Money for Nothing?

Our broken campaign finance system is what’s producing less than satisfactory legislation, write Eric Alterman and Mickey Ehrlich.

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Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) discuss clean energy legislation at a press coference on Capitol Hill last year with U.N. Secretary-General Ban Ki-moon. (AP/Haraz N. Ghanbari)
Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) discuss clean energy legislation at a press coference on Capitol Hill last year with U.N. Secretary-General Ban Ki-moon. (AP/Haraz N. Ghanbari)

Many in the media enjoyed covering the intraliberal fight that broke out over the final version of the health care reform legislation. The New Yorker’s Hendrik Hertzberg collected some of the more colorful complaints in this week’s comment, when he noted the angry opposition of Markos Moulitsas,, Arianna Huffington, Keith Olbermann, and Howard Dean. Ralph Nader even had the bad taste to call President Barack Obama “an Uncle Tom groveling before the demands of the corporations that are running our country.”

Hertzberg also notes Paul Krugman, Paul Starr, Jonathan Cohn, and Harold Pollack are among the bill’s supporters, despite its myriad flaws, adding, “it is nonsense to attribute the less than fully satisfactory result to the alleged perfidy of the President or ‘the Democrats.’ The critics’ indignation would be better directed at what an earlier generation of malcontents called ‘the system.’”

Kai Wright of The Nation is buying none of this. He insists that those like Hertzberg who make excuses for the “[c]orporate special interests and the Democratic politicos they underwrite would like us to accept this false choice between fake reform and the status quo. But there are many, many more choices—including both the public option compromise Obama proposed and the Medicare-expansion compromise the Senate hammered out. Our leaders—the same ones who will once again ask for our money, our votes and our volunteer labor next election cycle—simply were not prepared to fight for those choices.”

Hertzberg and Wright’s arguments both suffer from a lack of specificity, which is often the case in short columns and blog posts. What, for instance, are the primary components of this “system” that thwarts all progressive legislation to which Hertzberg refers? And exactly how does Wright propose that progressives “fight for those choices” if the votes are simply not there?

We take the position with Hertzberg that yes, legislative flaws in the health care bill, as well as in the cap-and-trade bill, and in financial regulation, and in fact, just about every piece of legislation Congress does or does not pass and the president does not sign do in fact stem from systemic failures that go beyond party affiliation or unwillingness of this or that politician to “fight harder.” But it is also true that perhaps they are not fighting for the right things in the first place. While most in the media prefer to focus on personalities of these influential “consensus builders,” “moderates,” and “conservatives,” they would be wiser to obey that old Watergate adage and “follow the money.” For it is the manner in which we finance our elections—rather than the courage or cowardice of any given individual—that determines the shape of the legislation the “system” produces.

Take for instance the obsessive media interest in the motivations of Senator Joe Lieberman (I-CT). An article in the Wall Street Journal in November focused on Joe Lieberman’s “stubborn” opposition to a public option in health care reform. The article depicts Lieberman as highly principled and concerned for the fiscal risks of a government-run health insurance program. One sentence hints that “Critics, of course, think Mr. Lieberman is merely protecting insurers from his home state of Connecticut.” The Center for Responsive Politics provides information on donations to congressmen and their political action committees. From 2001 to 2006, Joe Lieberman received $138,600 from Purdue Pharma and $93,000 from Aetna Inc. Seems relevant, huh?

The media have focused on several members of the Senate Finance Committee, which produced the version of health care reform that Hertzberg and Wright so vehemently disagree with. Two of the top three donors to Olympia Snowe’s (R-ME) 2006 campaign, who voted against the legislation, were Aetna Inc. and New York Life Insurance. Overall, the insurance industry made the largest percentage of donations to her campaign. In June, Sam Stein wrote about Snowe’s relationship with the insurance industry when Democrats were still courting the senator to support reform.

The top two donors to Committee Chairman Max Baucus’s (D-MT) 2008 campaign were Schering-Plough and New York Life Insurance. The combined donations to Baucus’s campaign and his congressional leadership PAC from health professionals and the pharmaceutical and insurance industries totaled $2,488,139 from 2003 to 2008.

Baucus, Chuck Grassley (R-IA), Orrin Hatch (R-UT), and Ron Wyden (D-OR) all serve on the Senate Finance Committee and have all played vocal roles in the debate taking strong positions against the public option. These four senators and their political action committees have received a combined $201,403 from Blue Cross/Blue Shield since 2005.

In July, Mike Ross (D-AR) led a bloc of seven Blue Dogs on the House Energy and Commerce Committee in a fight to weaken funding to a public health insurance bill. At The Wall Street Journal, Naftali Bendavid focused on the tension between the conservative Blue Dogs and the liberal committee leadership. However, The Washington Post’s Dan Eggen smartly reported at the time that the Blue Dogs had raised $1.1 million for their PAC, a majority of which came from health, insurance, and financial sectors.

Bendavid singled out Mike Ross for his tough negotiating and his "moderate" positions on health care reform. Eggen reported that Ross alone raised over $1 million from the insurance and pharmaceutical industries in five terms in Congress. Ross eventually voted against the bill, which passed without him.

The House Energy and Commerce Committee also produced the Waxman-Markey climate change legislation that passed in late June. That bill passed in the House with a seven-vote margin only after the inclusion of an amendment that largely exempted the agricultural industry from the carbon emissions standards set by the bill. The top three donors to the 2008 campaign of the amendment’s sponsor, Collin Peterson (D-MN), were the American Farm Bureau, American Crystal Sugar, and the National Cattlemen’s Beef Association. Overall, the industries of crop production, agricultural services/products, dairy, and food processing donated $623,123 to Peterson’s campaign and PAC for the 2008 election. That amounts to 41 percent of all the funds Peterson’s campaign and PAC raised for his most recent election.

Joe Barton (R-TX) serves on the House Energy and Commerce Committee. He said in a press conference in May that Chairman Henry Waxman (D-CA) “doesn’t have the nuts” to pass climate legislation. He also expounded on C-SPAN on the safety of carbon dioxide: “I’m creating it as I talk to you. It’s in your Coca-Cola. Your Dr. Pepper and your Perrier water. It’s necessary for human life. It’s odorless, colorless, tasteless, doesn’t cause cancer, doesn’t cause asthma. There’s nobody that’s ever been admitted to a hospital because of CO2 poisoning.”

Barton raised nearly $600,000 from the oil and gas industries for his 2008 campaign. He joined 176 Republicans and 64 Democrats in approving the Peterson amendment although he eventually voted against the Waxman-Markey bill.

Wall Street never had more at stake on Capitol Hill than during the 2009 $700 billion rescue package reluctantly granted by Congress, but it has been investing in congressional campaigns for decades for just such a moment. In December 2008, Eric Lipton and Raymond Hernandez described in The New York Times Charles Schumer (D-NY)’s role in the legislation. Schumer is a member of the Banking and Finance Committees and chair of the Democratic Senatorial Campaign Committee, where he raised $240 million while increasing donations from Wall Street by 50 percent merely in the period before the article appeared.

Lipton and Hernandez quote Schumer at a fundraising breakfast reassuring his valuable Wall Street constituency: “We are not going to be a bunch of crazy, anti-business liberals…We are going to be effective, moderate advocates for sound economic policies, good responsible stewards you can trust.”

Lipton and Hernandez write:

[Schumer] has embraced the industry’s free market, deregulatory agenda more than almost any other Democrat in Congress, even backing some measures now blamed for contributing to the financial crisis…He succeeded in limiting efforts to regulate credit-rating agencies, for example, sponsored legislation that cut fees paid by Wall Street firms to finance government oversight, pushed to allow banks to have lower capital reserves and called for the revision of regulations to make corporations’ balance sheets more transparent.

According to John C. Bogle, founder and former chairman of the Vanguard Group, Schumer was “serving the parochial interest of a very small group of financial people, bankers, investment bankers, fund managers, private equity firms, rather than serving the general public,” and in doing so, “hurt the American investor first and the average American taxpayer.”

Though Schumer is better at this game than most—and has the advantage of representing the state where Wall Street does its business—it is par for the course for many powerful members of Congress to aid important industries. Ex-Republican House Speaker Dennis Hastert co-sponsored the Bush administration’s Medicare legislation in 2003 and oversaw the bill’s passage. He raised nearly $1 million from insurance, health professionals, and pharmaceuticals and each was rewarded many times over in the bill, which by the way, was passed that year, in extremely unusual—likely unprecedented—parliamentary procedures.

These informal exchanges only skim the surface of what corporations provide legislators and their staffs, including lavish parties, vacations, free private flights, and when they decide they’ve had enough of Capitol Hill, high-paying lobbyist jobs.

Now, none of these corporations are in the business of giving away their stockholders’ profits for nothing. They are investing in both parties in Congress and these investments routinely repay rich rewards—even by Wall Street standards. And finally recall the fact that we are looking at only one aspect of the “system,” which is the effect of an out-of-control privatized campaign contribution system. If Congress adopted a system of the public financing of elections—as is done in most democracies—they would receive better legislation at a miniscule fraction of the cost they now pay indirectly for their penny-wise, pound-foolish attitude toward election funding.

In the meantime, we can rail at the “sellouts” all we wish, but a corrupt system is extremely unlikely to produce pristine legislation. If progressives need to “fight harder” then the first place they need to fight is to clean up our broken campaign finance system. And the sooner more people in the mainstream and progressive media start focusing on the real fight—rather than the phony ones it prefers—the more likely we’ll get there.

Eric Alterman is a Senior Fellow at the Center for American Progress and a Distinguished Professor of English at Brooklyn College. He is also a Nation columnist and a professor of journalism at the CUNY Graduate School of Journalism. His seventh book, Why We’re Liberals: A Handbook for Restoring America’s Most Important Ideals, was recently published in paperback. He occasionally blogs at and is a regular contributor to The Daily Beast.

Mickey Ehrlich is a freelance writer based in New York.

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Eric Alterman

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