JLF legal expert explains how matching-funds provisions chill free speech

Friday Interview: Taxpayer-Financed Election Campaigns Critiqued


JLF legal expert explains how matching-funds provisions chill free speech
 
July 30, 2010

Daren Bakst

RALEIGH — North Carolina legislators left Raleigh this year without expanding the state’s system of taxpayer-financed election campaigns. But advocates pushed for expansion, and they’re likely to push the idea again in 2011. Before lawmakers left town, Daren Bakst, John Locke Foundation Director of Legal and Regulatory Studies, discussed the problems associated with so-called “public financing” of campaigns during an interview with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

Martinez: This just doesn’t sound right. Let me make sure I understand this. Would this mean that, for example, a progressive, a liberal person, would end up having to help fund the election campaign of a fiscal conservative?

Bakst: Yes. They’d have no choice but to be funding those campaigns.

Martinez: How does this work? What’s written into this bill?

Bakst: Well, what it does is it gives some local governments the option of using public financing, i.e., taxpayer financing, to subsidize candidates for office. So basically these candidates get a lump sum amount of taxpayer dollars to run their campaigns. You don’t have a choice about whether or not that taxpayer money, your taxpayer money, is going to candidates you oppose or people who support ideas that you find reprehensible.

Martinez: What would happen if, let’s say, that I’m a taxpayer and I’ve decided for whatever reason that I’m just not interested in politics? I’m not even going to vote.

Bakst: Well, you decide you don’t want to pay taxes, but that wouldn’t be a good idea, so you have no choice.

Martinez: Well, supporters say this would move us toward something they describe as a “clean election system.” They say this will help fend off corruption so that people don’t have to go out and raise a bunch of money on their own. Valid? Or not?

Bakst: Well, the problem is, first of all I want to clear up [that] this entire system is almost certainly unconstitutional. And I won’t get into the constitutional analysis, but two federal District Courts recently have struck down these types of taxpayer financing systems, and I think certainly this would be found unconstitutional.

Martinez: What is the basis — for those of us who aren’t attorneys — the basis for striking that down?

Bakst: Well, the way it works is that the systems try to equalize the funding between candidates. So, if Candidate A, who is not taking taxpayer dollars, spends, say, $100,000, and they set a threshold limit of $95,000, and if you spend beyond $95,000, any additional amount beyond that goes to the opponent. So if I spent $5,000 above a threshold amount, the candidate that takes the taxpayer dollars gets $5,000 to equalize the funding between the candidates.

But as a result, if I’m the candidate who knows that I’m going to give $5,000 to my opponent, what am I going to do? Well, I’m not going to engage in speech. And what it does is, that is exactly what happens. It chills free speech because you don’t want to engage in speech if you’re going to help your opponent. And that’s why, primarily, they are being struck down.

Martinez: There are some candidates, and I have read about them and heard about them, who really like this idea of publicly financed campaigns. They don’t want to go out and raise money. But raising money, the folks on the other side say, is part of the whole process of vetting the ideas in the marketplace.

Bakst: Well, when you say the other side, I think you mean my side.

Martinez: Exactly.

Bakst: Right, absolutely. You know this idea that fundraising is somehow evil or is bad, well, fundraising is an essential part of the political process. That is how we determine whether or not somebody is a legitimate candidate. That is part of the process. Of course a lot of candidates don’t want to raise money. Why should they have to try to actually get support when they can take your taxpayer dollars and, you know, they can sit around and drink pina coladas.

Martinez: Interesting. You know over in Chapel Hill in Orange County, they actually had a pilot program with public financing of local election campaigns. This took place last fall. There’s been some interesting reaction to how that worked. What’s your take on what happened in Chapel Hill?

Bakst: You know, proponents of taxpayer financing can’t get their stories right. On the state level, they argue, “Oh, see the program works because so many people participate in taxpayer financing programs.” Well, of course people participate because if you’re going to punish a candidate for not participating so severely, you have no choice but to participate.

But then in Chapel Hill, what happened was only a couple of candidates participated, and most of the candidates didn’t participate. So it was kind of tricky for them. “We can’t argue that a lot of candidates participated.” What they did was to show that the candidate that did participate won. Well, that doesn’t show that the system works because a candidate won. … It doesn’t do anything as it relates to taxpayer financing. As for politicians, of course they love it, also not only because they get to sit around and hang out and listen to Jimmy Buffett and drink pina coladas, they…

Martinez: Who wouldn’t want that?

Bakst: Right. Who wouldn’t want to do that? You know, what’s important is, if they’re incumbents, it helps them because if you have equalized funding between candidates, incumbents are always going to benefit because they have better name recognition. So the only way for the challenger to overcome that advantage is to spend more money.

And the idea that more money somehow is bad for the system is incorrect. We need money to kind of get the message out there. It’s not just spending money; it’s about getting the message out. People become more informed about the campaigns, not to mention these systems only deal with direct contributions to these campaigns. It doesn’t deal with independent expenditures or other types of spending. So it’s not decreasing the total amount of spending in these campaigns — only one type of spending, basically.

Martinez: This issue of public financing of campaigns at the local level is one that’s probably going to be coming up. So if I’m a citizen out in the community and I know that my local government entity is talking about this, what questions should I be prodding them to ask as they consider this?

Bakst: Mr. Politician, Mrs. Politician, do you believe in political welfare? Do you believe that you should be taking our hard-earned dollars away from critical issues such as safety — if it was on the county level, from schools, maybe roads — and instead giving it to you for your personal benefit so that you can run your campaign so you don’t actually have to get out and actually raise money on your own? Is that really what you think our tax dollars are for — for your benefit? That would be one good question. Also, do you respect the United States Constitution? Because almost certainly, these systems are unconstitutional.

Martinez: What we’re talking about is doing this at the local level, but North Carolina does engage in public financing of campaigns a couple of different ways. Tell us what they are. One is judicial races.

Bakst: Judicial races — appellate judicial races — and also three Council of State races, which means the Commissioner of Insurance and a couple of other positions.

Martinez: There is somewhat of a push, by some folks at least, to fund more Council of State campaigns this way.

Bakst: Absolutely. I mean, look, the goal for people that support clean elections is to have clean elections for every race. What’s interesting is that the State of Arizona, where clean elections kind of started — one of the states — there’s tons of corruption. Because what happens is people game the system and they will figure out ways to trigger these kind of funds that I was talking about — these matching funds — to the candidate. So I’ll run an ad that actually hurts a particular candidate as opposed to helping and gives the impression that it is helping. Then it triggers money to the other candidate that I actually support. So there’s lots of gamesmanship. There’s lots of corruption in those systems as well. So it’s not getting rid of corruption.

Money isn’t bad in the system. There are many other alternatives. And also, we need to do things that are actually consistent with the Constitution. The other thing — final point — taxpayers simply don’t support these systems. On the tax returns in the state, you … can check off a little box. Only about 7 percent or 8 percent of taxpayers have checked off that box to support public financing

http://www.carolinajournal.com/exclusives/display_exclusive.html?id=6670

NC Session Offers Disappointment, Not Much Surprise

John Hood's Daily Journal: Session Offers Disappointment, Not Much Surprise


By Becki Gray, July 23, 2010
 
This week’s “Daily Journal” guest columnist is Becki Gray, Vice President for Outreach at the John Locke Foundation.


RALEIGH — During the recent legislative session, I relied heavily, as you have, on Carolina Journal, The Locker Room, and JLF policy reports and briefings to understand the debate and decisions made by North Carolina’s 50 senators and 120 House members.

In addition, in my role as the Locke legislative liaison, I spent most of my time since May 12 at the General Assembly, walking the 206,000 square feet of the Jones Street complex, monitoring meetings of the 67 legislative committees, talking with lawmakers and many of the 500 legislative staffers, and attending session on the 35 days they met (at a cost to the taxpayer of $62,500 per day, or $2,187,500 for the short session), along with 734 registered lobbyists and 93 government agency liaisons. Since the principal clerks dropped hankies and adjourned sine die at 5:30 a.m. Saturday, July 11, I’ve had time to reflect on the 2010 short session, the 876 bills considered, and the 127 new laws passed.

And here’s what I think…
I think government is too big.

In the last 15 years, North Carolina’s budget has more than doubled while population has grown only 28 percent. There are more than 661,000 current and retired state employees, all eligible for state-sponsored health insurance and pensions, both grossly underfunded. Instead of shoring up the plans, legislators added 863 new government jobs this year. Medicaid is the fastest-growing segment of state government and now consumes 16 percent of the budget. Almost 20 percent of North Carolinians are eligible to receive Medicaid. Estimates show government agencies will seek next year at least $3 billion more than the state has available from recurring taxes and fees. When government becomes bigger than the sources that pay for it, the whole system becomes unsustainable.

I think government costs too much.

This year’s final budget topped out at $20.6 billion. General Fund spending increased by $200 million when you count the $1.6 billion in federal stimulus money. (Why wouldn’t you count it?) Instead of lowering the corporate tax rate for all businesses, legislators authorized more than $350 million in new corporate welfare for targeted businesses, including a $1 million tax break for big name movie stars. There are $1.45 billion in new fees and taxes this year. Our state debt is more than $6 billion, over a third of it non-voter-approved, and service on that debt now eats up 4.25 percent of the state budget.

I think government should mind its own business.

In the ultimate nanny-state legislation, the honorables decided kids are too fat. Thus government should regulate the amount of juice kids in day care should be served and whether it should be in a cup or a bottle. The honorables wanted to outlaw 2 percent milk for children over 2 years old, as well as chocolate milk and sodas. A watered-down version of these ideas passed. Now they are guidelines, rather than mandates. But the point was made — government knows better than parents what kids should eat.

They banned the use of plastic bags in all stores in several coastal counties. They tried to outlaw country stores from making and selling peanut butter and banana sandwiches and pimento cheese sandwiches. They continued to cap the number of charter schools at 100, limiting education choices for students and their families. In spite of concerns over privacy issues, arrests for most felonies will warrant DNA collection.

Only after a very loud public outcry was a plan to use taxpayer money to fund more political campaigns for Council of State and municipal offices rejected. A two-year fight continued to wrestle a federal license for hydroelectric plants away from the company that built and owns them. Cities still have the ability to annex property owners against their will, and efforts to protect property owners constitutionally from government land grabs through eminent domain were dropped.

I think government is not being entirely honest.

Aside from the budget, ethics reform was the must-do issue of the short session. Lawmakers argued long into the final hours to pass a bill that claims to clean up bad behavior. It turns out that the final bill regulates lobbyists, contributors, and other elected officials; makes public records more accessible; and offers little additional oversight of lawmakers themselves. Efforts to expand the cooling-off period longer than six months for lawmakers who want to become lobbyists were unsuccessful, and a key provision to eliminate pay for play was dropped at the last minute.

They claimed to help small businesses while maintaining a high marginal income tax rate that affects most businesses, along with a high corporate tax rate. They offered minimal tax breaks that may sound good, but affect few businesses and actually help even fewer.

They preached open meetings, transparency, and fairness while backroom deals continued. Lengthy, complicated bills were changed with little notice and even less time to review. A budget technical corrections bill that did much more than make technical corrections was introduced in the final hours of the session with virtually no time for review. New provisions that were not included in either version of the House or Senate budgets showed up in the final budget conference report — a clear violation of legislative rules. Most bills considered were sponsored by the majority party, and most of the minority party’s bills were never heard.

Legislators loved gambling when the lottery passed in 2005 (with the tiebreaking vote cast by then Lt Gov. Bev Perdue), but they hate it now that video poker and sweepstakes have proliferated. Despite claims of the potential of 10,000 lost jobs and a $576 million revenue loss, video sweepstakes were banned. Thirty-one legislators who voted no for privately operated gambling voted yes for state-run gambling in 2005. They promised lottery proceeds would never supplant existing education spending and then passed a budget that uses lottery money to fund teacher salaries.

I think government is headed in the wrong direction.

Next year the $1.3 billion state tax increase sunsets, and the $1.6 billion federal stimulus money runs out, creating a $3 billion shortfall. The state treasurer has advised that the debt limit has been reached and that pension contributions will require $1.2 billion next year. The reserve accounts have all been drained. Lawmakers took more than $30 million out to balance this year’s budget with plans to take $152 million more if Congress doesn’t come up with FMAP money. North Carolina’s economic recovery is expected to be slow. The years of spend-and-tax ratcheting, dependence on one-time revenue to fill recurring obligations, and offering short-term solutions for long-term problems finally have caught up with us.

I think we need to change the way we look at government.

The years of excessive spending, government growth, infringement on rights, nanny-state regulation, and hollow claims of responsible governing continued during the short session and have left us with an unsustainable system. North Carolina’s tax system, which was established in the 1930s, needs to be updated. It should be fair, revenue-neutral, rooted in a respect for liberty, and dedicated to freedom of choice. Government has a role, and it’s defined in the Constitution. Growth in government should be tied to population growth. People should be given ample freedoms to make choices without government interference, and they should be held accountable for those choices, as should elected officials.

The 2010 short session was a disappointment, but not a surprise.

I think we can do better.

©2010 John Locke Foundation, 200 West Morgan St., Raleigh, NC 27601, Voice: (919) 828-3876


DesignHammer, a Raleigh, Durham web design company ~ Building Smarter websites

http://www.carolinajournal.com/jhdailyjournal/index.html