MODERATOR: Thanks for coming to the Foreign Press Center this afternoon for a look at campaign finance and the Presidential Election of 2008. We're delighted today to have Ciara Torres-Spelliscy, who is counsel for the Campaign Finance Reform Project in the Democracy Program at the Brennan Center for Justice at the NYU School of Law, and Richard Briffault, who is the Joseph P. Chamberlain Professor of Legislation at Columbia Law School. And they will be offering some remarks about the state of campaign finance and a look ahead at possible reform of campaign finance laws and then we'll take your questions. And I believe Mr. Briffault will be opening. Welcome to you both.
MR. BRIFFAULT: Great, thanks. Thank you very much. I actually have a little handout which may help follow along because there's a lot of both -- I speak very quickly I've been told, and there's a lot of fairly technical stuff. And so I'm not sure at what level of technical versus general you all want to be. So I thought it would be easier to put it all on a page and sort of walk through it. And then as you have questions we can come back to it. And when Ciara's done, we'll have a general Q&A.
So what I've got here, let's see, is the general legal framework and then some specific issues, some of which are more resolved than others. So just -- general legal framework we're thinking about federal campaign finance on the general election is we have statutes, which is the acts of Congress, Federal Election Campaign Act of 1971, which has been amended several times, and the Bi-partisan Campaign Reform Act of 2002, sometimes called McCain-Feingold, which again reshaped the environment. There's the Internal Revenue Code, which affects certain organizations. There are leading Supreme Court decisions. The two most important are the Buckley decision from 1976 and the McConnell decision more recently, and the regulations of the Federal Elections Commission.
And it's really the -- it's basically the acts of Congress, the Supreme Court decisions which sets the outer bounds of what Congress does and the FEC regulations which implement the gray areas that together set the basic framework. And within that basic framework the Constitutional settings, the major things that the Buckley case did, is to approve disclosure requirements that are imposed on candidates, political parties, political committees, donors, approving contribution limits, the amounts on what different entities can give to different entities, that is what individuals can give to candidates, what committees can give to candidates, what partners can give to candidates, invalidating in general expenditure limits. There are no spending limits on what candidates or parties or independent committees can do, and upholding the President public funding system.
And then the McConnell case, some 25 years later, really upheld just a number of things but two major things. Like Congress had in 2002 to deal with certain loopholes that emerged in the Federal Election Campaign Act, and I'll get to what those are in a minute.
So turning to reporting and disclosure by the candidates' committees, I think the thing that's caught everyone's eye recently, of course, are the reports of the presidential candidates, technically by their committees. That's a product of federal law which requires that candidates' committees file reports on a periodic basis. In the pre-election year -- we are only in the pre-election year -- they're required to file quarterly, that is as of March 31, with a report due 15 days later. There will be another report on July 15, as of June 30th another one October 15, as of September 30th and the last quarter they get 30 days. Then next year they're required to file monthly in the election year itself. So you saw on the 20th of -- on February 20th you'll get the January 31st numbers, and on March 20th you'll get the February 29th numbers, etc.
And what are they supposed to tell us? The cash on hand, total contributions plus the names and addresses and a lit bit more of identifying information if anybody's given more than $200, total disbursements, and again the names and some identifying information of anybody they have given more than $200 to. That tells you what they're spending their money on. And this is all done if you're filing above a certain level, and they all are, this is all done electronically with the FEC.
In terms of contribution limits, somebody mentioned before we started that you've already found out that what the number is this year it's -- for individuals, two candidates, it's $2,300 per candidate, per election. Per election means that the nomination phase is treated as a separate election from the general election. That mean you can give $2,300 for the nomination contest and another $2,300 for the general election and it's per person. So you can do it, your spouse can do it, and then your children can do it. So there is no effective family limit.
In addition, there are also separate limits on what the individuals can give to the national party committees like the Republican National Committee and the Democratic National Committee, what they can give to other political committees, and there is an overall cap on what any individual can give in what we call the election cycle, that's 2007 and 2008 together, and that's $108,000. These are all numbers that were adopted in 2002 and then are adjusted for inflation, which is why they're such odd numbers.
There are also limits on how much the parties and political action committees, I'll get to what those are in a minute, can give to candidates. They're under a cap of $5,000 per election. And then there's an additional limit, which will be more relevant to Ciara's discussion of Presidential public funding, which is that the parties can give in support of their candidates in the general election, they can spend a certain amount of money in coordination with their candidates. And I don't know that that number's been adopted yet. I was trying to find out this morning whether that has been adopted yet for next year. But what it was in 2004 was $16 million and that will be indexed. The odds are it will be around $20 million maybe a little bit less.
In addition to the dollar limitations, there are source prohibitions. The following entities cannot give or spend money in federal elections: Corporations; labor unions; foreign nationals, which are defined as non-resident aliens; resident aliens can; and government contractors. The part about corporations and unions surprise a lot of people because they're always being told about how much corporate and union money there is. Well, technically it's not from the corporations or the unions, it's from these thing called political action committees, which is the name we call them. There is a separate legal name for them.
What it is is that the law has, for a long time, prohibited corporations and unions from using what we call their treasury funds, from dipping into their general funds and giving money to candidates or spending in the election. But what they can do is set up committees, pay for the administration of the committee, pay for the staff that runs the committee and have those committees solicit people who are affiliated by the entities setting it up.
Corporation - they can solicit the officers and directors, the senior staff, the senior personnel and shareholders. And the union can solicit the union members. And from those solicitations, they are supposed to result in voluntary contributions. Legally they must be voluntary, and perhaps that more debatable. So the officers, directors and senior employees of a corporation and shareholders, but they usually don't bother shareholders, can be asked to give up to $5,000 to the PAC. And then the PAC in turn can make contributions to candidates. Same thing for unions.
The PAC device is also used by a lot of other organizations to form what are called political committees to make contributions or engage in expenditures. And so when you
-- the Federal Election Commission will periodically list the total number of PACs and the amount of PAC money involved. They'll tend to refer to them as connected and non-connected. Connected PAC means they're connected to a parent organization like a corporation or a union. Non-connected is if they're formed just for the purposes of being involved in politics.
We also use -- I referred to coordinated expenditures. That is when a party coordinates with its candidates, and it could be when anybody coordinates with a candidate. That's coordinated expenditure and it's treated as a contribution. We also have the idea of independent expenditures, that is in addition to candidates spending money, political parties can spend money, political committees can spend money, and I can spend money. Since many of you I suspect are foreign nationals, you cannot. But I can spend money; I can take out ads in newspapers; I can go to -- I can campaign on my own and hire lots of people to do it. There are no limits on that. If it crosses a certain fairly low dollar threshold, there's a disclosure requirement but no limit.
Quickly, the term "soft money" has been very famous in the last 10 years or so. Soft money refers to money that is useful in an election but was not technically given to or spent in direct support of a candidate. And so it wasn't subject to the legal limits, such as the dollar limits on individuals and the corporate and union (inaudible).
What might that be? It might be money spent on a voter registration campaign targeted to people who support your party or a Get Out The Vote drive. It also could be spent for certain kinds of ads which, prior to 2002, were defined as not election related. They sounded awfully election related to most people. Almost everyone who heard them thought they were election related, but technically as a result of a Supreme Court decision, they were not considered to be election related. They were considered to be issue ads in that they discussed candidates and issues together or discussed candidates' personalities. They discussed whatever they wanted but so long as they didn't come right out and say vote for or vote against somebody -- that's known as express advocacy -- they were considered to be issue advocacy and not covered by federal law. So you could use unlimited individual contributions with corporate or union money to pay for that.
The 2002 law, BICRA or McCain-Feingold largely eliminated that with respect to political parties. Political parties can -- the national parties can no longer take any corporate money, any union money, any large individual donations above the federal limits. And the state political parties cannot take it for all the purposes that would be relevant to a federal election like voter registration, Get Out The Vote, general party advertising, and these issue ads. In addition -- but it was really focused -- that part of BICRA was really focused mostly on the parties.
More generally, the law came up with a new category of ads, basically, that it expanded the idea of expressed advocacy ads and it narrowed the idea of issue ads so that any ad that is broadcast within 60 days before an election -- this is really, I'm now on sort of number 7 -- 60 days before a general election or 30 days before a primary -- that's why it's kind of written 60/30 -- is considered an electionary communication, and that's given the same treatment as express ads. So corporations and union cannot take out those ads. Those ads are now subject to disclosure.
The thing that emerged in 2004 partially in response to the shut-down of soft money for the political parties and the shut-down of issue ads by the political parties were things called 527 Committees. On the Democratic side, America Coming Together, Move-On.org were famous for that. The Media Fund on the Republican side, Swift Boats group is most famous.
527 refers to a section of the tax code, and it's basically the section of the tax code that provides for the organization of political committees. What it really says is that income received by political committees is not taxable, otherwise, you'd have the oddity of campaign committees having to pay taxes on the contributions they receive. So basically it says that they are tax -- the income they receive is not taxable so long as they engage in political activities. And this became a device for people needing to get around the Election Law regulations.
So a couple of years ago some reporting was required as to who exactly is giving to these committees and what are they doing. But so long as these committees restrict themselves to election activities that doesn't fall within either express advocacy or electionary communication -- electionary communication being really defined mostly in terms of broadcast ads in 60 days before the election -- they too are not subject to the general limits, the dollar limits and the corporate and union prohibition, which is why they emerged as somewhat significant in 2004 mostly with large individual contributions and union contributions.
One of the interesting developments in 2004 is that the amount of corporate soft money largely disappeared. There have been something like $500 million worth of soft money in 2000 of which about half was corporate. In 2004 there was over $400 million in 527 money. The exact number is debatable. But maybe no more than $30 million was corporate. Corporate money largely disappeared. Union money went up.
What really -- it occurred very dramatically in 2004 was the role of extremely large individual amount -- individuals giving huge amounts of money. I think I did some research on this, and it's all public records, something like there were 25 individual or married couples who together gave $150 million. George Soros led that with about $25 million of his own money. So that was really the huge turnout in 2004 was, some of it was union money, but very little of it was corporate money. Most of it was extremely wealthy individuals on both sides. Soros was obviously giving to committees that were helping Democrats and opposing Bush, so, on both sides.
I'll stop and why don't you take over. And then we'll take questions at the end.
MS. TORRES-SPELLISCY: Good afternoon. My name is Ciara Torres-Spelliscy. I'm an attorney at the Brennan Center for Justice where I work on campaign finance reform. Usually I spend most of my days getting calls from people who were drafting legislation. They give me a draft bill and they ask me if it's Constitutional.
I'm going to emphasize the reform aspect of Federal Campaign Finance laws especially in the context of the upcoming election for the White House. And I'm going to talk as generally as I can, because this is an area of the law where there are exceptions to exceptions to exceptions, and so it makes it particularly hard to give you a perfect picture without going into sort of some of the elaborate detail you've just heard from Professor Briffault.
So why is 2008 shaping up to be a billion dollar race for the Presidency? One, there is no heir apparent. Bush can't constitutionally run for another term and Cheney is not running. So there is a wide open field for both political parties.
Two, so far no frontrunner candidate is willing to opt into the public financing system in the primary. Without public financing, there's no spending limit. And without public financing, there's little incentive to go after small contributors because small contributions are no longer matched, which has a consequence of focusing fundraising on the largest donors that you can find.
Three, after McCain-Feingold, which is also known as BICRA, parties are no longer allowed to spend soft money on federal campaigns, which leads candidates to gather as many hard money contributions from as many donors as possible.
Four, what I would call the mega primary, New York and California have moved their primaries to February 5th, and 18 other states are likely to do the same. This requires candidates to run campaigns simultaneously in the most expensive media markets, which in turn requires millions of dollars.
So all of these forces are coming together to create a perfect storm, and this is pushing candidates towards the most expensive presidential season ever. So let me take a step back. So where is the need for reform in all of that?
For me, the answer lies in the economic context in which this presidential race is being run. The New York Times reported in late March that income and equality in the United States is as high now as it was in the 1920s. So for many Americans campaign contributions are a luxury that they cannot afford. But for those at the higher end of the economic spectrum, contributions are almost becoming a cost of doing business. But as a democracy, we need to ensure that politicians are not bought like commodities and that voters have faith that their elected officials are making policy choices based on the good of the people and not just on the good of their political benefactors.
Campaign finance systems are multifaceted to address a myriad of intersecting problems. These systems usually have some of the following attributes: (1) disclosure of contributions and expenditures to provide transparency; (2) contribution limits to prevent corruption; (3) bans on certain types of contributors like corporations or unions to prevent distortions of influence; (4) enforcement to ensure that all candidates are playing by the same rules; and (5) some systems provide public financing to offer an alternative to reliance on private money.
The federal campaign finance system in the United States has all five of these attributes. Some work better than others. In the realm of privately funded campaigns, supporters of campaign finance reform see the reform as a means of opening up the political system so that no large political donor can give so much money that he or she is perceived as buying influence over a candidate or candidates.
All individual donors theoretically have the same effect on a candidate. For example, in the federal system even a rich person, who has a million dollars at their disposal, cannot write a check to a candidate for a million dollars. Rather, each individual can give $2,300 to each candidate per election and is also subject to aggregate limits. But there are other avenues for the rich to give. They can give to convention host committees, to political parties, to PACs, to 527s, to 501(C)(4)s, and other entities.
Some critics charge that campaign finance laws are a violation of the free speech and associational rights of both the candidates and their contributors. The free speech purists think that contrary to federal law and Supreme Court precedent that donors should be able to give as much money as they want to whatever candidate they want.
And consequently, campaign finance laws are very heavily litigated because of the free speech concerns that they raise. And this is an area of the law that makes some very strange bedfellows. In particular, several right-to-life organizations have spent years litigating cases, trying to make Swiss cheese out of the campaign finance laws. But on the other end of the ideological spectrum, the ACLU often challenges campaign finance laws for very similar free speech reasons.
Another facet of campaign finance reform is the use of public funds to level the playing field among candidates and to free candidates from the ordeal of perpetual fundraising. In the federal system, public financing is only available to presidential candidates. The federal system is a mix between partial public financing in the primary and full public financing in the general election. In the primary season, the presidential election fund provides participating candidates with matching funds for small contributions. And in the general, participating candidates receive a full grant to run their campaign, so they don't have to do any fundraising in the general election if they've opted into the system.
Many states and localities have versions of public financing. Maine, Arizona and Connecticut have full public financing for legislative and state-wide races. In North Carolina there is public financing for judicial elections. In New York City there's partial public financing for candidates for the Mayor and City Council. Public financing reduces and in some cases eliminates the need for large donations and attracts candidates into the political system who have fewer connections to wealthy donors. That, as is evident by recent events surrounding the federal presidential election system, public financing systems can fail if they're not properly funded to keep participating candidates competitive with privately funded candidates.
We already touched on this a little bit before, but I'm going to go back to BICRA a little bit. BICRA is the most recent reform in the U.S. It was passed right after the Enron scandal in 2002. And BICRA attempted to close specific loopholes in the federal election system.
BICRA was meant to ensure that national parties, federal officeholders and federal candidates only use hard money contributions to influence federal elections and that state parties would cease acting as vehicles for channeling soft money into federal races.
BICRA also regulates electionary communications. This was meant to address the issue of what they would call sham issue ads that avoided using magic words like vote for or vote against a particular candidate. The trouble with the pre-BICRA loopholes was that large special interest money from corporations and unions flowed into the federal elections undermining the hard money limits which seek to equalize influence among donors.
And sham issue ads also had a pernicious effect by avoiding magic words like "vote for" or "vote against" a federal candidate. Corporations or unions could pour millions of dollars into thinly veiled attack ads to help the candidates of their choice, and BICRA has largely close these avenues for abuse.
Supporters of campaign finance reform predicted that BICRA would force parties and politicians to rely on smaller, hard money contributions, and that's exactly what has happened. The explosion of fundraising by the 2008 candidates reflects a new focus on smaller donors. Combined with fundraising on the internet, the law and the technology is building a new base for small donor democracy.
We at the Brennan Center believe that the only way to fix the federal election system is by providing a full functioning public financing system for both congressional and presidential elections, which would allow publicly funded candidates to compete with privately funded candidates. This would require fixing the presidential election system, which right now no major frontrunner candidate has opted into.
And there's also a bill called the Fair Elections Now Act, which would provide public funding to congressional candidates. That bill is structured differently than the presidential system. It's modeled on the clean elections systems in Maine, Arizona and Connecticut. Many feel that the congressional races -- putting public funding into the congressional races would have a bigger impact than even what's happened in the presidential race because a relatively small amount of public money could have a huge impact in a congressional race in a way that it hasn't had the same effect on the national level.
So I think I've probably used up my time. And I thank you for your attention.
MODERATOR: We're going to go ahead and take questions now. If you can just give your name and your affiliation please.
QUESTION: I'm Lennart Pehrson, I'm with the Swedish newspaper Dagens Nyheter. I wonder if you could address a little bit more the First Amendment factor, because it's not just the ACLU and anti-abortion groups litigating it. All this comes up in Congress and meaningful reform is being discussed. And how serious enough is an obstacle is it for -- does it make meaningful reform impossible?
MS. TORRES-SPELLISCY: I guess we can go back to the Buckley case. Buckley said that you can regulate contributions. That's constitutional. But you can't regulate expenditures. That's unconstitutional. So it sets up this dichotomy where if I'm abiding by all the rules, I have to get in my $2,300 contributions from every place I can get, and then I buy my million dollar ad. That takes an enormous amount of effort. And some reformers would say you need a constitutional amendment to fix that problem because -- and actually in 2006, the Supreme Court made very clear in a case called Randall v. Sorrellthat Buckley is alive and well. And that case, Vermont tried to put in expenditure limits in their statewide elections and they were roundly rebuked by the Supreme Court who said didn't you read Buckley. We've already addressed this and you cannot do it. That's one First Amendment issue. There are lots of them.
MR. BRIFFAULT: That's right. I mean what the Supreme Court said in Buckley is not so much that money is speech, although it's usually read that way, but that the spending of money is essential to the dissemination of speech that in a large, complex society like the United States, you can't get your message out unless you're allowed to spend money. So the spending of money on electioneering is itself protected. And then there was some debate as to what are the justifications for limiting the uses of money.
One of the Courts said it's okay to limit money to prevent the corruption or the appearance of corruption, which is why the Court was willing to sustain contribution limits. But the Court said there's nothing corrupting about spending as long as you're not using it to buy votes but you're just using it to send messages out. That's fine. We'll let the voters decide.
What the Court also rejected rather summarily, and Ciara said they just re-rejected it in 2006, is the idea that equality would be a basis for limiting spending. Although, part of the problem is the equality of the candidates is the way it was presented, and it wasn't quite clear whether there was a basis for saying that you should be able to prevent one candidate from outdistancing another candidate if the first candidate simply got more contributions. So that was part of the difficulty.
But it also meant that you cannot limit independent spenders, that is to say individuals, wealthy individuals or groups who want to participate. That parenthetically has actually been a problem for a lot of other countries which have adopted spending limits, have actually been more comfortable applying spending limits to parties.
In our system, we're a much more candidate-centric system than most. Most countries, most of the countries you're from, I think, are party-centric systems and election laws deal with parties. We're not, partly because of the party primary system. Since so much of the electoral activity in the United States is about winning nominations, you can't just focus on the parties themselves. I don't think that's the whole story, that's part of it.
So the Court has basically said you cannot limit spending, with one odd exception, and in some ways it relates back to a very old, actually our first campaign finance law really dealt with corporations. And the Court says you can limit the spending of corporations -- of business corporations -- and of unions. That doesn't seem very well thought out, but they agreed with the union's part, too.
All that means, though, is that it suggested more of a focus on public subsidies because the Court has said there's no problem at all with public subsidies, and there's no problem at all with giving -- with conditioning public subsidies on the candidate's willingness to accept a limit. So the only spending limit with did have was for candidates who agreed to take public money.
Even then, of course, you cannot limit non-participating candidates. The New York City mayoral election is a good example. New York City has a reasonably good public subsidy program for participating candidates. But somebody like Michael Bloomberg could spend as much as he -- didn't have to participate and he could spend as much as he wanted. New York City actually provided his opponents more money because he didn't take the limits but, of course, not nearly as much as he had.
So the First Amendment -- to go back to the opening question, the First Amendment is a very real issue. There's actually a very interesting case before the Supreme Court next week on this. I have a brief in it, and I know your organization does. I'm not sure if you personally do also.
MS. TORRES-SPELLISCY: I did not write that brief, but yes.
MR. BRIFFAULT: I wrote a brief in it dealing with in particular one piece of the McCain-Feingold law which limits the ability of corporations to spend in the pre-election period. Part of the problem with the law, it focuses on the term "corporation." There are a lot of entities which are not business entities which take the corporate form and some of them often are Right to Life organizations. And so there's an organization called Wisconsin Right to Life which is challenging one application of this. And that's going to be argued next week, ad we'll see where the Court is right now.
QUESTION: Neeme Raud, Estonian Television. I would like to ask you about lobby groups. Like yesterday after the shooting in Virginia it was interesting to see how almost all politicians from both parties said that it's not time to talk about guns. And how these groups are tied into this debate about financing and -- it seemed to me yesterday everybody was afraid even to mention the word because there are voters and there's money involved.
MR. BRIFFAULT: Maybe two ways make sense. Lobbying literally means efforts to influence activity oriented towards Congress or the legislatures. And money spent in Washington on that or money spent at home getting people to write letters to their representatives; that's not subject to this law. There are laws dealing with that and Congress has actually recently amended them. There are no limits on lobbying expenditures. And again, for First Amendment reasons it's not clear there could be. There is more disclosure now partly aimed at the lobbyist and partly aimed at the members of Congress where it's clearest that you could have those kinds of restrictions as well as prohibitions on certain kinds of junketeering, buying gifts, things like that.
But more generally the big -- amongst the big actors in the system, if you think of who the system is composed of, there's the candidates, I mean sort of concentric circles, the candidates, the parties, and then we'll just call them interest groups. Interest groups can be business, they could be labor and they could be all sorts of advocacy organizations. Well, guns is an area where there is a very powerful pro gun advocacy organization. And one of the things that makes it powerful is not just its ability to raise money, but it's got a lot of members. And so they would fall into -- there's the National Rifle Association. They have a PAC which they use to make campaign contributions. They were affected by McCain-Feingold because they take some corporate money. They're largely sponsored -- supported by individuals but they do take some corporate money, so they are -- they themselves are limited to what they can do directly, but there's a lot they can do indirectly as well as -- the other thing that they can also do that we didn't mention is -- again, it's a First Amendment idea -- is of course their most effective campaigning is with respect to their own members, basically telling their own members and their families who to vote for. That the Supreme Court long ago in the union context referred to as "internal communications." And although unions are prohibited from spending their own money in elections, they' are not prohibited from spending their own money to communicate with their members. The Supreme Court said that's constitutionally protected. So the same thing would apply to the NRA and similar organizations.
So their most effective activity is sending newsletters or in these days of course by e-mails to their own members, you know, legislation alerts, candidate alerts. So, yeah, that's a real factor though. Gun regulatory lobby is not nearly as big or as well organized.
QUESTION: Yes. I'm working for Knack. I'd like to ask you a question about bundlers and the world of bundlers because you were saying that a millionaire cannot simply transfer $1 million. But through bundling and networking, he still would be able to do so.
MS. TORRES-SPELLISCY: Bundlers have become -- they play a bigger and bigger role, especially as you have more hard money requirements. And bundling is basically gathering up checks from a number of people and then handing that pile of checks over to the candidate or over to the PAC or to the party.
And the way I think about it is the campaigns are outsourcing the trouble of raising money to well-connected individuals. And sort of the reform question is, is that a problem because the one person can still only give that $2,300. But if they can drop off a pile of checks that is a million dollars, have they in essence evaded the spirit of the law?
Right now, bundlers who bundle checks bigger than $200 have to disclose, but there's no limit on how much you can bundle.
MR. BRIFFAULT: Yeah, I mean Bush was the king of the bundlers. I mean he was the king. His Pioneers and his Rangers, in some ways what really brought bundling to the fore was the Bush Pioneers in 2000. And I guess it was the Pioneers were the hundred thousand and the Rangers were the 250s, something like that. But he actually had a significant group of $250,000 bundlers, people who -- so again, each individual check was under the -- the cap then would have been $2,100 I think or $2,000 but together -- but yes, it's a serious issue.
QUESTION: So if Mrs. Clinton has Hill raisers and these Hill raisers are -- basically they are bundlers?
MR. BRIFFAULT: Exactly.
QUESTION: When you mentioned public financing and the difficulty of making it larger or more accessible, I guess what we're talking about here is the future of democracy. And I wanted you to address the question of the role played by TV commercials and the possibility perhaps of giving free airtime to candidates.
MS. TORRES-SPELLISCY: We have long advocated for either free airtime, at least from broadcasters. Broadcasters in the U.S. have license to broadcast, and at least theoretically these are the public's airways. And you could make the licensing mean something. You could say that in order to be a broadcaster in the United States, you have to give a reasonable amount of time to candidates for political office. This has gone absolutely nowhere so far. The other approach would be to do subsidies that candidates in publicly financed systems would have like a sort of media account, and that's gone basically nowhere.
MR. BRIFFAULT: I think for -- in our system the appeal of free air time would be -- the government it would be sort of public funding on the cheap in that public funding would cost Treasury money. Now it wouldn't cost a lot of money. As things go, I think most plans suggest we could get a great deal done for just a couple of single digit billion dollars. But it's still some money and of course free airtime would be putting it up to the broadcasters who could afford it, but of course would be very resistant to doing it.
It has some anomalies in the United States, less at the presidential level where I think it would be pretty useful. But the lower down you go in the system, the less well the election constituencies match the media markets. So presidential elections, particularly in the -- the general presidential election is heavily about broadcast.
Senate races, somewhat less so. Congressional elections, much less so. In New York City you won't see any broadcast ads affecting congressional elections because the city media markets affect about 20 congressional elections at once. You'd be wasting your money unless you were extremely rich doing it. So it would be of limited usefulness since a lot of places in all the big media markets, New York or Philadelphia, Washington, you affect too many states at once. But it would make a lot of sense in presidential elections, especially the general presidential election.
QUESTION: Frode Froyland from the Norwegian Business Daily. Just a follow-up to that previous question. I mean how serious is the fact that no other leading candidates will accept public funding? I mean how serious a democratic challenge do you think it is?
MS. TORRES-SPELLISCY: Let me choose my words carefully here. I think it's a horrible risk that a future Congress would say look, no one used the system. We have a foreign policy to pay for; we have this to pay for. Why are we putting this money aside for this purpose when no one's using it. So at any point they could pull the system, and I think non-use of it makes that all the more likely. And as I said, there's an effort to expand the system to congressional races where I think it would have a huge impact.
If you think about now a state like Montana where they have one state rep for the entire state and about a population of about a million. A small amount of public money could really open up who could run for that slot in Montana. In a way, there will always be a lot of money in the presidential race, as we're seeing now. I'll leave it at that.
MR. BRIFFAULT: The problems in the presidential nomination phase are really -- part of what happened is that campaign finance reform is extremely hard to accomplish politically. And it's, therefore, almost hard or maybe harder to update it. The problem is that laws need to be dynamic in response to the environment, political environment. The presidential funding law we're dealing with was really enacted in 1972. It didn't really take effect until after that election. So the presidential election system has changed enormously then.
As Ciara mentioned, the primaries -- there are many more primaries and they're now front loaded. But technically under the law, the first matching funds wouldn't be paid until January 1st of next year, which the law clearly doesn't match -- which was -- until four years ago, that was -- or even certainly until eight years ago, that would have been fine in the way the presidential system was working. But the system has changed dramatically.
The amounts of money are simply way too small. What I like to say is that when presidential public funding was adopted in the early 1970s, we had just had an election in which somebody one by the greatest percentage in American history. Richard Nixon beat George McGovern basically by 60 percent of the vote, and he spent something like $60 million. And McGovern spent something like $30 million. So what did we do? We said we're going to give a public grant of $20 million. So the public grant was significantly less than the amount of money spent by the loser in that election. It's adjusted for inflation, but general inflation's been a lot lower than election campaign inflation because of the role of television, the role of communications technologies which didn't exist then which are now essential to campaigns.
The costs of campaigns have just gotten -- have grown much faster than general inflation. So right now the grant for the general election is $88 million, which is barely enough, maybe not enough at all. The grant for the primaries is half that. That was the structure that they invented in 1972.
So if they had opted in, maybe opting in for a $44 million limit, which is to run in 18 states at once, including New York and California as well as Iowa and New Hampshire. And so it's not surprising that -- I mean I'm not praising any of the candidates for opting out, but it's not surprising that they did. It doesn't work very well anymore.
The general election may or may not survive, because by then you're down to two and the so called free media do give a fair amount of coverage in the general election. So it could very well be that the public will be totally sick of everybody -- excuse me -- by then. But anyone -- and two nominees likely will have had extensive coverage, and it may very well be that they'll be able to rely on the public grants because it's a short campaign. But we don't even know that yet. No one is saying one way or the other.
Obama was very clear, he got a ruling from the FEC and a couple of other candidates followed that to say I'm going for private money now. I want to reserve my option to go for public money later. They said basically keep two separate accounts. Don't take in anything that wouldn't comply with the public system. Just keep it separate and we'll see.
And I think Edwards is doing the same thing. And I think he and Obama and I think at least McCain have said they would, vis-à-vis each other, would abide by the rules. So we'll see what happens then.
But I think the primary system I think has simply collapsed through -- it just, it no longer matches the electoral system that we have.
QUESTION: Just to clarify that, the first of January is the first contribution for the primary, isn't it?
MR. BRIFFAULT: Well, that would have been the case, but I don't think anybody has opted in.
QUESTION: No, they haven't but --
MR. BRIFFAULT: So that would have been -- and the other thing that happened also that made it worse compared to private financing is that one of the things that BICRA did when they got rid of soft money is it doubled the hard money limit. Congress adopted a $1,000 limit in 1974. That was never adjusted for inflation until 2002. In 2002 it was doubled and then indexed.
So you could collect either $1,000 in private money or you could collect for every $500 in private money collected you could get the federal match. So there wasn't a big discrepancy between the public system and the private system.
Now they did not change the match level for private contributions if you want to give matching money, but the ceiling on private money if you're going wholly private is no close to five times the match level. It's $2,500. So it's also a lot easier to fund your campaign on private money. The comparative disadvantage of relying on the public system has grown too. Nobody thought -- maybe somebody thought and they just didn't do it -- but I don't think people focused on the gap that was emerging when you double the permissible private contribution but you didn't double the public match.
QUESTION: Pia Mascaro, Capa Television. I have a more theoretical question. Do you see any public pro or against that? I mean this seems to be the earliest election ever, and we already 18 months before the election see people dropping out because of money, not because they're not liked by people but it was Vilsack, I think, and (inaudible) might be out also. Do you see one day a real public protest happening on this very issue of money in the election?
MS. TORRES-SPELLISCY: I mean, as a reformer, I hope that if we have a billion dollar election as predicted, that that will be a cause for a reform moment. But there wasn't too much of an outrage in the last election and that was also a very expensive election.
MR. BRIFFAULT: It's hard to say. If you look at the times in which major campaign reforms have been adopted, it's not been so much of the spending level alone as some other scandal that's accompanied it, some usually more fundraising scandal. Whether it was the significant number of illegal corporate contributions that was part of Watergate or the scandal about the fundraising methods in the Clinton Administration, the White House coffees which people -- I mean they were legal but they were seen as offensive, which eventually got us to McCain-Feingold. I guess Canada recently adopted major campaign finance reforms in response to scandal there. So scandal often has something to do with it.
I don't think this is perceived as a scandal at this point. You could say that a billion dollar election where you have, you know, a multiple trillion dollar economy, the stakes are -- I'm actually not that bothered by the amount of money if you figure what the stakes are. I mean people will trot out these numbers all the time, you know, Colgate spends five times this advertising toothpaste. I mean I'm making up these figures, but there are figures like this. You know, the amount of money spent advertising yogurt is significantly greater than this.
We actually spend very little on our presidential elections considering what's at stake. The question is where it comes from. I agree with that. It seems to me that the volume is not important at all. We probably should spend more to educate more people and to get more people voting. It's entirely where the money is coming from that is the problem. And potentially the mal-distribution, the fact that some people have and some people don't and why is that.
I think actually part of what's going on now is people are really focused on in some ways the candidates. I mean it's been an interesting -- I can't believe I'm saying it's been an interesting election so far. Normally, we wouldn't even use that. We wouldn't be putting it in the past tense. The election would be happening in the future, but I think the President's not seeking re-election, the Vice President is not running for President. It's the first time since 1952 I think where there is nobody, you know, at the top of the country -- neither the leaders of Congress is running really.
So, I mean, Hillary Clinton is not a new face exactly, but you have a sense that it's a fairly open election on both sides and people -- a lot of people that people are getting to know for the first time and that's part of the process, which is why I don't think this has been an issue yet, but it may become so but as the numbers mount up as the year goes on.
QUESTION: Let me follow up on that. I'm a little bit surprise by the reason you make for advertising for like yogurt and whatever. I mean we see clearly now we are four or five frontrunner, and you might say it's an open election but one is almost a rock star, the other one is a wife of a former rock star President, and Rudy's a hero of the nation, a former hero. Basically there is no chance to candidates who have a real political message, Republican or Democratic Party, if there is not this little level of national advantage.
MR. BRIFFAULT: But here I think the real problem has been the change in the election calendar. That I think is the real -- I mean the money is a scandal too. But in some ways less seen as a "scandal" scandal is the fact that everyone's moved to February 5th. Before it was very bizarre, our old system, which was that places like Iowa and New Hampshire, which are totally unrepresentative of most of the country became central, but it had the advantage of allowing little known people with relatively amounts of money to make a name for themselves.
Jimmy Carter is the most famous coming out of Iowa. No one had heard of Jimmy Carter before. He spent a lot of time in Iowa. He came out of Iowa and did very well. You have, you know, similar things in New Hampshire. I mean McCain did very well in New Hampshire eight years ago. He didn't win but… Gary Hart in 1984. You actually had -- you couldn't get the really poor candidates, of course, but you have the sort of second tier candidates, other candidates had a chance to get their messages out and maybe get heard under the old system. Now it's basically we've gone to the equivalent of a national primary and that -- also -- half the country's going to vote on one day. And that I think gives the priority to the money and gives the priority to early money. And if we were to have a public system, you'd have to start handing out much bigger checks and handing them out on January 1 of 2007, which I would be in favor of. But in some ways it's really -- the perfect storm metaphor is absolutely right. It's these two things coming together, its' the extremely early calendar and the inadequate public funding system.
MS. TORRES-SPELLISCY: One more plug for the public funding system. Reagan, in his first run for President, used the public funding system, and a lot of people think that if it wasn't there he would have gone broke and he wouldn't have been President for two terms. And the same thing with Bill Clinton.
So, you know, how these systems are structured has a huge effect on who ends up on the November ballot.
QUESTION: What does it mean that fundraising now increasingly in the media is seen as maybe sort of a dominant measure of success? You see McCain is the "loser" with only $12.5 million but Romney, who is doing worse in the polls, is doing fine because he has more money.
MR. BRIFFAULT: You could probably answer that better than we can, you're the media. But it does so that people are focused on the horse race element of this. And until you have an election you have fundraising. So what else can you measure? The only things that are measurable now are poll results and these quarterly reports, which is why everyone is very eagerly awaiting the quarterly reports.
What does it tell us? To me it -- it tells me, for one thing as we were saying before the start, that the Democrats are looking very good this time. This is the first time possibly ever, certainly ever in the current that the Democrats as a group have raised significantly more money than Republicans as a group, it tells you at the very least. You also have to look at who the donors are. I mean and what we reveal as to what extent they're getting small donations versus big donations, and who's got more people supporting, you can learn that by looking at the results. But at least in the aggregate you're seeing, you know, at this moment most of this money is still coming in big donations and you're seeing that at an early stage the elites are beginning to support Democrats.
MS. TORRES-SPELLISCY: This reminds me of -- I have a lot of friends who run campaigns. And I once asked him why he wasn't spending -- this was in a really small campaign -- why aren't you buying more lawn signs. And he said lawn signs aren't voters, that even though you have all of this money going here and there, at the end of the day it's the votes that count. And you know, just ask Howard Dean, he did very well with raising money in 2004 and then got absolutely creamed in Iowa. So it does not always translate.
MR. BRIFFAULT: Phil Gramm, who was running for the Republican nomination I don't even remember which election, the Senator from Texas, and I think as of the end of the year before the election he had the most money, and I don't think he got any votes at all. Or John Connelly -- this is long ago, but he spent $12 million I think it was 1980, and got a single convention delegate. So it's a factor. But I think in terms of media attention it's because you're the reporters but you report on what you can count, and these are hard numbers and everything else is soft. Everything you're -- measuring attitudes, you can actually count these monies.
QUESTION: Maybe a more political analysis. What do you make of the fact that first Obama did so well on the Democratic side and Romney, who was not really seen as a frontrunner, did so well? Do you have any explanation?
MS. TORRES-SPELLISCY: I work for non-partisan, non-profits, so I'm going to pass on that question.
MR. BRIFFAULT: I'm not a political scientist. I think you're as well positioned to answer that as we are.
QUESTION: You mentioned you are even more scared, maybe, of the national primary aspect of the February 5th -- that one will have an even bigger impact. Is that necessarily so? I mean if John Edwards or even Bill Richardson spends much time in New Hampshire and Iowa could come out as a winner there and then two weeks in media coverage and then bang, he's won the election even before people maybe have had a good look at him. Isn't that --
MR. BRIFFAULT: It's a possibility. It's true, we've never had this situation before, so we'll have to see how it unfolds. Some would say you need to have a lot of money in the bank to take advantage of it. I mean, I think some say that's what happened to McCain eight years ago is that he won New Hampshire but he didn't have enough money to carry it forward. Same thing happened to Gary Hart in '84. He was able to get a lot of attention and he placed very well but didn't have quite enough -- or it wasn't just money, he didn't have a lot of organization backing.
So you're right, this is kind of a new arrangement and it's sort of happened in a haphazard way. No one really planned this. I mean the next reform has to be which we'll -- it's just as unlikely to happen, maybe it's more likely some kind of federal regulation of the primary process to give it some kind of sensible structure, but it's not clear that will happen.
QUESTION: A more general question. How much do you think Americans themselves understand what's going on in the primary aspects? It's so difficult. Do regular people really understand? Do they want to understand? And do they understand that there is this manipulation as you said? It seems like it's so difficult that --
MS. TORRES-SPELLISCY: Yeah. One of my great laments is to run for office in this country I think you need election law lawyers and that should not be the case. You know, as an election law lawyer I like that to a certain extent, but as a citizen I think it's tragic.
MODERATOR: Other questions? If not, I'd like to thank our speakers for coming today. And thank you all. I think they may have a few minutes to stay and take individual questions. Otherwise, thank you all very much.
