A Dramatic Move by a Fed-Up ‘Fat Cat’

Max Palevsky knows something about political campaign financing. He has given millions over the years to Democratic candidates--Robert Kennedy, George McGovern, L.A. Mayor Tom Bradley, Gov. Gray Davis. . . .

In fact, Palevsky gave Davis his first political job--as chief fund-raiser for Bradley’s 1973 mayoral campaign. During the last decade, the so-called “fat cat”--a Beverly Hills investor who made his fortune in computers--has donated $150,000 to Davis’ political ventures.

That’s what makes Palevsky’s latest contribution so fascinating. Davis recently has been raising hundreds of thousands of dollars from special interests to fight California’s latest political reform attempt, Proposition 25. But Palevsky has countered the governor’s effort with one personal check: A $1-million gift to the strapped “Yes on 25” side.

It’s Palevsky’s biggest political donation ever.

“I feel that corruption of the electoral process by enormous sums of money is the critical issue facing our country,” he says. “The level of cynicism [in politics] is appalling.”

It’s so corrupt, Palevsky adds, that “we’ve gotten beyond what Jess [the late Assembly Speaker Jesse Unruh] said about money being ‘the mother’s milk of politics.’ It is now both the mother’s milk and the oxygen.”

He wrote the check after actor-director Warren Beatty--another champion of campaign finance reform--introduced him to Prop. 25 coauthor Ron Unz, a wealthy Silicon Valley entrepreneur and Republican.

The liberal Palevsky is so committed to political reform that for the first time in his life he has raised money for a Republican: Sen. John McCain.

And he’s planning to vote for McCain in Tuesday’s primary.

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John McCain also knows something about campaign financing and contributor pressure. He should, cynics might say. The Arizona senator was one of the infamous “Keating Five.”

McCain and four other senators attended a 1987 meeting with federal regulators on behalf of Arizona developer/donor Charles Keating’s embattled Lincoln Savings and Loan. McCain essentially did nothing for Keating, but the Senate cited him for “poor judgment.” From that sprang McCain’s crusade for campaign finance reform.

He is the only major politician who has endorsed Prop. 25. For the initiative to pass, backers believe, the candidate must elevate the issue in the voters’ consciousness. “McCain, God bless him,” observes Tony Miller, a liberal reformer and Prop. 25 coauthor.

McCain’s popular reform message has been diluted recently by other issues. But at every campaign stop he denounces “the iron triangle of lobbyists, big money and legislation” that produces corporate tax loopholes and pork barrel spending.

He calls California “a classic example of a system that has veered out of control.” Noting that Davis raised $13.2 million last year from special interests, he adds: “Don’t tell me that doesn’t affect the [governing] process.”

But Prop. 25 apparently has been losing support and is in trouble. A Field poll last week found that only 36% of the voters favor the proposal, with 46% opposed.

Opponents began running TV ads as the survey was being conducted. Supporters couldn’t match the spots until Palevsky plopped down his check.

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Special interests know something about campaign financing, as well. For them, political contributions are an investment.

“It’s the most efficient way for corporations to spend money,” Palevsky says. “They get their best return.”

The special interests, including unions, are fighting Prop. 25 for the same reason Davis and most politicians are: The present system works fine for them.

That said, there are credible reformers who oppose Prop. 25, which would ban corporate contributions, sharply limit union and individual donations and require overnight disclosure of big checks.

State Sen. Debra Bowen (D-Marina del Rey) has sponsored several failed reform bills and backed a 1996 measure (Prop. 208) still stalled in court. But she says Prop. 25 has “goofy stuff.” She calls “half baked” a provision offering public financing of TV ads for candidates and sponsors of initiatives who agree to spending limits.

The League of Women Voters protests that Prop. 25 would create Sacramento loopholes for soft money abuses--the same evil McCain is fighting in Washington.

This proposition clearly is not perfect. McCain’s answer is that “we shouldn’t allow the perfect to be the enemy of the good.”

And Palevsky, 75, says he is tired of waiting for the political system to reform itself. It never will unless voters keep sending loud messages.