With Prop. 208 in Abeyance, the Politicians Will Collect

No one should be surprised at the revelations springing forth from the California insurance commissioner’s office, least of all anyone who has witnessed Sacramento’s transformation into a modern-day version of the Wild West marked by an anything-goes, nearly lawless spirit of political fund-raising.

Perhaps the only difference between now and the Old West is that, back then, political bosses stuck-’em-up with silver-handled pistols. Today’s officeholders do the deed to donors with a cell phone, a Palm Pilot, a scare tactic and, apparently, in the case of Insurance Commissioner Chuck Quackenbush, the threat of whopping regulatory fines.

In this context, the enterprising Quackenbush is merely doing what his peers have been aiming at for years: finding fresh, new ways to come out on top in a never-ending competition for a limited pool of campaign dollars. In another political atmosphere, viewed through a rosier prism than the one currently raised by a scandal-starved press, Quackenbush might have been hailed as a Meriwether Lewis of sorts, guilty of little more than hacking a new course through an untamed wilderness, albeit with a sharper machete than most. “This was a very creative way to maximize one’s political advantage,” said Tony Miller, former secretary of state and a reformer who filed a complaint against Quackenbush with the state Fair Political Practices Commission.

Quackenbush certainly had them coming and going. First, he got the insurance companies to sponsor him for the elected post that regulates the industry, promising them an easier ride than they received when John Garamendi ran the commissioner’s office. Then, more than a million dollars and two terms in office later, Quackenbush gave insurers an incentive to contribute to private foundations his department lieutenants set up in each area of the industry that Quackenbush regulates. The lieutenants recommended the companies pay gazillions of dollars in fines for failing to treat Northridge earthquake policyholders right or (Quackenbush to the rescue) they could agree to plunk into a foundation a sum far more to their liking.

Something in the air made Quackenbush and others like him feel like he could get away with a legal stretch here, an ethical lapse there. He came to believe it so deeply that he apparently felt comfortable telling blatant lies to reporters who asked him, face to face, about money collected and spent by the foundations. In one case, he claimed to know nothing about a flashy quake-awareness TV commercial filmed with L.A. Laker Shaquille O’Neal and paid for by a foundation. But Quackenbush himself appeared in that ad, donning a referee’s uniform. Now, who is going to buy his story that he played a part alongside Shaq and knows nothing of it? Maybe the same folk who believe he can extract millions from insurance companies and still be a fair regulator and consumer protector.

So there was something in the air. As with previous class-A, head-turning Capitol scandals, such as the FBI’s bribery and extortion bust of former state Sen. Alan Robbins and pals in the 1980s and ‘90s, the backdrop for Quackenbush’s troubles was set on a much broader stage. The stage director, so to speak, was District Court Judge Lawrence K. Karlton, who rejected Proposition 208, the latest of three campaign-finance reform acts passed by California voters since Watergate.

By placing limits on campaign contributions, Proposition 208 was meant to cleanse the political system of abuse and stop the runaway train of influence buying by special interests. In effect for just 1997, it gave pols a taste of the restricted life, and they didn’t like it. When time came for hearings in Karlton’s courtroom, political consultants and players of both major persuasions marched to the witness stand to excoriate Proposition 208, complaining that it kept contributions too low. One simply could not run a campaign on that kind of budget, they said, as if what they really meant was that one simply could not live on bread and water alone.

Karlton ended up agreeing. He put 208 in deep freeze, ruling it unconstitutional because it curbed not only fund-raising but, by extension, TV and postbox blitzes, and thus a candidate’s right to free speech. This had a liberating effect on Sacramento’s political crowd, who set about with renewed jubilation as if Karlton had declared it Mardi Gras in July.

It’s been open season on potential donors ever since, as exemplified by Gov. Gray Davis’ astounding, record-breaking pace of collecting an average of $36,000 a day, more than the average annual wage in the United States in 1999, which clocked in at $33,700. Lately, Davis and others no doubt have been soliciting money from corporate contributors and other interests by raising the specter that Proposition 208 might be reinstated in the wake of a recent U.S. Supreme Court ruling in favor of contribution caps. They tell donors their window of opportunity is about to close. Wink, wink. Nudge, nudge.

Meantime, California is one of only six states in the nation without contribution limits for state races. How bad is it? The crusade that Arizona Sen. John McCain popularized nationwide over reining in “soft money” abuse didn’t even hit the radar screen in California’s state races, where “hard money” going right to the candidates’ accounts still flows like water at a hydraulic mine. California is “a classic example of a system that has veered out of control,” said McCain. Even Hollywood, which has become a regular spigot pouring cash into statewide causes and initiative campaigns, as well as federal races, revealed it is sick of it all: DreamWorks execs recently announced a moratorium on political fund-raisers.

Against this background, some will argue that Quackenbush’s quandary is singular, that his shenanigans stand out as particularly egregious, and he should be made an example of, perhaps fined or chased from office. Certainly, the four investigations underway--one in each house of the Legislature, one in the state attorney general’s office and the more modest inquiry at the Fair Political Practices Commission--offer venues for stringing up the man who, among other things, thinks outside the box.

A better outcome, more beneficial for the public, lies in the possibility that uproar and outrage over Quackenbush’s latest venture could spark a revolution in Karlton’s thinking. Timing is everything: Proposition 208 is due back in Karlton’s Sacramento courtroom in July for a retrial ordered by a higher court. Just as Watergate led to the passage of Proposition 9, the quarter-century-old Political Reform Act that created a system of conflict-of-interest checks and balances and disclosure requirements, Quackenbush could lead to a reinstatement of Proposition 208. While that may have no direct bearing on a scheme like the one Quackenbush devised around private foundations, it would at least change the anything-goes tenor around the Capitol fund-raising machines and might start reining in abuse. Until then, you may be hearing from the governor, asking you to give while the giving is good. *