“Money Talks” with Trevor Potter
OpenSecrets Blog recently sat down with Trevor Potter, one of the nation's leading authorities on government ethics and campaign finance issues, to discuss the changing campaign finance landscape. The wide-ranging conversation touched on the seriousness of Colbert's super PAC, how political speech isn't for "sissies" and how the U.S. Supreme Court is made up of "theorists" who are "not in touch with reality" when it comes to how money is being raised and spent.
OpenSecrets Blog: You spent some time as a commissioner at the Federal Election Commission, including a stint as the chairman. Nowadays, the FEC gets knocked for being too partisan, for typically ending in a 3-3 deadlock. Would you say the FEC is more partisan today than it was when you served on the commission, and if so, what implications do you think that has?
Trevor Potter: Today, it's got an ideological split rather than a partisan split. When I got there, the commissioners viewed themselves as representatives of the Republican Party and Democratic Party, or at the least the congressional leadership who put them there and kept them there.
Their view was they were there to make sure that the other side didn't unfairly deal with their party. And often in discussions you would hear commissioners say, "Well, I think that's the law. I think there was a violation here. And I'm going to vote for it, even though it's against the Democrats and I'm a Democratic commissioner. But I want you Republicans to remember this. Because when this comes up next time, and it's a Republican who has done this, I expect you to vote the same way." There was a sort of consensus, where both sides actually believed in enforcing the law. They just wanted to make sure it was enforced fairly against both sides.
What's changed is that you now have three commissioners who are basically deregulators and don't believe in the law they're there to enforce. And then you have three Democrats who are in an awkward position. They, I think, believe more in the law, but they're not going to go out there and enforce it only against Democrats. So you end up with a commission that has this often 3-3 deadlock, even to proceed to look at something.
OpenSecrets Blog: What, if anything, do you think it would take to make the FEC better as a regulatory body?
Potter: What it would take is commissioners who at least believe in the law and the role of the agency.
I've always favored the idea of the president saying, "I'm going to exercise the power to nominate. I'm not going to do the traditional thing and defer to the party leaders for names. But, I'm going to do what is often done on judges. I'm going to appoint a distinguished, bipartisan outside group to come up with names. And it's my intention to choose a candidate from that list, or candidates from that list."
You can have representatives from both parties come up with a list, and the president would choose from that list. And then he'd essentially say to Congress, "I've done my job. If you've got something you object to about these people, then let's have it out. But otherwise, my job is to nominate, yours is to give advice and consent, not to nominate."
I think a strong president could do that and end up with independent people. The sort of people I favor would be individuals who have already had a career, who are not looking to make a name for themselves but are looking to finish their service. It could be former congressmen, who usually do very well at the FEC. It could be retired federal judges. It could be people from state and local campaign finance agencies. People who have shown themselves to be fair, who would take the job seriously and who are not afraid to enforce the law.
OpenSecrets Blog: How often do you think money has a corrupting influence in politics?
Potter: The more money you have, the greater potential you have for that. The more reliant candidates are on needing to raise money, the greater potential [for it to have a corrupting influence].
If you go back and look at the interviews that were done of former members of congress in the 1990s and early 2000s [before the passage of the Bipartisan Campaign Reform Act sponsored by Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.)] -- some of them were done by the McCain-Feingold defendants; some were done by the Center for Responsive Politics -- they were asked once they had left Congress what the role of money was.
They would say they thought it was either corrupting or certainly had the potential to corrupt. They said that members cast their legislative votes based on either 1) a fear that if they voted the other way, they would have money spent against them or 2) knowing that major financial forces in the country would be judging their vote -- and that they either could be helpful afterwards or could dry up their support.
What we spent the last 20 years arguing over is ways in which money still influences members, either through soft money, party committees or now through these independent expenditures. In [the Citizens United v. Federal Election Commission] case, I think the Supreme Court is wrong in thinking that independent expenditures are not corrupting. I think that just is not in touch with the reality of how money is being raised and spent.
OpenSecrets Blog: What do you think about members of Congress' ability to solicit limited contributions for super PACs?
Potter: The FEC, as you say, held that only limited federal money could be solicited. No corporate money, no labor money and only up to the individual $5,000 person or PAC limit. That was in a sense a victory because the alternative of soliciting unlimited money would essentially have meant the whole end of the limits on campaign contributions.
If you can take money from an individual and then say, "I'd like you to give an unlimited sum to this PAC, which is going to be spending money to elect me," there's no [campaign finance] system left.
Obviously, the fact that they can solicit money at all for what is supposed to be an independent expenditure PAC is peculiar. I think the law could be changed to say that members may not solicit money for independent expenditure groups because they're by definition supposed to be independent. I think the court would uphold that. But that's not the law. The law was written at a time when it never occurred to anyone there would be these unlimited PACs because prior to Citizens United they didn't exist.
OpenSecrets Blog: Speaking of super PACs, you were comedian Stephen Colbert's lawyer in his quest to form a super PAC. What do you think of the FEC's ruling in his case, and do you think that it opens a door for other media companies to potentially abuse the system?
Potter: First of all, I don’t think Mr. Colbert sees having a PAC as a joke; he sees it as a way to demonstrate how the process works and to play a role in the process through his television show. That gives people an idea of what actually happens, what's permitted and how PACs work.
Beyond that, I thought the process worked just fine. I thought the commission took it seriously, and it was a serious request. The PAC did need to know how to do these things. The staff asked good questions. As you know, I had recused myself from the comments filed by the Campaign Legal Center, which I head, because in private practice I was Colbert's lawyer. I thought they filed very good comments, and the commission largely followed the road map -- the analysis -- laid out by the Campaign Legal Center in saying, "Yes, of course, he can talk about this on his show to the extent he wants; he can cover it to the extent he wants; but the PAC is an independent creation, and there is no way for a media company to actually run an independent PAC and not disclose its support." In terms of public policy, I think that makes sense.
OpenSecrets Blog: Do you think that Colbert's super PAC and this ruling -- regardless of how much it follows the law -- is going to change people's ideas and make the FEC seem illegitimate at all?
Potter: To the contrary, I think it makes the FEC seem legitimate. Unlike, for instance, Jim Bopp [the Republican lawyer who did not seek an advisory opinion from the FEC when he created the Republican Super PAC, to which he hoped candidates and members of Congress would steer money], Mr. Colbert actually went to the FEC. He got an advisory opinion. He went through the process, and the whole country had a chance to see what that process was. So I think people have a higher degree of awareness that the commission exists than they did before.
OpenSecrets Blog: What is the biggest change that we saw during the 2010 election cycle as a result of Citizens United, and what changes can we be expecting to see during this election cycle?
Potter: Well, obviously, the big change is that corporations and unions are now free to spend an unlimited amount. Unions already spent a large amount because they could already spend unlimited amounts communicating with their members. Corporations spent a lot less because they were not interested in communicating with their shareholders -- which is who they were allowed to communicate with. WithCitizens United you have the potential for huge expenditures.
Your question is interesting because it asked about what we saw. And the answer is because of the disclosure problems, we didn't see much. We know money was spent. We know there were these huge independent expenditures by 501(c)(4) nonprofits. We don't know if that was corporate money or individual money. We can assume the independent expenditures by the Chamber of Commerce were corporate money because it's logical their money would come from their corporate members. But we don't know how much of the 501(c)(4) spending is new money. Also I think a midterm election is not the same as a presidential election -- the spending is usually lower. So the test will be in 2012 how much money gets spent by all of these outside groups.
The biggest change in 2010 is the non-disclosure of the sources of funding. And that is highly ironic because Citizens United upheld the disclosure requirements.
It's a funny case because Jim Bopp went into that case not asking for the corporate ban to be overturned but rather asking that the spending not be disclosed. It was only when lawyers were changed at the Supreme Court that they then made the argument that you ought to overturn the spending ban. The argument that this money shouldn't be disclosed because it wasn't express advocacy lost 8-1. Huge loss.
So we have a resounding Supreme Court decision in favor of disclosure, talking about how important it is. And indeed Justice Kennedy, I think he's going to regret saying it, but he said in the decision, "Now for the first time, we will have unlimited corporate money, but it will be fully disclosed." And, of course, it wasn't.
That is not the Supreme Court's fault, except that they clearly didn't understand the law and what the FEC has done to it in its rule making. But the effect of all this is you have large sums of money that are undisclosed. And those two are related. In fact, the Chamber of Commerce has said, "We can't raise large sums of money if we have to disclose our donors."
OpenSecrets Blog: What do you think about super PACs attributing donations solely to 501(c)(4) nonprofits? And do you think that's something the FEC should take a look at?
Potter: It obviously doesn't do any good if all the super PAC is disclosing is that money came from Americans for a Better Country and you have no idea who that is. Then, it is not disclosing anything. It violates the spirit of the law to do it that way, and that's something that any new disclosure provision needs to take account of. We need what you could either call a "look-through provision" or "anti-circumvention provision."
OpenSecrets Blog: Why do you think disclosure is so important? Why is it one of the essential things to be discussing when talking about campaign finance law?
Potter: As the Supreme Court has said, it's an important part of a democratic discussion for people to know who is speaking and who is funding the speech. If it's corporate money, shareholders deserve to know what their corporation is doing. And if they don’t like it, they should be able to object to it. Citizens, the court has said, are better informed if they know where the speech is coming from.
Say you have an ad that is running. It's attacking a proposition on the ballot, and the proposition has to do with oil drilling. And the ad says, "This a terrible thing for our state." I think it makes a significant difference to the viewer to know whether this ad is paid for by the Sierra Club or by the oil companies.
People who are free-market Republicans will benefit from knowing this is paid for by oil companies and the oil companies think this is going to make the state less attractive to business.
People who are environmentalists and distrust oil companies similarly benefit from knowing if this is paid for by the oil companies or by the Sierra Club, which is a source they trust.
I don't think the notion that speech is itself neutral -- that it doesn't make any difference who is funding it -- is true in terms of how voters make up their minds. It’s a relevant piece of information.
As Justice Scalia said in a disclosure case recently, political speech shouldn't be for sissies. It's not hidden. If you feel strongly about something and you're going to be talking about it, you ought to be able to say who you are. For those reasons I think disclosure is important to the political discourse.
There's a second level at which disclosure is important: We have learned overtime that disclosure can lead to better informed judgments about our campaign finance system. The way in which Congress was finally pressured to get rid of soft money was that it was disclosed. It initially wasn't. The FEC wasn't doing anything. And Common Cause sued, and the court ordered the FEC to do something.
Rather than ban it, the FEC took the smaller step of requiring its disclosure. For a ten-year period, the public could see -- and researchers and journalists and others could document -- the way in which soft money dovetailed with legislative activities, whether industries gave money to party committees and got results they liked or prevented things they didn't like. And that led to a consensus that soft money was, in fact, corrupting the legislative system. We only knew that because of disclosure.
So I think disclosure is a necessary step in knowing what's happening. And it may be a first step to reforms, depending on what people learn from the disclosure. In the past, it has been what caused further reforms.
OpenSecrets Blog: We see Republicans trying to back off disclosure more than Democrats. Has it always been that way? Have Republicans been moving away from that more? And what do you think it might take to get everyone on the same page about disclosure?
Potter: Congress used to vote overwhelmingly for disclosure. People forget, but after the 2000 election when there had been this furor over secret 527 expenditures, both houses voted substantially in favor of disclosing donors to 527s.
Also, disclosure used to be a Republican battle cry in terms of saying what we need is a disclosure system, not limits. Republicans used to argue all we need to do is disclose money in politics rather than limit it. Now that we are reaching the stage where there are relatively few limits and no limits on independent expenditures for corporations and unions, Republicans have suddenly changed their tune. It's clearly opportunistic.
As a Republican, I find it embarrassing to have people not really be able to explain why they were for disclosure and are now not, except for momentary partisan advantage.
OpenSecrets Blog: You served as counsel on Republican John McCain's 2000 and 2008 presidential campaigns. Knowing how a campaign works, how do you think that some of these court decisions -- such as Citizens United -- are going to change the way presidential elections and campaign fund-raising work?
Potter: Raising money from individuals within the federal limits is, in fact, hard. That's why it's called hard money. And it's proving difficult in this election. The press is reporting that the candidates are not raising as much money as "expected." But supporters of those candidates still have a lot of money -- it's just that they've given their legal limit. Therefore, I think it is likely that we will see independent expenditure campaigns tied to most of the major candidates -- on both sides. They have people with deep pockets that are willing to spend that money, and they can under this new system. They may or may not disclosure who they are -- depending on whether they do it through a super PAC or through a 501(c)(4) or through a shadow corporation.
OpenSecrets Blog: You've been dealing with campaign finance for a long time. Since you've been in this world of campaign finance, what do you think is the one decision, ruling, anything, that's had the largest implications? What's changed the world of campaign finance, for the better or the worst, to the most significant degree?
Potter: The one decision that's changed the world most was the decision of Justice O'Connor to retire from the Supreme Court. She was the key vote holding McCain-Feingold law in the McConnell v. Federal Election Commission case in a 5-4 decision [that upheld the constitutionality of the Bipartisan Campaign Reform Act in 2003]. But deeper than that, she was the only justice on the court who had held elected office, who had run in partisan election, who had served in a state legislature as a party leader. She had an understanding of the legislative process from the inside, the political election process and how the two related to each other. I think her vote in [McConnell] reflected that.
As you probably know, she had started out by voting against the Austin v. Michigan Chamber of Commercedecision when it first came up in the 1980s [which prohibited corporations from spending money on expenditures that supported or opposed political candidates]. Then she upheld [the campaign finance system] in [McConnell]. I think the reason is that she understood that if you got rid of all limits on corporate expenditures, you would create a system susceptible to corruption and a wave of money that potentially could change the whole system. It wasn't disinterested money. It wasn't citizens' money. It was corporations who were seeking financial gain and specific results.
So I think the loss of her voice and her vote on the Supreme Court changed things more than anything else. It has left us with a court of theorists -- of people who are largely academics, none of whom has served in elected office, none of whom has been part of the interplay of money in politics and the legislative process. I think they don't understand the dangers that they have unleashed.
OpenSecrets Blog: Realistically, is there a chance that the campaign finance world will ever go back to a pre-Citizens United state, that this decision could be reversed?
Potter: Sure. That's the problem with the Supreme Court's Citizens United decision. The dissent said, "Look, we believe in the value of precedent. We decided on McConnell just a couple years ago."
What has changed? Nothing. Except one vote on the court. We can have one vote change again.
If that's how people are going to play the game -- in terms of not having a coherent reason to change other than to say we don't like it and we now have the votes -- then I can see a scenario where this comes back to the court in a different form at some point in the future.
Different justices could say, "We've now seen the corruption that's been unleashed, and we think that dealing with it is appropriate."
OpenSecrets Blog: Is there anything else you would like to add?
Potter: There is no one perfect system. Things change, and the system needs to adapt. The problem now is the system isn't adapting. There is no legislative response to the lack of disclosure. The language in Citizens United is not only unintentional, but a great surprise to pretty smart people. It's not how they read the law. So Congress ought to be fixing the law, but they didn't in the last session. And it looks as if they're deadlocked now.
And the FEC ought to be saying, "We made a mistake." They're not because they're deadlocked. So we have, temporarily, a situation of deadlock where we're going to face all of these problems and this system is not going to work. We're not going to have the disclosure we thought we were and that the court has said is constitutional. But that will change. There will be pressure because of that, and there will be different majorities in Congress at some point.
The Q&A above ran August 3, 2011 on Money Talks, OpenSecrets.org's ongoing interview series, in which prominent players in the arena of campaign finance, lobbying and political influence speak for themselves.