PRESIDENTIAL PRIMARIES AND CAMPAIGN FINANCE WEDNESDAY, MARCH 29, 2000 UNITED STATES SENATE, COMMITTEE ON RULES AND ADMINISTRATION, Washington, D.C. The committee met, pursuant to notice, at 9:38 a.m., in Room SR-301, Russell Senate Office Building, Hon. Mitch McConnell, chairman of the committee, presiding. Present: Senators McConnell, Dodd, and Feinstein. As I indicated before we began the hearing just in conversation, we have a vote at 10:00. What I would like to do, with the concurrence of the ranking member, is to forego our opening statements until after we come back after the vote, and that will give us a chance to hear from the Senators who are here. Today's hearings are going to focus on what many believe to be the obvious failures of the current Presidential system: front-loaded primaries, low contribution limits, and lack of enforcement of existing laws, such as the ban on foreign soft money and the ban on fund-raising on Federal property. We also will focus this morning on what I believe to be the abysmal failure of taxpayer financing of Presidential campaigns. The American people detest the idea of spending their tax dollars to pay for political buttons, bumper stickers, yard signs, and, of course, campaign ads as well. I must say that I have always found it insulting to taxpayers and a bit perverse that we make taxpayers pay for the advertising that apparently people don't care much for. But we will withhold, Senator Dodd and I, our opening statements, and we look forward to hearing today from some of our colleagues who have, I think, interesting and promising bills. One of them, the Gorton-Lieberman bill, S. 1789, relates to regional primaries Senator Lieberman and Senator Thompson, the ThompsonLieberman bill, S. 1991, relating to the clarification of existing laws and the strengthening of penalties. And with that, why don't we lead off with our colleague from Tennessee. Senator DODD. That is fine, and I am delighted we have our witnesses here this morning. I thank them for coming. Trying to make that 10 o'clock vote, I am more than happy to do that as well. I am delighted to have our colleagues here with us. I know there are others who care about all the issues involved campaign finance reform, and I hope that we might hear from them as well. I believe we are planning to towards the end of this series of hearing. But we do need to hear from people like Senator McCain and Senator Feingold, Congressman Shays, Congressman Meehan, and others who have some strong views on these issues. But, nonetheless, I am delighted to have three of our colleagues here today to talk about a couple of ideas that would strengthen potentially the electoral process. So we are delighted to hear from them, and I will wait until we come back for the full statement. The CHAIRMAN. Thank you, Senator Dodd. STATEMENT OF HON. FRED THOMPSON, A UNITED STATES Senator THOMPSON. Thank you very much, Mr. Chairman, Senator Dodd, and members of the committee. Thank you for the opportunity to testify today in support of S. 1991, introduced by myself and Senator Lieberman. As you know, Senator Lieberman, myself, and the members of the Governmental Affairs Committee spent a year investigating some of the worst campaign finance abuses in our Nation's history. Despite a number of obstacles-witnesses fleeing the country, people pleading the Fifth Amendment, entities failing to comply with subpoenas-our committee uncovered numerous activities that were not only improper but illegal. But although we were able to demonstrate to the American people basically what went on in the 1996 election, I m disappointed in the failure of the Justice Department to use that information to aggressively investigate and prosecute those who violated the law. After almost 4 years of investigating the many wide-ranging abuses, only one person connected with the Presidential election, Yogesh Gandhi, will spend any time in jail. The question we have to ask ourselves is why. Unfortunately, I think the primary reason is that the Justice Department simply has not done its job. Leads were not pursued. Subpoenas were not sought. Suspects were ignored. Agents were instructed not to ask questions about certain people. The law was misapplied, and no independent counsel was ever appointed to ensure a credible investigation. The plea bargains that were entered into also raise concerns. However, we have also learned that the Federal election law itself also makes prosecution of violators more difficult than it should be. The bill that Senator Lieberman and I have introduced would ensure in the future that conscientious prosecutors could more effectively pursue those who violate existing law. S. 1991 accomplishes the following five goals: First, the bill makes knowing and willful violations of the act involving at least $25,000 in a year a felony. Currently, no violations of FECA are felonies. The law does not differentiate between a donor who accidentally writes a check in excess of $1,000 limit and the fund-raiser who launders $100,000 to a party or campaign. This bill will provide a deterrent and appropriate punishment for those who knowingly and willfully flaunt the campaign finance laws. It is designed to catch those who, as I say, are not either so liciting or donating a $1,000 check and mess up in that regard, or maybe $2,000, a man and his wife, but someone who is more or less in the business, as there is a $25,000 threshold before this kicks in. Secondly, the bill will extend the statute of limitations from 3 years to 5 years. You know, outside of the Internal Revenue Code, virtually every violation of Federal law has a statute of limitations of at least 5 years. This provision brings FECA into conformity with the rest of the law. Third, the bill would require the Sentencing Commission to promulgate a guideline specifically for FECA violations. In addition, the bill provides specific factors for enhancement of sentences. Currently, without a specific guideline, judges are forced to turn to other guidelines, typically those intended to govern or set sentences for fraud. Unfortunately, because the donor makes the contribution with full knowledge of the scheme, the enhancement factors for fraud are basically useless. By providing judges with a specific election law sentencing guideline, they could impose more appropriate sentences. Fourth, the bill prohibits foreign soft money contributions. Prior to the 1996 campaign, I thought that we all agreed that foreign soft money contributions were illegal. Thereafter, the Justice Department interpreted "contribution" as used in FECA to have two different meanings depending on how the contribution is used, raising the possibility that foreign soft money did not fall within the scope of FECA prohibitions on foreign contributions. I had a discussion with Attorney General Reno about that very subject, and I pointed out to her that her interpretation of the word "contribution" meant that foreign soft contributions would be perfectly legal. She argued with that, still thought that they were illegal, but a contribution is a contribution and you can't really make that differentiation. Indeed, in two cases, a Federal district court in D.C. ruled that foreign soft money was, in fact, legal. Subsequently it was overruled by the Court of Appeals. However, in order to clarify the law, S. 1991 would definitively prohibit foreign soft money contributions. Also, Mr. Chairman, earlier this month, the FEC wrote to Congress and asked for a clarification on this very issue regarding the legality of foreign soft money. So I believe we should provide that guidance. Finally, this bill would prohibit conduit soft money contributions. Under current law, it is illegal to give $500 of hard money in the name of another, but it is perfectly legal to give $500,000 of soft money in another person's name. This bill would close that loophole and provide what I think we can all support, and that is full disclosure. As you know, you have to state and disclose who is giving the soft money. This goes along with the notion if we are going to disclose it, it ought to be correct. In closing, I personally believe that we need to reform our campaign finance system. However, no reform is going to mean anything unless we do a much better job enforcing the law when it is violated. I believe this bill in the hands of prosecutors who are interested in enforcing the law will help ensure that in the future violators of the campaign finance laws will not walk away with a slap on the wrist. And with regard to a prosecutor who is not so interested in enforcing the law, our proposal would eliminate major excuses for not enforcing it. Thank you very much. The CHAIRMAN. Thank you, Senator Thompson. The CHAIRMAN. Now, Senator Lieberman, you are a cosponsor of both of these bills. I don't know whether you are planning to speak to both of them at once or not. What would your preference be? STATEMENT OF HON. JOSEPH LIEBERMAN, A UNITED STATES SENATOR FROM THE STATE OF CONNECTICUT Senator LIEBERMAN. Thanks, Mr. Chairman, Senator Dodd. I think I would like to give a brief "Amen" to both of the pillars of the law and truth and justice on either side of me here. [Laughter.] Senator LIEBERMAN. It is my honor to appear before you on both of these bills. I would just like to say a brief word about the bill that Senator Thompson and I have introduced and then yield to Senator Gorton. I would be happy to say just a brief word afterward. Senator Thompson described very well what this bill aims to accomplish. It grew out of our investigation of the 1996 elections in the Governmental Affairs Committee. Obviously, there are disputes coming out of that that continue about matters such as soft money and limits on contributions and the rest. But one thing I have never heard an argument about is, for instance, whether it is illegal to knowingly infuse foreign money into a political campaign in this country or to use unwitting straw donors to hide the true source of money that was going to candidates or parties. I think all of us believed that the people who did those things in 1996 would be prosecuted and appropriately punished, but as we now know, and as Senator Thompson said, that has not been the case. I must say that when he and I met with some of the career prosecutors at Justice who were working on this, I was surprised by what I learned about the shortcomings of the law here. In this bill we try to overcome those shortcomings. I would offer, as broadly credible testimony here, the now famous memo that Charles LaBella wrote that was quoted in the Los Angeles Times. It has received most of its notoriety because of the criticism of the Attorney General's decision. But he also said in that memo, according to the Times-and, you know, I have met LaBella. He is a first-rate prosecutor. And he said, and I quote, "The fact is that the so-called enforcement system is nothing more than a bad joke." I think in that he was referring to the kind of legal inadequacies that we are talking about. Many people, including myself, are upset that people like Charlie Trie and John Huang have not been more severely punished for what they did in 1996, but the Federal Election Campaign Act doesn't authorize felony prosecutions. So no matter how egregiously someone violates FECA, all they can be charged with is a misdemeanor. And as we know, people rarely go to jail for misdemean ors. To get around FECA's weaknesses, prosecutors often charge campaign finance abusers with other Federal crimes that are felonies, whih is what they did with Trie and Huang. But that still very often doesn't solve the problem, and that is because when it comes time for sentencing, judges have to turn to the Federal Sentencing Guidelines, which still often bring light sentences because there is no guideline on campaign finance violations. And those two weaknesses are at the heart of what our bill tries to do, as Senator Thompson indicated. I want to just finally say two things the bill doesn't do. It doesn't criminalize participation in the political process. That clearly is not our intent, and we believe it is not the effect of our bill. As Fred Thompson indicated, the bill would allow felony prosecutions only if, first, the defendant knowingly and willfully violated the lawyou got to prove that—and, second, if the offense involved at least $25,000. Finally, the bill is not about campaign finance reform in the broader sense in which it has been discussed on the floor, for instance. It is not about soft money or issue ads or any of the numerous other difficult controversial campaign finance issues that have divided the Senate. It is instead about something I think we can all agree upon, which is that actions that are already criminal and that I think we all agree are wrong should be punished. That is the purpose of this bill. I thank you very much for the opportunity to testify about it, and I hope you will include it in your markup when it comes along. Thanks very much. The CHAIRMAN. Thank you, Senator Lieberman. The CHAIRMAN. Our timing is excellent in taking a look at the Gorton-Lieberman proposal because the two Presidential primaries are now effectively concluded. Even though there are still a number of primaries left to be held, the nominations are essentially determined, and it is my understanding that the two parties are already having meetings weighing the ramifications of what has developed this year with more and more States moving their primaries up, in effect, creating national primaries on March 7th and March 14th. Senator Gorton and Senator Lieberman have for a number of years been considering legislation, which we are now going to consider in committee, that would take a different approach. Senator Gorton is the principal sponsor of this. Why don't we start with Senator Gorton? STATEMENT OF HON. SLADE GORTON, A UNITED STATES SENATOR FROM THE STATE OF WASHINGTON Senator GORTON. First, Mr. Chairman, I have a relatively lengthy written statement I would like to include in the record. The CHAIRMAN. That will be included. Senator GORTON. I believe, Mr. Chairman, for the first time in a generation, when both parties have had contested Presidential nominations, either a tiny handful of Democrats in New Hampshire or a tiny handful of Republicans in Iowa will have picked the next President of the United States relatively early. The two caucuses and primaries don't have a notable record of success, but they have |