Business Needs to Be Part of Investment in Democracy

Corporate America has long promoted investments in democracy and freedom. From the Marshall Plan through the emergence of new economies in Eastern Europe, the business community at its best has helped bring reform and renewal to nations around the globe. Now it’s time for the business community to invest in democracy at home. It must contribute to fixing a campaign financing system that is a threat to our democracy.

Today’s campaign financing system doesn’t work for anyone. Elected officials are consumed with the money chase. Most House elections have become uncompetitive. Most Americans think money has too much influence in elections and government policy. That has left our system weakened and our electorate demoralized. In ever greater numbers, voters are giving up on it. That is where the business community must help.

Corporate executives, as major contributors and civic leaders, must recognize the problem and become part of the solution. That’s why the Committee for Economic Development is offering a campaign finance reform package and undertaking efforts to build support for reform from the business community.

There is a certain self-interest. Politicians, after all, aren’t the only ones getting a black eye from a campaign finance system that the public sees as suspect and even corrupt. Many Americans identify “special interests” not as political groups or organizations but as corporations that buy too much influence and access at the expense of average citizens.

No one--especially those in the business community--should think the current trends in campaign finance are sustainable. As the CED report says: “A vibrant economy and well-functioning business system will not remain viable in an environment of real or perceived corruption, which will corrode confidence in government and business. If public policy decisions are made--or appear to be made--on the basis of political contributions, not only will policy be suspect, but its uncertain and arbitrary character will make business planning less effective and the economy less productive.”

What are the problems? The focus on big-dollar donors, for one. The role of small-dollar contributors is being muscled out by deep pockets. In 1984, 38% of individual contributions to congressional candidates were in amounts of $500 or more; by 1998, the portion had grown to 61%. Meanwhile, “soft-money” contributions--the unregulated donations to political parties, often raised in $100,000-plus chunks--have skyrocketed, reaching $201 million in 1997-98. This has left millions of voters disheartened and disenfranchised. Does their vote or contribution make a difference? Many conclude that it doesn’t, and they simply stop voting and giving.

The burdens of fund-raising take their toll on politicians, too. Lawmakers spend vast amounts of time raising money, leaving too little time for doing their jobs. Many would-be challengers abandon their hopes for office because the price is just too high.

So what can be done? It will take more than tinkering, and it won’t be easy. Reform must balance 1st Amendment rights with the need for regulation.

First, we should close the most egregious loophole through which the biggest dollars are funneled: soft money. Congress should also raise individual contribution limits from $1,000 to $3,000. Campaigns do cost money, and the $1,000 limit--set more than 25 years ago--is no longer realistic. Next, Congress should establish a 2-to-1 federal matching program for individual contributions up to $200. This bold step would empower small-dollar contributors and stimulate candidates’ interest in them. It also would provide enough money to finance most of an average campaign. Then Congress should set realistic spending limits for candidates who accept public funding. Limits should be generous enough to encourage candidates to accept them, yet strict enough to pare the growth in spending. Finally, “issue ads” that clearly promote specific candidates should meet the same requirements as other election ads; their funders must be disclosed.

Together these reforms would provide the foundation for an effective, broad-based and competitive system. Most important, they would restore public confidence in elections and encourage greater citizen participation. That’s an investment worth making.