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Clean Money Will Work in California--Look at the Details

trentlange.jpg

By Trent Lange
President
California Clean Money Action Fund

AB 583, Assemblymember Loni Hancock’s Clean Money bill, passed through the Assembly Elections Committee and is now in the Appropriations committee. AB 583 would clean up California’s out of control campaign finance system and give voters confidence that elected officials are accountable only to them because the public would be paying for their campaigns, not special interests.

Unfortunately, those who benefit from the current out-of-control campaign finance system are already trying to knock it down. Their claims don’t hold up under close scrutiny.

First, they say it’s just like Prop 89 which lost at the ballot last year. Then they claim that it will somehow hurt challengers while wasting money on hordes of “fringe” candidates. They say that it won’t work in California, and that even if it did work, we can’t afford it.

None of these claims are true.

AB 583 isn’t Prop 89. AB 583 provides for a voluntary Clean Money system of public financing for state offices, and nothing more. Prop 89 included a version of Clean Money, but it also had mandatory contribution limits, limits on how much corporations could spend on initiative campaigns, and a corporate tax increase. These non-Clean Money components were the focus of the campaigns for and against Prop 89 and led a number of newspapers that had endorsed last year’s AB 583 to oppose Prop 89. A much simpler AB 583, without Prop 89’s more controversial components, could have a very different result in a state in which 64% of voters say the state government is run by a few big interests. Already, in fact, one of the newspapers that opposed Prop 89, the San Francisco Chronicle, has endorsed the new version of AB 583, calling it “An idea whose time has come”.


How Well Do Challengers Do in the Current System?

One of the most unlikely concerns about Clean Money is that it would somehow hurt challengers. Bill Cavala went so far as to claim that “the current system of private contributions has produced enough money for every challenger who has run in a winnable race in the last 30 years”.

Sadly, that’s not true. A California Clean Money Campaign study found, for example, that only 5 out of the 179 general elections involving incumbents from 2002 through 2006 had a challenger who managed to spend as much as the incumbent. And not a single challenger managed to spend as much as the incumbent in primaries. In 2002 and 2004 the highest spending primary challenger was outspent by 100-1. 100-1!

This means that the current system isn’t democracy – it’s an incumbency-protection racket. Even the strongest challengers usually can’t compete financially with incumbents who constantly rake in contributions from special interests who are trying to influence them.

Combine that with the fact that 93% of races from 2002 through 2006 were won by the candidate who spent the most money (including even 77% of contested open-seat legislative primaries), it’s no wonder that not a single incumbent has lost a primary this century.

This is why concerns that Clean Money will hurt challengers by stopping them from being able to outspend incumbents are either misplaced or disingenuous. Except for the odd multi-millionaire, it just doesn’t happen. The system is broken.

How Well Would Challengers Do With Clean Money?

AB 583 would give challengers a fighting chance by providing enough public funds to qualified candidates to run competitive campaigns. It provides matching funds if they’re outspent by non-participating candidates or attacked by independent expenditures, up to a limit. Candidates will not be allowed to raise or spend additional money beyond what they receive from the fund.

We are often asked if AB 583 provides enough to help level the playing field for challengers. It absolutely does. For example, AB 583 would provide $800,000 to qualified major party State Senate candidates in the general election. This is more than challengers were able to spend against incumbents in all but one race from 2002-2006. In fact, it’s more than the second highest spender spent in all but 4 out of the 60 races.

On top of that, Clean candidates get matching funds up to five times the baseline amount if they’re outspent. That would have provided a full match in every single Senate race except one since 2002, and even that race would have been close.

In other words, if AB 583 passes, we’d move from the current situation, in which challengers are outspent in almost every single race, to a situation where qualified challengers would have a level financial playing field in almost every race.

What About Independent Expenditures?

People are also often concerned about what Clean Money does with independent expenditures. Under current U.S. Supreme Court cases, no law can legally stop independent expenditures for free speech reasons. But by providing matching funds to Clean candidates within 24 hours of when they are attacked by independent expenditures or when one of their opponents benefits from them, AB 583 will allow Clean candidates to respond. The caps on the matching funds are high enough to have fully matched independent expenditures in almost every race in the last six years. No other form of campaign finance reform has any way deal to independent expenditures at all.

Would Fringe Candidates Qualify?

We often hear the claim that too many candidates will qualify for Clean Money and that it will waste public money on fringe candidates, particularly worrying about how many people ran for governor in the recall election.

There’s no comparison between the two. To run in the recall election, one only had to pay $3,500 and turn in 65 signatures. Qualifying for Clean Money is far more difficult. Candidates have to get $5 contributions and signatures from a large number of registered voters in their districts. In the case of governor, AB 583 requires 25,000 $5 contributions and signatures. To illustrate the challenge that presents, consider that only 32,000 people contributed to all the candidates in the recall election combined. Granted, many of those contributions were $20,000 checks, not $5 checks, but the point is clear – only candidates with a broad base of support will be able to qualify for Clean Money.

The qualifying contribution thresholds for AB 583 were set by scaling up the proven thresholds used in Arizona and Maine on a per voter basis. Neither Arizona nor Maine, both of whose systems have been active since 2000, have had any serious problems with the number of candidates qualifying. In 2006, 128 candidates qualified for 98 Arizona races (an average of 1.3 per race). 314 qualified for 186 Maine races (an average 1.7 per race). So experience shows that well-designed Clean Money systems have virtually no problems with fringe candidates nor too many candidates qualifying – even while voters get more choices at the polls from qualified candidates.

As an extra safety measure, AB 583 requires third party and independent candidates to gather twice the normal number of qualifying $5 contributions and signatures to get full funding in the general election because they will not have had to prove themselves by winning a large primary, as major party candidates do. That should virtually eliminate any chance that fringe candidates will get full funding, while at the same time ensuring that the very strongest third party and independent candidates (like a Matt Gonzales in San Francisco) have the opportunity to compete.

How Can Arizona and Maine Possibly Compare to California?

Other people who don’t want to change the system say that it’s great that Clean Money works so well in little Arizona and Maine, but those experiences don’t apply to a huge state like California that has Assembly districts with an average of nearly 200,000 voters in them.

They’re forgetting that Arizona has had two statewide elections with Clean Money. The governor of Arizona, competing for over 2.5 million registered voters, was elected with Clean Money twice. In 2002, in fact, she won while running Clean against a wealthy privately funded candidate who had fundraising support from President Bush at the height of his popularity.

In fact, 9 out of 11 of Arizona’s statewide officeholders (a mix of Democrats and Republicans were elected with Clean Money. All competed for those 2.5 million voters -- about 13 times as in the average California Assembly race and over six times as many as in the average California State Senate district.

Clean Money works, and it works in large and expensive elections.


Will There Be Enough Money in the System to Pay For It?

Some people wonder whether there will be enough money in the system. The answer is yes. The California Clean Money Campaign did a detailed analysis of what the “most expensive” case costs would have been with the actual candidates and spending of 2002-2006. We found that even in the most expensive possible scenarios the system would have cost an average of about $77 million a year. This includes cases where every single candidate ran Clean (which doesn’t happen in Arizona and Maine) or every single candidate except the highest spender (maximizing the amount of matching funds needed). Most scenarios would have cost less. AB 583 currently allocates $3.65 per year per resident 18 or older, or about $98 million a year, which would have been more than sufficient to cover even these worst case scenarios based on actual history.

It is possible that the amount AB 583 allocates should be increased. If the system encouraged one extra qualified candidate per race to run because they could afford to run with Clean Money but couldn’t afford to run privately – which would mean there would be actual competition in many races where now there is none – the most expensive case would go up to about $125 million a year. Any number ending in “millions” sounds like a lot, but that’s only about 1/10th of 1% of California’s budget, or less than $4 per year per resident. We believe that most people would feel that that’s a reasonable amount to pay to remove the undue influence of money in politics. We’ve recommended that AB 583 be amended to cover this possible scenario.

These relatively minor amounts would be more than paid for by the savings in reduced giveaways to special interest contributors. There’s a reason that California has systemic deficits while Arizona and Maine don’t. The public in those states have invested in better government, and it’s paid off.

The Bottom Line

Most complaints that Clean Money “won’t work” simply don’t bear up under the facts. Experience in four elections in both Arizona and Maine proves that it allows more new candidates with good ideas to run. But it’s hard enough to qualify that fringe candidates almost never qualify. Most importantly, it provides enough funds that both challengers and incumbents are able to compete on a level playing field. Before Clean Money in Arizona, the candidate who spent the most won 79% of the time (in 1998). With Clean Money in 2002, there was only a significant different in spending levels in 2% of races. In other words, it made races about ideas, not money.

Incumbents still win most of the time in both states, but they actually do lose sometimes, in both primaries and general elections, because their challengers have the funds to compete. So incumbents have to serve their constituents better or else they’ll get kicked out of office. Because they don’t have to cater to the needs of special interest contributors, they actually can serve their constituents better.

AB 583 has been designed with Arizona and Maine’s long experience in mind and with careful analysis and attention paid to the amounts of money spent in campaigns in California. As Marc Spitzer, the former cleanly-elected Republican chair of the Arizona Corporations Commission, said, “The question isn’t how you can afford to have Clean Money. The question is how you can afford not to have it..”

Trent Lange is President of the Board of Directors of the California Clean Money Action Fund and Vice President of the California Clean Money Campaign. He is an expert on analyzing the policies and costs of public financing systems. Mr. Lange runs a hedge fund for a living.

Posted on May 02, 2007

Comments

I could write a book disagreeing with everything you wrote, but most of the reasons I don't like "Clean Money" have been written about elsewhere.

However, I wanted to point out that anyone who was at the State Democratic Convention in San Diego got to see first hand the dangers of public financing with the activities of supporters of Lyndon LaRouche.

For those not familiar with LaRouche, he was a small time scam artist who decided to make himself rich by running for President several times and using the matching funds system to pay for quote, unquote, organizers whose real job was to raise more money for LaRouche organizations that he could then spend on himself.

This is no secret and has already been mentioned in numerous newspaper stories and in several court cases. However, what's new is that because of the financial generosity of political matching funds, they have gotten so well organized using matching funds that they now have a large organization of paid people that are articulate and give a great first impression to go out and raise money for them. You could see just how articulate they were at the Convention where the LaRouchies were successful in electing a Vice Chair of the African American caucus and a Recording Secretary of the Asian Caucus, both of whom will now be promoting their groups viewpoint (and raising money for the group) from positions of seeming authority. They use pitches like supporting the impeachment of President Bush and Vice President Cheney and other such issues as a come on to raise money from grassroots people who don't know any better and it all is coming about because Federal matching funds gave them the money to hire top class fundraisers. With this kind of abuse in the system now, you want to provide new incentives for crazy groups to get involved in politics? I guess that raises some questions for me.

Posted by: Tom Kaptain at May 2, 2007 12:06 PM


This is a valuable thorough list of answers to many of the questions about AB 583. I hope everybody in the California State Assembly and California State Senate reads it and learns the true essence of this excellent policy for all democratically minded people to understand!

I will print out a copy and learn these facts well.

I hope California Governor Arnold Schwarzenegger will jump on this popular and completely viable solution to the corrosive unfair influence of money in politics, this "global warming" of our democracy.

It would be great to see Governor Arnold Schwarzenegger supporting Clean Money Fair Elections Act AB 583, just like he's supporting solid environmental law, so that we can truly launch a new era in America of interested and active challengers into politics who are focused on policy, not fundraising.

Let's call it "The Post Corruptive Era" since the ability of big-money to corrupt has never been so huge and so powerful. And Clean Money would meet them at their game.

Full Public Financing of Elections is the real campaign ticket Governor Schwarzenegger rode on. With his aggressive and vocal full support of AB 583, it can become a reality and no more will we say:

"Money goes in, favors go out, the people lose."

We'll say instead on the day the the law is signed:

"Thanks to Governor Schwarzenegger (and Loni Hancock, and the voters of California bringing on the dawn of the Post Corruptive Era) henceforth... the people win!"

Posted by: James Saxon at May 2, 2007 03:40 PM


I'll repeat my statement: no Democratic candidate for the Legislature has failed to win because of a lack of money if demography or circumstance made the race competitive.

The lack of competitive races between 2002 and 2006 was not due to the lack of money. Spending money would have been silly - the seats were not competitive.

That's because Democrats drew districts that guaranteed 10 years of governance. Fortunately, (republican) money could not change that fact.

The seats where money could make a difference were AD 17, 30, 31, 76, 78, 80 and possibly 15. Not surprisingly, that's where both parties spent. No seats turned over, but the closeness of margin is perhaps an indication that the spending was well targeted.

The other close contest in the last six years took place in AD 21. The current insurance commissioner spent several million dollars in a losing cause - but made it close.

Posted by: william cavala at May 2, 2007 07:21 PM

There are two replies to Bill Cavala’s statement that “no Democratic candidate for the Legislature has failed to win because of lack of money”:

First: Most people who support public financing of campaigns don’t do it to “help Democratic candidates”. They support it to clean up a dysfunctional system that makes voters feel – rightly in some cases, as shown by Tom Delay, Duke Cunningham, and others – that their elected officials are corrupted by private campaign contributions. They also support it because good candidates who aren’t supported by big money interests almost never stand a chance, no matter how popular their ideas might be with regular voters.

Second: Bill’s statement is certainly arguable even in the limited situations he wants to look at. In 2004, Democrat Patty Davis lost by only 1.3% (1,998 votes), even though she was outspent by nearly $600,000 by incumbent Republican Shirley Horton. I’ll bet a good consultant would have a fighting chance to make 1,000 people switch their votes if their candidate wasn’t outspent by $600,000.

In 2006, Democrat Maxine Sherard was highly competitive against Horton, coming within 5%. Not being outspent by 2-1 (nearly $900,000) probably would have helped. Democrat Steve Clute lost by only 3.2% to incumbent Republican Bonnie Garcia. Not being outspent by $300,000 certainly could have made a difference. The AD 15 races Bill mentions also featured serious Democrats who lost after being outspent by hundreds of thousands of dollars.

Ask the losing Democrats in those competitive races if they wish they’d had as much money as their opponent.

(To be evenhanded, there were also a number of competitive races in the districts Bill mentioned in which the losing Republican would have a fairer chance if they weren’t badly outspent.)

Bill is also ignoring primaries. Gerrymandering doesn’t affect primaries, and yet not a single legislative incumbent has lost a primary in California this century. Is this because all those 230 incumbents were loved by their party’s voters? Given the popularity of the legislature, that seems unlikely.

The fact that incumbents outspent their primary challengers by 7,289-1 from 2002-2006 might have had something to do with it, though.

The voters deserve a real choice, and under the current system they’re usually not getting one. Clean Money would change that by providing a level financial playing field in nearly every race that candidates could qualify.

Posted by: Trent Lange at May 3, 2007 10:06 AM

Considering the fact that we currently have spending limits in this century, maybe that has something to do with why incumbents never lose. If you look back at the nasty pre-limits days which were essentially Pre-1990, incumbent legislators were losing their seats all the time, many in contested primaries. Of course that is the hidden reason so many politicians support campaign reform, they know it's a shell game and by changing the rules, they can keep control away from ordinary people.

Posted by: Tom Kaptain at May 3, 2007 12:38 PM

Prop 34's contribution limits, such as they are, didn't come into place until 2004. If having no contribution limits helps challengers so much, then perhaps you can explain why not a single primary challenger was able to raise even 10% as much as the incumbent and why only 1 out of 63 was able to raise as much as the incumbent in the general election in 2002, when there were no limits.

The current system is broken. Challengers will almost never be able to compete financially with incumbents when their only option is to try to get money from special interests that would rather give big checks to incumbents to try to influence them. That’s true whether contributions are limited or whether the sky’s the limit.

The only way to fix that is to provide Clean Money public financing to qualified challengers so they can compete on a level playing field. If you think that competition in elections is a good thing, that is.

Trent Lange
Vice President of Board of Directors
California Clean Money Campaign

Posted by: Trent Lange at May 6, 2007 01:26 PM

A question for Trent Lange:

I really like the fact that Clean Money provides matching funds to Clean candidates when they're outspent by non-participating candidates and attacked by independent expenditures. That's what swayed me to vocally support Clean Money. This system can match private with Clean Money thus keeping a level playing field of ideas for the voters to choose from.

With immediate matching funds candidates would be able to respond, thus remaining financially competitive.

But given the tremendous growth independent expenditures in California, will the system be able to afford it? What has happened in Arizona?

Posted by: James Saxon at May 7, 2007 03:03 PM

Lots of people ask that question: With independent expenditures in support of candidates or attacking candidates skyrocketing in California, would AB 583 really be able to afford to provide the matching funds Clean Money gives to participating candidates when they are subject to them?

The answer is that our analysis shows that it would have been able to afford them even in “most expensive case” scenarios assuming that the system had to match every single high-spending candidate and independent expenditure in 2006. That most expensive case is highly unlikely, given that not all candidates will use the system (it’s a voluntary system) and the fact that a lot of the candidates who would likely be the highest spenders actually will use the system -- like Arizona’s incumbent governor did in addition to her opponent.

The most interesting thing is that in Arizona the amount the system has had to provide to match high-spending candidates and independent expenditures has dropped since the first time it was used for statewide raises. In 2002, Arizona had to spend $3.1 million matching independent expenditures, but by 2006 that amount had dropped more than a third, to only $949,000. This is true even though the number of participating candidates increased dramatically during that time.

In short, Clean Money doesn’t limit independent expenditure groups who have something serious to say. But it does make them think twice if they only intend to attack a candidate to try to drown them out, because they know that with Clean Money’s matching funds those candidates would be able to respond. And that’s why Arizona’s Clean Money system has actually had to pay out relatively little in matching funds, and why the same would probably be true in California also.

Trent Lange
Vice President of Board of Directors
California Clean Money Campaign

Posted by: Trent Lange at May 7, 2007 05:06 PM

The problem with your comment is that the reason IE's have dropped is that people with money have started to dominate Arizona politics shutting out minorities in the process and don't have any need for IE's. Arizona should have long ago been a Democratic state, but because of so called campaign reform, the poorer people of the state have not been able to get organized like they should and the rich who are in control have done things to make it harder for them to vote, keeping power in the same hands. I would love to see an example anywhere in the country that passed campaign finance reform where challengers were elected at a higher rate than they were before the reform passed.

Posted by: Tom Kaptain at May 8, 2007 12:53 PM

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