not by popular vote, but by state legislatures. Thus, the Senate was referred to in some quarters as a millionaire's club, due to the practice of paying state legislators for one's seat. Exposed bribery occurred in Colorado, Kansas, Montana and West Virginia.

Abraham Lincoln's attempt to finance his own 1858 Senate run bankrupted him, even though he had arranged a number of $500 expense accounts from wealthy donors. However, he was able to regain enough money in his law practice to purchase an Illinois newspaper to support him in the presidential election of 1860, for which he gained the financial support of businessmen in Philadelphia and New York City.

After the Civil War, parties increasingly relied on wealthy individuals who had become rich from the war industry, such as Jay Cooke, the Vanderbilts and the Astors. In the campaign of 1872 a group of wealthy New York Democrats pledged $10,000 each to pay for the costs of promoting the election. Vote buying and voter coercion were common. After more standardized ballots were introduced, these practices continued, applying methods such as carbon paper under ballots for proof of payment.

As an aftermath of the aforementioned Jacksonian political patronage, a practice of political assessment required officeholders to return an assessed portion of their pay to the machine in order to secure the future of a position. This system provoked the Pendleton Act of 1873, which prohibited political contributions from federal employees, but this increased pressure to acquire funding from corporate and individual wealth.

Boise Penrose mastered post-Pendleton Act corporate funding through extortionist tactics, such as squeeze bills. During his successful 1896 U.S. Senate campaign he raised 1/4 million dollars within 48 hours. He allegedly told supporters that they send him to Congress to enable them to make more money.

The wealthy Ohio industrialist, shipping magnet and political operative, Mark Hanna assessed banks 1/4 percent of their capital. Corporations were assessed in relation to their stake in the prosperity of the country. He was made chairman of the Republican National Committee after giving $100,000 out of pocket for the 1896 nomination of William McKinley. He managed to make McKinley's run the prototype of the modern commercial advertising campaign, the most expensive up to post-WWI, issuing the President-to-be's image on buttons, billboards, posters, etc. Supporters explicitly recognized that they were paying for the service of managing the politics of their business interests.

Twentieth century Progressive advocates, muckraking journalists and political satirists made it clear to the general public that the policies of vote buying and excessive corporate and moneyed influence were abandoning the interests of millions of taxpayers. They advocated regulating antitrust laws, restricting corporate lobbying and campaign contributions, as well as greater citizen participation and control, including standardized secret ballots, strict voter registration and women's suffrage.

Theodore Roosevelt, following the McKinley assissination of 1901, began trust-busting and anti corporate influence activities, but fearing defeat, turned to bankers and industrialists for support in what turned out to be his 1904 landslide campaign. Roosevelt was embarrassed by his corporate financing and was unable to clear a suspicion of a quid pro quo exchange with E.H. Harriman for what was an eventually unfulfilled ambassador nomination. There was a resulting national call for reform, but Roosevelt still claimed that it was legitimate to accept large contributions if there were no implied obligation. However, in his message to Congress following the election, he proposed that "contributions by corporations to any political committee or for any political purpose should be forbidden by law." The proposal, however, included no restrictions on campaign contributions from the private people who owned and ran corporations. Roosevelt also called for public financing of federal candidates via their political parties. The movement begun by the (citizen's lobbying group) National Publicity Law Association's for a national law to require disclosure of campaign expenditures was supported by Roosevelt, but delayed by Congress for a decade.

Widespread local and state corruption, corporate funding and vote buying continued. In 1907 Congress responded with the Tillman Act, restricting banks and corporations from campaign contributions and expenditures (many states, as Florida, Illinois and New York have still failed to abide by this law). In the same year Roosevelt proposed publicly financed campaigns, full disclosure of campaign funding and expenditures, and caps on individual contributions. In 1908 both presidential candidates disclosed.

...SKIP TO 1985
Kenneth Lay, CEO for most of Enron's life, joined Exon after receiving his doctorate in economics from the University of Houston, then after a stint as a federal energy regulator, during the Reagan deregulation period, took charge of Houston Natural Gas, which merged with Nebraska-based InterNorth in 1985 to form Enron. This new corporation bought and sold from and to wholesale suppliers and retail customers worldwide, infrastructure commodities such as natural gas pipelines, power plants and wholesale electricity contracts. In early 1986, Lay became its CEO.

Lay was close to the Bush family no later than 1992, when he was co-chair for the Republican Convention's Houston host committee, when George Bush Sr. was running for presidential reelection and George W, Bush was preparing for the Texas gubernatorial race. Lay was George W.'s first and most valuable donor with $146,000 donated by Enron's PAC and executives. Although Bush later claimed in 2002 that Lay was a supporter of his opponent, incumbent Ann Richards, she received only 1/7 that amount. Enron provided another $50,000 to the Bush innaugural committee.

Lay then barraged Governor Bush with suggestions on energy policy, taxes, tort reform and recommendations for administrative positions, such as Patrick H. Wood III, whom Bush appointed as Texas Public Utility Commission Chairman. Bush put tort reform on the Texas legislatures short list as a state emergency, following Lay's request in 1994 to make it the highest priority. The bill passed in 1997 to limit awards in civil suits and restrict the definition of "liable parties." Bush later gave Lay the nickname "Kenny Boy." One Enron lobbyist recalls that when the Enron capital crew needed extra grease in the executive or legislature, they would refer to "Plan B" for Bush. With Enron's urging, a Texas bill provided what many consider as the most extensive deregulated energy market in the Southwest and what Lay described as the best deregulation bill in the country.

Lay ensured that Enron would remain Bush's largest campaign donor following the 1999 presidential candidacy announcement, by co-chairing a record-breaking $21 million fund-raiser, then became one of Bush's first "Pioneers" by providing Enron jets for Bush family and aides, raising $100,000, and helping to underwrite the 2000 GOP convention, the Florida recount and inauguration.

By 1998 Enron was padding the quarterly reports and used off-the-books offshore partnerships to obfuscate its financial state. It expanded into risk-management consultation services, broadband Internet services and online trading of energy and telecommunications commodities by 2000, jumping, with profits over $100 billion, from 18th to the 7th largest U.S. Fortune 500 company.

Under the Bush presidency top administrative positions were filled by former Enron employees and consultants, and others friendly with Enron:

• Lawrence Lindsey (received $100,000 as an Enron consultant), chief White House economic advisor claimed that Enron's deteriorating situation did not warrant a response.

• Robert Zoellick (paid consultant on Enron's advisory board) - U.S. Trade Representative, owned Enron shares valued between $15,000 and $50,000, which he sold after joining the administration.

• Harvey Pitt (outside council to Enron, also represented Tyco, Global Crossings and the accounting industry) Securities and Exchange Commission chairman, became a political liability after the corporate responsibility crisis in the summer of 2002.

• Thomas E. White (senior executive with over $25 million in Enron stock, former head of key subsidiary Enron Energy Services) secretary of the Army, who said that he would apply Enron experience to privatizing military bases' utilities, was rebuked by the Senate Arms Services Committee for failing to divest his stock in the required timely manner. Only in October 2001, just before the Enron collapse, did he sell the last of his stock. Although he claimed that he did not talk with former Enron colleagues about the impending collapse, more than a dozen phone calls to them were documented.

• Curtis Hebert Jr. Federal Energy Regulation (FERC) chairman was not formerly associated with Enron, but in early 2001, Lay told him that he would support him only if he backed a push for more retail competition in energy and did a better job of opening private company access to the power grid. Herbert told Congress and state leaders that this attempt to manipulate energy policy was always in the best interest of Enron instead of American energy companies. He knew that refusing to comply with Lay could cost his job. When he told Lay that he didn't think it was the right thing to do and that there was no legal basis, Lay told him that he could no longer support him. A couple of months after the discussion, Herbert resigned. Bush replaced him with Patrick Wood, the former Texas Public Utility chairman, as recommended by Lay.

• Spencer Abraham (former Senator who had received contributions from Enron) Energy Secretary, in order to produce the national energy report, would not meet with one environmental group, but met with several dozen representatives and top company executives of the energy industry.

• Vice President Cheney held more than six secret meetings with Lay and other Enron officials as he developed the energy plan, one in Oct, 2001, only six days prior to Enron admitting to $586 million in overstated profits since 1997. Cheney couldn't recall what was discussed other than it wasn't about the deteriorating financial status.

The Bush-Cheney energy plan and the energy bill introduced in 2001, could have included an Enron letterhead. Although Cheney bragged to the press after finally having met environmental groups (only after the plan was completed) that he adopted eleven of twelve environmental recommendations into the plan, Sierra Director Carl Pope recalled that it was more like one. As passed by the House it provided tax breaks of $3.5 billion for natural gas gathering and distribution lines. Cheney task force recommendations would allow utilities with tax breaks costing the government $2.4 billion to buy stock in or sell transmission properties under the guise of electricity restructuring programs. The Bush energy policy is also committed to increase supplies of fossil fuels and the deregulation of electrical utilities, development of nuclear plants and to oil-drilling in the Arctic National Wildlife Refuge (ANWR). The Bush Presidency has halved the renewable energy source funding, repealed forest service regulations in wilderness areas and rejected the international global warming treaty.

Congress also fell under Enron's spell...


^ Politcal notes
GLOSSARY

Campaign Finance Reform Glossary


501(c)3: nonprofits generally founded for religious, educational or charitable purpose, not directly engaged in political activities, though semi-political functions as voter registration allowed. Public tax return; not required to disclose donors.

501(c)4: nonprofit ideological lobbying organization under IRS code. Like 527's, can spend significant funds on political communications though, stricter tax penalties. Those not receiving contributions from unions or corporations may claim a special status (MCFL exemption) allowing issue advertising in weeks preceeding election (now banned for many groups under the new law). Public annual tax returns; not required to disclose donors.

501(c)5 and 501(c)6 organized Unions and Trade Organizations can spend on direct political action, including issue advertising and voter registration;not required to disclose their donors.

527: nonprofit influencing the political process; required to disclose donations to IRS.

Candidates and Political Parties can directly receive money (which must be reported to the FEC) from PACs and individuals. Campaign finance reform raised individual doner limits to $2,000 to each candidate for each election (including primaries) and up to $95,000 to candidates and political parties in any two-year election cycle.

FEC Federal Election Commission

PAC Political Action Committee often set up by unions and corporations; can pool smaller, regulated donations from individual members or employees; often related to above non-profits, which provide outside vehicles to directly contribute to candidates or parties. All contributions to PACs must be publicly reported to the Federal Election Commission.