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Soft on Big Money

In North Carolina, it's easy for corporations and other wealthy donors to get around campaign-contribution laws.

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For more than an hour, Bob Hall held the state Board of Elections members spellbound, describing in excruciating detail how North Carolina's limits on campaign contributions to political candidates have been obliterated by the Republican and Democratic parties. Page by page, he tracked aloud, from party records, the way cash tossed into the national committee coffers in Washington by corporations and wealthy donors from all over the country can slosh around through various accounts until, lo and behold, it comes out in the campaigns of North Carolina candidates to the tune of millions of dollars. In comes the money, from contributors like E.G. Kendrick, chief executive officer of Datatel, a company in Paradise Valley, Ariz., to the Republican National Committee's soft-money accounts. Kendrick, on June 28, donated $75,200. Out comes the money, to the N.C. Republican Executive Committee, which received $155,000 from Washington on June 29. Around and around it goes, to the N.C. GOP Federal Account, the N.C. GOP State Account, and the N.C. GOP Victory 2000 Account--a total of $154,743 between June 30 and July 12. The Democrats do the same thing.

Hall, chief researcher for Democracy South, the Chapel Hill-based reform group, pleaded with the Board of Elections to declare the parties' money machinery illegal in North Carolina. "Soft money is overwhelming our last safeguards," he said. The Board should act "to make real the power of the vote and keep it safe." State election laws put a $4,000 limit on individual contributions to candidates for the legislature and state executive offices and bar contributions from corporations and unions. Because of the gaping soft-money loophole in federal election laws, though, the national parties are under no such constraints--except for the ban on foreign contributors, they can take as much as they can get from everybody. If they can then turn around and give unlimited amounts of money to candidates in North Carolina, the effect is to make the state laws a fiction, Hall argued. "We can't let that happen," he said. "We'll have total chaos. It is ... it's madness."

Madness it may be, Board Chair Larry Leake declared finally, but it is not illegal. "The shell game that all of us reasonable people have to understand is going on," as Leake put it, would have violated North Carolina law at one time, but as the result of an amendment enacted last year by the General Assembly, it doesn't any more. Hall said Leake was misreading the amendment. However, the five-member Board voted unanimously to reject Hall's, and Democracy South's, position. It also voted unanimously to tell the General Assembly, again in Leake's words, "you have fractured, badly, the rules," and should think about undoing the damage when the next legislative session begins in January, 2001.

Whether it will or not is a question, but regardless, for the 2000 elections, the money spigot is wide open. Some $2 million had come down from Washington to Republican campaigns through the first week in September, including $750,000 to gubernatorial candidate Richard Vinroot; another $700,000 made its way to Democratic campaigns in the state. We know that because of a Board of Elections rule that soft-money flows from the national parties be reported weekly. On the other hand, the General Assembly continues to let candidates' spending and fundraising be reported quarterly. Thus, the most recent reports are as of June 30, when Vinroot, for example, reported total contributions to his campaign of $3.3 million and Democratic gubernatorial candidate Mike Easley $4.8 million. How much more they've collected since then, and from whom, won't be known until the next quarterly reports come in on Oct. 30. That's right, the third-quarter reports, through the end of September, aren't actually due in Raleigh until 30 days later, or just eight days before the Nov. 7 elections.

Thus, in contrast to Vermont, where clean-elections reforms have opened up politics to a whole new cast of characters and issues (see "A Model State," page 25), North Carolina's laws are going the other way. Disclosure requirements continue to be minimal, with contributions made after Sept. 30 not reported until the election is over. But while the general public is kept in the dark, big-money contributors have been given the green light. The N.C. Center for Voter Education (NCCVE), looking at the June 30 reports, says spending in the governor's race is on track to break the record $19. 4 million spent by Gov. Jim Hunt and Republican Robin Hayes in the '96 election. And in every one of the other nine Council of State races--from Lieutenant Governor to Insurance Commissioner--the top fundraiser in this year's election is ahead of his or her '96 counterpart.

So with all the money that's being spent, the 2000 elections are pretty exciting, eh? Actually, NCCVE expects voter turnout to be lousy. Only 17.5 percent of eligible voters cast ballots in the May 2 primaries, down from 20 percent in the '96 presidential election year and 25.5 percent in '92. "It won't be a big surprise if fewer voters than ever vote in this year's fall elections as well," it says.

NCCVE, a new organization this year, is headed by former U.S. Sen. Robert Morgan, who worked his way up from the courthouse politics of Harnett County back in the days when, as he said, "candidates mingled with regular folks and found out what was on their minds." Now, campaigns consist of paid advertising, and the candidates can be found only at private fundraisers. "The truth is, you don't see them anymore," he complains. "One candidate down in Charlotte said her consultant told her to spend all her time fundraising and not do anything else."

And regular folks have gotten the message, Morgan adds. He found that out when he tried to get his Rotary Club to invite some candidates to speak. No one was interested. "It comes down to apathy," he says. "People don't feel like their vote and their little money make a difference any more."

In a lot of the legislative campaigns, they don't. Of the 50 state Senate seats and 120 seats in the House, only about a dozen are considered close calls by political experts. The rest are lopsided races for the Democratic or the Republican candidate--indeed, for 62 of the 170 seats, the other party isn't even on the ballot. One reason is gerrymandering. When the General Assembly draws the district lines, it creates safe districts for a lot of incumbent members by jiggling the boundaries to give them as many favorable precincts as possible (packing the unfavorable ones into other districts where the opposite party is ticketed to win). After the districts are whacked up, the parties concentrate their money on the winnable ones, leaving their remaining candidates to fend for themselves. That's another reason why so few races are contested. "It'd take a good man to run against a state senator who's going to spend $150,000, or $200,000," Morgan scoffs, especially if your party has written the district off.

District lines will be redrawn by the next General Assembly, using 2000 census data, which is why both parties are spending so much money on so few legislative races. The state Senate is safely in the Democrats' hands. If they hold the House, currently 66-54 Democratic, they'll control redistricting. Only if the Republicans can win it away will they have a say in how the lines are drawn. (The governor's veto does not extend to redistricting.)

Morgan's answer to all this is public financing of campaigns using the clean-elections models adopted in recent years by Vermont, Maine, Massachusetts and Arizona. In general, candidates who collect a specified number of small-money contributions--and who agree to do no further fundraising and to limit their own spending--are given a lump sum of public money to conduct their campaigns. In Maine, for example, candidates for state House seats need just 50 checks for as little as $5 each, and they receive $14,000 from the state elections fund. According to Maine Citizens for Clean Elections, 115 of the state's 353 candidates are "running clean," including a few incumbents who decided they'd rather spend their time campaigning than fundraising.

"It won't change politics overnight," Morgan says, "but it will make a difference, it will help."

Diana Phillips, of Hillsborough, the president of the League of Women Voters of North Carolina, agrees. "There is a growing feeling of, 'he's a politician, he's bought [by special interests].'"

The ranks of public-financing advocates, limited until this year to progressive groups like Democracy South and the N.C. Alliance for Democracy, have expanded lately to include political heavyweights like Morgan, former UNC President Bill Friday, and former U.S. Rep. Alex McMillan, a Charlotte Republican. That's because of the creation of NCCVE, organized as an educational nonprofit group with major funding from the Z. Smith Reynolds Foundation, based in Winston-Salem. Even Gov. Hunt, now that he doesn't have to raise money any more for his own campaigns, says it's time to reform campaign-finance practices.

But neither party in the General Assembly has shown any sign that it will push for public financing, nor have Vinroot or Easley, the gubernatorial candidates. The momentum, if any, is the other way. Under North Carolina law, the state party organizations are allowed to take contributions of any amount from individual contributors for so-called "party building" activities, including paying for staff, polling, mailings and advertising as long as it isn't aimed at electing specific candidates. Thus, unlimited contributions from the national party committees were allowed prior to last year, but only to the party, not candidates.

But in the '99 session, responding to a federal district court's ruling on another portion of the election laws, the General Assembly inserted one word in the section about national party contributions. The effect, the Board of Elections says, was to make it possible for the national committees to give unlimited amounts of money not just for party-building but also to individual candidates. The distinction is somewhat arbitrary, since party-building, to the parties, means electing candidates, and they've been paying for campaign staffers and targeted advertising all along.

However, it continues to be against the law for a contributor to give the allowable $4,000 to a North Carolina candidate and then give $20,000, say, to the national party with the stipulation that it be sent on to the campaign of that candidate. Hall's complaint, rejected by the Board of Elections, was that such things are happening despite the law, disguised only by the allocation of the North Carolina contributor's $20,000 to a candidate in California, say, and a Californian's $20,000 contribution back to North Carolina. "I'm saying there's every indication [of that]," he said. "It's as clear as you can get."

Morgan agrees with Hall that "circumvention" is occurring, but it'll never be proven unless a crusading prosecutor impanels an investigative grand jury and puts some contributors under oath. At one time the head of the State Bureau of Investigation, Morgan says that's what'd he'd have done if he were still there. "I would have been guilty of misfeasance if I had not," he says. "And I suspect the first charge would have been money-laundering." EndBlock

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