Senator Galbraith statement on the Senate floor on the conference report on S. 82, the Campaign Finance Reform bill

Thursday, January 16 during the Vermont Senate debate on S. 82

Senator Galbraith statement on S. 82

Mr. President

I know I have already tested the Senate’s endurance on this issue and I want to apologize to my colleagues for that. I have learned my lesson.

If this were the bill that passed out this body last year, I would simply vote against the bill and say nothing at all.  I made my arguments for prohibiting corporate contributions and the Senate decided otherwise. There is no point in rehashing a case that was already not persuasive.

But, this is not the same bill.

As compared to S. 82 as approved by the Senate, this bill more than triples the amount of money an individual can contribute to a political party, from $3000 to $10,000.  And it redefines a political party so that a state party and its national affiliate are considered two separate parties. Under existing law, the state party and its national affiliate are a single party.  As a result of the changes proposed by this bill, an individual or corporation can contribute $10,000 to a state party and $10,000 to its national affiliate and then the state and national party can each make unlimited contributions to a Vermont candidate. And, there is nothing in this bill to prohibit or restrict a donor who wants to circumvent the limitations on contributions to individual candidates from using the state and national parties as a pass through for contributions totaling $20,000. Such coordination is completely legal and there is no reason to think parties won’t do it.

The effect of these changes is a nearly four times increase in the amount that a single donor can contribute to a political party if the limitations of the senate version of S. 82 had been used and a ten-fold increase as compared to existing law.

These new limits make it incredibly easy to evade any limits at all. According to senator white, the justification for raising these limits is to allow parties to compete wit Super PACs. But, the history of campaign finance reform is that each reform triggers its own abuse and this bill is no exception.

The new limits reflect concern that a single wealthy individual was able to spend $1 million in 2012 through a Super PAC to promote a candidate for Treasurer and a candidate for Governor. In fact, this money had no discernible impact on the election, except as a welcome boost to our local broadcast media. Undoubtedly, the same money would have been much more effectively spent had it gone directly to the candidates, but the donor could only contribute $2000 to each of her candidates as well as $2000 to their political party.

Under this bill as reported by the conference committee, she will easily be able to contribute hundreds of thousands of dollars right into the campaign coffers of her preferred candidates. How?

Vermont law considers each individual and each corporation as a separate  “single source” for the purpose of making campaign contributions. Very wealthy people almost always hold part of their wealth through corporations and LLCs that they control. For the purposes of this example, I assume that anyone spending one million dollars on a political campaign has at least 10 such entities, though she quite likely has many more.  Thus, the donor could contribute $10,000 herself and $10,000 from each of her LLCs or corporations to the state political party of her preferred candidate. She could, of course, condition her contribution to the state party on it giving the entire $110,000 to her chosen candidate. But, that is not all. She could do the same thing with the national party affiliated with the state party.   By using the state and national parties as pass through she increases  the amount of her contribution to $220,000. But, that is not all. Vermont has many minor political parties, some of which are affiliated with the major national parties. For example, the working families party often endorses Democratic candidates. Thus, our donor could contribute $110,000 personally and from her 10 corporate accounts to an allied minor party both at the state level and at the national level for a total of $440,000.

Under existing law, the same donor can also evade the limits on contributions by individuals.  But because of the limits on the size of contributions and because national and state parties are currently one entity, the maximum that this donor could contribute is $44,000.

Finally, this bill said to increase transparency. But increasing the number of reports does not increase transparency if we don’t know who the contributors are. I have asked both the AG and Leg Counsel to review transparency under this bill and existing law. A single source is an individual, corporation, partnership, association, organization or group of individuals. And, there are no public records in Vermont—or elsewhere in the case of out of state contributions—that would enable an individual reliably to find out who owns a private corporation, an LLC, or a partnership or who controls an organization or is a member of an association. And this bill actually reduces transparency because the conferees dropped the requirement that in the senate bill that campaign finance reports include information on the occupation and employer of a donor contributing over $100, even though both bills required listing the occupation of the donor.

I support campaign finance reform but this bill is not that. Vermont’s current system of campaign finance is opaque and this bill does nothing to change that. Privately-held corporations, LLCs, unregistered partnerships, organizations, and associations can all contribute to Vermont candidates and there is no way the public can find out who owns the corporation, who are the partners of an unregistered partnership, and who is in the organization or association. A name on a campaign finance report is not transparency if no one can find out who is behind the name.

This bill increases the amount a single donor can give to a political party (if giving to both the national and state party) from $2,000 under current law to $20,000. Political parties can make unlimited contributions to Vermont candidates. It is entirely lawful for a wealthy donor to use a political party a pass through so to evade the lower limits on direct contributions. Under this bill a donor—making use of corporate entities controlled by the donor–can give hundreds of thousands of dollars to his preferred candidate, all perfectly legally. A bill that allows this is not campaign finance reform.

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