Wang: When It Comes to Campaign Cash, There Will Be Scandal

Posted July 24, 2012 at 11:20am

In 2007, Hollywood portrayed the upheaval brought on by the California oil rush in a movie aptly titled, “There Will Be Blood.” As we head into the 2012 elections, critics are predicting similar turmoil from the rush of money in politics brought on by the Supreme Court’s Citizens United decision.

This year, political spending is expected to total $11 billion — more than double the $5.3 billion spent in the 2008 presidential cycle. One Congressional champion of controls on campaign cash has been buzzing around with unsubstantiated allegations of “major scandals.”

Here in the nation’s capital, residents are already hearing the drumbeat of scandal in their own backyard. To date, three associates of Mayor Vincent Gray have pleaded guilty to criminal conduct during his 2010 campaign. In the latest bombshell, PR consultant Jeanne Clarke Harris admitted to funneling more than $650,000 in corporate funds from city contractors to what media have portrayed as a “shadow campaign” for Gray. Is this the canary in the coal mine of corruption that will collapse on us in November?

Hardly. Far from validating all the fear mongering, the Gray scandal demonstrates the Supreme Court got it right when it said that independent spending does not pose the same danger of corruption as contributions given directly to candidates. All of the transgressions in the mayoral race are the classic campaign finance violations of yesteryear, which remain (and likely will always remain) violations, and which have nothing to do with the type of purported “corruption” that critics are going on about.

To understand these points, it is first necessary to explain the violations to which Harris actually pled guilty. Regarding the alleged “shadow campaign” — a term that implies the effort was being run outside of Gray’s official campaign — the plea agreement suggests this is inaccurate. Rather, Harris admitted to using funds from corporations owned by Gray supporter Jeffrey Thompson to pay for yard signs, banners, T-shirts, brochures and other campaign paraphernalia, and delivering these items to Gray’s campaign offices.

In addition, Harris admitted to using corporate funds to bankroll voter identification and get-out-the-vote activities for Gray, at the request or suggestion of Gray’s staff. In coordination with Gray’s campaign, Harris admitted to hiring canvassers, consultants and drivers; and paying for their food and lodging, as well as for rental vans. In most jurisdictions, these corporate expenditures are treated as prohibited and/or excessive in-kind contributions, because services were coordinated with the campaign and materials were delivered directly to campaign offices. In drafting its campaign finance regulations, the District of Columbia apparently attempted but failed to specify that coordinated expenditures are to be treated as in-kind contributions. Prosecutors were able to charge Harris, nonetheless, with failing to report these activities as independent expenditures.

Aside from this coordinated spending on the mayoral race, Harris also pled guilty to using funds from Thompson’s corporations to reimburse tens of thousands of dollars in monetary contributions to federal and D.C. candidates. Colloquially, this practice is known as making “straw contributions.”

What is so remarkable about Harris’s spending for Gray is that it was done after Citizens United, which meant that  Harris could lawfully have run such a campaign, had she done it independently of Gray’s campaign. Critics of Citizens United have derided the court’s supposed naïveté when it pronounced that sponsors of large independent expenditures could not corrupt candidates in the same way as those making large contributions. But Harris chose not to fund a truly independent expenditure campaign, which suggests that she figured such an effort would not be as effective — be it in terms of currying favor with Gray, or in persuading and turning out voters for the candidate.

The straw contributions component of this scandal demonstrates the same point. In the typical straw contribution scheme, fundraising “bundlers” try to impress candidates by promising to raise a boatload of money for them. Falling short on their abilities, they end up funneling their own money to the campaigns through associates in order to evade the per-individual contribution limits. Again, if lawfully spending six figures on independent expenditures were as effective as illegally giving the money directly to candidates, straw donors wouldn’t risk the stiff criminal penalties. All this confirms the Supreme Court’s assessment; contributors still have a strong preference for steering money directly to candidates, and this is why independent political spending should not be subject to the same restrictions.

When all is said and done, the District’s campaign finance mess suggests nothing of the type of corruption that critics allege will arise from independent spending. Irrespective of Citizens United, the Gray matter demonstrates that there will always be scandal, because there will always be plenty of people who have access to a lot of cash in their piggybanks, but not a lot of gray matter in their heads.

Eric Wang is a political law attorney in the Washington, D.C., area and a former counsel at the Federal Election Commission.