Disclosure v. Anonymity in Campaign Finance, by Ian Ayres

Disclosure v. Anonymity in Campaign Finance, by Ian Ayres

Postby admin » Wed Nov 06, 2013 5:53 am

DISCLOSURE V. ANONYMITY IN CAMPAIGN FINANCE
by IAN AYRES

NOTICE: THIS WORK MAY BE PROTECTED BY COPYRIGHT

YOU ARE REQUIRED TO READ THE COPYRIGHT NOTICE AT THIS LINK BEFORE YOU READ THE FOLLOWING WORK, THAT IS AVAILABLE SOLELY FOR PRIVATE STUDY, SCHOLARSHIP OR RESEARCH PURSUANT TO 17 U.S.C. SECTION 107 AND 108. IN THE EVENT THAT THE LIBRARY DETERMINES THAT UNLAWFUL COPYING OF THIS WORK HAS OCCURRED, THE LIBRARY HAS THE RIGHT TO BLOCK THE I.P. ADDRESS AT WHICH THE UNLAWFUL COPYING APPEARED TO HAVE OCCURRED. THANK YOU FOR RESPECTING THE RIGHTS OF COPYRIGHT OWNERS.


(forthcoming NOMOS 1999)

Preliminary Draft -- May 22, 2001 File: E:\Attach\nomos.pap.wpd

*William K. Townsend Professor, Yale Law School. ayres@mail.law.yale.edu (e-mail). Bruce Ackerman, Jenni Joshua Cohen, Steve Gotlieb, Peter Harris, John Langbein, Larry Lessig, John Lott, Bob Munch, Richard Posner, Jay Pottenger, E. Joshua Rosenkranz, Steve Ross, Ian Shapiro, Victor Stone, David Strauss, Kathleen Sullivan, Cass Sunstein, Tom Ulen, Fred Wertheimer, and seminar participants at the American Bar Foundation and the University of Chicago provided helpful comments. Sarah Goddard and Andrea Rottinger provided excellent research assistance.

Table of Contents:

INTRODUCTION
I. MITIGATING THE PROBLEMS OF POLITICAL CORRUPTION
II. CONFRONTING PRACTICAL PROBLEMS OF IMPLEMENTATION
o A. Details of Implementation
1. Private versus public administration
2. Mechanics of blind trust operation
3. Donor speech
4. Soliciting contributions.
5. Drawing the line
o B. Can Anonymity Be Maintained?
o C. Is the Game Worth the Candle?
1. Less candidate speech
2. Less donor information for voters
3. Less donor information for PAC contributors
III. CONSTITUTIONALITY
CONCLUSION
NOTES
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:54 am

DISCLOSURE V. ANONYMITY IN CAMPAIGN FINANCE

INTRODUCTION

About the only campaign finance issue on which there is a strong consensus is the belief that the law should force candidates to disclose the identity of their contributors. The Supreme Court in Buckley v. Valeo has signed off on such regulation as a means of deterring candidates from selling access and influence in return for contributions. Today there are calls for “instantaneous” disclosure via the Internet. Indeed, a growing group of scholars and advocates are coming to believe that mandated disclosure should be the only campaign finance regulation. For example, Representative John Doolittle has proposed “The Citizen Legislature and Political Freedom Act” which essentially would repeal all limits on political campaign contributions merely require immediate disclosure by candidates when they do receive contributions.1 This type of “pure disclosure”reform has garnered support from a wide spectrum of both liberals and conservatives -- including the CATO Institute, Sen. Mitch McConnell, and Kathleen Sullivan.2 People who want to repeal all campaign finance regulation save mandatory disclosure have come to believe that other restrictions are counterproductive because they tend to shift money to less accountable forms of political speech – such as “independent expenditures” and “issue advocacy.”

An set of enduring poetic images for the advocates of mandated disclosure was provided by Justice Brandeis:

Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.


But there exists in our polity a counter image -- the voting booth -- that stands against this cult of disclosure. Ballot secrecy was adopted toward the end of the nineteenth century to deter political corruption. "Before this reform, people could buy your vote and hold you to your bargain by watching you at the polling place."3 Voting booth privacy disrupted the economics of vote buying, making it much more difficult for candidates to buy votes because, at the end of the day, they could never be sure who voted for them.

A similar pro-anonymity argument can be applied to campaign finance. We might be able to harness similar anonymity benefits by creating a "donation booth": a screen that forces donors to funnel campaign contributions through blind trusts. Like the voting booth, the donation booth would keep candidates from learning the identity of their supporters. Just as the secret ballot makes it more difficult for candidates to buy votes, mandating anonymous donations through a system of blind trusts might make it harder for candidates to sell access or influence because they would never know which donors had paid the price. Knowledge about whether the other side actually performs his or her promise is an important prerequisite for trade. People - including political candidates - are less likely to deal if they are uncertain whether the other side performs. The secret ballot disrupts vote buying because candidates are uncertain how a citizen actually voted; anonymous donations disrupts influence peddling because candidates are uncertain whether contributors actually contributed.

So which is better mandated disclosure or mandated anonymity? Each holds the potential for disrupting political corruption. This article tries to imagine the effects of pure disclosure and anonymity regimes.4 If we were to repeal all contribution or expenditures limitations and were only going to regulate information, which should we prefer? I tentatively argue that mandated anonymity is preferable. It is a lesser restrictive alternative that is more likely to deter political corruption.

Critics are quick to point out that mandated anonymity is likely to convert some direct contribution into independent, “issue advocacy” expenditures (where anonymity cannot be required), but fail to see that mandated disclosure, if it were effective in deterring political corruption, would also likely to shift some direct contributions toward issue ads (where disclosure cannot be required). The simple reason why mandated disclosure is unlikely to hydraulically push money toward issue advocacy is that disclosing the identity of donors deters very little corruption. Disclosure regimes may make us feel good about ourselves but they probably don’t produce very different results than a true laissez-faire regime where contributors had complete freedom whether to remain anonymous or to disclose their identity to the candidate and/or the public. Thus, while the article nominally confronts the choice between mandated anonymity and mandated disclosure, in most cases this will be essentially the same as a choice between mandated anonymity and informational laissez faire. At the end of the day reasonable people could disfavor mandated anonymity -- for example, because of the predictable shift of resources toward less accountable independent, issue advocacy – but they should not particularly favor mandated disclosure because it generates substantial benefits beyond a regime which declined to mandate either disclosure or anonymity.

Several states have already experimented with prohibiting judicial candidates from learning who donates to their (re)election campaigns.5 The rationale, of course, is that judges don't need to know the identity of their donors: Judicial decisions should be based on cases' merits, not contributors' money. But there is no good reason why legislators or the executive needs to know the identity of their donors. An individual's power to influence government should not turn on personal wealth. Small donors are already effectively anonymous because $100 isn't going to buy very much face time with the President. n5 Mandating anonymity is likely to level the influence playing field by making small contributions count for relatively more. Anonymous donors can still signal the intensity of their preferences by marching on Washington - barefoot, if need be.

In what has become a post-election ritual, politicians wring their hands about the problem of campaign donors buying unwarranted "access." Candidates claim that contributions do not affect their political positions. Nonetheless, the suspicion that "access" leads to corruption persists. If candidates really want to stop themselves from selling influence or access, they should forego finding out the identity of their contributors.

The idea of mandating anonymity at first strikes many readers as a radical and dangerous departure from the current norm of disclosure. The metaphors of "sunshine" and "open air" are currently very powerful. But to assess the anonymity idea fairly, it is necessary to free ourselves from what might be little more than the happenstance of history. The public ballot was similarly accepted as a natural and necessary part of democracy for roughly half of our nation's history. This system produced "the common spectacle of lines of persons being marched to the polls holding their colored ballots above their heads to show that they were observing orders or fulfilling promises."6 These spectacles put such pressure on the disclosure norm that, ultimately, the secret "Australian ballot" caught on and spread like wildfire at the end of the nineteenth century.7 Readers need to consider whether the current spectacle of campaign corruption might be sufficient to overturn our deeply ingrained disclosure norm.

This article is divided into three parts. Part I compares how mandated anonymity and disclosure regimes might disrupt the market for political influence. Part II then describes in more detail how a system of mandated anonymity might operate. To avoid the "nirvana fallacy" of comparing an idealized reform to a real-world market failure, this part assesses whether the private efforts to evade anonymity - via "independent expenditures" or "issue advocacy" - undermine the usefulness of the proposal. Part III argues that mandated anonymity is clearly constitutional. Indeed, appreciating the possibility of anonymity may even undermine Buckley v. Valeo’s conclusion that mandated disclosure is constitutional.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:54 am

I. MITIGATING THE PROBLEMS OF POLITICAL CORRUPTION

The corrupting influence of campaign contributions has been a central concern of finance reform.8 The notion that wealthy donors are able to purchase political access or influence is antithetical to our ideal of equal citizenship.9 As Cass Sunstein has observed, "[T]here is no good reason to allow disparities in wealth to be translated into disparities in political power. A well-functioning democracy distinguishes between market processes of purchase and sale on the one hand and political processes of voting and reason-giving on the other."10 Bruce Ackerman also advocates separating market and political processes: "A democratic market society must confront a basic tension between its ideal of equal citizenship and the reality of market inequality. It does so by drawing a line, marking a political sphere within which the power relationships of the market are kept under democratic control."11 The most popular reforms for decoupling these spheres operate by regulating money: They either limit the amount that donors can give, or they limit the amount that candidates can spend.

But there is another way to decouple private wealth from public power. Instead of limiting money, we might limit information. Since Watergate, the only informational reforms have been those that have increased the amount of mandated disclosure. Discussions of disclosure often assume that we must choose between a world in which everyone knows of a gift (the disclosure regime) and a world in which only a donor and her candidate know the source of a gift (the laissez-faire regime). But as shown in Table I, this analysis overlooks the possibility of moving toward a world in which only the donor knows about a gift.

Image

In fact, there are several different continua of possible informational regulations. For example, we could require the blind trusts who received a candidate’s contributions to publicly disclose the identity of all donors but not the amounts that the individuals gave.12 For specificity, I will image a “mandated anonymity” regime where the donor has the option of remaining completely anonymous or having the blind trust verify publicly that she gave up to $200. The trust would never disclose whether a donor had given more than $200. It is my thesis that failure of scholars and courts to consider these alternative informational regimes is largely responsible for the strong consensus in favor of public disclosure.

The impetus for disclosure is that a public armed with knowledge about political contributions will be able to punish candidates who sell their office or who are otherwise inappropriately influenced. It has, however, proved exceedingly difficult to infer inappropriate influence from the mere fact of contributions. Politicians claim they would have acted the same way regardless of whether a questionable contribution had been made. Moreover, we have been unwilling to prohibit selling access (re: face time) in return for contributions. The Attorney General has flatly concluded that such quid pro quo agreements are legal.13 And today's jaded citizenry imposes hardly any electoral punishment on candidates known to have sold political access. In sum, public disclosure produces very little deterrent benefit: Types of corruption that can be proved (contributions for access) are legal, and types of corruption that are illegal (contributions for influence) can't be proved. At most, disclosure deters only the most egregious and express types of influence peddling.

In contrast, a regime of mandated anonymity interferes with an informational prerequisite for corruption. Put simply, it will be more difficult for candidates to sell access or influence if they are unsure whether a donor has paid the price. Of course, much turns on whether government can actually keep candidates uninformed about who donates to their campaigns. But to begin, this section considers what an idealized regime of mandated anonymity - without evasions or substitute speech - can and cannot accomplish.

An idealized donation booth would severely impede quid pro quo corruption -- the trading of contributions for political access or influence. This effect would encompass not only explicit trades (donations for nights in the Lincoln bedroom, presidential coffees, legislative activity), but also a large range of implicit deals, including sequential action whereby either the politician or donor "performs" in expectation of subsequent performance by the other side. The Supreme Court's concern with the corrupting effects of "political debts"14 would also be neutralized by the donation booth for the simple reason that politicians would be unable to determine to whom they were indebted. This rationale was explicitly used to justify a proposed system of anonymous donations to presidential legal defense funds. In 1993, the Office of Government Ethics ("OGE") reasoned, "Anonymous private paymasters do not have an economic hold on an employee because the employee does not know who the paymasters are. Moreover, the employee has no way to favor the outside anonymous donors."15

Mandated anonymity could also deter politicians from extorting donations. The popular discussion of quid pro quo corruption focuses solely on campaign contributions in return for legislative favors. In the terminology of public choice theory, donors would be engaged in a kind of "rent seeking." But there is a radically different kind of quid pro quo corruption. Politicians engage in "rent extraction" when they threaten potential donors with unfavorable treatment unless a sufficiently large contribution is made.16 Rent extraction almost surely explains some of the anomalous patterns of giving - particularly, the "everybody loves a winner" phenomenon. The high level of contributions made to incumbents with safe seats is consistent with rent extraction because incumbents have the greatest ability to extort donations.17 Understanding rent extraction also explains why several corporations have privately agreed not to make soft money contributions.18 Fear of rent extraction may even keep private interest groups from organizing because politicians will have a harder time shaking down an unorganized mass.19 Mandated donor anonymity would allow private interests to organize without fear of being targeted for extortion.

Just as the secret ballot substantially deterred vote buying, mandating secret donations might substantially deter both forms of quid pro quo corruption: rent seeking and rent extraction. There is a lively academic debate about how much current campaign donations are intended to garner access or influence or to avoid unfavorable treatment.20 Since mandated anonymity is better suited than mandated disclosure to deter quid pro quo corruption, an important part of its justification must turn on the extent to which this form of corruption is truly a problem.

However, the problems of "monetary influence corruption" or "inequality" also plague our current system of campaign finance.21 Although mandated anonymity would not eliminate these problems, a regime of mandated anonymity is also likely to mitigate these problems much more than a regime of mandated disclosure. Even when politicians don't condition their behavior on contributions, they may nonetheless expect that taking certain positions will cause donors to give more money. This is the problem of “monetary influence.” And even when wealthy donors don't expect their giving to change a candidate's behavior, they may reasonably believe that giving to a candidate with whom they agree will increase that candidate's chance of (re)election. This at times is referred to as the inequality problem. In the first instance, the possibility of a contribution has a corruptive influence on the candidate's behavior. In the second, even though the candidate's positions are uncorrupted (read "unchanged") by the contribution, the contributions of those with disproportionate wealth corrupt the process by increasing the likelihood that positions favored by the wealthy will be disproportionately favored in our political sphere.

Some might argue, however, that monetary influence is not a problem because donors' willingness to pay usefully informs candidates about the intensity of voter preferences. Yet there is strong consensus from a broad range of scholars that politicians should not choose their policies with an eye toward campaign contributions.22 Not all interest groups can readily organize to compete for candidates' monetary interests. A concentrated interest group advocating a law that decreases social welfare may be able to donate more money than can more diffuse interests opposing the measure. Under such conditions, donations may give candidates a false signal of citizens' intensity of preference. Insulating candidates from the influence of donations may lead toward legislation that more truly reflects the preference intensity of voters.23 Monetary influence corruption, like vote buying, is rejected because the legitimate preferences of citizens with unequal abilities to pay or unequal opportunities to pay are given undue influence.24

Scholars have also rejected the notion that contributions should influence politicians in part because contributions tend to reduce independent deliberation and reason-giving.25 David Strauss, in particular, has argued:

[O]n any plausible conception of representative government, elected representatives sometimes should exercise independent judgment .... Campaign contributions do not create the possibility that representatives will follow instead of lead; that is an unavoidable (and to some extent desirable) part of any democracy. But because contribution-votes can be so much better targeted than votes at the ballot box, a system in which contributions are explicitly exchanged for official action will accentuate this tendency of representative government.26


Under this view, the monetary influence of contributions impedes the deliberative processes of democracy. At times, representatives should take positions that are not merely aggregations of their constituents' preferences.

Mandated anonymity would reduce the corrupting influence of contributions on candidates' behavior by reducing both the candidates' feedback about how particular positions affect giving and the willingness of donors to make large donations to influence candidate behavior. Candidates would still learn the total amount of money that had been contributed to their campaigns, but they wouldn't learn how particular positions translate into particular contributions. Mandated anonymity would create a kind of Tiebout model27 for candidates' policies. In the original Tiebout model, different towns committed to particular taxes and amenities, and then potential citizens voted with their feet by moving to the towns with the tax and expenditure package they most preferred. Mandated anonymity would push the contribution market in the same direction. Politicians would announce policies and wait and see whether those policies garnered financial support. This is not true independent leadership, but it is likely to be more independent than the current regime - one in which private interests can bestow gifts on a politician in full expectation that she will see and appreciate on which side her bread is buttered.

Past giving would be a poor guide for predicting future donations under a mandated anonymity regime because donor anonymity would exacerbate the "donor's paradox." Just as it is irrational to vote when there is an infinitesimal chance that one's vote will affect the election, it is irrational to give if one's gift imperceptibly increases the chance of a candidate's victory. Under the current regime, politicians overcome the donor's paradox by developing a reputation for giving donors special consideration; large donors expect their contributions to yield concrete benefits concerning a candidate's policy, legislative activity, or at the very least, the candidate's willingness to meet with the donor. But mandated anonymity greatly diminishes the expected return on an individual donation and thus, in all likelihood, will substantially reduce the number of large donations. It would be difficult for candidates to provide favors or special access for individual contributors without knowing the contributors' identities.

Mandating donor anonymity would reduce the disproportionate influence of wealth in our political system not only by reducing the number of large donations, but also possibly by increasing the number of small donations. While mandating anonymity exacerbates the donor's paradox for large donors, the same anonymity might mildly mitigate the paradox for small donors. Under the current system, small donors have virtually no impact on the electoral process. "For example in the 1996 election cycle less than one-fourth of 1 percent of the American people gave contributions of $200 or more to a federal candidate," but this tiny group of donors generated an astonishing eighty percent of total donations.28 By reducing the importance of large donations, mandated anonymity would make small donors relatively more important and thus might induce less affluent donors to give more.

Mandated anonymity -- even if perfectly implemented -- is not a panacea. Candidates would still have a muted incentive to take certain positions in order to generate contributions, and the wealthy would continue to have a disproportionate voice in electioneering. But by (1) making it harder for politicians to reward their contributors, (2) substantially reducing the number of large donors, and (3) possibly increasing the number of small donors, a regime of mandated anonymity could mitigate the problems of monetary influence and inequality.

In contrast, mandated disclosure is much less likely to affect these problem. Monetary influence and inequality could only be deterred if voters punished candidates who pandered to contributors or received disproportionate contributions because of their position favoring wealthy contributors. Our experience with mandated disclosure is that the benefits to a candidate of having extra contributions for the campaign almost always outweigh any the possibility that some voters will be put off by the fact of the contribution itself. At the end of the day, a workable regime of mandated anonymity is likely to have a much larger effect than mandated disclosure on monetary influence and inequality for the simple reason that it is likely to reduce the number of 5 and 6 figure contributions.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:55 am

II. CONFRONTING PRACTICAL PROBLEMS OF IMPLEMENTATION

The preceding part considered the effects of an idealized system of mandated anonymity. But to avoid the nirvana fallacy, one must consider whether and how anonymity could be implemented. If candidates could easily decode the identity of their contributors, then the superficial requirement of anonymity would be counterproductive: We would lose the limited benefits of public disclosure and gain nothing, thus permitting quid pro quo corruption to proceed unabated. This part considers the details of implementation, assesses the extent to which anonymity can be maintained, and ultimately concludes that, even given predictable evasions, mandating donor anonymity is sufficiently workable to remain a plausible candidate for reform.

While it has been difficult to force candidates to disclose meaningful and timely information about the identity of their contributors, implementing a regime that keeps candidates in the dark is potentially even more daunting. To mitigate problems of implementation, the implementation rules in this section are organized around a “mimicry” principle. Contributions are kept effectively anonymous not by restricting the signals that true donors can send to candidates, but instead by allowing faux donors to send identical signals. As long as faux donors can mimic the signals of true donors, candidates will have difficult discerning whether a contribution was actually made.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:56 am

A. Details of Implementation

Mandated donor anonymity might be applied to any election. As mentioned above, some judicial election reforms have already successfully prevented candidates from learning the identity of their donors. For concreteness, this section considers how to implement a regime of mandated donor anonymity in federal elections.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:56 am

1. Private versus public administration.

One could imagine a system of literal donation booths controlled by the government: Once the curtain closed, people could drop their cash donations into a slot for the candidate of their choice, and the government would periodically pass these contributions on to the appropriate candidates. Just as there is a "ceremonial aspect[ ] of voting ... [that] is to some degree a self-conscious act of citizenship,"29 visiting a government donation booth might in time also come to be viewed as a constitutive act of citizenship.

Donation booths - whether publicly or privately administered - run greater risks of fraud than do voting booths. For either "booth" to be effective, we must trust the administrator not (1) to reveal for whom citizens vote or to whom they donate, or (2) to misapply the donation or vote to an unintended candidate. But with donations - unlike votes - there is the added risk that the administrator will convert the gift to her own private benefit.

Because of this embezzlement risk, we tentatively prefer a privatized system of blind trusts, operated by seasoned trust companies (say, those in existence for at least ten years) with substantial, preexisting assets (of more than, say, $100,000,000).30 More than 1000 financial institutions satisfy these requirements. Requiring the trust companies to be seasoned and large would make donors, candidates, and the public more likely to trust the participating institutions. The diversity of qualifying institutions would help assure that all candidates are treated fairly. But because the threat of defalcation is so high, the trusts’ records should be publicly audited ten years after each election. This ex post auditing would inform donors whether their donations had been properly routed and would allow the public to assess whether donations were - notwithstanding the trust - purchasing access or influence. Computer encryption software might make it possible for donors to verify anonymously that their contributions were credited to the appropriate campaign funds.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:57 am

2. Mechanics of blind trust operation.

Each candidate, political party, and PAC would choose a qualified institution to establish a separate blind trust account. Representatives of the blind trust could not be employed in positions influencing access or policy and, as a prophylactic, should be prohibited from privately communicating with candidates or campaign workers. The core regulation would require all donations to individual candidates, political parties, or PACs to be made to the blind trusts by mail. Campaigns would no longer be allowed to accept money in cash or by check. Campaigns would still need check books, but not deposit slips. The blind trusts would conceal the source of all contributions larger than $200. Large donors would have the option of having the trust disclose that they had given up to $200, but under no circumstance would the trust identify a donor as having contributed more than $200. Allowing donors to prove that they have contributed to a particular campaign mitigates the free speech burden of the regulation. The exact dollar amount for the anonymity threshold is unimportant, but the notion is that small donations pose a much smaller threat of corruption.

The blind trusts would then report to the candidates on a weekly or biweekly basis how much money had been donated, but would not detail the amounts given by large donors. The frequency of reporting would have to balance the candidate's need to know how much she could spend against the desire to impede candidates from decoding the identity of particular donors. Hourly disclosure of amounts available would allow a donor to say, "I bet your total went up $100,000 during the past hour." Large donations on Israel's independence day might analogously signal contributors' interest in pro-Israel policies. One way to shorten the time between disclosures would be to require that trusts intentionally obscure the presence of large donations. Trusts might even be allowed to report the daily amount available for spending, but this amount might be calculated using a randomizing procedure that breaks up unusually large contributions for future disclosure.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 5:58 am

3. Donor speech.

One might consider reinforcing the anonymity of the blind trust by prohibiting donors from discussing their contributions with the candidate or others. Such a prohibition could be backed up by criminal penalties, civil penalties, or both. But such a regulation is fraught with problems of enforcement and constitutionality. The law can do little to stop private, one-on-one conversations between donors and candidates. Even if such conversations could be regulated, the resulting burden on donors' free speech rights may not be compatible with the First Amendment.

A "cheap talk" regime is preferable. Just as anyone can tell Clinton they voted for him, allowing anyone to tell Clinton they gave him money - without more - would not give Clinton a very good idea of who is true contributors were. For the blind trusts to be effective, it is only necessary that donors cannot credibly communicate whether they have contributed. As long as the candidate cannot verify whether the donor's representation is true, the blind trust can impede influence peddling. Some will argue that it is simply wrong for the government to tacitly promote lying. However, it can be a civic virtue to dissemble in order to disrupt criminal activity. The possibly apocryphal World War II story of the Danish King wearing - and urging other Christians to wear - the Jewish yellow star is a prime example of the virtue of social "ambiguation."31 More prosaically, the ubiquitous (and oftentimes false) cab driver stickers - "Not more than $20 kept by driver" - shows that lying to discourage crime is an acceptable exception to truth telling.

Donors wishing to prove they donated to a particular candidate may brandish a canceled check showing the amount of their donation. To mitigate this problem, trusts should be required to providing a check cashing service for nondonors. A faux donor could mail a check to a trust with a note asking the trust to deposit the check and (once it had cleared) to mail back to the faux donor a reimbursement check. The faux donor requesting reimbursement would receive both a canceled check from her bank and a reimbursement check from the trust. A candidate seeing a canceled check made out to a blind trust couldn't be sure whether the canceled check evidences a contribution or merely a cash conversion. And since the trust's reimbursement check could be cashed or posted to a different account, showing the candidate a bank statement or audited books would not prove that a contribution had been made. As with cheap talk, appropriate regulation could undermine the credibility of canceled checks.

Donors wanting to signal their gift credibly might instead mail the check to the blind trust while in the presence of a campaign representative (or simpler yet, give the check to the campaign worker to mail to the trust on the donor's behalf). We favor prohibiting such behavior. Yet even here, a system of mandated anonymity does not need to rely solely on the deterrent effect of ex post penalties. It might be advisable to give donors a ten-day cooling-off period, during which they could cancel any donation. As long as a period exists in which donors can privately cancel their contributions, the credibility of previous public signals will be attenuated.
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 6:00 am

4. Soliciting contributions.

The fundamental requirement would be that, in fundraising, no one from the candidate's campaign could accept contributions; only representatives of the blind trust could accept checks (via the mail). Candidates could still ask individuals for support, but they could not close the deal. Bob Dole could still have fundraisers and limit invitations to rich, registered Republicans. But under this regime of mandated anonymity, the invitations could not be conditioned on a campaign contribution, and the dinner could not be priced above cost. Instead, campaign workers could do no more than distribute postage-free envelopes addressed to the blind trust so that attendees could later mail in a contribution. Making it more difficult for candidates (and their political opponents) to solicit funds personally from wealthy contributors might alleviate the current fundraising marathon.32

This scheme of mandated anonymity would go a long way toward eliminating the longstanding practice of rewarding successful fundraisers with ambassadorships. The representatives of the trust could not take jobs or even consult with the administration. A candidate might observe a fundraiser's inputs (how many New Hampshire coffees she hosted), but not her output (how many donations she generated).
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Re: Disclosure v. Anonymity in Campaign Finance, by Ian Ayre

Postby admin » Wed Nov 06, 2013 6:00 am

5. Drawing the line.

In deciding what types of contributions to subject to the anonymity requirement, we will be obliged to distinguish close cases. Line drawing is a necessary feature of any reform program trying to constrain the influence of money in the political sphere. To begin, the in-kind contribution of services by political volunteers would not be made anonymously because it would be impossible for a candidate not to know their identities. Thus, people could still volunteer in order to receive undeserved access or influence. There is also no practicable way to stop candidates from knowing how much they contribute to their own campaign.33

Benefit concerts present a difficult issue. If Barbra Streisand performs a series of concerts to benefit the Clinton campaign, Clinton could easily estimate how much revenue is being generated. Allowing benefit concerts would provide an easy end run of the rule mandating that fundraising dinners must be priced at cost. Many of today's $1000-a-plate fundraising dinners could become tomorrow's $1000-a-seat benefit concerts with only nominal entertainment. Accordingly, performers should be prohibited from contractually dedicating the proceeds from an event to a political campaign. The performer or audience could independently contribute or claim that they gave or will give the proceeds; they just couldn't enter into an enforceable contract ensuring that attendance ensures contribution. We would still allow politically motivated concerts and rallies, but any profit would need to escheat to the state (or possibly to a nonpolitical charity).
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