5/5/92 329

S.3: A "REFORM" ONLY AN INCUMBENT COULD LOVE The last week of April, Congress sent the President a campaign reform bill which supporters claim will clean up elections by reducing special interest influence and promoting citizen involvement. In fact, the 'W- form" bill, S.3, would perpetuate special interest influence, erect new re g ulations to hinder independent citizen political activity and magnify incumbent advantages in elections. Furthermore, the reform bill requires a hid- den tax increase to fund its unpopular public financing provisions. The President should veto the bill, a s he has threatened to do.' The House and Senate passed differing versions of campaign finance reform earlier this year. A combined package which covers House and Senate campaigns with fi-equently diverse rules was passed by the House of Representatives by a vote of 259 to 165 early last month, and by the Senate 58 to 42 on the 30th. S.3 adver- tises spending limits of $600,000 for House races, and between $950,000 and $5.5 million for Senate races, though actual spending may be more than twice these limits due to a complex series of subsidies and exemp- tions. Though the limits are supposed to be voluntary, the system of benefits for participants and penalties gainst those who do not comply virtually compels participation. Benefits include government matchi n g funds, discounts and vouchers for fire television and radio advertising and reduced postal rates. For candidates whose opponents do not participate, spending limits are removed or raised, while the benefits of participating in the system remain. Loophol e s and Regulatory Overkill. S.3's system of heavy regulation combined with spending and contri- bution limits has been tried before and failed. While sections of the Federal Election Campaign Act of 1971 were declared unconstitutional, its remiants are res p onsible for the explosion of special interest PACs and overall campaign spending since 1974. S.3 represents an intensification of this same stultifying system. The complex new requirements threaten to be a regulatory nightmare. S.3 would increase the ay!a d y heavy burden of compliance on campaigns and detract from the legitimate conduct of political activities. The regulatory burden will be especially harsh on non-incumbent campaigns and on grass roots political groups. Evidence that Congress actually sees t hese regulations as a weapon against challengers is the fact that S.3 would require many state ballot initiative efforts to comply with federal campaign finance laws-a provision clearly aimed at the term limit movement. Incumbents will find it far easier t o comply with the web of regulations and'to ex- ploit loopholes known only to insiders. Lax enforcement practices-the FEC finished accounting for the 1988 presidential campaign in 1991-ac- tually encourage campaigns to exploit complex provisions with ques tionable practices. Even if a practice is

I For further details on the contents of the House and Senate versions of campaign fmance reform, see Steve Schwalm, "Back to the Congress: Campaign Finance Reform in 1992," Heritage Foundation Backgrounder No. 88 5, February 28, 1992. 2 Steve Schwalm, ibid., pp. 34. 3 Cm?Wdgn Finance Reform - A Report to the Majority and Minority Leader, United States Senate, Campaign Finance Reform Panel, March 6,1990. p.3.

later,-declared improper, that decision, and any penal ty, would come long after the campaign. Further, S.3 re- d even r a quires o@ly random auditing, so there is a good chance that illegal activity will not be detecte afte campaign ends. Beyond campaigns, S.3 would add restrictive new regulations on state p o litical parties and on independent political activity. The aim appears to be to make it dOicult for anyone other than incumbents to participate in the electoral process. Taxpayer Funding, Government Control. Taxpayers have indicated time and again that th e y do not wish to pay taxes for government campaign financing. Even the voluntary Presidential Campaign Fund is expected to go broke by the next election. S.3 includes numerous government funding provisions, yet there are no pro- visions to pay for the sub s idies. S.3 represents a lurking campaign tax, as proponents hope to pass the bill now and stick someone else with the tab later. Beyond the direct subsidies, S.3 would require private broadcasters and the Postal Service to subsidize campaigns without reim b ursement, costs which will ultimately be borne by consumers. Another objectionable element of the public financing is the indiscriminate way in which funds will be dis- tributed. Candidates who meet the mathematical thresholds for receiving government ben e fits will receive them, even the David Dukes or Al Sharptons. This already happens in Presidential primary races. The problem will only be exacerbated by opening for funding 535 more races with lower qualifying standards. While S.3 opens the public coffer s to candidates, it fails to eliminate the special interest advantage incum- bents claim to oppose. Political Action Committees (PACs) are the greatest source of special interest funding in elections. PAC contributions favored incumbents over challengers i n House races by more than thirteen to one in 1990. The PACs' power is due largely to the fact that PACs are allowed to contribute more than individ- uals in elections. Yet S.3 continues a contribution limit that is two and one-half times (for the Senate) t o five times (for the Hduse) greater than the $1,000 limit for individual contributors. Perpetuating Incumbent Advantages. S.3 does little to offset the huge electoral advantages incumbents enjoy by virtue of their office. Incumbents have access to tax mo n ey for activities and resources that support their re-election, such as full-time paid staff, district and state offices, the ability to do constituent service on behalf of district voters, virtually unlimited travel, and use of House and Senate broadcast studios. The biggest of these re-election perks, is the fi-ee mailing privilege, or frank. Congress sends out hundreds of millions of pieces per year, only ten percent of which is in response to constituent mail. Senators have agreed to a ban on election- y ear franked mass mailings largely because that leaves five years in which they can flood their states with taxpayer-funded mail. A staff error initially included an election year ban for the House as well. But, in an unusual procedure, the House quickly r e moved the election-year limit: with terms of only two years, the free mail was simply too valuable for House members to give up. Rules for the House and Senate also differ in regard to contribution sources, government funding, and other subsidies. These d i fferences reveal that S.3's real aim is not so much to clean up campaigns as to appear to do so while protecting favored-and differing-fundraising sources and campaign techniques for House and Senate in- cumbents. S.3 would do virtually nothing to address the real problems in campaign finance: unfair incumbent advan- tages and a cumbersome regulatory system. Instead, S.3 would add even more bureaucratic restrictions on po- litical activity and would enhance incumbent advantages with spending limits and pub lic financing. The need for true campaign finance demands that the President veto S.3 as promised.

Steve Schwalm Congressional Analyst U.S. Congress Assessment Project

}}