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Closing Loopholes Means Ending Worthy Programs

July 30, 1989|Ronald Brownstein | Ronald Brownstein covers politics for the National Journal

The campaign finance reforms approved after Watergate were intended to prevent wealthy interests from buying the ear of elected officials with huge donations. That's how the law reads on paper.

Now, for a look at the real world, consider the case of Charles H. Keating Jr., whose quest for access spotlights the gaping holes perforating those reforms.

Keating is chairman of the company that owns Lincoln Savings & Loan in Irvine, a firm seized by federal regulators in April. In the last few years, according to one recent compilation, Keating funnelled at least $1.35 million into causes favored by five senators who met twice with top Federal Home Loan Bank Board officials to discuss the agency's investigations of the thrift. Former Bank Board Chairman Edwin J. Gray has accused the senators--including Alan Cranston (D-Calif.)--of pressuring the regulators to loosen supervision of Lincoln; its collapse has left the government holding losses that may exceed $2.5 billion. The senators deny Gray's charge.

However those accusations are resolved, the Keating case has already made a larger point: The $1,000 contribution limit to federal candidates has become meaningless.

Increasingly, candidates and the two national parties find ways to advance their goals through institutions not subject to that limit. Over the past decade, politicians in both parties have identified crucial political functions, separated them from formal campaigns and "subcontracted" them to new organizations that can accept the large contributions prohibited by the campaign finance reforms. For example, Cranston solicited $850,000 from Keating in 1987 and 1988, not for his next reelection, but for a series of ostensibly "nonpartisan" voter registration organizations he is affiliated with.

"This really demonstrates the ability of both legislators and special interests to be creative about how money can be used in politics," said Ellen S. Miller, executive director of the Center for Responsive Politics in Washington. "It really flies in the face of the Watergate reforms, which at the bottom line, set limits on who can contribute and how much they can contribute."

One way politicians avoid the rules is through nonprofit educational or charitable organizations that can accept unlimited, usually tax-deductible, gifts. In a survey two years ago, the Center for Responsive Politics found that more than two dozen politicians--from Sen. Edward M. Kennedy (D-Mass.) to Sen. Jesse Helms (R-N.C.)--had established such institutions, most advocating the sponsors' policy agenda. In the early stages of the 1988 presidential race, six candidates--roughly half the field--opened nonprofit think tanks. The tanks paid for travel, conferences and research that found its way into campaign speeches. TV evangelist Marion G. (Pat) Robertson even used his nonprofit Freedom Council to recruit supporters during the first GOP presidential contest in Michigan.

More damaging to the finance law than these maneuvers, however, has been the growing subcontracting of voter registration and turnout programs. Both activities--intrinsic to any campaign's success--are now largely funded with donations that would be illegal if given directly to candidates.

The voter registration battles between the parties through the 1980s catch the arms-race mentality that has allowed big donors back to the table. In the early 1980s, as Democratic strategists talked of unseating President Reagan by mobilizing millions of low-income voters, liberal foundations increased contributions to grass-roots organizations that register minorities and the poor. During the 1984 campaign, the GOP responded in part by raising millions of dollars for voter registration aimed at military personnel and evangelical Christians through a nonprofit foundation.

Enter Cranston, long interested in measures that improve turnout. He is now sponsoring legislation requiring registration reforms in those states the U.S. attorney general determined have "barriers" to participation. After the 1984 campaign, Cranston joined with Robert J. Stein, a leading liberal voter-registration strategist, to form USA Votes. The group pushed the cause of registration reform and, more important, helped direct funds from national donors to local registration efforts. After Cranston's narrow 1986 reelection victory--one he credited in large part to programs that mobilized low-income voters--the senator established a grass-roots group of his own: the Center for Participation in Democracy, which registers "underrepresented groups" in California, such as blacks and Latinos.

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