THE CONSTITUTION AND CAMPAIGN REFORM

WEDNESDAY, MARCH 22, 2000

UNITED STATES SENATE,

COMMITTEE ON RULES AND ADMINISTRATION,

Washington, D.C.

The committee met, pursuant to notice, at 9:22 a.m., in Room SR-301, Russell Senate Office Building, Hon. Mitch McConnell, chairman of the committee, presiding.

Present: Senators McConnell, Warner, Dodd, Feinstein, and Torricelli.

The Chairman. The hearing will come to order. I want to welcome the first panel of witnesses: Ira Glasser, Executive Director of the American Civil Liberties Union; Joel Gora, Professor of Law at Brooklyn Law School; and Deborah Goldberg, Deputy Director of the Democracy Program at the Brennan Center for Justice at the NYU School of Law.

Good morning, and welcome to the first in a series of hearings the Rules Committee will be conducting this spring to explore the many facets of the campaign finance debate. The backdrop for these hearings is an emerging proposal put forth by Senator Chuck Hagel, who has bravely sought to step into the breach and try to bridge_the_differences of opinion on this issue. He may earn another Purple Heart in the process.

It is with some dismay that I have noted reform groups and their advocates in the media sniping at the Hagel-Kerry bill for its supposed deficiencies. It is with not a little irony that I also note the phenomenal pragmatism these so-called reform groups displayed when it was the McCain-Feingold bill being pared back and pared back-finally stripped of so many of its original provisions that there were one more to be jettisoned, even I could co-sponsor it because there would be nothing left but the effective date.

Indeed, it was just 3 years ago that we were still being told by these same reform groups that there could be no reform without candidate spending limits. All these other provisions that we hear about now were ancillary, their sole purpose to make the candidate's spending limits function. The spending limits, the reformer's end-all/be-all, were tossed out like so much garbage back in 1997.

So let us be clear that the reform groups proved along time ago just how malleable they can be when their principles are concerned. We are often counseled in this debate, by reformers, to not let the perfect be the enemy of the good. Yet, reform groups have been trying to cut down the Hagel bill before it can get too much traction. It is a curious hypocrisy.

Now, I have not and do not endorse the Hagel bill. To the reform groups, my non-endorsement should auger well for the Hagel bill. It should be considered a compliment, actually. I am not keen on capping party soft money. I think the parties would suffer, and socalled special interests would simply move their money elsewhere into the completely unregulated and unregulatable non-party_softmoney arena. But I do advocate hard-money increases, so I see much to like in the Hagel bill. But on balance, as it is presently written, I do not support it. It is a starting point, not an endpoint. We will have more on that in the weeks ahead in our other hearings.

Since taking over as chairman of this committee and particularly since I announced last November that we would have these hearings, I have looked forward to utilizing this venue for a thorough discussion of campaign finance: to consider what is reform, to delve behind the sound bites, to explore the assumptions on which the reform debate has been predicated, to examine the legislative remedies being advanced, and most importantly, fully vet the implications in terms of constitutionallly-protected political freedoms of citizens, groups, candidates, and parties.

"Soft money," "hard money," "issue advocacy," "express advocacy," "independent expenditures," "bundling," "PACs," and all the other terms of art tossed around in this debate are euphemisms for constitutionally-protected means of political speech and association. It is no more complicated than that.

To illustrate that point, I would urge everyone, especially those in the media who cover the campaign finance debate, to contemplate the ramifications of repealing Section 431(9)(B)(i) of the current Federal election law. In playful moments, I refer to this as the "media loophole."

This provision says the term "expenditure" does not include any news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication unless such facilities are owned or controlled by any political party, political committee, or candidate.

Why? A thoughtful observer might ask why does the federal campaign finance law include an explicit exemption for the media? The answer is: because, without the media exemption, the media's own political issue advocacy, contributions, and independent expenditures could be regulated by zealous federal bureaucrats.

With the media exemption, federal campaign finance law makes a distinction where there is no real difference. If the Republican National Committee bought NBC from GE, suddenly Tom Brokaw and Katie Couric would have to watch what they say. And if socalled reformers had their way, Mr. Brokaw and Ms. Couric would have to watch not only what they say, but when they say it-proximity to an election being one of the reformer's criteria for inflicting the federal speech police on citizen groups.

Make no mistake, the campaign finance debate is a battle over constitutional freedom of private citizens and groups, as well as politicians and political parties, to participate in our democracy. That is why we are leading off with this hearing and why I am so grateful for the efforts of our witnesses, even the ones with whom I disagree, to be here this morning.

Senator Feinstein would like to make an opening statement. I also want to thank her for coming over and helping us get the hearing going.

Senator Feinstein. Thanks very much, Mr. Chairman, and let me begin by thanking you for holding this hearing. I think it is the first of the series and hopefully will be a good first start.

I am one that personally very much believes in the need for campaign spending reform. Just as the chairman was speaking, I was adding up what I had to raise in the last decade alone, and it totals $56 million. Of course, $23 million of that was in a race for governor in 1990, but $8 million in '92 for a 2-year Senate seat, $14.5 million in '94, and I was out-spent 2 to 1 by my opponent. So far in reelection, oh, let's say 5- to $6 million that I have raised so far. If you add all of that up, it is over $50 million. $28 million of it alone is to run for the United States Senate where contributions are regulated.

Additionally, I have voted for the McCain-Feingold reform legislation at least 6 times in the last 4 years, and I am prepared to vote for it again. However, it is very likely that McCain-Feingold would not come up for a vote again in this Congress, and as a Member of this committee, I have watched the gridlock that has surrounded this issue now for 7 years. In an effort to try to bridge the gap, I am introducing today an additional piece of legislation with the hope that it might be regarded as a worthwhile compromise.

The bill I will introduce contains three very simple provisions. The first is it would ban soft money. The second is that it would raise the hard-money contributions going directly to a candidate from $1,000 to $3,000, and thirdly, it would require the disclosure of those who contribute to the so-called independent campaigns and the issue ads that anyone who would contribute more than $3,000 would have to disclose that within 48 hours, particularly if that contribution goes toward the expenditure of anything costing more than $10,000.

For me, it has been interesting in my decade of major campaign fund-raising to watch what has happened with soft money, and according to the FEC, the Republican Party raised $131 million in soft money just during the '98 election cycle. That is 150-percent increase over the last midterm election in '94. The Democratic Party raised $91.5 million. That is an 86-percent increase.

Common Cause has found that national political parties raised a record $107 million during the '99 campaign calendar year, 81-percent more than the $59 million they raised during the last comparable Presidential election period. Congressional campaign committees of national parties raised more than three times as much soft money during '99 than they raised during '95. That is $62 million, compared to $19 million. The escalation in soft money is unparalleled.

So, to talk about campaign finance spending reform and not deal with soft money becomes an oxymoron. So I think the key to any bill really has to eliminate this kind of high-level, unregulated, to a great extent undisclosed ability to change the dynamic nature of a political campaign in a very anonymous way.

The reason I believe my bill is a compromise is that it offers an increase in the hard-money contribution limit to a level that more realistically reflects modern-day needs. The original $1,000 limit was set in 1971. That is 29 years ago. I think it needs adjustment. Any of us that have been in politics since 1971, and I am one of them, understands the escalation of costs of campaign materials, consultant services, television, radio, all of the necessary tools of any viable campaign.

So what my bill does is move campaign contributions really from under the table to above the table. Instead of hundreds of thousands of unregulated dollars flowing into the coffers of national political parties, the legislation would increase the amount that an individual may contribute to a candidate's campaign and require disclosure of those additional dollars that currently go on an unregulated basis and would eliminate soft money.

I thank the Chair, and I look forward to the testimony.

The Chairman. Thank you, Senator Feinstein.

Our ranking member is now with us. Senator Dodd, would you like to make an opening statement?

Senator Dodd. I would, Mr. Chairman. I thank you, and I apologize to you and the witnesses. I will try to make this brief this morning.

First of all, let me thank you, Mr. Chairman, for holding these hearings. This is an important time. This committee historically has had the lead role on this issue. I commend the chairman for restoring that historic role by holding this series of hearings on this issue so that we could thoroughly examine the kinds of legislation we ought to consider. So I thank you immensely.

I want to commend my colleague from California for an eloquent statement and tell her that I very much appreciate the legislative proposal that she has outlined. It is a creative one and one that I think is worthy of support.

Mr. Chairman, it was about a year ago this week that our committee held its first hearing on campaign finance reform, and what a difference a year can make. In the last year, the Supreme Court considered and decided arguably one of the most important cases involving Federal election law since the Buckley decision was handed down almost a quarter of a century ago. The case of Shrink Missouri PAC is an important decision. While constitutional scholars and Members of Congress are going to disagree about the ultimate impact of that case, as will be clear from this morning's testimony, one might also conclude that there is something in that decision for everyone as they look at it.

Also, in the last year, we have witnessed the beginnings of the Presidential election campaign. The issue of campaign finance reform has become not just a rallying cry, but a defining issue, I might argue, as we have seen already, separating not only our two major political parties in this country, but even distinguishing between the candidates within those parties.

Finally, for the first time since the enactment of the Presidential primary system of public financing, a major Republican Party's leading candidate, George W. Bush, has chosen to forego public financing in exchange for the ability to raise unlimited amounts of money, something Ronald Reagan, George Bush, Bob Dole rejected.

There can be no question that the money in exchange for campaign dollars and its potential to undermine our system of democracy has grown beyond what Congress could have imagined when we passed the 1979 amendments to the Federal Election Campaign Act; nor can there be any question that the explosion in the reliance on soft money and the development of so-called sham issue ads present legal challenges to the courts today that are significantly different from those faced by the court in the Buckley decision in 1976.

With that backdrop, let me state for the committee how I intend to approach this series of hearings. I have consistently stated my belief that the problem is one of too much money in the system, not too little. Let me just reiterate some examples of that.

Congressional candidates and the national parties raised in excess of $1 billion in the 1997-1998 election cycle. In the Senate races, winning candidates raised a total of $162 million, for an average cost of just under $5 million. To fund such a campaign, the Senate candidate today would have to raise more than $2,000 a day for every day of a 6-year term, and that represents an actual increase of over 740 percent in average expenditures under direct control of the candidates, or almost a 260-percent increase in constant dollars.

When compared to the expenditures of winning Senate candidates in the 1976 elections, the reliance on unregulated soft money has similarly exploded. The total amount of soft money raised from special interest by the two national parties, including the Senate and House campaign committees in the 1992 election cycle accounted for 23 percent of all receipts. By 1998, that number had almost doubled to 43 percent, and the most recent data confirms the continuance of this trend. Overall, the national parties raised over $107 million in soft money in 1999, 81-percent more than the $59.2 million raised in 1995, the last comparable Presidential election cycle.

For this Member of the United States Senate, the growing reliance on unregulated soft money and the increased use of so-called sham issue ads creates exactly the improper influence, in my view, and the opportunities for abuse that the Supreme Court recognized in Buckley and reiterated in Shrink Missouri PAC were sufficient to justify congressional action limiting campaign contributions.

Scholars clearly disagree over how far we can go to bring soft money and sham issue ads under the constitutional rubric of Buckley and its progeny. But that disagreement over the degree of a form has for too long prevented us from reaching a bipartisan consensus. The reforms embodied in the McCain-Feingold legislation which I, too, support as Senator Feinstein today indicated, are designed to achieve the delicate balance of insuring the integrity of our election process while affording candidates and citizens their First Amendment rights to associate and to be heard.

While I am not prepared at this point to dismiss out of hand the proposals by our colleagues, Senators Hagel and Kerrey, I believe that that legislation inadequately solves the corrosive effect of large soft-money contributions while needlessly fueling the amount of money in the system. While I would not categorically rule out increasing the individual contribution limits, such an increase in my view must be coupled with real reform which eliminates the cor