Editor’s note: With the Senate’s passage of campaign finance reform this week, the controversial legislation has come another step closer to becoming law. One critic of the measure, Reason magazine national correspondent Michael Lynch, says the proposal is fraught with problems and may even be unconstitutional. In a pre-Senate vote interview with WorldNetDaily’s talk-radio host Geoff Metcalf, Lynch discussed the bill’s problems and explained key concepts in the debate around campaign-finance reform. Lynch holds a master’s in economics and served as Washington editor of Reason from 1997 to 2001.

Metcalf’s daily streaming radio show can be heard on TalkNetDaily weekdays from 7 p.m. to 10 p.m. Eastern time.

Q: I read your piece in Reason magazine, and you quote Bradley Smith from the Federal Election Committee. What did he tell you last year?

A: He said the thing about campaign-finance reform that he often finds himself telling people is all the problems, or at least perceived problems, that it won’t solve. He mentioned some of them. It doesn’t get money out of politics. What it does is it doesn’t allow political parties to raise soft money. But independent groups can still do it. Therefore, one of the things it will do is shift power away from political parties.

Q: Or it causes the development of coalitions. So if a party were to come to Mike and Geoff and say, “Hey, we want you guys to form a group, and we’ll give you the money and support to do it,” is that legal?

A: Yes. It’s legal, and you could do it in various ways. It can’t be directly linked, but there are ways to do it indirectly. Also, they’ve attempted to put the kibosh on it by limiting what those groups would be allowed to do 30 days before a primary election or 60 days before a general election. Even those groups couldn’t go on the air and run issue ads.

Q: Maybe it’s just the cynic in me, but among the acts of disingenuousness, there was a recent article in the Wall Street Journal about supporters of the bill. The article noted Daschle and others are saying as soon as they get this, they want to move on it quicker than a minnow can swim a dipper. They are rabid about making it happen. But none of this is going to happen until after the next election, right?

A: Right. They put all kinds of loopholes in form, so none of this will happen until after the next election. The Democratic National Committee wants to build new headquarters, and they are going to build it with soft money. Therefore, they have to put in an exemption for that, or at least put the big $25 million check out before next November. We know that congressmen care mostly about their own jobs, and one thing that keeps them in their jobs is keeping their district. State legislatures are in charge of redistricting, so they put in a loophole exemption for that. They can raise any kind of soft money they want to lobby on their own behalf to state legislatures to keep their districts.

The list goes on and on. Negative ads have been restricted. If you run a negative ad, or something that is seen as a negative ad, you have to run your picture and put your name on it, which is seen as a disincentive. It wouldn’t surprise your readers to know negative ads are the most informative ads – the ads that people actually like the best and the ads that are most effective against incumbents.

Q: And that’s why incumbents will strive to make running negative ads harder.

A: The other thing they did and are seeking to do is to give themselves cut-rate TV time. Pretty much anywhere they face a choice, they try to further ensconce themselves in power, which is exactly what you might predict.

Q: So it’s really kind of an incumbent protection act.

A: Absolutely. I did a column earlier based on talking with Bradley Smith. He said the whole “level playing field” metaphor is wrong for politics. He said it’s more like “capture the flag,” where each team has various advantages of terrain – their own terrain – and they seek over time to overcome the other team. At that time, I said what happened was the incumbent politicians figured out they were playing on the same team against challengers when it came to campaign-finance reform. That’s what allowed it to go through.

Q: Is it safe to say that this whole exercise in campaign-finance rhetoric and posturing is really more form than substance?

A: It is, because if you think what the various problems are, or the perceived problems – money in politics, businesses and labor unions funding candidates and therefore getting access to them or running various ads – it can’t solve those problems.

Q: Why not?

A: The reason it can’t is because we have this thing called the First Amendment. The First Amendment protects freedom of speech. The chief reason for this is to protect political speech. We have a $2 trillion-a-year government that puts its nose into pretty much every corner of our lives. As citizens, we have the right to buy TV time and say, “Look!” We can criticize our government, criticize our representative, criticize our senators …

Q: And the Supreme Court has already ruled that giving money is an exercise of free speech.

A: Yes. They have in various ways, although they say if there is even the appearance of corruption it can be counterbalanced, and that can outweigh the freedom of speech.

Q: In your Reason piece, you bring up a good question: If this so-called campaign-finance reform accomplishes so little, why is everyone pushing so hard for it?

A: Because it serves the interest of those doing the pushing. It’s getting pushed by incumbent politicians. They are already in office; it certainly benefits them by further restricting how challengers can raise money and have their campaigns funded. Soft money benefits the challengers at the expense of incumbents. And also, the goo-goo groups that are pushing it – Citizens for Government Reform and other groups – raise money off this. The issue is front and center. It’s quite ironic that when they put the pressure on the politicians to vote their way, their campaign is funded with what is essentially soft money – a wealthy person kicking in a bunch of money to fund a phone bank.

Q: Yes, but as you mention in the article, the main ambition is not to prohibit all soft money.

A: No. It is to prohibit soft money that will benefit the challengers. The incumbents can use their soft money to keep their jobs and go down to lobby for themselves at the state legislature. They are pushing for it because it looks good; it’s got the high rhetorical ground, I guess, in many quarters – at least on the dominant opinion pages of the country. The New York Times is certainly behind it. And at the end of the day, it really won’t cost them much.

Q: You wrote a great line: “The principle is clear: Soft money that hurts incumbents is corrupting, but that which helps them is ennobling.” It’s bad, corrupting, nasty and dirty. But if soft money helps them, then it’s cool, it’s ennobling, it’s a good thing.

A: Yes, but like most things in politics and in human affairs, you can figure out where people stand by where they sit. They are not going to pass a campaign finance reform bill that actually hobbles incumbents.

Q: How does soft money really help challengers?

A: I guess there are at least two major reasons. First is that hard-money donations tend to go to incumbents because what people are in fact buying with hard-money donations is access. They want you to know they contributed to you so at least maybe you’ll return their phone calls or talk to them. Since incumbents generally win re-election, people like to put their money on winners. That’s what their interest is in the political process. So the hard money is very hard for challengers to get. That goes to the incumbents. Therefore, the political parties have a general interest in their team getting elected.

So the Democrats have an interest in getting other Democrats elected, and Republicans have an interest in getting other Republicans elected. They take their soft money and tend to spread it about equally between incumbents and challengers. But this actually greatly benefits challengers because of the disproportionate amount of effort that goes on their behalf. So that’s why incumbents benefit from taking away soft money. The reason money is important is the second reason: It is very important to get your message out, to get your name ID out. Incumbents have all kinds of ways to get their name before the voters.

Q: They are on TV all the time talking about legislation.

A: And they can send out “franked” mail. They are already known entities. But for challengers, the biggest challenge is just getting the people to know who you are – who is Geoff Metcalf, who is Mike Lynch, that sort of a thing. And that simply just takes money.

Q: Bob Terrel at the American Spectator had a great line. He said, “Alas, tis true … campaign-finance reform is again in danger of being passed in Congress … where our elected representatives admit they cannot be trusted with the money they raise. So weak is their probity that they fear financial supporters will turn them into willing tools if they accept soft money, possibly even hard money.” The question is whether the bill is really in danger of being passed or not.

A: We’ll have to see. As McConnell said last time when the Senate passed it, “We’re shooting with real bullets now.” Let’s see what happens. There is a lot of interest. It is clear that the incumbents are sitting pretty; this clearly benefits them. There are other interest groups that don’t necessarily want to see this passed. So, for example, the Black Caucus in the House is very leery of this bill, and the reason, again, is they come from districts that tend to be poor. They get less hard money, and soft money enables them to do stuff like get-out-the-vote efforts, get their messages out, so it benefits them and they don’t want to see this passed.

It’s also true there might be advantages and disadvantages breaking down between the parties. The way the press plays it is the evil Republicans that get corporate money are against campaign-finance reform and virtuous Democrats, of course, want to see it passed. That’s not necessarily the case, and it’s not necessarily clear that doing away with soft money will benefit Democrats vis-?-vis Republicans, because Republicans are better able to raise hard money than Democrats. Democrats actually rely more on soft money. So it could end up being a bigger hit. But it’s hard to predict anything because as soon as the law is passed, there will be legal challenges, and clever, smart lawyers and accountants will go to work figuring out how to redirect this money to basically serve their interests.

Q: I think McConnell already said that if it passes, he’ll be the first guy in line to sue.

A: He will sue. Interest groups will sue. You’ll see a coalition from the NRA to Planned Parenthood and National Right to Life come together on the same team, and the American Conservative Union and the ACLU will be on the same team. They see this as an issue of speech, to be able to advocate for their position in the national political debate.

Q: How solid are the votes on this? I saw that Ernest Hollings changed his mind, and Ted Stevens changed his mind.

A: I don’t know. Rhetorically, they get themselves locked into supporting the bill. Ted Stevens went the other way, so maybe now they can’t filibuster. But what that really does is put whoever goes the other way “in play.” So now Stevens can be sort of a deal maker. Look at it as essentially a political ploy. What has changed? If you supported it before and now it’s the same bill, is it only that it is actually going to pass now? So you voted before because you thought you had a free vote.

Q: Hollings was going to vote against it, and now he says he’s going to support it.

A: Exactly. I guess he wants to set himself up as sort of a hero. I’m actually not a good vote counter.

Q: Or they could grab themselves another 90 seconds of TV time, I guess.

Does this bill restrict an individual citizen from placing a political ad on television so many days before a primary?

A: If you place an ad that identifies a clearly identifiable candidate for public office or would be determined to implicate that candidate, it would have to be purchased with what is considered hard money.

Q: So we are in the home stretch. Congress allegedly wants campaign-finance reform like breath, or that’s what they claim. I’m not so sure. It really seems to be a whole lot of form and not much substance. It is really an effort on the part of Congress to protect incumbents, and as proposed, it’s basically a means of jabbing the guys who are trying to challenge the incumbents.

A: That’s definitely one way to look at it. We had a question about whether an individual could go and spend his own money to purchase an ad 60 days before an election and whether or not that will be illegal. I can’t determine whether that would be considered illegal or not. I’ve gone through the summaries of the bill, and it is extremely complicated. My feeling is individuals could still do it because they could spend their own money. What I don’t think could be done is to get together with your neighbor to pool your resources and then do it, because at that point they would come under these regulations.

Q: But what about the negative ad thing? If I want to run an ad against Sen. Dianne Feinstein in California because, let’s say, she’s benefited from the Red Chinese through her connection with her husband and the Desert Wilderness Protection Act was a scam, can I do that if I use my own money?

A: Yes, if you use your own money. I’m fairly certain you could do that.

Q: But if you gave me $100 for the cause, I couldn’t?

A: You could still run a negative ad. If candidates want to run negative ads at the guaranteed lowest TV rates, they have to identify themselves and put their own picture on the ad and identify the sources of funding.

Q: So if they were willing to pay a premium and not go for the deep discount, they wouldn’t have to comply?

A: I think that is the case for the candidates. It is very complicated, and I apologize.

Q: Hey, you didn’t write it. Sen. John McCain was suggesting that anybody who takes part in a filibuster is somehow going to have big problems in some subsequent election. Is that really a significant political ploy at this point?

A: I don’t know. It’s one of the things the “chattering classes” – the people in the media and in D.C. – care about a great deal. But pollsters will say that it really doesn’t show up on public opinion polls. It doesn’t show up as a very high priority. But it may now because recently it’s been in the news; it is kind of the issue du jour. But they also point out it doesn’t pack the huge intensity. One of the things that matters now in politics is how “intensely” people feel about an issue. People like David Keene at the American Conservative Union will point out that no one ever lost an election over campaign-finance reform, and they predict that nobody ever will. It’s not an issue that voters care about that much.

Q: The critics argue the bill is unconstitutional and that it is biased in favor of the Democrats. Could that be part of the scam? To intentionally create legislation to say, “See, we’re doing something! We passed this bill.” Yet at the time, they know it is unconstitutional and some court will have to deal with it later on.

A: That’s one of the things that may provide comfort for those people voting for it: the feeling that the most onerous provisions will be found unconstitutional, and therefore there will still be limits on the party soft money, corporate soft money and union soft money going to political parties and buying ads, but that some of the other speech provisions will be struck out. It’s a question of morality and ethics whether or not people who are sworn to uphold the Constitution ought to vote for something they think is unconstitutional because they think some other branch of government will do its job and strike down the bad parts.

Q: About six years ago, someone in Congress had a piece of legislation that seemed to make all the sense in the world. It was a very simple thing. It would have required any bill, before it could be submitted, to have a citation documenting its constitutional authority. He couldn’t get it out of committee!

A: There was actually a Supreme Court case – I believe it was the Lopez decision on a gun-control issue – where a gun-free school zone law was overturned by the Supreme Court, I believe, in part because Congress forgot to cite the law’s constitutional authority. Congress will get cute and say something vague like “the Commerce clause” or “the Welfare clause” or something. Even that wouldn’t stop these people.

Q: I’ve heard from a bunch of people who feel the president should veto this puppy if it is passed. Sure, he’ll get vilified in the big mainstream papers, but, hey, the New York Times and Washington Post aren’t ever going to do anything for him anyway. Why not stand on principle and the press be damned? Does the administration have the guts to do it?

A: That’s a good point, but they never have. They haven’t done a lot on domestic policy stuff. This is one of those areas where Bush has been clear that he wants to sign a campaign-finance reform bill. He’s been saying he wants to sign legislation that will make the system better.

Q: But this does not do that! It’s kind of like the USA Patriot Act: It says one thing and does something else.

A: But Bush hasn’t issued a strong veto threat on this at all. Ari Fleisher, his spokesperson, hasn’t said he is really thinking about vetoing it and hasn’t said he supports it either. I think that if this McCain/Feingold bill ends up on his desk, he will probably sign it. He could have some outs. I believe he wants what he calls “paycheck protection” so that union dues couldn’t be spent on any political activity without express permission from union members.

Q: What ever happened to the Beck decision?

A: The Beck decision would have theoretically allowed people who have jobs covered by union contracts not to join the union and pay only that portion of fees that goes to maintaining the union contract.

Q: I thought it also meant that if you were a member of a union you could compel your union not to spend money on political activity you didn’t want.

A: If you join the union, you are consenting to its activity. That’s what paycheck protection would do. Paycheck protection would allow union members to tell the union not to spend any of their dues on political activity that they disagreed with. But the Beck decision basically gives the worker the decision to join the union, and if you join you pay full dues and you get a vote. But at that point, the union can do whatever it wants with your money. You can stay out of the union and you don’t get a vote, but theoretically, you would only have to pay a portion of your dues. Often times it is still 100 percent of the dues, as National Right to Work will point out over and over again.

Q: I remember in the wake of Beck, people were hearing absurd stories from their unions like, “We’re only spending 2 percent of your dues on political activity.”

A: There are also big exemptions for internal communications. For example, anything they say in their own newsletters doesn’t count. But it is clear they spend a lot come election time. A lot of people who work for the union will actually get two weeks off to go do nothing but campaign, run huge phone banks – a lot of the “in kind” contributions that do cost money and greatly tend to benefit Democrat candidates.

Q: Is campaign-finance reform actually in danger of passing this time, as Bob Terrell suggests?

A: I think it is in danger of passing. I was actually surprised it went through the Senate when it did in the spring. I didn’t think it would pass then. I thought it would suffer under the weight of its contradictions, that people would be able to put together a winning coalition against it. But they didn’t. It didn’t go through the House, and then the Enron thing came up. Even though it is totally unrelated, it’s given campaign-finance reform a lot of momentum.

Q: Please repeat briefly for our readers the difference between hard money and soft money and why soft money is bad.

A: Basically, all the distinctions are artificial, but they are legal. Hard money is political money that is regulated by the Federal Election Commissions or FECA regulations. Individuals are limited to how much they can give candidates. Individuals can give candidates up to $1,000, and political action committees can give candidates up to $5,000. Individuals are limited under current law to total contributions, I believe, of $25,000. This is an attempt to limit how much candidates can get by basically limiting how much any individual can give. That means the amount in candidates’ coffers depends on how many individuals give. You can only give $1,000.

Q: OK, that’s hard money. What about soft money?

A: Soft money was originally recognized because political parties have to fund their activities, and they have activities that generally help the political process: the get-out-the-vote drives, general advertising, their issues. This is not regulated by the same law, because it doesn’t go to individual candidates. So for this, individuals and corporations and labor unions can give large sums of money.

Q: And they do!

A: They’ll write $100,000 checks to the DNC or to the RNC. What the innovation here was – and I believe it was a Clinton innovation – was to take this soft money and give it the characteristics of hard money. In other words, the political parties would get this money and buy TV ads. Remember the ads that ran against Gingrich? Those were all run with Democratic soft money. That was a Bill Clinton innovation with his pollster Dick Morris. I believe it is chronicled in the Bob Woodward book, “The Choice.”

Anyway, political parties found many good uses for soft money in the 1990s, and it became a threat to candidates. Candidates didn’t like it because they would then have to answer the soft-money ads. For example, if the DNC goes into your district and starts running ads that Mike Lynch wants to destroy Medicare, I have to answer those ads with hard money. But I have a limited amount of hard money, because I’m restricted to getting it in $1,000 chunks. They saw that it disadvantaged them.

Q: Matt Drudge reported that there was a heated debate developing inside the Bush administration over whether or not to veto this congressional bill. Daschle has vowed swift action, which would outlaw advertising by groups that target candidates just before the election. According to some unnamed but allegedly senior source inside the Bush camp, “We can’t let this stand! We ran against this issue during the campaign.” The president, reportedly, hasn’t made up his mind on a veto. The big question is whether this campaign finance law can survive the Supreme Court, and many don’t think it will, as currently written.

A: Yes, but it’s severable, so big chunks can survive even if small pieces get lopped off. If it passes and is signed into law, it most certainly will change the rules of the game.

Q: But they’ve changed the rules in the past, Mike.

A: Sure, but it always moves toward more regulation. And that answers the last part of the question, which is why is hard money good and soft money bad? The big answer to that is because hard money is sort of controlled and regulated money. You know how much it is, and you know where it comes from and what it is used for. Soft money is seen as people getting around this regulatory system.

Q: What has the Democrats so upset is that Republicans are better at getting direct hard-money donations, and the Democrats are really dependent on the soft money.

A: Yes. In percentage terms, a Democrat would rely more heavily on the soft money. But what the Democrats have going for them is the labor unions. But if labor unions are not allowed to give soft money anymore and are not allowed to directly spend money to buy advertisements, there’s still plenty of room for political-action labor unions. They give people time off to work phone banks. They can do internal communications. What the Republicans really fear is that what their pro-business supporters mostly have is money to give. So that is sort of seen as a counterbalancing force that would benefit Democrats.


Michael Lynch’s articles can be found on Reason magazine’s website.


Visit Geoff Metcalf’s archive for previous “Sunday Q&A” interviews.

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