Governor’s Blue-Ribbon Commission on

Campaign Finance Reform

 

State of Wisconsin

 

 

 

Volume I:

Report of the Commission

 

 

May 1997

 

Governor’s Blue-Ribbon Commission

on Campaign Finance Reform

 

 

 

David W. Adamany

Robert H. Friebert

Donald F. Kettl, Chairman

James R. Klauser

Brandon Scholz

 

 

Staff

Terry Shelton, Executive Director

Shirley Smith, Administrative Assistant

 

Inga Glodowski

Robert Turner

Kristen Jensen

J. Lloyd Horwich

Kurt Sippel

Mark Brown

Wendy Kloiber

 

Consultant

Kenneth Mayer

 

Contents

 

1. Introduction

The Case for Reform

Money and Politics

The Commission’s Findings

Framing the Recommendations

2. Ensure Accountability through Full and Prompt Disclosure

The Case for Disclosure

Experiences of Other States

Electronic Filing

Electronic Disclosure

3. Make Elections Candidate- and Political Party-Centered

Roads Not Taken

Contribution Limits

Political Action and Legislative Campaign Committees

4. Encourage More Competitive Elections

Citizens’ Debates over Campaign Finance Reform

Public Financing Grants

The Wisconsin Clean Election System

5. Level the Playing Field

Promoting Freedom of Speech

Free Speech and the Electoral Process

New Challenges for Campaign Finance

Issue Advocacy and Express Advocacy

Promoting Free Speech through Disclosure

6. Improve Regulation of Campaign Practices

Transforming the State Elections Board

Improving the Board’s Resolution of Questions

Strengthening the Board’s Resources

Enforcement

7. Secure other Important Improvements in Campaign Finance

Local Public Finance Systems

Clear Rules of the Game

Restrict the Use of Campaign War Chests

Bundling and Conduits

Creation of a New Commission

Appendix I: Index of Recommendations

Ensuring Full and Immediate Disclosure

Making Elections Candidate- and Political Party-Centered

Encouraging More Competitive Elections

Leveling the Playing Field

Improving Campaign Finance Regulation

Securing Other Important Improvements

Appendix II: Executive Order

Appendix III: Schedule of Commission Meetings

Appendix IV: Supplementary Comments of Commissioners

Supplementary Comments of David W. Adamany

Supplementary Comments of Robert H. Friebert

Supplementary Comments of Donald F. Kettl

Supplementary Comments of James R. Klauser

 

Acknowledgments

 

The Commission is grateful to the people of the state of Wisconsin, who contributed their ideas and energy to its search for comprehensive campaign finance reform. Close observers of state politics cannot remember an issue that has so galvanized residents of the Badger State. The Commission, quite simply, could not have done its work without the energy and commitment of the citizens who invested so much of their energy.

The Commission wishes to express its deep gratitude to two organizations that provided generous financial support: the Joyce Foundation, and especially Vice President Larry Hansen; and the University of Wisconsin-Madison, especially Chancellor David Ward. The considerable staff assistance and the public opinion poll would not have been possible without this help.

Finally, the Commission is profoundly grateful for the tireless work of the staff of the Robert M. La Follette Institute at the University of Wisconsin-Madison. The staff provided endless labor with remarkable good humor, no matter the pressures of time. In particular, Terry Shelton, the Institute’s outreach coordinator, was invaluable as the Commission’s executive director. Shirley Smith managed the endless details of the Commission’s work and the production of its report with unfailing grace. All of the Commissioners are, jointly and individually, grateful for this support.

 

1. Introduction

 

Public outrage over campaign finance practices rose dramatically during the 1996 election season. The presidential campaign found itself enmeshed in charges and counter-charges about foreign money, special-interest contributions, misuse of the White House for fund raising, and a financial arms race that drove campaign spending upward. Voter turnout in the presidential election was an embarrassing 49 percent of eligible voters—and only one-fourth of eligible voters actually elected the president.

Although Wisconsin’s 1996 elections were spared such battles, the elections nevertheless upset many voters. Citizens complained that the races were too negative, too long, and too devoid of debate on the big issues. Candidates, for their part, complained that independent money poured into many races, causing them to lose control of their own campaigns in the last days before the election. Stealth campaign tactics—large amounts of money from undisclosed sources funding principally negative ads—invaded key races.

Wisconsin has a rich and long tradition of clean elections. Experts have regularly cited the reforms enacted in 1975 after the last major commission study as a national model. Since then, though, the spreading problems of campaign finance have begun to infect Wisconsin’s model system and have eroded its preeminent position. What first began as small problems in the mid-1980s have gradually bubbled over into a quiet but serious crisis.

To tackle the quiet crisis of Wisconsin’s campaign finance practices, Governor Tommy Thompson appointed a five-member Blue-Ribbon Commission on Campaign Finance Reform in November 1996. The Governor sensed that this is an issue on which the state needs to act. Governor Thompson exerted strong leadership by creating the Commission and asking it to take a thorough look at the problems of campaign finance in Wisconsin and to propose fundamental reforms.

The Commission has spent the last seven months carefully examining the problem and listening to citizens from throughout Wisconsin. It held three public hearings (in Madison, Milwaukee, and Green Bay); surveyed citizen attitudes through a public-opinion poll; collected written suggestions through fax, mail, and e-mail; created a 24-hour telephone hotline to which citizens could call in their suggestions; and reached out to citizens through electronic public hearings on Wisconsin Public Television and through the state’s mass media.

Wisconsin has long been a model of campaign finance reform. With this report, the Commission seeks to upgrade and improve the state’s existing system—and to adapt it to rapidly changing political conditions. Its goal is to make important changes in the state’s campaign finance system before small problems become large ones.

Our central mission is to strengthen the connection between Wisconsin’s citizens and the government that represents them. We seek to respond to the entreaty of a World War II veteran who asked for fundamental reform and told the Commission in an electronic public hearing, "I did not offer my life for this type of government."

The Case for Reform

Especially since the closing weeks of the 1996 presidential election, the mass media in Wisconsin and throughout the nation have produced a constant drumbeat of campaign finance stories. The problems identified in the news coverage, as well as in water-cooler and coffee-shop conversations, have raised concern about campaign finance reform to a level unprecedented since the Watergate scandals of the early 1970s.

To gauge citizens’ attitudes about campaign finance reform, the Commission arranged for the St. Norbert College Survey Center to conduct a public opinion survey of Wisconsin residents. The poll showed widespread concern about campaign finance and strong support for reform. Two-thirds of the respondents said that "the political election process is in big trouble." But 86 percent believed that the problem is not "too far gone" and that "some reform will help." More than 84 percent of those responding agreed that "I’d like to see sweeping and fundamental campaign finance reform."

Although concern about campaign finance was high, however, other issues ranked higher. The poll showed that citizens ranked "reducing taxes in Wisconsin," "reducing crime in Wisconsin," and "protecting the environment in Wisconsin" almost equally important. Citizens believed that "improving highways in Wisconsin" was less important, followed by "reforming the way campaigns are financed in Wisconsin."

Citizens believed that campaign finance reform was important—but that other problems were even more so. When the survey asked how important campaign finance ought to be when compared with other issues like taxes and foreign policy, only 13 percent of those responding believed that it ought to be more important. Just over 54 percent thought it was less important, while 31 percent gauged it as important.

What do these findings add up to? It is clear that the headlines about campaign finance abuses have upset citizens. But it is equally clear that bread-and-butter issues matter more.

Does this mean that the case for campaign finance reform is weak? The Commission has carefully studied the questions and emphatically believes that the answer is "no"—but that campaign finance reform is a different kind of public policy issue.

Campaign finance is not so much a "the sky is falling" issue. It is, rather, a "termites in the basement" problem. The electoral process—and the campaign finance process that supports it—forms the very foundation on which a vibrant and free democratic society is based. Problems with other issues, like taxes and the environment, can be more obvious and demand more immediate attention. But if the foundation of democracy is allowed to erode, our society will be far less equipped to solve its most critical problems.

Campaign finance reform problems, left unsolved over time, will slowly but steadily eat away at citizens’ trust in their government and government’s capacity to solve citizens’ problems. That is the overwhelming message that the members of the Commission have taken from the public opinion poll, scores of hours of public input, and comments from hundreds of citizens. Campaign finance reform cannot in itself solve the problem of trust. But the Commission concludes that, without it, restoring public trust in government will be impossible.

The people of Wisconsin are far luckier than the citizens of other states. Those who built the state’s political system and framed its civic culture made it of sturdy stuff. Nevertheless, the Commission has concluded that important problems have emerged in the state’s campaign finance system that, quite simply, must be fixed.

This is a critical time in the state’s history. While new problems have emerged, there is still time to fix them before they worsen. Well-planned reforms can reaffirm Wisconsin’s place as a national leader in campaign finance—and in building a government that listens carefully to its people.

It would be a serious error, however, to view the problem casually or to tinker with reforms incrementally. Rebuilding public trust and confidence, if lost, would take monumental work. Small tensions in the system can quickly widen into major gaps that make it harder for political parties to work together effectively or to govern citizens well. The Commission has carefully considered the problems facing Wisconsin and has crafted a thorough and solid set of recommendations. They are not a menu from which to select some palatable fixes but, rather, an interlocking set of ideas, in which the whole is far stronger than the pieces.

The Commission urges, therefore, that its recommendations be considered and passed by the legislature as a complete package. It is critical that the state legislature avoid the urge to tinker with the package, to pull out the easiest or most attractive pieces, or to postpone serious consideration. The Commission’s recommendations are woven together with a single thread. Tugging on it anywhere could cause the whole fabric to unravel: to give unfair advantage to some players over others; to risk creating new loopholes; and to plant the seeds for new problems that future commissions will have to attack. Wisconsin’s citizens deserve nothing less than quick action from their elected officials in reviewing and passing the recommendations in this report.

Money and Politics

It is easy to point to "big money" as the problem of campaign finance. It is just as easy to overlook the important point that money has a positive value and great importance in politics. The ability of voters to know about and act on the choices they face depends on money: on candidates gaining the resources necessary to speak effectively to voters. Indeed, the U.S. Supreme Court has a two-decade-long tradition, based in Buckley v. Valeo, which puts substantial protections around the money used in political campaigns. Campaign money has become an important part of the First Amendment’s freedom of speech protections.

The central issue of campaign finance reform is balancing the necessary role of money in the political system with citizens’ interest in ensuring that the system is protected from undue influence by those with the most money. Money provides a meaningful voice to persons engaged in political campaigns; it shapes the strategies of campaigns and the means candidates use to talk with voters. But that leads to a central problem: controlling the supply and demand for money to preserve the ideals of an informed electorate, while avoiding both the appearance and the reality of elected officials being dominated and controlled by those successful in the economic system.

This is the problem that has most preoccupied the members of the Governor’s Blue-Ribbon Commission on Campaign Finance Reform. Indeed, it is the biggest problem of a democratic system operating in a market economy. There is no perfect balance between these competing principles, and no balance that is struck by today’s laws can remain stable for long. No reform can possibly satisfy everyone, and no reform can work forever.

The Commission concludes that the conflict between these forces has nudged Wisconsin’s system out of balance and that fundamental reforms are therefore needed. The Commission has dedicated its efforts to rejuvenating the state’s democratic processes.

The time for reform is ripe. The need is great. The members of the Commission conclude unanimously that Wisconsin’s campaign finance system requires a comprehensive review and thorough reform.

The Commission’s Findings

The Commission has identified five central problems that must be solved. To attack these problems, the Commission has framed five basic principles.

Ensuring full and immediate disclosure. Too many parts of the campaign finance process have become invisible and unaccountable to voters. Citizens deserve the full and accurate facts about campaign finance, and they deserve that information before they vote.

Making elections candidate- and party-centered. The election process has drifted away from the candidates and parties. Citizens deserve a process that puts candidates for office and the parties they represent at the center of the campaign process, because they are accountable to the voters at the polls.

Encouraging more competitive elections. The high—and rising—cost of political campaigns has made elections less competitive. Citizens deserve to have a rich choice of candidates and opinions from which to choose in casting their ballots.

Leveling the playing field.Promoting free speech. Recent changes in campaign technology, especially the spread of campaign ads masquerading as "educational" ads, have created "stealth campaigns"—substantial advertising during the election season that has occurred independent of political parties and candidates’ campaigns. Many of these efforts have had significant effects on the electoral process, but the source of the money paying for the ads has frequently been hidden or unknown. These tactics have denied voters critical information about who is making which claims. Voters deserve the full facts before casting their ballots. Such information would promote, not hinder, speech. It would also level the playing field for everyone.

Improving campaign finance regulation. The state’s system of campaign finance regulation is seriously strained. Citizens deserve a prompt and effective system to enforce campaign finance laws and ensure clean elections.

In framing its recommendations, the Commission carefully reviewed hundreds of suggestions submitted by ordinary citizens and public officials alike. Indeed, no other group in recent Wisconsin memory has so carefully surveyed Wisconsinites before framing proposals. Some citizen proposals were deemed unworkable. Some proposals violated long-standing Constitutional protections of free speech. Others, the Commission feared, might unintentionally produce new loopholes that could worsen the problems. But all have been valuable in shaping the Commission’s work.

Wisconsin’s citizens have contributed a remarkable array of impassioned opinions and suggestions. In fact, it is an enormous testimony to the civic concern of the state’s citizens that the Commission has assembled such an amazing collection of ideas. (See Volume II of this report for the testimony and proposals citizens presented to the Commission.) The recommendations range from full public financing of all state elections to strong opposition to public financing, with full disclosure of campaign finance instead. With such disparate—indeed, completely contradictory—advice, the Commission’s recommendations are bound to disappoint many of those who participated in the process. There was no citizen consensus around which the Commission could have framed its recommendations.

Campaign finance is an extraordinarily complex process. It is, in fact, much like a football game, in which fans go to the stadium, watch the teams match wits and fight for advantage—but in the campaign game, the fans themselves determine the winner. Like football, most of the game’s deep strategizing happens in the locker room, far from public view. Presenting voters with a good contest requires ensuring that the complex locker room strategies are fair to all players.

To improve the game, some citizens proposed "single-bullet" solutions that, they believed, would solve critical problems. But as effective as Reggie White is at rushing opponents’ passers or Brett Favre is at finding the open receiver, no play on offense or defense can possibly work every time. There are too many ways to counter any single tactic—in football or in elections. Rather than seek a single reform to solve all problems, the Commission has sought to craft a broad and comprehensive set of reforms.

As the Commission framed its recommendations, it relied on the considerable experience of its members. One of the commissioners is widely acknowledged as one of the nation’s foremost scholars on campaign finance reform. Three of the members have decades of experience in managing campaigns. The Commission built on this expertise as it prepared its report. The experience of its members provided a clear sense of which recommendations were most likely to be effective, which ones candidates were likely to ignore, and which ones would create new, unintended loopholes. The recommendations that follow thus represent not only the commissioners’ sense of which changes were most desirable. They also represent the recommendations that the commissioners believe are most likely to work. Reform ideas not well grounded in the realities of campaigns, the Commission concluded, would not serve the process well.

In proposing its recommendations, the Commission sought to follow three principles:

Preserve freedom of speech. The bedrock of both law and principle in campaign finance is the First Amendment of the U.S. Constitution. The First Amendment’s protection of freedom of speech is one of the most revered liberties in the Bill of Rights. Free speech is rarely more important than in elections; the lively and vibrant exchange of ideas is the absolute cornerstone of elections in a free democracy. The Commission seeks to recommend campaign finance reforms that will preserve and, where possible, enhance freedom of speech.

Do no harm. As they begin their professional lives, physicians take the Hippocratic oath. They swear to do no harm to their patients. The Commission is devoted to the same goal. Campaign finance is an enormously complex area with the possibilities limited only by the imagination of campaigners. It is frighteningly easy to create unintended loopholes and distortions in campaigns. Despite the manifest problems with current campaign finance reform practice in Wisconsin, the state nevertheless has a foundation of clean practice and a citizenry especially dedicated to clean elections that reformers in other states envy. The Commission has devoted itself to keeping what is good, changing what needs to be fixed, and avoiding doing anything that could undermine the current system’s strengths. As part of this effort, the Commission has focused on identifying and rooting out loopholes in current or proposed practice that could have dangerous effects. It has also subjected each of its recommendations to a careful examination to avoid, as much as possible, unintentional creation of new loopholes.

Neutrality with respect to outcomes. Just as it is possible inadvertently to create loopholes in the system, it is also possible unintentionally to design reforms that advantage some players in the system over others. Democrats often seek funds from different sources than Republicans; Republicans sometimes use different campaign tactics than Democrats; and third-party candidates often operate very differently than the major political parties. In framing its recommendations, the Commission has quite self-consciously sought to avoid advantaging any player over another. The commissioners have subjected each recommendation to close examination to determine if it might distort the process.

Framing the Recommendations

With these principles in mind, the Commission developed recommendations in 5 areas:

Ensuring full and immediate disclosure

Making elections candidate- and political party-centered

Encouraging more competitive elections

Leveling the playing field

Improving campaign finance regulation

 

The Commission’s recommendations are summarized in Appendix I. The chapters that follow detail the philosophy and prescriptions of reforms that will, the Commission believes, restore Wisconsin to its place as national leader in campaign finance reform.

 

 

2. Ensure Accountability through Full and Prompt Disclosure

 

Full and frank discussion is the keystone of democratic society. If voters are to make intelligent choices among the candidates vying for public office, voters must know what the candidates stand for. If they are to decide whether to return current officials to office, voters need to understand and debate their performance in office. Democracy is impossible without voting by citizens, and voting is impossible without freedom of speech. But effective speech is impossible without full and complete information about the critical issues—especially the role of money in political campaigns.

As the U.S. Supreme Court rightly contended in Buckley v. Valeo, campaign money is an integral part of free speech. Indeed, without money, it would be hard for candidates to talk with voters: to distribute flyers describing their views, to purchase television time to advance their platforms, to mount "get out the vote" programs. While reformers rightly point to the dangers that excessive campaign spending can bring to the electoral process, it is important to note that without money, effective campaigns that promote democracy would be impossible.

The Case for Disclosure

The first step to reform lies in balancing the right of those with money to speak with the right of voters to know where the money is coming from. It is not only the right of citizens to contribute to political campaigns. It is the right of citizens to think about the size and source of contributions in deciding how to cast their votes. It is also the right of citizens to have campaign finance laws enforced by having campaign spending practices fully reported. Full, frank, and immediate disclosure is therefore the bedrock of campaign finance reform.

Disclosure is important because it promotes four important values.

Basic information. Disclosure informs voters about basic campaign practices, which allows them to cast their votes more intelligently. This is important not only for the contributions made to and expenditures made by those running for office. The principle extends as well to those making contributions and expenditures independent of a candidate’s campaign, whether through issue or express advocacy.

Timing of policy debates. Disclosure of campaign finances informs the media and the voting public of possible connections between campaign money and policy decisions by elected officials. Democracy not only requires citizen participation in voting but in the deliberations about policy as well. Campaign contributions received by an elected official should be known to citizens so they can assess that official’s interests in making policy decisions and can know what groups or individuals affected by policy proposals have campaign finance ties to public officials.

Enforcement of campaign finance laws. Disclosure is a critical tool for the enforcement of campaign finance laws and regulations. Many of these laws and regulations are triggered when expenditures or contributions reach certain levels, involve certain sources, occur at certain times, or connect certain players. Without full and clear information, enforcement of these laws and regulations is impossible.

Information about needed reforms. Disclosure provides invaluable information about what in the campaign finance system is working well—and what requires fixing. Disclosure therefore is a critical instrument of ongoing reform.

The Commission concludes, therefore, that:

1. The Wisconsin campaign finance system ought to set as a goal the instantaneous reporting and disclosure of all relevant campaign finance information.

The Commission recognizes that reporting can be a real hardship for small campaigns with limited resources, so the Commission proposes to pursue this goal for all election activities above a specified financial threshold.

The Commission strongly believes that disclosure ought to be the keystone that holds together Wisconsin’s campaign finance system. Disclosure is a necessary condition for reform. However, disclosure alone is insufficient to address the problems with the current system, for two reasons:

Information overload. Voters cannot be expected to absorb and act on all of the information that such a system produces. The information overload is clearly too much for any voter to digest. Disclosure, in itself, therefore, is inadequate to solve many campaign finance problems.

Priority of issues. If disclosure were a sufficient condition for reform, voters would punish those who violate campaign finance standards by voting against them in elections. However, while campaign finance issues are important, voters have shown that they are unwilling to substitute these issues for other public policy concerns, like foreign affairs or taxes. Campaign finance is not the only, or even the foremost, issue facing voters on election day. That, in fact, is the lesson taught by the public opinion survey the Commission conducted.

Disclosure alone is not sufficient to ensure clean elections. Without disclosure, however, real reform will prove impossible.

Experiences of Other States

Moving to an immediate, fully electronic reporting and disclosure system can seem daunting: to candidates, for whom this might represent new technology; and for state officials, who would be required to cope with a large volume of data. That has led some reformers to consider making electronic filing voluntary.

The experiences of other states, however, provide clear warnings about mixed electronic and paper filing systems. Citizens naturally expect quick and easy access to such data. In Florida, for example, the state’s electronic filing law permitted state election officials to grant a waiver to candidates without the resources to file electronically. That cost the state about $60,000 in labor, as well as long delays in access, to manually enter the data submitted on paper forms into the electronic system. The waiver, moreover, led to abuse by some candidates who declined to file so they could avoid making their campaign finance data easily available. The Florida system was inexpensive: $50,000 to create the data system and an estimated $60,000 for part-time data entry workers during peak periods, but it was plagued by long delays and serious controversy.

In Hawaii, by contrast, the state started small, provided technical assistance to candidates, and contracted with a good vendor to provide a superior system. The contract, which cost the state $250,000 to create the data system and $60,000 for part-time data entry for reports not filed electronically, provided a far smoother start to electronic filing and disclosure.

Electronic filing and disclosure is spreading quickly across the states, but through many different strategies. Florida’s system, with mandatory filing, little technical support, and easy waivers, has proven trouble-prone. Hawaii began with electronic filing only for the state attorney general and mayor of Honolulu the first year. Some states (Oklahoma, Texas, New Mexico, and Arizona) have voluntary filing, which leaves large holes in the data and fails to provide the full and immediate access that true reform requires. Missouri allows voluntary filing but charges a fee to candidates who do not file electronically. The state uses the money raised by the fee to enter the data. Finally, Maryland is just creating a new electronic filing and disclosure system.

The Commission carefully examined the experiences of these states (and San Francisco) in framing its recommendations. In addition, the Commission’s staff conducted its own review of the technical issues. The Commission has sought to develop recommendations on the cutting edge of technology but which also serve the promise of making campaign finance information readily available, at minimal cost, to everyone in the process.

Electronic Filing

Without disclosure few other reforms would be possible. The Commission has therefore concluded that Wisconsin should move aggressively to implement a full and instantaneous disclosure system, using the most up-to-date technology, as soon as possible.

2. All candidates for state offices—both legislative races and statewide races—should be required to file full financial reports with the State Elections Board. Such reports should be filed electronically, using software certified by the Board, and instantaneously, within 24 hours of when financial transactions occur.

 

Candidates for state office, of course, are already required to submit paper reports about their financial information to the State Elections Board. The Commission does not propose to change what is being reported—just how. The current paper system is an archaic relic of days long past, and it works a serious handicap on citizens.

The current law requires candidates to file a single paper copy with the Board in Madison. Citizens living elsewhere in the state face the stark choice of driving to the capital to examine the financial records of the candidates seeking to represent them; trusting the news media to collect and report the information that most interests them; or doing completely without critical information that would inform their vote.

The current law does not require the information to be reported in any consistent form. The result is that the law’s principle of full reporting and free access is undermined by a system that hides, not provides information.

The current law allows financial reports to be submitted long after the activities in question. Contributions and expenditures in the critical last days of political campaigns frequently are not reported until three months after election day, long after citizens have any opportunity to act on the information they provide.

With only a single copy of financial reports available in a single office, the demands on the materials and the risks to preserving the information are high. The reports for some races are heavily used, hard to keep in order, and are difficult to maintain for archival purposes.

Electronic systems, such as e-mail and the World Wide Web, have made it possible to transmit immediately large quantities of complex data. Quite simply, there is no reason candidates cannot report their financial information as transactions occur—as they deposit checks and as they make expenditures. The Commission believes that the goal ought to be immediate reporting of all financial transactions: contributions as they are received; expenditures as they are made; and even bills received by a candidate or committee that are not paid within five days.

Computer-based filing software has already been developed and tested in jurisdictions like Hawaii and San Francisco. It not only allows candidates to file electronically but also to keep internal campaign records in a clear and easy-to-find form. The software automatically audits the financial information as it is entered, which reduces the chances for inadvertent violation of the state’s reporting requirements. It also automatically sorts the right information into the right categories and produces the proper reports for filing with the state.

The electronic reporting system, therefore, offers great promise not only for providing citizens with critical information but also for easing the reporting burdens on candidates. Many software programs, moreover, help candidates maintain important internal records for their campaigns, such as who might be willing to accept yard signs or help with fund raising. The electronic filing systems that the Commission has examined would actually make it easier, not more burdensome, for candidates and their campaigns.

The Commission realizes, however, that some candidates might be concerned about the costs of purchasing electronic filing software and the computers required to operate it. Some candidates might also be concerned about finding someone with the required skills to manage the system. The Commission has investigated both the electronic systems in use elsewhere and current filing practices. Based on its research, the Commission recommends that:

3. The State Elections Board should provide all campaigns for state office with copies of electronic filing software, at no cost to the campaigns. The State Elections Board should also offer all campaigns basic training in operating such software.

To ease the burden on small campaigns with modest resources, the Commission recommends a threshold below which candidates should not be required to file electronically:

4. Electronic filing should be required for campaigns with contributions or expenditures greater than $20,000. This number should not be adjusted for inflation over time.

The Commission also believes that all candidates who accept public grants ought to file electronically from the beginning of the general election campaign. For State Assembly races, the Commission recommends public grants of $15,000. Even modest fund raising from individuals and organizations would likely take these campaigns above the $20,000 threshold. The grants for Senate races will be $35,000. Therefore,

5. Candidates who participate in the state’s public funding grant system, described in Chapter 4, should be required to file electronically.

For campaigns that do not exceed the $20,000 threshold, the Commission recommends:

6. Campaigns with contributions or expenditures less than $20,000 should be allowed to file paper reports on the current reporting schedule. Electronic reporting from such campaigns should be required immediately when candidates cross the $20,000 threshold. The State Elections Board ought to issue regulations outlining the process for electronic filing of contributions and expenses received before the threshold was crossed.

While some candidates have expressed concern that this threshold is too low, it is actually very generous when compared with regulations in other jurisdictions. San Francisco’s system requires electronic filing for all campaigns over $500. In Hawaii, the 1997 threshold will be $5,000.

Electronic filing is important not only for candidates but also for others who participate in the electoral process and who are, therefore, required to report their financial activities to the Elections Board:

7. Conduits, political action committees, and all other entities required to report their financial activities to the State Elections Board should be required to submit those reports electronically and instantaneously (within 24 hours of the financial activity), under the same rules as for candidates.

Electronic Disclosure

Electronic filing provides only a partial answer on the disclosure issue, however. Once the information is provided to the State Elections Board, it must be made available as soon as possible to voters all over the state.

The rapidly emerging technology of the Internet, especially the World Wide Web, provides a ready solution. As Hawaii, Florida, and San Francisco have already demonstrated, government can use the Internet to make campaign finance information readily available to citizens everywhere. The Commission recommends that

8. The State Elections Board should make electronically filed campaign finance information available on the Internet as soon as possible (and in any case within 24 hours) after receiving electronic reports.

Currently available technology allows state election officials to take the information as it is filed, post it on the Internet, make it available to users anywhere, and allow users to analyze the data in any way that they choose. The technology, for example, allows users to download data into a spreadsheet and determine who gave to which candidates from which cities; who a candidate’s largest and smallest donors are; and which candidates are spending how much money on which purposes. The technology, moreover, also would permit users to conduct on-line searches on the State Elections Board’s site.

Testimony before the Commission showed that when the press in Wisconsin cities has direct access to campaign finance data bases, reporters thoroughly cover levels of spending, sources of campaign funds, and other aspects of political money. Electronically filed campaign finance information that is made readily accessible on-line to citizens and the media will increase the volume of coverage of campaign finance practices in the press throughout the state.

The same conclusions hold for campaign activity by groups other than candidates. Just as the Commission concluded that non-candidate groups ought to file their reports electronically, the Commission also concludes that:

9. All financial reports filed electronically by non-candidate organizations ought to be disclosed electronically as well.

The Commission understands that these recommendations pose two difficulties.

Access. While electronic filing and disclosure makes campaign finance information easily available to citizens who own computers, it will be harder for citizens without computers to gain access to the data. Those barriers are rapidly falling, however, as schools and libraries throughout Wisconsin are being wired into the Internet. Moreover, although this approach does not make disclosure perfect, it would be an enormous improvement over the existing system of a single paper copy filed in Madison.

Use of paper reports. Both candidates and non-candidate organizations with financial activity less than $20,000 would still file their reports on paper. Unless the State Elections Board enters all of these data manually into the system, information about small campaigns would remain less accessible. Moreover, even if the Elections Board were to attempt to enter the data itself, the process would prove time-consuming and disclosure would be less than immediate. The Commission views electronic filing as a long-term goal for all campaigns. If smaller campaigns were not to be immediately included in such a system, information about larger races that generate more money and more attention would nevertheless be fully available. At the least, therefore, this would prove a major advancement.

No other state in the nation currently requires electronic disclosure for such a wide array of election races. No other state in the nation currently provides such extensive disclosure, although many states are now considering similar proposals.

The Commission’s recommendations would make Wisconsin the unquestioned national leader in electronic filing and disclosure, an approach which itself is proving to be the cutting edge of campaign finance reform. This approach, moreover, is the keystone for other reforms the Commission is proposing. Without it, truly comprehensive campaign finance reform is impossible.

 

 

3. Make Elections Candidate- and Political Party-Centered

 

Since the last Wisconsin campaign finance reform commission in 1975, there have been massive changes in the technology of campaigns. The mass media, especially television, have come to play a far larger role, even in legislative races. Just as significantly—and perhaps as a result—new forums for raising and spending campaign funds have sprouted. In Wisconsin, there has been a gradual evolution from grass-roots campaign activity to mass-market tactics, and from candidate- and political party-centered actions to campaigns on a vast array of simultaneous but different fronts.

Forcing campaigns back to past practices would prove impossible. It is deceptively easy to romanticize about the past and impossible to recreate it. The Commission has no desire to try. Nor does the Commission wish to uproot the roles of new campaign organizations like political action committees (PACs) or independent expenditure committees that have become significant forces in Wisconsin politics. They have become important instruments of political action and have provided mechanisms for individual voters to band together and exert real force in the election process.

Finally, the Commission believes that even the recent and rapid spread of media campaigns that seek to educate voters on the issues play an important role in the process. In the spring of 1997, as the Commission was doing its work, there were two different such issue-based television campaigns: a statewide campaign, funded by the Crandon Mining Company, supporting the expansion of mining in northern Wisconsin; and a regional campaign based in southern Wisconsin and funded by the AFL-CIO that argued the need to reduce special tax benefits for large corporations. The Commission, of course, does not take a position on the merits of either advertising campaign. But it does recognize the unquestioned legitimacy and value of such mass media campaigns in educating voters about the important issues facing them and their elected representatives. (We will return to this issue in Chapter 5.)

Nevertheless, the Commission believes that the center of the electoral process ought to be individual candidates and the political parties they represent. The Commission concludes that the pendulum has swung too far away from them. To the extent that campaign finance regulations affect this balance, we believe that those regulations should recognize and reinforce the roles that candidates and political parties play in politics.

Our system of democracy is a republic, founded on the election of officials to debate the nation’s great issues and to frame solutions. Everything that promotes that process helps democracy. But, in the end, elected officials are responsible for resolving public policy questions. The electoral process needs to focus on them, the alternatives they formulate, the performance they have demonstrated, and the ideas they represent.

In our system, political parties—both the major parties and smaller parties that have often been the launching pad for important new ideas—have provided the critical connection between voters and candidates. The electoral process therefore should center on them.

The Commission therefore seeks to nudge the balance in the campaign finance system slightly to focus more activity on political parties and candidates. It seeks to make them the most important medium between citizens and their government.

Roads Not Taken

In framing its proposals, the Commission reviewed a host of ideas submitted by citizens and public interested groups. Many of these ideas sought to reduce the amount of money flowing into political campaigns by changing both the source and the amounts of money that candidates could collect. The Commission has great sympathy for the underlying purpose of these proposals: to ensure that government represents the public interest of its citizens.

Nevertheless, the Commission reviewed and decided not to support several proposals, for a combination of philosophical and constitutional reasons.

Lower contribution limits. Wisconsin already has relatively low contribution limits for legislative races: $500 for the Assembly and $1,000 for the Senate. The Commission heard testimony to reduce these limits dramatically. The Supreme Court, however, has held that while the government can impose contribution limits to minimize corruption in the process, some limits (at about $100) were so low as to infringe on individual’s right of expression. The Court has left the critical line unclear: between permissible restrictions on contributions and unconstitutional restrictions that hinder free speech. Wisconsin’s current limits are clearly constitutional, and the Commission does not find evidence of corruption caused by the current contribution limits that could establish a case for lowering the limits.

Restricting out-of-district contributions. The Commission also heard testimony from citizens urging that contributions be prohibited from individuals or groups from outside of Wisconsin. Some citizens argued that out-of-district money might drown out the voices of Wisconsin citizens. Some citizens favored requiring candidates to raise more money from within their districts to ensure that they generate more of their support from local sources. Other citizens have contended that substantial sums of money were flowing into Wisconsin politics from outside the state, without clear disclosure or adequate accountability.

The Commission is mindful of the Supreme Court’s rulings that make it difficult if not impossible to impose such restrictions. The Court has ruled that geographic boundaries cannot be put around freedom of speech. Individuals from outside Wisconsin might have a legitimate interest in the policies the state government frames, and the Commission believes that they ought to have the right to participate in the state’s politics.

Citizens in various districts within Wisconsin likewise might have strong interest in issues focused elsewhere in the state, such as the interest of urban environmentalists in the treatment of the state’s beautiful, sparsely settled areas. Citizens might also have a strong interest in the partisan balance of the state legislature and wish to contribute to key races likely to affect its makeup. While the Commission believes that the primary responsibility of elected officials is to represent the citizens in their constituencies, the Commission has also included that others have the right to have their opinions heard—and that the Supreme Court is unlikely to look kindly on attempts to restrain their voices. In later sections of this report, however, the Commission does recommend steps to ensure disclosure by such groups.

Limits on out-of-district contributions would be almost impossible to administer in the case of PAC contributions. A labor, business, commercial, agricultural, or issue-oriented PAC might raise money from many contributors from many districts or even many states. It would be very difficult to determine whether PAC contributions to candidates in specific districts were made from funds raised in that district. The same problem would face state and national political party committees that raise money from a broad base of donors and make contributions to candidates in various districts.

The Commission has also heard considerable concern about money flowing into Wisconsin from outside the state. Many citizens have expressed grave concern that such contributions could give citizens from other states undue influence over Wisconsin politics. For all of the reasons outlined above, it would be constitutionally difficult, if not impossible, to impose such restrictions.

However, the Commission does believe that all money in Wisconsin politics ought to be on a level playing field. Those contributing money to Wisconsin campaigns ought to have to abide by the same rules as Wisconsin residents. Therefore, the Commission recommends:

10. All those making contributions to Wisconsin political campaigns, as well as PACs and groups engaged in independent expenditures and other election-oriented activities as defined in Chapter 5, ought to comply with the same rules, especially for disclosure, as Wisconsin citizens.

Tighter restrictions closer to elections. Finally, the Commission heard from citizens interested in imposing tighter restrictions on contributions close to election day. For example, there were proposals that contribution limits be cut in half two weeks before the election. The Commission decided not to embrace these proposals for several reasons. First, the Commission was concerned that such restrictions might make tight races less competitive. Second, the Commission was concerned that the proposal might raise unsolvable constitutional problems. Finally, the Commission was deeply concerned that such restrictions might push more money out of candidates’ campaigns and into non-candidate organizations, where restrictions are far looser and accountability much less. The Commission believes that its proposal for full and immediate electronic filing and disclosure will reveal the source and extent of last-minute contributions. Citizens will have full information to judge whether such activity creates an issue that they might want to consider in casting their ballots.

Contribution Limits

The Commission carefully reviewed the existing contribution limits (see Table 3-1). The existing limits are approximately 20 years old and have not been adjusted for inflation since they were created. The Commission has concluded that the existing contribution limits are adequate for running competitive campaigns.

Table 3-1

Limits on Individual Contributions to Candidates

 

Contribution Limit

Governor

$10,000

Lieutenant Governor

$10,000

Attorney General

$10,000

State Treasurer

$10,000

Secretary of State

$10,000

Superintendent of Public Instruction

$10,000

Supreme Court

$10,000

Senate

$1,000

Assembly

$500

 

However, the Commission also recognizes that the rising cost of campaigns over time will eventually require some adjustment of these limits. In Chapter 4, the Commission reviews this problem as it applies to public funding grants and the spending limits that accompany them; that chapter contains a recommendation that the grants and limits be automatically increased over time. The Commission, however, is not eager to apply automatic increases to contribution limits.

The Commission believes instead that these limits ought to be subject to regular review by the State Elections Board and the state legislature. Rising campaign costs might require periodic increases in contribution limits, but the increases ought to be the result of careful study instead of an automatic escalator. Hence, the Commission recommends that:

11. Every two years, the State Elections Board ought to review the contribution limits contained in the state elections laws. If the Board finds that the limits need to be increased, it should frame a proposal and present it with supporting information to the state legislature, which should consider and act on the Board’s recommendations.

Political Action and Legislative Campaign Committees

The Commission heard a great deal of testimony about the role of political action committees (PACs). Some witnesses believed that PACs have too much power in the electoral process. Some witnesses, moreover, called for dramatic reductions in the role of PACs—or even their elimination. The Commission believes that PAC activity ought to be focused, as much as possible, through the political parties and the campaign committees of individual candidates. The Commission has also concluded that any effort to restrict the flow of PAC money, no matter how well-intentioned, would simply push it out into other forms of political expression that would be far less controllable and even less subject to disclosure.

The Commission agreed that the method for establishing contribution limits by PACs should be modified to make it more clear. The limits are currently expressed as a percentage of the spending limit for a particular race (see Table 3-2). That requires a series of calculations to determine how much PACs may contribute to different races. The Commission believes that the contribution limits ought to be expressed more clearly in dollar terms. The Commission recommends that:

12. Contribution limits by PACs to candidates’ races should be changed from the current standard (a percentage of the spending limit in a race) to a fixed dollar amount. The limits for each race should be: Governor—$45,000; Lieutenant Governor—$13,000; Attorney General—$22,000; Secretary of State—$9,000; State Treasurer—$9,000; School Superintendent—$9,000; Supreme Court—$9,000; Senate—$2,000; Assembly—$1,000.

The Commission also concludes that there ought to be aggregate limits on the amount of PAC contributions that any candidate can accept. Thus,

13. Candidates should raise at least 35 percent of their income from individuals. Any public financing grant that they receive ought to be counted against the 65 percent of the contributions they can collect from sources other than individuals.

Candidates who participate in the public financing grant program would receive 25 percent of their spending from the public grant (see Chapter 4). They would be required to raise at least 35 percent of their spending from individuals. Thus, public grants and individual contributions would finance at least 60 percent of their spending. Contributions from all other sources, including PACs, would be limited to no more than 40 percent of their entire spending. For candidates whose spending was less than the spending limit, the limit on PAC contributions would be effectively even less. With full and immediate electronic disclosure, furthermore, taxpayers would be able to learn the source and size of all PAC contributions.

The Commission also believes that the principles of full disclosure and making elections candidate-and party-centered create a strong case for banning PAC-to-PAC transfers. The Commission has absolutely no desire to restrict the ability of PACs to support the candidates and causes in which they believe. However, the Commission has found that some PACs have evaded disclosure by engaging in multiple transfers of funds.

For example, in the spring 1997 elections, substantial money flowed between PACs into a Madison school board race. Wisconsin 2000, a La Crosse-based conduit, channeled money from the Democratic National Committee into a race that was, at least officially, nonpartisan. Neither the amount nor the ultimate sources of the funding were disclosed. Such transfers greatly distance the source from the use of the funds. This makes it impossible to determine who actually contributes money to fund some electoral activities.

PACs occasionally incur expenses that can legitimately be reimbursed. The Commission believes that modest transfers between PACs, of up to $100, ought to be allowed for such purposes. However, the Commission has concluded that most transfers between PACs evade the principle of full disclosure. Therefore, the Commission has concluded that:

14. PAC-to-PAC transfers of more than $100 ought to be prohibited.

The Commission also believes that the same restriction ought to apply to candidate-to-party and candidate-to-candidate transfers. The Commission believes that candidates ought to be able to attend each other’s fund-raising events, as well as the fund-raising events conducted by political parties. However, the Commission has concluded that contributions greater than the actual cost of the event, such as the value of the food, ought to be prohibited. Thus, the Commission recommends:

15. Candidate-to-party and candidate-to-candidate contributions ought to be prohibited, except for contributions covering the actual cost of events, up to $100 per event.

Finally, the Commission was concerned that the legislative campaign committees—in each house of the state legislature, representing each political party’s caucus—have taken on disproportionate influence in legislative races. This influence has come at the expense of the state’s political parties. It has also blurred the lines between lawmaking and campaigning, including campaign fund raising, in ways that have undercut public confidence in the political system.

The Commission believes that the party- and candidate-building activities undertaken by the legislative campaign committees ought to more properly be undertaken by the political parties themselves. The Commission believes that the political parties ought to play an expanded role in the election system. This would separate legislating from fund raising. It would improve accountability for the campaign finance process and strengthen the political parties’ ability to recruit, support, and elect candidates to office. That, in turn, would increase the focus of elections on the critical issues of the day.

The Commission understands that such a step will prove a difficult one for legislators to take. At the same time, however, the Commission has concluded that this step would be one of the most important ones that the state legislature could take to demonstrate its serious commitment to campaign finance reform. Therefore, the Commission concludes that:

16. The legislative campaign committees in the Assembly and Senate ought to be abolished.

Table 3-2

Limits on Contributions by

Political Action Committees to Candidates

 

 

 

Current Limits

Proposed Limit

 

Percentage fixed in law

X

Current spending limit =

Dollar amount

Dollar amount

Governor

4%

$1,078,200

$43,128

$45,000

Lieutenant Governor

4%

$323,475

$12,939

$13,000

Attorney General

4%

$539,000

$21,560

$22,000

Secretary of State

4%

$215,625

$8,625

$9,000

State Treasurer

4%

$215,625

$8,625

$9,000

School Superintendent

4%

$215,625

$8,625

$9,000

Supreme Court

4%

$215,625

$8,625

$9,000

Senate

$1,000

$2,000

Assembly

$500

$1,000

 

Source: Wis. Stat. 11.26(2), 11.31(1).

 

4. Encourage More Competitive Elections

 

A strong and vibrant democracy depends on lively and competitive elections. Our republican form of government rests on candidates running competitive campaigns—putting their views before the public and testing them in the crucible of free ballots. An effective democratic process requires first that voters have real choices to make.

The rapid rise of the mass media in electoral politics at all levels, down to school board and city council races, has allowed candidates to communicate their views better to a busy public. But it has also driven the cost of campaigns upward. The rise in the cost of campaigns, in turn, has made it harder for new candidates to run for office and for many candidates to run competitive campaigns. Building competitive elections requires ensuring that potentially strong candidates are not discouraged from running by the cost of elections. It also requires ensuring that, once they take the first step into the electoral arena, they can speak loudly enough to make their views heard.

Much of the reform debate has centered on limiting the spending on campaigns and making elections more competitive. The U.S. Supreme Court, in Buckley v. Valeo, has sharply limited the government’s options, especially in restricting spending. The Court ruled that while the government could limit contributions to campaigns (on the grounds that very large contributions might corrupt the process), it could not mandate spending limits (on the grounds that spending constituted speech by candidates). The Court did permit one way to restrict spending: voluntary limits. The government could, for example, provide public grants to candidates in exchange for candidates’ agreeing to limit the amount of money they spent. All attempts to restrict spending since Buckley, therefore, have been accompanied by public grants. Buckley, in turn, has become the touchstone grounding all campaign finance reforms.

Citizens’ Debates over Campaign Finance Reform

In the course of its many hearings, the Commission heard numerous calls from citizens to encourage more competitive elections. Some citizens have suggested that campaigns are too long: that the din of campaigns discourages voters and that the press of campaigning overwhelms candidates. The Commission has concluded, however, that attempting to prescribe either the length or style of campaigns would hurt, not help, democratic debate. Part of democracy’s great vitality comes from the imaginations of those who seek to lead it, and the Commission has no desire to channel that spirit.

Some citizens have suggested that, since the cost of mass media is responsible for driving up the cost of campaigns, candidates should either be forbidden from using the media or that the government ought to purchase a pool of time to distribute to candidates.

The Commission thinks it unwise to prescribe the manner in which candidates choose to communicate with voters, including the mix of mass media and other forms of contact. Especially in state elections, where campaign strategies vary so significantly, government could not possibly foresee and structure the richly textured approaches that candidates use. The Commission has concluded that it would be far wiser to allow candidates to set their own course. In this case, the medium is part of the political message.

Some citizens have suggested that the state ought to impose strict spending limits on campaigns, and that those limits ought to be ratcheted back from today’s levels. One proposal flows from the initiative that Maine’s voters approved in 1996: spending limits set at 75 percent of the average of the previous two elections. The Commission believes that it would be extremely difficult to reduce campaign spending so dramatically. Experts appearing before the Commission testified quite emphatically that moving backward so substantially would likely prove impossible.

A comparison of the Minnesota and Wisconsin public financing systems provides instructive evidence on the need for realistic spending ceilings to accompany a public grant system. In Minnesota, spending limits are reasonable and participation by candidates in the system is high. For example, in 1994, 91 percent of all Minnesota state House incumbents accepted public funds and the spending limits that accompanied them. In Wisconsin, the rate for incumbents in the Assembly races was just 36.3 percent. In Minnesota, 93.5 percent of all challengers in legislative races accepted public funds and the spending limits, while in Wisconsin only 57.6 percent did.

Dramatically lowering spending limits, as some witnesses suggested to the Commission, would likely produce no real limits at all. Many candidates, especially those in competitive races, would likely reject public funding and spending limits rather than restrict their campaigns severely. That is the clear evidence from the existing systems in Minnesota and Wisconsin: low limits accompanied by small grants in Wisconsin have discouraged participation in the system, while adequate limits and attractive grants have encouraged the Minnesota system.

Moreover, basing spending limits on an average and seeking to roll the average back would fail to deal with three other difficult problems. First, wide differences in the nature of Wisconsin legislative districts and the media markets in which they are situated cause campaign costs to vary substantially. Second, highly competitive races tend to require and attract far more money, which in turn would make it hard to roll spending for these elections back. Third, all of the costs associated with running political campaigns—labor, advertising, and products—increase annually. Candidates can no more roll back inflation than can other citizens.

Public Financing Grants

The Commission reviewed these citizens’ views very carefully as it considered three basic options for public financing grants.

Keeping the system as it is. The Commission concluded that Wisconsin’s current spending limits and public finance grant system are simply not working. The system has neither adequate grants nor reasonable financing. Wisconsin deserves an election system where reality matches rhetoric.

Moving to a system of full public financing for all state elections. The Commission has profound philosophical and practical reservations about providing full financing for all elections. On the philosophical level, the Commission believes that there is great value in having candidates demonstrate their commitment and viability through fundraising.

Furthermore, providing full public financing would also prohibit individuals from contributing to candidates whose views they favor. The Commission believes that such participation by citizens in the electoral and policy processes is important. Citizens have shown that they value the right to choose who to support and how strongly to support them. Of those surveyed, 87 percent agreed that "It’s important for citizens to contribute individually to political campaigns." More than 76 percent agreed that "Raising money is important in helping candidates get their message across to voters."

Many citizens have expressed deep concern about using public money to fund election campaigns. The Commission has not found broad or deep public support for full public financing of state campaigns.

On the practical level, the amount required for full public financing would be substantial: a minimum of $8 million annually for full public support of state legislative races, plus another $4 million per year for statewide races. The Commission does not see adequate public support at this point for such an infusion of public funds into the state’s elections.

Full public financing rests on an intriguing assumption—that getting private money out of elections would improve democracy. The Commission has concluded, however, that the assumption is unproven. Barred from participating in election campaigns of candidates, money would continue to flow into elections—but through independent expenditures or issue advocacy campaigns far removed from the candidates and, often, removed from many campaign finance regulations as well.

Hence, a system of full public financing would be unlikely to end the role of private funds. It might unduly restrict citizen participation. And a scheme of public funding would be more costly than the public would be likely to support.

Strengthen Wisconsin’s existing system of public financing grants. Wisconsin’s partial public financing grant system has proven of great value. Moreover, testimony from leading national experts has pointed out that Minnesota’s partial public grant system has made elections more competitive and improved the overall campaign process.

The Commission has concluded that the third option would create the best system for Wisconsin. Following extensive staff research and the testimony of expert witnesses, the Commission has found that:

Public financing grants may help attract candidates for office by providing at least a basic grant to establish their campaigns.

Public financing grants may spur competition by drawing more and better candidates into more campaigns.

Public financing grants tend to benefit challengers more than incumbents, the professional literature in political science shows. This helps to counter the advantage that incumbents naturally bring to elections.

Public financing grants help candidates diminish, but certainly not eliminate, the potential excesses of private money.

Public financing grants provide a valuable incentive for candidates to accept reasonable and voluntarily limits on their spending and, therefore, are the only workable strategy for holding down increases in the cost of elections.

Where public financing grants are made, and expenditure limits are legally imposed as a condition of those grants, the combination of public grants and limited expenditures reduces the pressure on candidates to devote excessive time to raising funds. This process also diminishes the pressure to take funds from other sources, including those who are seeking undue access or special consideration in the conduct of government business.

The Commission has concluded, therefore, that public financing grants can play a valuable role in the campaign finance process. However, as Professor Kenneth Mayer demonstrated in a paper he prepared for the Commission, both funding and participation in Wisconsin’s public grant program have steadily dropped over the last decade, for three reasons.

First, in 1986, the spending limits for state races, which had been increased by law according to increases in the consumer price index, were frozen. As time went by, the limits fell further behind the cost of campaigns. For example, since 1986 the spending limit for state Assembly race has been $17,250. The average Assembly campaign in 1996, however, spent $19,508. For competitive races (in which candidates won between 40 and 60 percent of the vote), the average was far higher: $41,186. (See Figure 4-1.)

For state Senate races, the gap between the frozen limit and current spending practices is far wider. The limit has been frozen at $34,500. However, in 1996, the average spending for all Senate races was $83,289. In competitive races, average spending was even higher, $147,563. (See Figure 4-2.) The Commission concludes that the widening gap between the current limits and campaign practice has discouraged participation in Wisconsin’s public grant program.

Second, Wisconsin’s original campaign finance law contained no provision to recognize growth in the number of people of voting age. Spending limits have not acknowledged the additional costs of campaigning in a growing electorate.

Third, public participation in the income tax check-off program, which funded the grants, has dropped dramatically over the last decade. In 1977, when the check-off began, 18.9 percent of all taxpayers participated in the program, in which they marked their income tax forms to contribute $1 to the state public grant campaign fund. By 1995, participation had dropped to just 8.4 percent of taxpayers. (See Figure 4-3.) The falloff in participation reduced the amount of all public grant awards and thus further reduced the incentives to participate.

Only Minnesota and Wisconsin have mature public grant systems for state legislative races. Ten states have created public grant systems, most only for statewide offices. Only in the two Midwest neighbors is there a mature system of public grants that includes state legislative races.

Mayer found that in Minnesota, which has funded a system of public grants with realistic spending limits, virtually all candidates for the state legislature have taken part in the system. Between 1990 and 1994, with three election cycles, all but 40 of the 753 candidates who ran in state House elections took part in the system. In the 1990 and 1992 state Senate elections, 98 percent of the candidates took part. In the most recent election, 88 percent of Minnesota candidates took part in the system. In Wisconsin, by contrast, participation was 41 percent. The public grant system, therefore, has limited spending in campaigns.

Minnesota’s system, moreover, increased the number of races with challengers and made elections closer. In 1996, for example, only 7.8 percent of Minnesota’s incumbents were unopposed. In Wisconsin, 32.6 percent of incumbents were unopposed (see Table 4-1).

Table 4-1

Incumbents Not Opposed:

Lower House

Year

Wisconsin

Minnesota

1996

32.6%

7.8%

1994

51.1%

10.5%

1992

44.3%

8.5%

1990

43.0%

16.8%

Source: Professor Kenneth Mayer.

In Minnesota, moreover, far fewer incumbents ran in non-competitive elections (as defined by incumbents who won by more than 60 percent of the vote). (See Table 4-2.)

 

Table 4-2

Incumbents in

Non-Competitive Races

Year

Wisconsin

Minnesota

1996

78.3%

N/A

1994

78.9%

33.3%

1992

75.9%

30.6%

1990

78.2%

40.3%

Source: Professor Kenneth Mayer.

 

The Commission concludes, therefore, that a public finance grant system with adequate funding and sufficient public grants can restrain the cost of elections and make them more competitive. There is no guarantee that increasing the funding of the system will accomplish the objectives outlined above. It is certain, however, that the objectives cannot be accomplished without sufficient funding.

The Wisconsin Clean Election System

The Commission has concluded that the philosophy supporting the public grant system created following the last blue-ribbon commission is sound. The Commission finds that public financing grant systems offer great potential for restraining the cost of campaigns and making elections more competitive.

The Commission agrees on the amount of money that such a public grant system requires (see the discussion below). However, the Commission did not agree on how it should be funded.

The Commission reviewed three financing options. First, the Commission considered funding the system through appropriations of general public revenue. This option has the clear advantage of providing adequate and stable revenue, as long as the legislature agrees to continue supporting the program. However, as the public opinion poll conducted by the Commission made clear, many citizens have grave reservations about financing campaigns with public money.

Second, the Commission considered expanding the existing check-off. This option has the value of making contributions to the system voluntary, since taxpayers do not have to support it unless they want to. However, Wisconsin’s check-off system, now at $1, does not provide sufficient revenue even for the current system. Increasing the check-off, even to $5, would still not raise enough money and would likely further reduce participation in the program. Thus, although the check-off enjoys the advantage of individual choice about participation in the system, it would not provide adequate and stable funding.

Finally, the Commission considered the option of a tax add-on. In this option, taxpayers would check a box on their tax forms to increase their taxes (or reduce their refund) by a certain amount. Unlike the current check-off, this option would on balance increase the revenue available to the system. This option also has the advantage of allowing citizens free choice about whether to participate in the system. The Commission was concerned, however, that few taxpayers would participate and that the option, therefore, would be unlikely to raise enough money to support the system.

The members of the Commission could not agree which option was the best, although a majority of the Commission’s members favor direct appropriation from general state revenue. Some members of the Commission, however, have serious reservations about this option. In the end, this is a decision that the state legislature will have to make.

The Commission recommends that Wisconsin create a Clean Election System, with attractive public grants, spending ceilings set at four times the amount of the public grant for each race, and adequate funding. In examining Wisconsin’s system, as well as those in other states, the Commission believes that generating $1 per year per voting age person in Wisconsin would provide the needed funds. Thus, the Commission concludes that:

17. Building a workable and effective public grant system will require adequate funding. The Commission concludes that the state legislature should create a Clean Election System, at $1 per year per voting age person, and provide a means for funding it.

 

Legislative races. The Commission began its examination of the state financing grant system by carefully reviewing expenditures for state legislative races in 1996. As Figures 4-1 and 4-2 demonstrate, the expenditures showed three important patterns. First, candidates who spent only modest amounts either won or lost overwhelmingly. These races tended to involve incumbents with safe seats who needed to spend relatively little to maintain them, and challengers who had a difficult time mounting credible campaigns.

Second, the high-spending races tended to be very close—and close elections tended to attract more money. Substantial campaign funds helped candidates wage competitive campaigns.

Finally, other races featured campaigns where the loser made a solid showing (at least 40 percent of the vote). These races proved most instructive in estimating the size of the public funding grant required to make more races more competitive. These data also were useful in establishing what the appropriate spending limits ought to be in these races.

The Commission also examined the Minnesota public grant system as a guide to set the spending limits for legislative races. In Minnesota, the public grant system allows candidates to spend up to $1.65 per registered voter. Applying this amount to Wisconsin legislative districts produces the following results (see Table 4-3).

 

Table 4-3

Spending Ceilings:

Minnesota’s Formula Applied to Wisconsin Legislative Districts

 

Wisconsin registered voters per district

Minnesota amt. per registered voter

Calculated: Wisconsin spending ceiling

Lower house

28,369

$1.65

$46,809

Senate

85,107

$1.65

$140,427

Source: Professor Kenneth Mayer and staff calculations.

 

Based on these data, the Commission concludes that:

18. For legislative races, the Wisconsin Clean Election System should make public funding grants available to candidates during the general election campaign: $15,000 for the Assembly; and $35,000 for the Senate.

19. Candidates who accept the public grants should be limited in the total they can spend during the election. The limits should be four times the amount of the grant: $60,000 for the Assembly, and $140,000 for the Senate.

 

Statewide races. The Commission has used this research to determine an adjustment factor for statewide races (state Supreme Court, School Superintendent, Secretary of State, Attorney General, Lieutenant Governor, and Governor). This factor is the increase from the frozen 1986 frozen levels required to bring legislative races to a competitive level in 1996. Based on this factor, the Commission recommends that:

20. The Wisconsin Clean Election System should make public financing grants available for statewide races in the general election campaign: $87,500 for Superintendent of Public Instruction, Secretary of State and State Treasurer candidates; $100,000 for State Supreme Court candidates; $187,500 for Attorney General candidates; $281,250 for Lieutenant Governor candidates and $875,000 for Governor candidates.

As a condition for the grant, candidates ought to accept strict spending limits, set at four times the public financing grant, for their campaigns:

21. Candidates who accept the public grant ought to be limited to the following spending limits: $350,000 for Superintendent of Public Instruction, Secretary of State, and State Treasurer; $400,000 for State Supreme Court; $750,000 for Attorney General; $1,125,000 for Lieutenant Governor; and $3.5 million for Governor.

For a summary of the public funding grants and the spending limits recommended for each race, see Table 4-4.

 

Eligibility. The Commission believes that such grants ought to be available to candidates from new political parties as well as major-party candidates. The state’s existing law spells out the standards for qualifying for public grants: a candidate is eligible to apply for a public financing grant if the candidate is representing a party that, at the preceding general election, won 6 percent of the vote cast for all candidates on all ballots for the office. The Commission recommends that this standard continue:

22. A candidate is eligible to apply for a public financing grant if the candidate is representing a party that, at the preceding general election, won 6 percent of the vote cast for all candidates on all ballots for the office.

 

Adjustment in grants and spending limits over time. To ensure that these grants and spending limits are maintained at a level sufficient to encourage candidates to remain in the public financing system, the Commission believes that both the grants and spending limits ought to be increased in each election cycle. Thus:

23. Both the public funding grant and the spending limit for each race ought to be adjusted every two years according to two factors, each weighted equally: increases in the cost of living, as measured by the federal government’s consumer price index (as it may be adjusted); and increases in the state’s voting age population, as determined by the Federal Election Commission.

 

Incentives. As the Supreme Court has ruled, both the acceptance of grants and of spending limits cannot be mandated. However, the Commission believes that the election system ought to contain incentives to encourage candidates to take part in the public grant system. A popular incentive is the "double-bubble": when one candidate in a race does not take the public grant and accept the related expenditure limit, the opposing candidate who does accept a grant and the expenditure limit has his/her expenditure limit lifted and receives the opponent’s grant as well. In a case involving Minnesota’s public financing grant system, however, a federal court has ruled that the "double bubble" is unconstitutional. The acceptance of public grants and spending limits, the Supreme Court has ruled, must be voluntary. The 8th Circuit Court of Appeals ruled that the "double bubble" effectively made the system compulsory and, thus violated candidate’s First Amendment rights.

The Commission believes that candidates ought to have a strong incentive to accept the public financing grants. The Commission, however, recognizes that the acceptance of the grants must ultimately be voluntary. To find this balance, the Commission recommends that:

24. If a candidate’s opponent chooses not to take part in the public financing grant system: the candidate’s spending limit is removed; and the candidate receives a pro rata share of the grants not used for other candidates running in the same category of election campaigns. There will be four categories of election campaigns: (a) Assembly; (b) Senate; (c) State Supreme Court and Superintedent of Public Instruction; (d) Governor, Lieutenant Governor, Attorney General, Secretary of State, and State Treasurer. All grants that are unused ought to be distributed equally within each category, to all candidates who participate in the Wisconsin Clean Election System by accepting public grants and spending limits.

There would be relatively large numbers of candidates in Categories A (Assembly) and B (Senate). If rejected grants were redistributed to the candidates that agree to accept the grants and the spending limits that accompany them, there would be an incentive to take part in the system. The incentive could not, however, be viewed as so strong as to make the system compulsory. That, the Commission believes, would keep the system constitutional.

In Category C (State Supreme Court and Superintendent of Public Instruction) races, however, the campaigns occur in cycles. Some years have both judicial and superintendent races; alternating election years have only judicial races. The Commission believes that it would be unwieldy and unconstitutional to follow the same rules for these races. Therefore, the Commission recommends:

25. For Category C races: In each year when there is an election for State Supreme Court justice and/or Superintendent of Public Instruction, the money for which candidates would be eligible, but which those candidates have rejected, would be placed into a pool. Half of the pool of unused grants would be redistributed to candidates who accepted grants. The balance would remain in the pool for the next year in which a Category C election occurred.

The balance from prior years would thus be combined with any unused grants in the current year to form the new pool from which a portion (50 percent) would be drawn and redistributed. This means that the pool would accumulate over time. It would thus become more and more valuable to the candidates who did take the grants, thus causing all candidates to think more carefully before rejecting the grants.

In category D (Governor, Lieutenant Governor, Attorney General, Secretary of State, and State Treasurer) races, the process would work like this:

26. For Category D races: the unused grants of Category D candidates would become a single pool and would be distributed to each other in the same ratios to the various candidates who take their grants as their grants are to one another.

For example, in the Commission’s proposal, the grant to the gubernatorial candidates would be 57.6 percent of the grant amounts available for all Category D offices. The gubernatorial candidate(s) who take public financing grants would receive 57.6 percent (divided equally among them, if more than one candidate accepts the public financing grant) of the unused pool.

These formulas are admittedly complicated. They would ensure, however, that unused grants are distributed in proportion to the public grants available to candidates at each level. The Commission believes that such an approach would create incentives for candidates to accept the public financing grant while allowing candidates to make a free choice on participating. That, the Commission concludes, would satisfy the federal courts’ holding that incentives in such public financing systems must not be coercive.

 

Unopposed candidates. While the Commission supports public grants, it believes that the grants should only be used to encourage more competitive races. Therefore,

27. Candidates who are unopposed should not receive public grants.

 

War chests. The Commission has concluded that the use of war chests—surpluses remaining at the end of campaigns—ought to be restricted. In particular, the Commission does not believe that public financing grants ought to be used to create war chests. The Commission believes that candidates who accept public grants and end the campaign with a surplus in their campaign treasuries ought to repay the state treasury for the amount of the grant, to the extent of any surplus remaining in the campaign treasury. That recommendation is included with other recommendations on the use of war chests in Chapter 7.

 

 

 

Figure 4-1

 

Source: Wisconsin Democracy Campaign, from candidate reports on file at the State Elections Board.

 

 

 

State Assembly

Mean

Median

All races

$19,508

$13,868

Competitive races

(winning between 40 and 60 percent of the vote)

$41,186

$35,793

 

 

Figure 4-2

 

 

Source: Wisconsin Democracy Campaign, from candidate reports on file at the State Elections Board.

 

 

 

State Senate

Mean

Median

All races

$82,289

$55,507

Competitive races

(winning between 40 and 60 percent of the vote)

$147,563

$140,416

 

 

 

Figure 4-3

Year

Source: State Elections Board

Table 4-4

Recommended Public Funding Grants

and Spending Limits

 

Current Limit

Proposed Limit

Public Grant

Cost

(per year)

Assembly

$17,250

$60,000

$15,000

$1,485,000

Senate

$34,500

$140,000

$35,000

$595,000

Supreme

Court

$215,625

$400,000

$100,000

$100,000

Superintendent of Public Instruction

$215,625

$350,000

$87,500

$43,750

Secretary of State

$215,625

$350,000

$87,500

$43,750

State

Treasurer

$215,625

$350,000

$87,500

$43,750

Attorney General

$539,100

$750,000

$187,500

$93,750

Lieutenant Governor

$323,475

$1,125,000

$281,250

$140,625

Governor

$1,078,200

$3,500,000

$875,000

$437,500

Total

$2,983,125

Wisconsin Clean Election Fund: $1/voting age person

$3,824,000

 

 

 

 

5. Level the Playing Field

 

For a decade, independent expenditures have played a major role in Wisconsin races. In the last election cycle, however, the scale, scope, and strategy of money independent of candidates’ campaigns have changed substantially. Different groups engaged in a wide variety of mass media activities: television ads, radio ads, mass mailing, and mass telephone banks. These activities came from very different ideological perspectives. They weighed in both for and against very different candidates. In many cases, it was anything but clear who was sponsoring and paying for these activities.

The Commission has found that these activities were clearly designed to influence the outcome of elections. They have in fact significantly transformed the conduct of many election campaigns. Because they operated apart from candidates and political parties, many candidates complained that these activities caused the candidates and parties to lose control of their campaigns in the critical last days of campaigns. Because expenditures for these activities have often been very large relative to the size of candidate’s own campaigns, and because candidates could not predict whether they would be targeted by such campaign activities, they have fueled a fund-raising arms race. And because the timing, the size, and the source of the spending often went undisclosed, they produced stealth campaigns unaccountable to the state’s campaign laws. As a result, the campaign playing field has been rendered uneven.

The Commission recognizes that such campaign activity is clearly an important exercise of freedom of speech. It believes that individuals and groups have a clear right to educate voters on the critical issues of the day. It fully supports the Supreme Court’s ruling in Buckley v. Valeo (1976) that the expenditure of money in the electoral process is an important form of free speech.

However, the Commission has also concluded that the development of campaign practice since the Court’s decision raises important new issues. First, while the basic principles of law stand, the facts on which the Court based its 1976 ruling have changed remarkably. The Court ruled long before the new tactics of independent groups emerged in their current form. These tactics present new questions that the Court did not consider in reaching its 1976 decision.

Second, in its 1976 decision, the Court left many fundamental questions unanswered about the role of such independent spending. The Court, in particular, was unclear in drawing the line between two important campaign tactics: voter-education efforts that do not urge the election or defeat of a candidate (known as "issue advocacy"); and efforts to influence elections by urging the election or defeat of a specific candidate (known as "express advocacy").

As a result both of changing facts and uncertainties in the Court’s 1976 ruling, considerable work needs to be done to refine the issue advocacy and express advocacy problems. The Commission fully supports the Court’s protection of freedom of speech outlined in Buckley. It has concluded, however, that new steps are now required to adapt Buckley’s principles to new facts and to resolve ambiguities in judicial opinions.

The case for doing so is clear and compelling. In recent years, voters increasingly have had no way of knowing the true source of funds for many of the advertisements they have seen during election season. As a result, accountability of those participating in the electoral process has eroded. The true contributors to some independent expenditure campaigns have been hidden. Even more important, large issue advocacy campaigns have been mounted with the size and source of the funding hidden. The public deserves clear disclosure of who is doing what. The Commission therefore seeks to ensure full disclosure of such campaign activities.

Promoting Freedom of Speech

In its landmark 1976 decision, the Supreme Court made an important distinction. Political speech intended to educate voters about public policy issues enjoys special protections. Political speech intended to influence an election could be regulated the same as other campaign contributions and expenditures. However, the Court did not define clearly just where the line between such educational speech and electoral speech was to be drawn.

In Buckley, the Court invalidated a section of the Federal Election Campaign Act of 1971 that prohibited any person or organization (other than campaigns and political parties) from spending more than $1,000 during a calendar year to advocate the election or defeat of a candidate for federal office. Buckley concluded that the government could require disclosure of campaign spending and limit contributions for such activity only if it were "express advocacy": communications that "in express terms advocate the election or defeat of a . . . candidate for federal office." A four-line footnote accompanying the opinion provided examples that became enshrined in constitutional law: "‘vote for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote against,’ defeat,’ ‘reject.’"

Thus, as long as a communication did not expressly call for the election or defeat of a candidate, the communication would be considered "issue advocacy" and government would be forbidden to regulate it. Individuals or groups who, independently of candidates’ campaigns, wished to engage in such issue advocacy were free to do so as long as their communications did not engage in express advocacy. It did not matter that such "issue advocacy" might occur close to an election, portray a candidate in a distinctly unfavorable light, encourage voters to call in to the candidate and complain about the candidate’s position, and do everything but advocate the candidate’s electoral defeat. If the magic words went unspoken, the Court held, the speech was constitutionally protected.

The Federal Elections Commission responded by writing regulations to clarify which speech could be regulated. It applied a "reasonable person" test. Its regulations asserted that "express advocacy" includes communication that either used the "magic words" or that:

When taken as a whole and with limited reference to external events, such as the proximity to the election, could only be interpreted by a reasonable person as containing advocacy of the election or defeat of one or more clearly identified candidates.

Although the Supreme Court in Buckley sought to draw a "bright line" to define express advocacy, its list of phrases was a set of examples, not an exclusive set of legally enforceable terms. The "magic words" define the kinds of speech that the Court believes ought to be protected, not necessarily the words that must be used to define the "bright line."

It is clear that the Court meant to differentiate electoral speech from speech about issues, but the Court was not nearly as clear in drawing the line as might be imagined from the subsequent debate. Moreover, even the examples are in a footnote, not part of a forceful articulation of the Court’s views. The federal courts have been much clearer about the principle of drawing the line than on how to do it.

For example, in FEC v. Furgatch the 9th Circuit Court of Appeals upheld the government’s right to force those making expenditures near election time to register and disclose the source of their funding. Harvey Furgatch, a private citizen, took out advertisements in the New York Times and the Boston Globe just before the 1980 elections. The advertisements criticized President Carter and his performance in office. He said that the president had hidden the truth about his record and that the country would suffer if he were reelected. "Don’t let him do it," Furgatch urged in the ads.

The Federal Election Campaign Act of 1971 (FECA) requires individuals who make independent expenditures totaling more than $250 and that expressly advocate the defeat of a candidate for federal office to report these expenditures to the FEC. Furgatch did not report his expenditures, and the FEC brought suit against him for violating the act. The 9th Circuit held against Furgatch. The court argued that Buckley covered more than just the "magic words." The court held that speech was express advocacy if "when read as a whole, and with limited reference to external events, [it could] be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate." The Supreme Court later denied certiori in the case and allowed the lower court’s opinion to stand.

Free Speech and the Electoral Process

Despite this ruling, however, a long string of other lower-court opinions has sharply limited policy makers’ options in regulating campaign activities. The courts have ruled that any regulation must be unambiguous so that those engaging in speech have no doubt about whether their speech is protected. As recently as April 1997, the lower courts have held that "the First Amendment forbids the regulation of our political speech" under standards that are "indeterminate." This decision, in a case in which the Federal Elections Commission sued the Christian Action Network over television commercials, confirmed a series of previous lower-court rulings that have sharply limited the government’s ability to restrict speech—including television commercials—involving issues and candidates.

The case law in the area is very new, as First Amendment cases go—just 20 years. But the lower courts’ consistency in restricting government regulation of issue-oriented speech has been notable.

The case law builds on Buckley, which held that campaign regulations potentially infringing on the First Amendment must demonstrate a compelling government interest and be as narrowly tailored as possible to achieve that interest. Preventing political corruption is the only compelling government interest in the campaign finance regulation that has been recognized by the Supreme Court since Buckley.

In examining the corruption argument, the Supreme Court focused principally on quid pro quo activity. In Buckley, for example, the Court held that large contributions posed an imminent danger of corruption, in the form of distribution of government benefits to large contributors. Individuals’ contributions to political candidates, therefore, could be limited. On the other hand, the Court held that campaign expenditures posed no danger of corruption and that, therefore, they could not be limited.

The Court wrote that "the independent advocacy [that Congress sought to restrict in FECA] does not presently appear to pose dangers of real or apparent corruption comparable to those identified with large campaign contributions." The Court therefore made its judgment not on an issue of law but on one of fact: that issue advocacy did not present dangers of corruption.

It also used issues of fact, not law, to define corruption solely in terms of a quid pro quo: government benefits in exchange for contributions. The Court based its ruling on what did not "presently appear to pose dangers" of corruption of the process. If campaign activities have changed in ways that create the danger of real or apparent corruption, the facts on which the Court based its earlier rulings would have significantly changed. If the facts have changed, the Court will need to adapt its principles of law to the new issues of fact.

If new forms of corruption of the process, beyond a quid pro quo, have emerged, the Court likewise will need to deal with the new facts. There is also a strong and constitutionally supportable case for government regulation: if new facts have materially changed the assumptions on which the Court decided in 1976; if these new facts have created new or potential forms of corruption other than a quid pro quo; and if campaign practices have evolved in ways that the Court’s decisions have not anticipated. There is a strong presumption that regulations advancing the First Amendment’s protections of freedom of speech are more permissible than those that restrict it, and that regulations restricting speech require a stronger foundation of support.

The lower courts have indeed followed a clear line in issuing their decisions. These decisions, however, build on a Supreme Court decision that now needs to be revisited. The law in the area is very new, dating only from Buckley in 1976. The facts since then have changed considerably. Campaign practice threatens to outstrip both the law and the facts.

Assessing the rapidly growing practice of issue advocacy campaigns, in the light of these arguments, requires sorting through three questions. First, are at least some of these issue advocacy campaigns election oriented? Many practitioners of issue advocacy frankly admit that it is a strategy for affecting elections. Lyn Nofziger, a former political consultant to President Reagan, directed Citizens for the Republic Education Fund, which spent more than $1 million on "educational" advertisements designed to defeat Democrats around the country. He said that it was "outrageous" that groups such as his were permitted to "go out and run political ads and call them educational." Tanya Metaska, executive director of the National Rifle Association’s Institute for Legislative Action and chair of its Political Victory Fund, said that "it is foolish to believe there is any difference between issue advocacy and advocacy of a politician." She described the distinction as "a line drawn in the sand on a windy day."

Second, is there a case for drawing such spending into the same rules that the Court has allowed for candidates? The case for regulating large contributions through issue advocacy is in fact the same as that for regulating large contributions directly to politicians. In Buckley, the Court held that the government can impose limits on individual contributions because such contributions, in themselves, posed an imminent danger of corruption, real or potential. The Court has not ruled that a quid pro quo must be demonstrated—only that such contributions create the potential for corrupting the process. It would surely be na´ve to think that candidates do not take the same notice of large expenditures made on their behalf, or that benefit them by negatively affecting their opponent, than they do of large contributions made directly to their campaigns. It is sensible, therefore, to subject them to at least some of the same rules.

Third, can some regulation of issue advocacy campaigns promote, rather than restrain speech? Independent activity that occurs near an election and that includes the name or likeness of a candidate is just as much a part of the electoral process as the candidate’s own activities and those who contribute money directly to campaigns. These activities are already regulated to protect the integrity of the process. Compelling the registration and reporting of such independent activity can be justified on the same basis as the regulation of campaign contributions and the candidates’ own activities. Moreover, it would allow voters more information about election-time speech. It would neither chill nor restrain speech but, rather, encourage a freer and fuller interchange of views about who should govern.

The issue of law on which the Court based its opinion is unassailable. The right of individuals to free speech is the bedrock of the Bill of Rights. The only grounds on which some speech can properly be regulated is that it threatens other basic principles, such as the right of citizens to a government free from corruption. However, the issues of fact on which the Court laid out its original findings have changed considerably. Moreover, the "bright line" on which the Court based the distinction between issue and express advocacy has become anything but clear or bright with the development of election-oriented issue advocacy during campaign seasons.

The key to dealing with rapidly changing campaign practices is to promote the freedom of speech on which Buckley was based; to understand how the issues of fact have changed since the Court promulgated Buckley; and to seek to understand where—and how—best to draw the line.

New Challenges for Campaign Finance

Especially beginning in 1996, issue advocacy during the campaign season dramatically expanded in Wisconsin. In fact, the Commission has found, such activity marks an innovation unmatched elsewhere in state elections. As a result, these emerging practices have framed tough challenges to campaign finance standards—and to campaign finance reform.

Consider the following practices:

Spring 1996 recall election: 21st Senate district. In this race, the Republican incumbent spent $288,602, and the Democratic challenger spent $186,500. Groups independent of both campaigns spent an additional $98,663 for the Republican; and $88,341 for the Democrat. These figures include only reported amounts and not money otherwise expended. Personal services are not included. Most of the money was framed as "issue advocacy." (See Table 5–1.)

Fall 1996 legislative races. Wisconsin Manufacturers and Commerce, a business organization, spent at least $357,000 against five Democrats running for the state legislature (see Table 5-2). The Sierra Club spent an additional $20,000 in the elections. Exact amounts are unavailable since these groups said that their efforts were issue advocacy and, therefore, were not subject to disclosure. In one of the races, WMC spent more than the candidate it supported in the race.

Spring 1997 State Supreme Court race. An anonymous group spent an estimated $135,000 to distribute post cards during the state Supreme Court race. The card read, in part:

"Your choices for the Supreme Court are:

"Jon Wilcox: 5 years experience on the Wisconsin Supreme Court; 17 years as judge.

"Walt Kelly: 25 years as a trial lawyer; ACLU special recognition award recipient."

Kelly’s campaign spokesman saw it as a concerted effort to defeat the attorney. However, because the individual or group presented the postcards as issue advocacy, neither the source nor the amount of the expenditure was publicly known.

The state Supreme Court race was officially nonpartisan.

Issue Advocacy and Express Advocacy

The Commission concludes that, in each of these cases, the expenditures were clearly campaign-oriented activities. They were quite clearly designed to influence the electoral process. They were focused either on electing or defeating a candidate. The Commission bases this conclusion on the following points:

Although those paying for the activities claimed they were aimed solely at educating voters on the issues, they each mentioned the names of candidates for office.

They occurred only when election races were in progress that involved a contest between an incumbent and a challenger. When the election was over, the activities ended.

The activity has occurred after legislative sessions when the issues about which advocacy was occurring were not being deliberated by the legislature.

The activity occurred in campaign season, between the candidate’s filing for candidacy and election time. Advertisements of this sort have tended to occur at virtually no other time.

The activity involved the electronic media, mass mailings, or centrally located telephone banks.

The Commission is not concerned with issue advocacy at the grass roots level, or with activities that simply provide public forums for candidates. The Commission does not wish to impinge upon extensive discussion of issues and candidates by groups and associations during the campaign period. In fact, the Commission wishes to encourage such debate. The Commission’s concern is with mass communication efforts.

Moreover, the Commission has found that clear issue advocacy, quite apart from the election process, can and has occurred. This advocacy can be clearly distinguished from the campaign-based express advocacy cited above:

In the late spring winter of 1997, the Crandon Mining Company financed a major television advertising campaign promoting its proposed mining operation in northern Wisconsin. The legislature was in the midst of debating the mining proposal and the campaign was clearly directed at educating voters and legislators on Crandon’s position.

In the early spring of 1997, the AFL-CIO placed a television advertising campaign promoting a reexamination of corporate welfare. The commercials presented a clear point of view on the issues suggested that viewers contact their congressman, Mark Neumann (R-1st). The issues were in play in Congress and there was no election in progress. The advertising, however, might have political and campaign effects.

The Commission concludes that some political activity presented as issue advocacy is, in fact, express advocacy. Although it did not use the "magic words" identified in the footnote of Buckley, these political activities are clearly election-related and intended to influence the election outcomes. The Commission also concludes that it is possible to differentiate issue advocacy from express advocacy.

The Commission believes without reservation that citizens have the right to voice their opinions about public issues. The Commission concludes citizens ought to be free to engage in political activities promoting their views on public issues. In this, the Commission completely supports the Supreme Court’s conclusions in Buckley.

However, the Commission also concludes that the Court left substantial ambiguity in drawing the line between issue advocacy and express advocacy. The Commission also concludes that the facts on which the Court has based its decisions in the area have changed dramatically, especially in the last several years.

The Commission concludes that the central challenge of dealing with these new practices, therefore, lies in maintaining the basic principles of law that the Court found in 1976; and in adapting those principles to new matters of fact that have emerged only very recently.

The Commission, finally, concludes that this issue is perhaps the most fundamental problem facing campaign finance reformers. The explosive growth of campaign-based advocacy, without even disclosure of its activities and funding sources, poses a grave risk to the integrity of elections. It has created a two-tiered campaign process: one, based in candidates and political parties, which is tightly regulated and controlled; the other, based in interest group activity under the guise of "issue advocacy" but actually quite clearly election-focused, which lies beyond accountability. Unless modest steps are taken to restore accountability, the rise of these tactics could well undermine virtually all of the other recommendations the Commission makes. It could also actually limit freedom of speech in campaigns by hiding from voters who is saying what.

Campaign money is increasingly seeking the path of least resistance. Clever turns of phrase have allowed some groups to concentrate very large amounts on campaigns in clear efforts to influence their outcomes. Such tactics are multiplying, leaving candidates far less in control of their own campaigns

Most important, these tactics are spreading without any disclosure either of the nature, amounts, or sources of this spending. That prevents citizens from making even a basic judgment about the claims they make. Candidate and political parties are required to report what they spend and who finances them, so citizens can include that knowledge in judging for whom to vote. The complete absence even of basic disclosure requirements for other activities that are just as clearly campaign based robs the system of accountability. As such campaign-based activity under the guise of issue advocacy grows, the overall accountability of the electoral process to voters shrinks.

Citizens have a right to accountability in their democracy that is just as fundamental as their right to free expression. The risks to accountability that spring from the rise of new campaign tactics pose real problems. In Buckley, the Supreme Court found that the risk and appearance of corruption created grounds for regulating speech. It found such a risk or appearance of corruption in the form of large campaign contributions, which could be seen as a quid pro quo: money in exchange for government benefits.

The rise of these new campaign tactics presents both old and new risks of corruption: old risks, because candidates might become beholden to those who contribute and spend large sums for issue advocacy that is, in fact, campaigning; new risks because of erosion of the fundamental accountability of the election process on which a strong democracy depends.

Promoting Free Speech through Disclosure

The Commission has absolutely no intention of chilling citizens’ right to free expression. However, the Commission concludes that several basic steps are required to ensure accountability in the system. Everyone in electoral politics—candidates, political parties, PACs, and groups educating voters or exploring issues—ought all to be playing on a level field, in the clear light of day.

First, the Commission believes that the basic points of law defined in Buckley need to be married to new electoral practices. These practices present questions of fact that the Supreme Court neither anticipated nor accommodated.

28. Mass activities—television commercials, radio commercials, mass mailings, and central telephone banks—that occur within 30 days before an election or primary, and which include the name or likeness of a candidate for office, should be considered an election-oriented activity.

The Commission extensively debated the time period within which such activities should be considered election-oriented. There was substantial sentiment that the proper period is from the last date for filing nomination papers until election day. There was also concern that the longer the period, the more difficult drawing the constitutional case would be. Opponents of the Commission’s recommendations might contend, for example, that a longer period might chill free speech. Recommendations of the sort offered by the Commission are more easily defended as the time to the election is closer.

Second, the Commission believes that such election-oriented activities ought to be subjected to registration and disclosure, the bedrock of democratic campaign practice. This recommendation drew overwhelming support in the Commission’s public opinion survey. Almost everyone surveyed—93 percent—believed that those conducting such activities "should be required to report clearly who pays for the ads."

The Commission has concluded that such disclosure would not chill speech. Rather, the Commission believes that it would promote speech. It would enhance public debate by improving the flow of information in the election process. Therefore, the Commission recommends:

29. All mass media activities by any individual or organization that exceed $1,000 and that are defined as election-oriented must be registered. The registration must include the name of the candidate involved in the activity. Contributions and expenditures should be reportable in the same way as are contributions to and expenditures made by candidates. Disclosure must occur within 24 hours of making total expenditure above the $1,000 ceiling.

The Commission believes that the same standards for electronic disclosure outlined in Chapter 2 ought to apply to these activities as well:

30. Mass media activities funded by any one organization that exceed the $20,000 contribution or expenditure threshold established for candidates must be electronically filed, according to the same standards set for candidates and other campaign-related organizations.

Disclosure of such activities, however, does not help candidates targeted by them to run competitive campaigns. Many candidates for office have told the Commission that they need to be able to defend themselves against these mass media activities. The Commission agrees that competitive elections require that candidates can engage fully in the debates shaping their campaigns. The Commission believes that the state election laws ought to provide remedies to allow candidates who find themselves the object of such election-oriented activities to mount a credible defense.

In particular, the Commission recommends the following "trigger" for candidates’ defensive activities:

31. Candidates will be allowed to defend themselves from such election-oriented mass activities if such activity directed against them or in favor of their opponents exceeds 5 percent of the candidate’s spending ceiling in the race. There ought to be separate triggers for the primary and general elections.

If such election-oriented activities exceed the trigger level, the Commission believes that candidates ought to have resort to several defenses. The defenses ought to be allowed all candidates in any race that exceeds the trigger level:

32. The following defenses should be allowed for all candidates in any race that exceeds the 5 percent threshold for election-oriented mass activities: (a) removal of the spending limits for all candidates; (b) doubling of the contribution limits for all candidates; and (c) removal of all limits on transfers from the candidates’ political parties to the candidates.

In addition, the Supreme Court has already held that political parties may make unlimited expenditures independent of candidates on their behalf. This provides an additional remedy by allowing political parties to support their candidates.

Finally, the federal courts are now reviewing a series of Wisconsin issue advocacy cases arising out of practices, especially by Wisconsin Manufacturers and Commerce, during the 1996 election cycle. The courts have, to date, upheld the State Election Board’s ruling that WMC’s mass activities are election-oriented and that, therefore, they are subject to the state’s election laws.

The Commission believes that the courts’ decisions in these cases are of national prominence. The eventual outcome of the cases might well establish the important legal precedent for election-oriented mass activity and the government’s ability to regulate such activity.

If the courts uphold the Elections Board’s position, the Board will need to write new rules to define the range of requirements and permissible activities for issue advocacy. It will be up to the Board to establish how the courts’ rulings ought to be implemented. The state legislature will also have to revisit the state’s campaign finance laws. The Commission therefore recommends that:

33. If the courts uphold the State Elections Board’s position that some issue advocacy activities during the 1996 election cycle were, in fact, electoral activities, the Board ought to immediately adopt new rules defining the range of permissible activities and the requirements for those who engage in election-oriented mass activity in election season. The state legislature should also thoroughly review Wisconsin’s campaign finance laws and make changes to comply with the courts’ ruling.

Finally, the Commission believes that the State Elections Board ought to play a more vigorous role in defining and regulating these issues. A more active role in fact finding and rule making would prevent the Board from being criticized for acting in ad hoc fashion and provide a clearer guide to candidates about the range of permissible activities. Therefore:

34. The State Elections Board ought to vigorously monitor and regulate these issue-oriented activities—and the others within its jurisdiction. The Board ought to engage in more thorough fact finding and in rule making to chart the range of permissible activities. If the Board believes that new election-oriented mass activities require new legislation, the Board should recommend to the state legislature what kind of legislation is needed.

Moreover, the Commission is concerned that, in this and other areas, the penalties that the Board can impose are often too light to create any real impediment to illegal activities. For some players in the election system, the penalty is little more than a parking ticket and the fine little more than an acceptable cost of doing business. Violators should not be allowed to pay minimal fines in exchange for substantial violations:

35. Tough penalties ought to be imposed on any individual or organization violating the provisions of this section. The penalties need to be tough enough to ensure compliance and discourage speculation that the fines are a small price to pay for the advantage such election-based activity can bring.

The Commission believes that tough penalties ought to be imposed for all violations of state election laws (see the discussion in Chapter 7). The Commission is especially concerned, however, that the penalties for violating this recommendation be severe enough to discourage anyone from calculating that paying the fine is easier and cheaper than complying with the law.

 

Table 5-1

Spring 1996: 21st Senate District Race

Candidates Incumbent Spending Challenger Spending Issue Group Spending Winner
George Petak (Rep.) v.

Kim Plache (Dem.)

Petak:

$288,602

Plache:

$185,500

Citizens for Tax Relief: $90,780 for Petak

WI Right to Life:

$7,883 for Petak

No More PeTax:

$6,991 for Plache

DLCC:

$14,000

for Plache

Wisconsin 2000:

$67,000

for Plache

GreenVote:

$350 for Plache

Plache

Source: Wisconsin Democracy Campaign

 

Table 5-2

Fall 1996 Legislative Races

Candidates District Incumbent Spending Challenger Spending Advocacy Group Winner
Lynn Adelman (Dem.) v.

Lisa Soik (Rep.)

28th Senate

District

Adelman:

$232,386

Soik:

$93,718

WMC:

$100,400

against Adelman

Adelman
Chuck Chvala (Dem.) v. Tom Metcalf (Rep.) 16th Senate District Chvala:

$200,127

Metcalf:

$233,628

WMC:

$39,710 against Chvala

Chvala
Alice Clausing (Dem.) v. Jay Griggs (Rep.) 10th Senate District Clausing:

$144,265

Griggs:

$125,157

WMC:

$119, 975 against Clausing

Clausing
Gary Drzewiecki (Rep.) v. Barb Lawton (Dem.) 30th Senate District Drzewiecki:

$188,688

Lawton:

$136,566

WMC:

$52,460 for Drzewiecki

Drzewiecki
David Plombon (Dem.) v. Chuck Schafer (Rep.) 68th Assembly District Plombon:

$38,459

Schafer:

$70,919

WMC:

$22,417

against Plombon

Schafer
Michael Wilder (Dem.) v. Tom Sykora (Rep.) 67th Assembly District Wilder:

$36,572

Sykora:

$68,926

WMC:

$22,417 against Wilder

Sykora

Source: Wisconsin Democracy Campaign

6. Improve Regulation of Campaign Practices

 

Effective regulation of the campaign finance system is critical to its health. No rule can be effective without adequate enforcement. No enforcement can be meaningful without adequate sanctions for those who violate the rules. Maintaining a game in which the fans have confidence requires good referees to keep the game fair. This is just as true for elections and campaign finance.

In the course of its extensive hearings around the state, the Commission heard considerable concern about the role of the referees in Wisconsin’s campaign finance system, the State Elections Board. The citizens recognized that the Board has a very difficult job. They also believed that its members were ethical and conscientious citizens who did their best to tackle that job.

However, through these hearings and the Commission’s own research, the Commission has concluded that the State Elections Board is weakened by four problems:

Partisanship. In its early days, the State Elections Board acted in a way that gave citizens great confidence that its decisions grew from a nonpartisan foundation. More recently, however, the Board’s process has given rise to concern that its decisions have become enmeshed in partisan wrangling.

Delay. Although the State Elections Board has worked hard on its agenda, critical decisions have sometimes languished for days—or even months. These delays have introduced uncertainty into a process that ought to be marked by predictability and steadiness.

Policy. The State Elections Board has made some of its key policy decisions through ad hocracy: it has applied its judgment to individual cases without having first created rules. This is not to criticize the decisions; the vast majority have been sound. However, without first establishing rules, the Board has sometimes left candidates, parties, and political organizations unclear about what the law requires of them. Because the Board has sometimes made its rulings without first establishing findings of fact, the Board has left others unclear about the precedents it set.

Resources. The Commission has found that an extremely high quality staff supports the Board. However, the Board faces new challenges that demand new resources: a computer system capable of managing the state’s new system of electronic filing and disclosure, as well as managing the Board’s internal business; and new skills for key staff members to solve the fresh problems it faces.

The Commission believes that several changes can improve the Board’s operations and give greater confidence in the fairness of Wisconsin’s electoral process.

Changing the composition of the State Elections Board.

Improving the Board’s ability to resolve questions.

Strengthening the Board’s resources.

Toughening the Board’s penalties.

Transforming the State Elections Board

To resolve concerns that the State Election Board’s process has become enmeshed in partisanship, the Commission believes that the composition of the State Elections Board ought to be revised. The Commission seeks to ensure that the Board continues to contain partisans who can bring both political experience and intuition to the Board’s decisions. However, the Commission also believes that the Board ought to contain a substantial number of individuals without partisan affiliation.

The Commission therefore recommends that:

36. The State Elections Board ought to consist of 8 members, each appointed by the governor to serve staggered 4-year terms: one member selected by the governor; one member designated by each of the following—the speaker of the Assembly, the Senate majority leader, and the minority leader in each house of the legislature; and three nonpartisan members.

37. The three nonpartisan members should be appointed by the governor and confirmed by the Senate, according to criteria defined for members of the State Ethics Board: no nonpartisan member may hold any other office or employment in the state or any local government of Wisconsin; no nonpartisan member, for one year prior to the date of appointment or during service on the board, may have been a member of a political party, an officer or member of a committee in any partisan political club or organization, or a candidate for any partisan elective office; and no nonpartisan member may become a candidate for or hold any such office while serving on the board.

This membership, the Commission believes, would reduce the chances that partisanship would preoccupy the Board in making its decisions.

Improving the Board’s Resolution of Questions

Campaign practices are changing with extraordinary speed. Strategists can deploy tactics that take advantage of quickly developing technology. The technology, in turn, has made it possible for campaigns to target particular groups, especially in the last days before an election.

These great transformations have produced equally great challenges for the State Elections Board. Effective regulation of the process requires the Board to be able to react quickly and precisely as new issues surface. However, because the current Board serves only part-time, scheduling meetings and reaching prompt decisions is difficult.

Ensuring compliance with Wisconsin’s campaign laws and regulations requires a quick response time. The Commission therefore proposes that the Board focus on formulating clear policy. The Commission believes that creating a new position, Election Examiner, would strengthen the Board’s functions. The Election Examiner would be available full-time during election season to provide quick, clear, and fair interpretations of Wisconsin’s election laws.

The Commission recommends that:

38. The Board’s principal function ought to be formulating basic policy and overseeing the work of its staff in executing that policy.

To assist the Board in executing policy:

39. A new position of Election Examiner ought to be created. The Election Examiner ought to be responsible for conducting hearings to determine the facts on questions dealing with state election laws; and to rule on the application of laws as they fit the facts.

The Commission believes that the Election Examiner ought to be a non-partisan person serving in the state’s classified service:

40. The state Division of Hearings and Appeals ought to designate hearing officers to serve, as needed, as Election Examiners. Especially during elections season, the Division ought to make available a sufficient number of Election Examiners to ensure quick and clear decisions.

Those participating in the election process, of course, might not agree with all of the Election Examiner’s decisions. The Commission believes that the State Elections Board ought to sit as a board of appeals for these decisions:

41. The Board ought to hear any appeals of the Election Examiner’s decisions; review the Election Examiner’s findings; and work with the Election Examiner to clarify and improve the administration of Wisconsin’s election laws.

Strengthening the Board’s Resources

To achieve its mission, the Board requires not only clear judgments, sharply defined and firmly administered. It also requires a staff equipped with the expertise and equipment to cope with the shifting technology of the campaign process. The core staff now in place is first-rate. However, the Commission finds that the Board’s staff is not equipped with the technology it needs to do its job. Neither does the staff have in place all of the experts required to serve its mission. Therefore,

42. The state should provide the State Elections Board with the technical resources required to implement the electronic filing and disclosure system recommended by the Commission. The state should also supply the State Elections Board with the up-to-date equipment required to manage state election laws adequately.

The Commission believes that creating and maintaining the Board’s electronic filing and disclosure system will require new expertise. Moreover, even though the electronic filing systems that the Commission examined are simple and straightforward, implementing a system will require at least modest technical support to candidates. Therefore, the Commission recommends that:

43. The state should provide the State Elections Board with the technical experts required to cope with the Board’s changing responsibilities. Not all of the experts need be full-time employees of the Board; private contractors could be employed to satisfy some of the needs. But providing the necessary expertise is essential if the administration of the state’s election laws is to be effective.

Enforcement

Finally, the Commission was concerned about the penalties for violating the state’s election laws. Some witnesses testified that the penalties are not strong enough to discourage illegal and unethical campaign finance activity. The Commission firmly believes that the state’s election laws ought to have teeth: enforcement that is quick and sure; penalties that are tough; oversight that detects and punishes violations. Thus,

44. The legislature should review the process for detecting and penalizing violation of state election laws. Violations ought to be quickly detected and firmly punished, so that Wisconsin’s voters can have full confidence in the election system.

7. Secure Other Important Improvements in Campaign Finance

 

During the course of its deliberations, the Commission reviewed a vast number of recommendations and suggestions from citizens. Some proved unworkable, unconstitutional, or in the judgment of the Commission, unlikely to improve the campaign finance process significantly. However, the Commission did conclude that several of these ideas had great merit.

Local Public Finance Systems

No community in Wisconsin currently has a system of publicly financed grants for candidates running for local offices. The Commission has concluded that Wisconsin’s 20-year old system of public grants was an important reform and needed to be strengthened. Local governments, especially the state’s largest communities, might reach the same conclusion. To implement such a system, however, the Wisconsin constitution requires the state to authorize local governments to provide such grants. The Commission concludes, therefore, that:

45. The legislature ought to allow counties and cities of the first class the option to pursue the option of creating their own public finance grant systems. If any of these governments creates such a system, the State Elections Board ought to monitor its operations and then consider whether to recommend that such an option be extended to other communities in Wisconsin.

Clear Rules of the Game

In reviewing the existing cacophony of campaign finance laws and regulations, the Commission was struck by the fuzziness of some of the rules of the game. Even after re-reading some rules several times, experts reached different conclusions about what they meant and what they required.

For participants in the campaign process making every effort to comply with the law, such ambiguity is frustrating. Moreover, it is a potential source of both political embarrassment and legal trouble if others in the process disagree with an interpretation and take action.

For participants seeking every loophole in the system, such ambiguity is an invitation to stretch the system’s laws and regulations into shapes unrecognizable by those who crafted it. Such behavior can only bring greater distrust upon a system already struggling to keep the public’s confidence.

The Commission therefore concludes that:

46. All campaign finance legislation and regulation should be written in a clear and intelligible style that prevents ambiguity and promotes trust in the system.

Restrict the Use of Campaign War Chests

Some citizens expressed concern about the use by candidates of "campaign war chests": surpluses in campaign accounts carried over to subsequent elections. Such war chests, some citizens argued, gave incumbents an unfair advantage in holding off challengers in the next campaign.

The Commission concluded that war chests in fact could convey advantage. It was concerned, however, that efforts to ban war chests completely could create unintentional distortions in the campaign process. Candidates who have large balances near the end of campaigns and who cannot carry surpluses forward would simply dump the money into the closing days of the campaign. This would only further escalate the already rapidly rising costs of elections. Moreover, candidates with sufficient support to amass a sizable surplus deserve some of the advantage they win.

To make elections more competitive, the Commission has recommended that all candidates be eligible for public funding grants large enough to mount a competitive campaign. This, the Commission believes, would counter at least some of the advantage that incumbents with carryover surpluses might otherwise enjoy.

However, the Commission was concerned about potential abuses of war chests. Candidates in the past have used surpluses as launching pads for campaigns for a different office. It is one thing to employ such surpluses as part of an effort to hold a seat already won; it is quite another to use it to gain an unfair advantage in a race for a different seat.

To limit potential abuses of large carryover balances, the Commission recommends that:

47. Any surplus remaining in a candidate’s campaign treasury should be counted against both spending and contribution limits for the next campaign cycle. The contributions would be counted toward the limits in the next campaign in the reverse order in which they were received: the last contributions received would be the first applied toward the limits in the next campaign.

This recommendation has two purposes.

While it does not eliminate campaign war chests, it does subject them to all of the existing campaign finance rules. If a candidate carries over a contribution from a previous race to the next one, that contribution would count against the spending limit for the new campaign. It would also count against the contributor’s contribution limits. Thus, while candidates would be able to take advantage of the contributions that have already been made to them, the advantage they might gain over potential opponents would be sharply limited.

The reverse-order standard would prescribe how to count such contributions against future limits. If surplus contributions are to count against the limits for future campaigns, the question is which contributions are to count against those limits. The Commission strongly favors the last-in/first-out accounting method: The contributions made in the last days of the campaign would be counted first in determining who contributed to the surplus. This would discourage potential floods of last-minute campaign contributions. It would also reward those who contribute earliest to a political campaign’s formative stages, when the competitiveness of a race is often established.

In recommending a system of public grants, moreover, the Commission was concerned that these grants not be used to generate campaign surpluses. Therefore, the Commission recommends that:

48. Candidates who accept public grants and who have a surplus in their campaign treasuries at the end of a campaign must repay the state treasury for the amount of the public grant, up to the amount of their campaign surpluses.

Finally, the Commission was concerned that candidates might unfairly use the surplus from one campaign to gain an unfair advantage in the race for a different office. Therefore, the Commission recommends that:

49. Transfers of campaign treasury balances to campaigns for offices different from the one for which the original contributions were made should be prohibited.

Bundling and Conduits

Both bundling of campaign contributions and contributions to campaigns through conduits are legal under current Wisconsin law. The Commission believes that this should remain the case. However, the Commission is concerned about the occasional practice, in both bundling and conduits, of collecting checks that do not include the amount or the name of the intended political recipient. Those running bundling and conduit operations then later fill in the amounts. This allowed the operators to decide which candidate would receive the contribution.

Such a practice, the Commission believes, violates the fundamental principle of full and immediate disclosure on which its recommendations are built. All bundling and conduit activity must be open. In bundling, therefore, the Commission recommends that:

50. All financial instruments, including checks, that are collected through bundling must include the name of the recipient, the amount, and the date of the contribution.

For conduits, the Commission recommends:

51. The contributor to a conduit should be required to make a written direction of how the contribution should be used. The direction should include the name of the recipient, the amount to be contributed, and the date of the contribution. The State Elections Board should prescribe the form on which the written direction of the donor’s purpose will be recorded.

For both bundling and conduits:

52. None of the documents involved in bundling and conduits should be post-dated. All items should be filled in by the contributor, not an intermediary. And money should be sent to the recipient within five days of the date of the document or financial instrument.

Creation of a New Commission

The Commission is concerned that its creation was long overdue. The most serious problems on which it labored emerged a decade ago and have steadily become more serious since. It is, of course, to the state of Wisconsin’s enormous credit that its elected officials and citizens have been vigilant on issues of campaign finance and have now twice created commissions to propose reform.

However, campaign technology is evolving rapidly. Society’s problems are quickly changing. There is great risk in waiting until both forces unleash serious new campaign finance problems before conducting a thorough reexamination of campaign finance reform.

The members of this Commission are quite cognizant of the limits of reform in general and commissions in particular. There can be no magic fix to election problems, nor any set of recommendations that can perpetually endure. The best reform is periodic reform: A careful look at emerging problems, reexamination of lasting principles, and an effort to solve little problems before they become big ones.

Determining exactly when such a reexamination will be needed is very hard to predict. The Commission prefers to leave that judgment to a future governor and state legislators. However, the Commission is quite certain that 25 years—the time between the last commission and this one—is likely to be far too long. The Commission believes very strongly that the campaign finance system should not be allowed to deteriorate to the breaking point before its defects are remedied.

The Commission therefore recommends that:

53. The State Elections Board ought to conduct a biennial review of Wisconsin’s campaign finance practices. In a report to be submitted to the legislature, the Board ought to assess: contribution limits, and whether they need to be increased; important problems that require legislative attention; and whether a new blue-ribbon commission is needed to review the state’s campaign finance laws.

54. A new blue-ribbon commission on campaign finance reform should be created by the Governor and legislature when changing electoral dynamics and campaign technology demand it.

It is hard to predict if such an effort will be needed in five, ten, or twenty years. But the Commissioners are quite confident that it will be needed—and quite firm on the need to ensure that campaign finance problems receive regular and searching reexamination.

 

 

 

 

 

Appendix I: Index of Recommendations

 

 

Ensuring Full and Immediate Disclosure

1. The Wisconsin campaign finance system ought to set as a goal the instantaneous reporting and disclosure of all relevant campaign finance information.

2. All candidates for state offices—both legislative races and statewide races—should be required to file full financial reports with the State Elections Board. Such reports should be filed electronically, using software certified by the Board, and instantaneously, within 24 hours of when financial transactions occur.

3. The State Elections Board should provide all campaigns for state office with copies of electronic filing software, at no cost to the campaigns. The State Elections Board should also offer all campaigns basic training in operating such software.

4. Electronic filing should be required for campaigns with contributions or expenditures greater than $20,000. This number should not be adjusted for inflation over time.

5. Final Commission Report Candidates who participate in the state’s public funding grant system, described in Chapter 4, should be required to file electronically.

6. Campaigns with contributions or expenditures less than $20,000 should be allowed to file paper reports on the current reporting schedule. Electronic reporting from such campaigns should be required immediately when candidates cross the $20,000 threshold. The State Elections Board ought to issue regulations outlining the process for electronic filing of contributions and expenses received before the threshold was crossed.

7. Conduits, political action committees, and all other entities required to report their financial activities to the State Elections Board should be required to submit those reports electronically and instantaneously (within 24 hours of the financial activty), under the same rules as for candidates.

8. The State Elections Board should make electronically filed campaign finance information available on the Internet as soon as possible (and in any case within 24 hours) after receiving electronic reports.

9. All financial reports filed electronically by non-candidate organizations ought to be disclosed electronically as well.

Making Elections Candidate- and Political Party-Centered

10. All those making contributions to Wisconsin political campaigns, as well as PACs and groups engaged in independent expenditures and other election-oriented activities as defined in Chapter 5, ought to comply with the same rules, especially for disclosure, as Wisconsin citizens.

11. Every two years, the State Elections Board ought to review the contribution limits contained in the state elections laws. If the Board finds that the limits need to be increased, it should frame a proposal and present it with supporting information to the state legislature, which should consider and act on the Board’s recommendations.

12. Contribution limits by PACs to candidates’ races should be changed from the current standard (a percentage of the spending limit in a race) to a fixed dollar amount. The limits for each race should be: Governor—$45,000; Lieutenant Governor—$13,000; Attorney General—$22,000; Secretary of State—$9,000; State Treasurer—$9,000; School Superintendent—$9,000; Supreme Court—$9,000; Senate—$2,000; Assembly—$1,000.

13. Candidates should raise at least 35 percent of their income from individuals. Any public financing grant that they receive ought to be counted against the 65 percent of the contributions they can collect from sources other than individuals.

14. PAC-to-PAC transfers of more than $100 ought to be prohibited.

15. Candidate-to-party and candidate-to-candidate contributions ought to be prohibited, except for contributions covering the actual cost of events, up to $100 per event.

16. The legislative campaign committees in the Assembly and Senate ought to be abolished.

Encouraging More Competitive Elections

17. Building a workable and effective public grant system will require adequate funding. The Commission concludes that the state legislature should create a Clean Election System, at $1 per year per voting age person, and provide a means for funding it.

18. For legislative races, the Wisconsin Clean Election System should make public funding grants available to candidates during the general election campaign: $15,000 for the Assembly; and $35,000 for the Senate.

19. Candidates who accept the public grants should be limited in the total they can spend during the election. The limits should be four times the amount of the grant: $60,000 for the Assembly, and $140,000 for the Senate.

20. The Wisconsin Clean Election System should make public financing grants available for statewide races in the general election campaign: $87,500 for Superintendent of Public Instruction, Secretary of State and State Treasurer candidates; $100,000 for State Supreme Court candidates; $187,500 for Attorney General candidates; $281,250 for Lieutenant Governor candidates and $875,000 for Governor candidates.

21. Candidates who accept the public grant ought to be limited to the following spending limits: $350,000 for Superintendent of Public Instruction, Secretary of State, and State Treasurer; $400,000 for State Supreme Court; $750,000 for Attorney General; $1,125,000 for Lieutenant Governor; and $3.5 million for Governor.

22. A candidate is eligible to apply for a public financing grant if the candidate is representing a party that, at the preceding general election, won 6 percent of the vote cast for all candidates on all ballots for the office.

23. Both the public funding grant and the spending limit for each race ought to be adjusted every two years according to two factors, each weighted equally: increases in the cost of living, as measured by the federal government’s consumer price index (as it may be adjusted); and increases in the state’s voting age population, as determined by the Federal Election Commission.

24. If a candidate’s opponent chooses not to take part in the public financing grant system: the candidate’s spending limit is removed; and the candidate receives a pro rata share of the grants not used for other candidates running in the same category of election campaigns. There will be four categories of election campaigns: (a) Assembly; (b) Senate; (c) State Supreme Court and Superintedent of Public Instruction; (d) Governor, Lieutenant Governor, Attorney General, Secretary of State, and State Treasurer. All grants that are unused ought to be distributed equally within each category, to all candidates who participate in the Wisconsin Clean Election System by accepting public grants and spending limits.

25. For Category C races: In each year when there is an election for State Supreme Court justice and/or Superintendent of Public Instruction, the money for which candidates would be eligible, but which those candidates have rejected, would be placed into a pool. Half of the pool of unused grants would be redistributed to candidates who accepted grants. The balance would remain in the pool for the next year in which a Category C election occurred.

26. For Category D races: the unused grants of Category D candidates would become a single pool and would be distributed to each other in the same ratios to the various candidates who take their grants as their grants are to one another.

27. Candidates who are unopposed should not receive public grants.

Leveling the Playing Field

28. Mass activities—television commercials, radio commercials, mass mailings, and central telephone banks—that occur within 30 days before an election or primary, and which include the name or likeness of a candidate for office, should be considered an election-oriented activity.

29. All mass media activities by any individual or organization that exceed $1,000 and that are defined as election-oriented must be registered. The registration must include the name of the candidate involved in the activity. Contributions and expenditures should be reportable in the same way as are contributions to and expenditures made by candidates. Disclosure must occur within 24 hours of making total expenditure above the $1,000 ceiling.

30. Mass media activities funded by any one organization that exceed the $20,000 contribution or expenditure threshold established for candidates must be electronically filed, according to the same standards set for candidates and other campaign-related organizations.

31. Candidates will be allowed to defend themselves from such election-oriented mass activities if such activity directed against them or in favor of their opponents exceeds 5 percent of the candidate’s spending ceiling in the race. There ought to be separate triggers for the primary and general elections.

32. The following defenses should be allowed for all candidates in any race that exceeds the 5 percent threshold for election-oriented mass activities: (a) removal of the spending limits for all candidates; (b) doubling of the contribution limits for all candidates; and (c) removal of all limits on transfers from the candidates’ political parties to the candidates.

33. If the courts uphold the State Elections Board’s position that some issue advocacy activities during the 1996 election cycle were, in fact, electoral activities, the Board ought to immediately adopt new rules defining the range of permissible activities and the requirements for those who engage in election-oriented mass activity in election season. The state legislature should also thoroughly review Wisconsin’s campaign finance laws and make changes to omply with the courts’ ruling.

34. The State Elections Board ought to vigorously monitor and regulate these issue-oriented activities—and the others within its jurisdiction. The Board ought to engage in more thorough fact finding and in rule making to chart the range of permissible activities. If the Board believes that new election-oriented mass activities require new legislation, the Board should recommend to the state legislature what kind of legislation is needed.

35. Tough penalties ought to be imposed on any individual or organization violating the provisions of this section. The penalties need to be tough enough to ensure compliance and discourage speculation that the fines are a small price to pay for the advantage such election-based activity can bring.

Improving Campaign Finance Regulation

36. The State Elections Board ought to consist of 8 members, each appointed by the governor to serve staggered 4-year terms: one member selected by the governor; one member designated by each of the following—the speaker of the Assembly, the Senate majority leader, and the minority leader in each house of the legislature; and three nonpartisan members.

37. The three nonpartisan members should be appointed by the governor and confirmed by the Senate, according to criteria defined for members of the State Ethics Board: no nonpartisan member may hold any other office or employment in the state or any local government of Wisconsin; no nonpartisan member, for one year prior to the date of appointment or during service on the board, may have been a member of a political party, an officer or member of a committee in any partisan political club or organization, or a candidate for any partisan elective office; and no nonpartisan member may become a candidate for or hold any such office while serving on the board.

38. The Board’s principal function ought to be formulating basic policy and overseeing the work of its staff in executing that policy.

39. A new position of Election Examiner ought to be created. The Election Examiner ought to be responsible for conducting hearings to determine the facts on questions dealing with state election laws; and to rule on the application of laws as they fit the facts.

40. The state Division of Hearings and Appeals ought to designate hearing officers to serve, as needed, as Election Examiners. Especially during elections season, the Division ought to make available a sufficient number of Election Examiners to ensure quick and clear decisions.

41. The Board ought to hear any appeals of the Election Examiner’s decisions; review the Election Examiner’s findings; and work with the Election Examiner to clarify and improve the administration of Wisconsin’s election laws.

42. The state should provide the State Elections Board with the technical resources required to implement the electronic filing and disclosure system recommended by the Commission. The state should also supply the State Elections Board with the up-to-date equipment required to manage state election laws adequately.

43. The state should provide the State Elections Board with the technical experts required to cope with the Board’s changing responsibilities. Not all of the experts need be full-time employees of the Board; private contractors could be employed to satisfy some of the needs. But providing the necessary expertise is essential if the administration of the state’s election laws is to be effective.

44. The legislature should review the process for detecting and penalizing violation of state election laws. Violations ought to be quickly detected and firmly punished, so that Wisconsin’s voters can have full confidence in the election system.

Securing Other Important Improvements

45. The legislature ought to allow counties and cities of the first class the option to pursue the option of creating their own public finance grant systems. If any of these governments creates such a system, the State Elections Board ought to monitor its operations and then consider whether to recommend that such an option be extended to other communities in Wisconsin.

46. All campaign finance legislation and regulation should be written in a clear and intelligible style that prevents ambiguity and promotes trust in the system.

47. Any surplus remaining in a candidate’s campaign treasury should be counted against both spending and contribution limits for the next campaign cycle. The contributions would be counted toward the limits in the next campaign in the reverse order in which they were received: the last contributions received would be the first applied toward the limits in the next campaign.

48. Candidates who accept public grants and who have a surplus in their campaign treasuries at the end of a campaign must repay the state treasury for the amount of the public grant, up to the amount of their campaign surpluses.

49. Transfers of campaign treasury balances to campaigns for offices different from the one for which the original contributions were made should be prohibited.

50. All financial instruments, including checks, that are collected through bundling must include the name of the recipient, the amount, and the date of the contribution.

51. The contributor to a conduit should be required to make a written direction of how the contribution should be used. The direction should include the name of the recipient, the amount to be contributed, and the date of the contribution. The State Elections Board should prescribe the form on which the written direction of the donor’s purpose will be recorded.

52. None of the documents involved in bundling and conduits should be post-dated. All items should be filled in by the contributor, not an intermediary. And money should be sent to the recipient within five days of the date of the document or financial instrument.

53. The State Elections Board ought to conduct a biennial review of Wisconsin’s campaign finance practices. In a report to be submitted to the legislature, the Board ought to assess: contribution limits, and whether they need to be increased; important problems that require legislative attention; and whether a new blue-ribbon commission is needed to review the state’s campaign finance laws.

54. A new blue-ribbon commission on campaign finance reform should be created by the Governor and legislature when changing electoral dynamics and campaign technology demand it.

 

Appendix II: Executive Order

 

EXECUTIVE ORDER #300

Relating to the Creation of the Governor's Blue Ribbon Commission on

Campaign Finance Reform

WHEREAS, Wisconsin's original campaign finance law was enacted in 1911 and comprehensively revised in 1974 to address campaign finance and related election practices in use at that time; and

WHEREAS, campaign finance and related election practices have evolved to the point where a fundamental reexamination of the laws governing these practices is both timely and necessary; and

WHEREAS, Wisconsin must always strive to ensure that the State's legitimate interest in regulating campaign finance and related election practices is precisely balanced against the rights guaranteed to the people of this great state by both the Constitution of the United States and the Wisconsin Constitution; and

WHEREAS, the laws of this State governing campaign finance and related election practices are rooted in a nationally recognized tradition of effective government based on a strong citizen voice in political decision making;

NOW, THEREFORE, I, TOMMY G. THOMPSON, Governor of the State of Wisconsin, by the authority vested in me by the Constitution and the laws of this State, and specifically by Section 14.019 of the Wisconsin Statutes, do hereby:

1. Create the Governor's Blue Ribbon Commission on Campaign Finance Reform (hereinafter "the Commission") to evaluate and study the laws of this state governing campaign finance and related election practices and recommend such changes to these laws that the Commission deems prudent;

2. Provide that the Commission shall be composed of five (5) members to serve at the pleasure of the Governor: two (2) Republicans, two (2) Democrats and one (1) person not affiliated with a political party;

3. Provide that the Governor shall designate one (1) member of the Commission as its chair to serve in that capacity at the pleasure of the Governor;

4. Instruct the Commission to solicit comments from the public on campaign finance reform;

5. Require the Commission to consult with experts in the field of campaign finance reform;

6. Direct the Commission to submit a report to the Governor on its findings and recommendations by May 1, 1997;

7. Provide that the Commission shall disband once the Governor has accepted its report;

8. Provide that the Commission shall receive, at no cost, staff assistance from the Robert M. La Follette Institute of Public Affairs at the University of Wisconsin - Madison;

9. Direct the Secretary of the Department of Administration, pursuant to Section 20.505 (3)(a) of the Wisconsin Statutes, to provide the sums of money that are necessary and proper to pay the expenses, if any, of the Commission.

IN TESTIMONY WHEREOF, I have hereunto set my hand and caused the Great Seal of the State of Wisconsin to be affixed. Done at the Capitol in the City of Madison this nineteenth day of November in the year one thousand nine hundred and ninety-six.

TOMMY G. THOMPSON

Governor

 

 

Appendix III: Schedule of Commission Meetings

 

 

 

December 3, 1996

Assembly Parlor, State Capitol, Madison

 

December 17, 1996

Room 328 NW, State Capitol, Madison

 

January 7, 1997

GAR Room, State Capitol, Madison

 

January 30, 1997

Room 301-A, Milwaukee City Hall, Madison

 

February 19, 1997

Room 4151 Grainger Hall, UW-Madison

 

March 12, 1997

Room 200, Brown County Building, Green Bay

 

March 31, 1997

Room 415 NW, State Capitol, Madison

 

April 1, 1997

Room 424 NE, State Capitol, Madison

 

May 7, 1997

Room 301-B, Milwaukee City Hall

 

 

Appendix IV: Supplementary Comments of Commissioners

 

 

Supplementary Comments of David W. Adamany

Commissioner Kettl joins in Commissioner Adamany’s comments.

Public Financing of Campaigns

For the reasons stated in the Commission’s report, I strongly concur in the recommendation for public or alternate financing of political campaigns where candidates voluntarily accept public grants and associated spending limits.

Whether we like it or not, the landscape of American politics has changed. The voting population has increased. Traditional political structures—such as parties, unions, neighborhood groups, and similar membership associations—have declined as vehicles of campaign activity. Americans are working longer hours, more members of the household are employed, and work schedules are often staggered, so there is less participation in voluntary associations and there is less availability to attend political or other community meetings. Crime has made us fearful, and we no longer welcome the stranger at the door—even if he/she is engaged in campaigning that is at the heart of our democratic politics. Only the rarest and most determined candidate or political organization can effectively campaign from door to door in our modern society.

These developments, like them or not, have fundamentally changed campaigning. Mass media, mass mailing, phone banks, and other anonymous mass methods of communication have displaced the face-to-face campaigning of an earlier day. These means of communication cost a great deal of money.

The media era, with its high costs, threatens our politics in many ways. First, many capable and worthy people cannot or will not consider campaigning for public office because they cannot raise the money, or because they do not wish to place themselves in debt to contributors, or because they are fearful of beggaring themselves and their families by undertaking campaign debts.

Second, in many districts the incumbent or the majority-party candidate faces no effective competition because individuals and organizations capable of contributing significant sums are unwilling to support opposition candidates whose prospects are small. When there is no effective opposition to the dominant candidates or parties, Americans have lost one of their most effective checks on government—a searching scrutiny by the political opposition, no matter how small its prospect for success, of the records and credentials of those who hold office or belong to the dominant party. On this point academic studies are unambiguous. A challenger gains more from access to campaign funds than does an incumbent. Previous election victories and the advantages of incumbency cause those who hold office to be visible to voters even before the campaign begins. Campaign money allows the challenger also to gain a measure of visibility; and as he/she gains visibility, the choice available at the polls becomes clearer to voters. When the ballots are counted, challengers who have a reasonable level of campaign funding are more competitive against incumbents than challengers who do not. Effective competition in elections, a fundamental check on power in a democratic society, can only occur if challengers have access to a reasonable measure of resources. But the established sources of campaign funds in our society are not likely to oppose incumbents with whom they have worked or to bet on challengers who necessarily begin the campaign at a disadvantage.

Third, candidates and officeholders are driven to spend more and more of their time raising money and less and less time discussing issues, visiting with voters, and otherwise maintaining face-to-face contact with their fellow citizens.

Finally and most troubling, those individuals and associations that can afford to give substantial sums to candidates or independently spend substantial amounts in politics become unduly influential. This is not a matter of buying voters or purchasing favors from government officials. It is far more subtle than that. Those with resources can assure that their message or their preferred candidates have disproportionate access to the voters and thus disproportionate influence in elections. And those with resources have better access to officeholders: when time is limited, the request for an appointment is more likely to be granted to a person who is known for his or her campaign than to the unknown citizen whose views may be equally thoughtful or urgent. Telephone calls, too, are more likely to be returned to donors than to less visible citizens. It is contrary to common sense and community experience to believe that access and influence do not follow money. Americans know this, and their disenchantment with politics is partly rooted in the common sense of their own experience.

The remedies for the emergence of money as the principal resource in our politics are few and difficult. We might well argue that more citizens should contribute. Only about 12 percent presently do. Disillusionment with our present financing arrangements discourage them; and the knowledge that large donors will dominate the system discourage them more. The historical American suspicion of politics, whether well founded or not, also deters fund raising from the citizenry at large.

Campaign finance is not the only aspect of our society where we may more effectively address issues by community action than by individual initiative. Defense, public safety, disaster relief, roads and airports, schools, and innumerable other examples come to mind. In the financing of campaigns we can also take collective action, by providing reasonable public grants to support candidates who qualify. Wisconsin has had such a system for more than twenty years, and that system needs to be adapted to contemporary conditions. The Commission’s recommendation for a strong element of public funding of campaigns is, in my view, a reasonable and thoughtful way to address some of the most troubling issues of financing political campaigns.

I do not believe we should pretend that this approach will not cost money. It will. Yet one dollar per voting age citizen is a small price to pay to assure reasonable competition for all public offices, to achieve reasonable spending limits, to permit worthy and thoughtful persons of small means to consider running for public office, to diminish (but unfortunately not eliminate) the pressure on public officials and candidates to spend too much time chasing after financially powerful constituents at the expense of spending time with voters, and to diminish somewhat the disproportionate access and influence of those with the cash resources to devote to politics.

I do not blink from respectfully addressing to members of the Legislature an appeal to appropriate the necessary public funds—one dollar per voting age person or about $3.7 million per year—to allow the people of Wisconsin as a political community to adapt our democratic electoral system to the new conditions of the media age in which campaign money has become disproportionately important and necessary. If we do not act collectively to help pay this price, individuals and private associations of means will pay the entire cost—and they will disproportionately call the tune. It is better, I believe, for citizens to act together, each bearing a small burden through the payment of taxes, to support a vibrant and more evenly balanced election system.

Other Matters

I do not believe that the current state of constitutional doctrine will support expenditure limits, contribution limits, and a ban on the use of treasury funds of corporations and private associations for the expression of views about issues or candidates when such expression does not meet the Supreme Court’s test of express advocacy. I believe, however, that such election-oriented issue advocacy may be subject to regulations that enhance first amendment values by disclosing to the public the sources of funds and the amounts spent, so that voters can cast their votes more intelligently and citizens can better evaluate the course of policy making when government acts.

However, I agree with the Commission majority, which I have joined, and with Robert Friebert, who has filed a separate opinion, that changing conditions have created uncertainty about the application of the Supreme Court’s doctrines on express advocacy to election-oriented issue advocacy, as that has been defined by the Commission. The State Elections Board is presently litigating this issue in the federal courts. If its attempt to regulate election-oriented issue advocacy is not sustained, I would recommend that as a separate action, specifically severable from the other campaign finance reforms recommended in this report, the Legislature should attempt to fashion a set of regulations, perhaps along the lines recommended by Mr. Friebert, that would be the basis for a test of this issue in the Supreme Court.

There is no doubt in my mind that election-oriented issue advocacy threatens the most basic premises of our political system, including disclosure of information needed by voters to cast ballots intelligently and to evaluate the forces at work in policy making by government as well as the reasonable restriction of influence over our politics by the massive wealth aggregated by corporations, unions, and other economic institutions.

 

Supplementary Comments of Robert H. Friebert  

A. Mass Communications Of Issue Advocacy During An Election Should Be Subjected To All Of The Wisconsin Election Laws.

Although I am in complete agreement with the recommendations made by the Commission, I believe that the Commission does not go far enough with respect to regulating, in the context of an election, mass communications of "issue advocacy" which names a candidate for public office or utilizes the likeness of a candidate for public office. In my opinion, such activity is clearly election-oriented activity. Issue advocacy organizations which engage in such television advertisements, radio advertisements, mass mailing to the public and central phone banks for purposes of contacting the public within specified days of a primary or general election should be treated no differently than any other political action committee. They should be required to comply with all of the provisions of the Wisconsin election laws.

The Commission merely recommends that organizations engaging in such activities file statements with the State Elections Board disclosing their sources of income and their expenditures. My proposal would prohibit corporations, unions, non-profit organizations, and any other public or private interest group from utilizing funds from its general treasury for such unregulated and unabashed campaign purposes.

Section 5 of the report contains an extensive analysis of the problem of "issue advocacy" in the context of a political campaign. The discussion makes the legal case for significant regulation and reform. However, the majority of the Commission, while recognizing the need for reform, has merely opted for disclosure of income and expenditures. In my opinion, this is not enough.

My plan for reining in issue advocacy in the context of a political campaign is to require any person who mentions the name of a candidate or presents the likeness of a candidate in the context of a radio advertisement, television advertisement, a mass mailing, a central phone bank, newspaper advertising and mass paid-for pamphletting to comply with all of the Wisconsin election laws, provided that the activity occurs between the filing of nomination papers and the general election. This regulation would not apply to an organization contacting its own members; it would not apply to legitimate polling, as that term has been defined by the State Elections Board and it would not apply to other exempt parties, such as the electronic and print media.

Issue advocacy is the soft money of unregulated campaign-related expenditures. The reason I say it is "soft money" is because, at the present time, there are no limits whatsoever on the raising of this money or the spending of this money. Issue advocacy is the rationale used to justify soft money contributions to the major political parties. To me, there is no difference between this kind of unregulated and unlimited money contributed to a national party directly, or identical money used for mass advertising during the political season.

I believe this proposal stands a very good chance of being upheld by the courts. First of all, and foremost, the proposal does not prohibit issue advocacy. The proposal only regulates a narrow type of issue advocacy during a limited period of time. If unlimited and unregulated expenditures of slanted advocacy is allowed to continue during an election season by utilization of mass communication tactics, there is virtually no meaningful way in which campaigns can be regulated.

I believe this proposal is an appropriate regulation on the time and place of speech. This proposal only regulates this kind of speech for about 4 months out of every 24-month period, with respect to candidates for the assembly; and 4 months out of 48 months with respect to statewide candidates and candidates for the State Senate. The proposal allows full and robust discussion by any means whatsoever for most of the time with respect to issues and possible candidates. The proposal never regulates issue-related speech that does not mention a candidate's name or present a likeness of a candidate.

During the campaign season, the government has a significant right to regulate campaign contributions, which right has already been upheld by the United States Supreme Court. It is only during this period that this kind of mass communication issue advocacy should be required to comply with all of the election laws. The regulation is narrow in scope, limited in time, and is a bright line test.

I suggest that the Commission has already crossed the constitutional line when we agreed that, at a minimum, this type of activity should be regulated to the extent of requiring registration, disclosure of contributors and disclosure of expenditures. If this is truly protected speech, then the arguments that have been employed against this proposed extension of what already has been agreed upon by the Commission can be used to defeat the limited disclosure proposal of the Commission. In my opinion, since the Commission has already crossed the constitutional line, we should go all the way by attempting to regulate it all.

Everyone knows that the overriding purpose for mass communication advertising of issues containing the name of a candidate or the likeness of a candidate in the context of a campaign is intended to influence the election. Under these circumstances, I believe that corporate treasury money, union membership money and the membership money of other organizations which cannot be used for direct contributions to candidates or for public advertising to "vote for" or "against" a candidate, should not be used to directly influence an election by the issue advocacy tactic.

Unless we attempt to come to grips with this very serious hole in the elections laws, "soft money" will continue to dominate elections in Wisconsin.

 

B. Candidates Should Be Allowed To Limit Their Own Conduct And Have Their Limitations Enforced By the Elections Board.

My second proposal is to enact a law that allows a candidate, a PAC, or any other organization to voluntarily limit the amount of money they will spend, the sources of contributions, or to create any other self-imposed limitation. Such a law would allow a candidate, PAC or other organization to file their self-imposed restraint with the State Elections Board and, upon filing of the self-imposed restraint, the restraint would have the force of law. In other words, upon filing, any candidate, PAC or other organization which violated its self-imposed restraint would be subject to all penalties provided by the law, including forfeiture, fines, injunctions and, even criminal prosecutions.

Under current constitutional interpretations of the First Amendment, there are significant restraints upon the government's ability to regulate campaign contributions and expenditures. For example, absolute prohibitions on PAC contributions to candidates are probably unconstitutional. Extremely low limits on individual contributions are probably unconstitutional. However, the Constitution does not restrict any candidate or organization from creating self-imposed limits on their own political conduct.

This proposal would take the right to create self-imposed restrictions a step further by allowing any candidate, PAC or other organization to voluntarily allow its self-imposed restraint to be monitored by the State Elections Board and to have any violations enforced as a violation of state law.

The Commission did not adopt this proposal. The majority of the Commissioners were concerned that this proposal would lead to political posturing between candidates, PACs and other organizations who might demand mutual agreements to limit contributions or expenditures. However, this is precisely the type of dialogue that my proposal is intended to encourage.

This proposal would also deflate the political posturing of candidates, PACs, and other organizations who claim that they would agree to campaign finance reform but, absent reform, will exploit the law as it is written. That excuse would disappear with this proposal because this proposal would allow the candidates, PACs or other organizations to write their own rules for their own campaign, and to make agreements with others and have those rules and agreements enforced by state law.

Supplementary Comments of Donald F. Kettl

Groups and individuals unquestionably have every right to express their views on the critical issues of the day. They also unquestionably have the right to attempt to persuade others through the mass media about their point of view. Such expression lies at the very foundation of American democracy and the Bill of Rights.

When the Supreme Court explored this kind of speech in Buckley v. Valeo, however, it did so tentatively. Its critical distinction between issue advocacy and express advocacy was fuzzy. Moreover, since its ruling the facts have changed markedly, as Chapter 5 of the Commission’s report makes clear. As long as those engaging in issue advocacy avoid saying the "magic words" (including "vote for" and "vote against"), the lower courts have ruled that they have a virtually limitless avenue for influencing elections.

Of course, many commercials that candidates present on their own behalf do not contain the magic words either. They are quite clearly devoted to electing the candidate or defeating the opponent. But the quirk that the Court created has allowed groups not connected with candidates far more freedom than candidates enjoy. Such groups have launched extensive—and expensive—campaigns on the eve of elections whose purpose can only be to influence elections.

Such issue advocacy, at least occasionally, is certainly election-oriented. That it threatens the fundamental accountability of the election process is just as certain. Much of it happens below the waterline, free from even basic disclosure and capable of doing immense damage to a candidate’s campaign. Such issue advocacy has, quite simply, become the iceberg threatening campaign finance reform. Candidates often find themselves losing control of their campaigns in the critical last days before an election with little recourse against an onslaught of ads. The fear of attack leads candidates to build ever-larger war chests. It discourages them from taking part in public funding systems that limit their flexibility in the last days of a campaign.

Thus, put bluntly, it will be hard to reform campaign finance without reforming issue advocacy. Such a reform need not damage the Court’s basic dictum that money is speech and speech is protected. Rather, the reform needs simply to ensure that all campaign-oriented speech, however presented, must play by the same rules. In this conclusion, I join Robert H. Friebert.

I present a different approach to drawing these rules, however. I propose the following:

Mass activities—television commercials, radio commercials, mass mailings, and central telephone banks—that occur within 30 days of an election or primary, and which include the name or likeness of a candidate for office, should presumptively not be considered election-oriented express advocacy.

Some of these mass activities, however, might be election-oriented. The evidence gathered by the Commission demonstrates that some of the television and radio advertisements placed in the last weeks before the 1996 general elections were in fact intended to influence the election.

If a candidate included in such a mass activity within 30 days of an election believes that the activity is intended to influence the election, the candidate ought to have the right to appear before the State Elections Board and present evidence about why that is the case.

The State Elections Board ought to rule within 24 hours on the candidate’s claim. If the Board holds that the activity is election-oriented (and therefore express advocacy), all of the state’s election laws (including full disclosure; limitations on contributions; and regulations on expenditures) ought to apply. Any activity on which the Board does not issue an affirmative ruling would be presumed to be non-election oriented (and therefore issue advocacy).

In making its ruling, the Board ought to employ a "reasonable-person" test: Would a reasonable person, on examining the activity, conclude that it is election-oriented? Such a reasonable-person test would include the timing (it is close to the election?); the amount of money involved (is it sufficient to lead one to conclude that it is an effort to influence the election?); and the content and substance of the activity (does it appear to deal with issues or candidates?).

In hearing the evidence, the Board ought to allow those engaged in the activity to present a vigorous defense.

The burden of proof in the case ought to rest with the individual seeking to prove that the activity is election-oriented. The First Amendment gives a powerful presumption to claims of Freedom-of-Speech protection.

The standard in the case ought to be a preponderance of the evidence.

 

This approach is clearly aimed at protecting speech. It holds those engaged in speech during election season accountable for their actions. If the speech in which they are engaging is demonstrated to be election-oriented, they should have to comply with the election laws just as everyone else involved in the elections process must. If, on the other hand, their speech is held to be issue-oriented, they maintain their right to say what they want as they want.

No campaign finance reform can be complete unless it deals with the issue advocacy/express advocacy problem. The playing field has been rendered uneven by new wrinkles in campaign technology. Without making it level again, no reform can work. Attacking the problem requires, at once, maintaining the basic constitutional principles of Buckley while adapting them to the dramatic changes in campaign activities that have evolved since the Court’s ruling. These are precisely the twin aims of this proposal.

 

Supplementary Comments of James R. Klauser

I would first like to acknowledge the assistance I have had in analyzing the variety of materials and preparing remarks from Christopher Mohrman, who was my Executive Assistant while I was Secretary of Administration. Christopher was of assistance to me while I was still at the Department and has continued his public service since I retired. Christopher is enrolled at the University of Wisconsin Law School, and I am sure will one day make an excellent lawyer.

Of course, these opinions and remarks are mine and no one else is responsible or should be held accountable for them.

I would also like to acknowledge Dr. Kettl, Terry Shelton, and Shirley Smith for their great effort in facilitating the work of the Commission and in preparing the report.

While I may not always particularly agree with the way and the enthusiasm in which some of the conclusions and recommendations have been stated, I nonetheless agree with the substance of the report, except as I may note here.

Prologue

Campaigns today have become increasingly nasty, brutish, expensive, and not short.

Insinuation, innuendo, aspersion, and personal attack—directly or indirectly—are becoming too common. Joe McCarthy would probably be embarrassed by the extremes occasionally taken.

Campaigns are expensive—certainly day techniques using television with focus groups and polling; measuring message effectiveness, and sophisticated computerized phone banks—technology—contribute greatly to these costs. These costs drive the consequent demand for more dollars.

Dick Morris, in his recent book about his association with the Clinton campaign, extols his role in creating a campaign starting a year before the actual campaign year. He highlights his role as a paid political campaign consultant in drafting major public addresses and administration programs and strategies. The campaign period is starting earlier and earlier—another cost factor.

However, restoring "sense and order" to this process by government prescription is not easyyeasy—or possible—or perhaps desirable. Such prescription would impact on our fundamental freedoms. The election process is the essence of democracy; without free and open voting our democracy is diminished. So whenever the government decides to restore "sense and order," we must be cautious. One person's "sense" may only be to advantage themselves and to disadvantage their opponents.

Regulation, Disclosure and Free Speech

The citizens of the United States have a unique right among the peoples of the world: the right to free speech. No other country's citizens enjoy the extensiveness of that right as those of the United States. I strongly support the interpretation of the Constitution by the courts that have so defined this right. It is on this right of free speech that rests most of our other freedoms if not all of them—freedom of association, freedom of religion, freedom of press. (One must remember that the Zenger decision defining freedom of the press involved political opinions and reporting criticizing the then current colonial government.) I cannot support any diminution or diminishment of that important right, because I believe it fundamentally is the basis of a free democracy in a free society.

I certainly do not agree with all that is done under the name of free speech or some of our other freedoms. There are those who, rather than exercising responsibility and courtesy to their fellow citizens, would abuse and do abuse these rights. But to limit the right because of some abuses is not a resolution.

There are candidates, independent groups, and newspapers who at one time or another abuse the process. The Capital Times is so outrageous at its occasional overt efforts to influence the political process and sell its paper that it is at times humorously ineffective. The Milwaukee Journal Sentinel is not above McCarthy-like reporting when it suits its political or commercial objectives. Senator Joe would be proud of the Journal. It increasingly follows too easily in his footsteps.

Public (Alternate) Financing

The concept of public financing has been with us for many decades. I would prefer to call it "alternate" financing—an alternate to private contributions. It often is proposed as a means of: (1) limiting the amount of money spent on campaigns; (2) limiting the reliance on private, i.e. non-government monies; and/or (3) encouraging competition by funding candidacies. I am more than skeptical. We have had many years of experience with public funding of presidential campaigns. More money is being spent today than ever before and the quality of campaigns has deteriorated. I, also, am not satisfied that one can draw conclusions from the Minnesota studies that would apply to Wisconsin. On the other hand, I am not adverse to an alternate financing system of campaigns, but I cannot support taxpayers' money for that effort.

As former Secretary of Administration, I am well familiar with the multiple demands on the taxpayers' dollars and the many uses to which those dollars can be put. The taxpayer can afford only a certain burden and not a greater one than at present. To use taxpayers' dollars to fund candidates' campaigns with the hope that it might encourage more people to run for office is something I do not support. The available evidence indicates that such funding clearly will not reduce the amount of money spent on campaigns nor will it improve the quality of campaigns.

Limitations

There are those who would advocate limits on campaign spending. Typically, these limits apply only to the candidate or then next to the parties supporting candidates with some limits on the amount of money an individual might contribute. Some of these things were done 25 years ago in the Wisconsin reforms of that time. The result seems to be that more money is being spent not by candidates or by parties, but by special and private interest groups in many creative limit avoiding ways. As a result, while more money is being spent, less of the amount is being spent by candidate committees. Less of the amount spent is being identified and disclosed.

To be effective, limits must be comprehensive, apply to every actor on the political horizon. There must be limits on dollars (both contributions and disbursements), services, and the campaign duration as well.

But, if such effective limits were desirable, they are not constitutional.

To have partial limits—some advocate a little is better than none—leaves an unrestricted playing field to some and ironically reduces the role of the candidate/party. This allows others to define the issues, while restricting the candidate's ability.

I have often viewed money spent on campaigns as a flowing river. If the river is not allowed to flow openly where all can see it and limitations and obstructions are put in place, the flow will then go underground or flow in other multiple fashions so it is not as easily identified. That is what happened. We should return to a system that encourages the candidates to take control and be responsible with what happens in their campaigns and support a stronger role for political parties. With such an approach, accountability may be restored and the electorate can hold candidates accountable.

Other

I am also concerned with the inadequacy of our "disclaimer" provisions. The sources of funding must be clearly identified. Today "independent expenditures" are infrequently not independent. Tougher standards and enforcement to assure, in fact, the independent nature of such expenditures is essential.

Direct Democracy

One cause of the increase in state spending is the amount of "power" exercised by state officials. If some of this "power" was limited by allowing the electorate to review actions—or failure of action—of their elected officials, they would be more accountable and the power diffused. I am disappointed that this approach received such little consideration during this process. Rather than dwell on it, please refer to the La Follette proposal contained in The Wisconsin Idea, (1912) Charles McCarthy, and in The Economist, "Full Democracy," December 21, 1996.

Truth in Campaigning

One reason for the increased "nastiness" and negativism in campaigning is candidates and others can get away with it. The U.S. Supreme Court decision in Times v. Sullivan materially weakened libel and defamation laws. The "malicious" standard has effectively allowed "lies" to be told about "public" figures without them having adequate recourse.

This has materially contributed to increased negativism and McCarthy-like activities in campaigns, as well as with some members of the media (see abuses discussion, supra).

While I have been critical of recent developments, I should acknowledge the very positive "We The People" program developed by some media and private sector organizations. Such programs help candidates get their message out.

* * *

Having focused on much of which to be critical, we still have the best political system. Political campaigns in a democracy may be the worst thing, but what system is better (to take liberty with Churchill).