That clanging sound you hear is the Supreme Court, hammering the final nails into democracy's casket. With Wednesday's decision in McCutcheon v. FEC, the court has crossed the line protecting the last vestige of campaign finance reform, and making it official: Rule by the rich is now unfettered. Plutocracy's moment has arrived.
How did we get here? The granddaddy of modern Supreme Court campaign finance cases was Buckley v. Valeo, which decided the fate of the post-Watergate reform amendments to the Federal Elections Campaign Act (FECA).
It was Buckley that first struck down limits on campaign expenditures made independently of a candidate's campaign. That kind of spending, the court said, is speaking, and is protected by the First Amendment. That misguided opinion has sent us down the long, dispiriting path of unlimited contributions: of independent PACs, followed by soft money, and, most recently, Dark Money and super PACs.
But also in that case, the court preserved a piece of FECA's reforms. While independent spending on behalf of a candidate was considered protected speech, merely contributing to a candidate, said the court, was not. Thus, FECA's limitations on contributions "do not in any way infringe on the contributor's freedom to discuss candidates and issues."
This upholding of limits on contributions to candidates has stood the test of time, and remained the law of the land for the 38 years since Buckley was decided. In McCutcheon, the court has crossed that line, and begun to tear down the last vestige of campaign finance regulation.
As a plaintiff, Sean McCutcheon did not seek and the court did not grant an end to FECA's limits on contributions to an individual candidate, enacted as a means to protect against "quid pro quo exchanges." Instead, he sought an end to FECA's overall limit on contributions to candidates, PACs and parties. But as Buckley pointed out, if we want an individual limit, we need an overall limit. Without it, multiple PACs will form around each candidate, and voilà, nearly-unlimited contributions to individual candidates are legal.
Let's look at just two of the grievous injuries that unchecked dollars have already inflicted on our polity: how the money chase has corrupted our Congress, and how it has contributed to the grotesque inequalities that now beset us.
How Campaign Money Has Hijacked Our Congress
With congressional representatives already spending four hours a day on “call time” (cold-calling donors to plead for campaign funds), and another hour on “strategic outreach” (meetings with donors), while spending only one to two hours on the work we're paying them to do, the McCutcheon decision is sure to usher in more time on fundraising. After all, this is a system of bad incentives, where whoever spends more money wins nine out of 10 elections. With more money spent on the 2012 election than any previous election in history, the 113th Congress is also the least productive Congress in history.
And how is our current batch of elected telemarketers choosing to spend their time? Fundraising, mostly. Even when they seem to be legislating, Congress is often fundraising.
In the first quarter of 2011, while our country was fighting two foreign wars in Iraq and Afghanistan, when Rep. Gabrielle Giffords, D-Ariz., and 19 others were shot by a lone gunman armed with high-powered weapons, sparking intense debates about gun control, and newly elected Tea Partyers launched a bitter crusade against the Affordable Care Act, what single issue did our Congress spend more time on than any other? The answer is swipe fees -- the fees businesses pay to banks when a customer uses his or her debit card.
The fees were set to be to be capped at 12 cents, down from the average of 44 cents per transaction that banks had been reaping, thanks to an amendment added in 2010 to the Dodd-Frank Wall Street Reform and Consumer Protection Act by Sen. Dick Durbin, D-Ill. However, in early 2011, Sen. Jon Tester, D-Mont., proposed a two-year delay of the caps, a move that would have allowed credit card companies to continue unfettered profit from a $16 billion a year industry. Tester himself netted $1.1 million in campaign contributions in the first three months of 2011, more than twice what his GOP opponent raised. In the six days after Tester proposed the delay, $16,000 came from TCF Financial, the lead plaintiff in a lawsuit hoping to stymie the Federal Reserve from implementing Durbin’s amendment. Tester went on to raise three times the amount of the average Senate candidate in the 2012 election cycle, including $5,000 from the Prairie Political Action Committee, Dick Durbin’s own leadership PAC. While it might be reaching toward conspiracy to suggest that Durbin positioned Tester, who was running in one of the most contested races that year, for this financial largess, the money certainly didn’t hurt his chances for reelection, as Tester won by just 3.9 percent of the vote in 2012. And Durbin did make time on the Senate floor to reaffirm that their “friendship remains strong” and that he would “continue my strong friendship” with Tester.
So what sparked this intra-Democratic warfare that set big banks against big retail without making a penny of difference to the average American consumer? It’s called a “fetcher bill,” after the contributions it fetches for our representatives’ electoral war chests, and the legislative docket is lousy with them.
Take HR 1848, the Small Airplane Revitalization Act of 2013, which sought to “spur small plane innovation and technology adoption,” and brought in $37,800 from the airline industry for its sponsor, Rep. Mike Pompeo, R-Kan. Or HR 215, the Baseball Diplomacy Act, which sought to waive trade and travel prohibitions on Cuban nationals playing professional baseball in the United States, and was sponsored by Rep. Jose Serrano, D-N.Y., who picked up $5,000 from the Major League Baseball Commissioner’s Office for his trouble. Or Senate Resolution 325, which seeks to recognize the week of Dec. 22-28 as “National Toy Week.” Though it may seem like Christmas is already a de facto National Toy Week, that’s not enough for sponsor Sen. Mark Pryor, D-Ark., and his third biggest contributor, the retailer Wal-Mart. Small planes, Cuban professional baseball players and National Toy Week -- the quotidian concerns of the average American.
How Unchecked Money Has Driven Extreme Inequality
In the 1970s, besieged by the arrival of foreign competition and declining profits, the American business community transformed itself into a political juggernaut and demanded more. The tip of their spear was campaign finance. Under both Democrats and Republicans, government gave in to this demand, passing policy after policy that made the rich richer and the middle class poor.
Congress began by lifting the restrictions on corporate PACs, in 1974. Within 10 short years, corporate PAC spending had increased by over 800 percent and dwarfed the spending power of labor. Today, the campaign spending advantage of business over labor is 15-to-1.
By the late '70s, thanks to the Buckley decision, plutocrats had discovered two more loopholes, each of them big enough to drive a Brinks truck through. "Soft money" allowed unlimited contributions to political parties for "party building activities," which included making campaign commercials for candidates specified by the donor. "Issue campaign" organizations could also accept unlimited contributions and use them to make candidate commercials, so long as they avoided the magic words, "Vote for ..." or "Vote against ...."
Once again, to understand the limitations placed on soft money and "issue organizations," all one had to do was look up -- the sky was the limit on these contributions.
In response to the flood of fat-cat money that poured into campaign coffers, public policy became a danse macabre of progressive bills headed for the grave, and a ticker tape parade of 1 percent enrichment schemes headed for the statute books. Taxes on the rich fell like wet laundry, along with protections for labor unions, whose ranks shriveled. Regressive taxes, falling most heavily on low-income workers, swelled.
While other countries scrutinized and slowed the closing of their factories, the U.S. government, with its palm greased by major manufacturers, aided and abetted the process, giving hefty tax benefits to companies that closed plants. The rich got richer; workers got minimum-wage, service-sector jobs with no benefits.
Regulations protecting Americans from corporate rapacity vanished. In their absence, Savings and Loan banks went on a gambling spree in the '80s. As their risky bets began to go bad, $2 million in hush money paid by the S&Ls to House Banking Committee members stopped reregulation in its tracks, until the total cost to taxpayers exceeded $500 billion.
Accountants without regulators forgot how to count. While the rich got richer at Enron, Sunbeam, WorldCom and Qwest, workers and investors lost their jobs and their savings. During the late '90s, more than 700 U.S. corporations were found to have defrauded the public.
The year 2000 was the apogee of soft money, and its principal recipient, George W. Bush, with the cooperation of those corporate favorites, the Blue Dog Democrats in Congress, returned the favor. In short order, the federal government gave away wheelbarrows full of taxpayer dollars to big oil, big banks, big agriculture, big insurance and big military contractors. Bush & co. were no less charitable to rich taxpayers, who got 73 percent of the massive tax cuts dished out in the early '00s. Together, this charity for the rich ballooned the deficit by hundreds of billions and constituted one of the largest transfers of wealth from have-nots to haves in American history.
Beginning in the '90s, Wall Street began delivering $5 billion worth of lobbying and campaign contributions to Congresses, presidents and bank regulators. In turn, the feds gave Wall Street carte blanche to make a killing, and kill they did, with a housing scam that was a license to print money. When the scam's bubble finally burst, it became the Great Recession. Its cost included a doubling, within one year, of the unemployment rate, to double digits. Six years later, unemployment still plagues 5 million more Americans than it did before the recession.
Other costs of the campaign money-induced recession include:
- A crashed GDP that even by 2013 was still $850 billion below normal, and is not expected to recover until 2017.
- A loss of net worth to U.S. households of $15 trillion.
- A skyrocketing national debt, fueled by lack of investment, which went from 66 percent of GDP in '08 to 103 percent by 2013.
- A drop in the income of the average male worker to less than what he'd have earned in 1968, adjusted for inflation.
- A dramatic rise in poverty among what were once middle-class families. The number of suburban households in poverty increased by 53 percent.
Recently, the Supreme Court's decisions in Citizens United v. FEC and SpeechNow.org v. FEC have opened broad new boulevards to corporate spending and to "super Pacs" -- very small groups of very rich donors spending very large amounts of campaign money -- more than $800 million in 2012 alone.
And speaking of corporations, it is important to note that about 75 percent of all campaign contributions – individual as well as corporate – represent a corporate point of view. It is no surprise that corporate interests are well served by today's Supreme Court, whose five conservative justices are among the top 10 most pro-business justices of the past 65 years. Indeed, according to the Minnesota Law Review, Samuel Alito ranks first and John Roberts is a close second.
While conventional wisdom held that super PAC spending was a "billion dollar bust" in 2012, campaign finance experts knew better. They grant that it is hard even for a super PAC to influence a presidential race, where each candidate is already spending $1 billion of his own campaign's cash to flood the airwaves. But the corollary on the other side of the coin is that "the relative impact of a super PAC can be far greater in a down-ticket race." For example, super PAC Liberty for All went four for four in the congressional races it backed. And Real Jobs NC went 12 for 15 in the state races it fought, solidifying hyper-conservatism's hold on North Carolina.
Overall, the middle class declined from 66 percent to 51 percent of the U.S. population during this rise of the plutocracy, in the years between 1970 and 2013. At the same time, the upper class increased its share of the national income from 29 to 46 percent. Today, the United States is the most unequal society in the developed world. There are, of course, many suspects in the case of America's great divide. But the buying of elections and public policy might just be the godfather of it all.
What Is to Be Done?
Good model legislation exists that would ameliorate the problem of money in politics.The problem with these proposals is that they must work within the unacceptable precedent set by the Supreme Court in Buckley, Citizens United and now McCutcheon: that spending is speaking, and cannot be limited. What is most needed is a new Supreme Court – or at least, enough new members to replace the conservative majority that has dominated the court since Buckley with the kind of progressive justices who have inveighed against this precedent, as a minority, ever since Buckley.
In the Progressive and New Deal eras, conservative justices struck down laws regulating child labor, the minimum wage, maximum working hours, and industries such as banking, insurance and coal mining. The solvent was time. As it went by, those conservative justices, representing the dead hand of past presidents, were replaced, and so were their precedents, by the very progressive policies they had prohibited. Under the American Constitution, patience is not just a virtue, it's a necessity.
Today, an emerging progressive electorate has put the presidency in Democratic hands for four of the last six terms, and needs just one more progressive justice to say that spending is not speaking, that bribery is not the law of the land, and that plutocracy is not democracy.