Campaign Finance Reform bill

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

January 17, 2014

As compared to the version of S. 82 approved by the Vermont 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 as compared to the bill passed by the Senate 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 with Super PACs. But, the history of campaign finance reform is that each supposed remedy triggers its own abuse and this bill is no exception.

These new limits for parties are the a response to the fact that a single wealthy individual spent $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 addition to the revenues of 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 someone who can afford to spend one million dollars on a political campaign has at least 10 such entities. 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.

And, 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, the wealthy 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. This is money that goes to the candidate, and not to an uncoordinated and often ineffective independent expenditure.

Under existing law, the same donor can also evade the limits on contributions by individuals by using her corporate entities. 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 under my example is $44,000—or one tenth of what she can contribute under the new law.

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 Attorney General and Legislative Council to review transparency under this bill and existing law. Vermont Law permits a “single source” to make a campaign contribution and a single source is defined as an individual, corporation, partnership, association, organization, or group of individuals. There is no way the public can reliably find out who owns or controls a private corporation, a LLC, an unregistered partnership or who runs or belongs to an organization or 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.

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