Recall Effort Shows Weakness of Reform

The redistribution of income is a wondrous phenomenon to behold, at whatever economic level it occurs. Anyone looking for a silver lining in the recall cabaret unfolding across the state can think about the prospect of watching a few scores of millions of dollars flow in the next 54 days from the pockets of millionaires, unions, Indian tribes and political parties into those of California pollsters, canvassers, advertising agencies and broadcasters.

That this will be happening despite the enactment a few short years ago of what was supposed to be epochal state campaign finance reform demonstrates how easy it is to make a mockery of anything crafted by politicians to strip special interest money out of politics.

The Oct. 7 vote will be the first statewide election conducted under the rules of Proposition 34, which was an unsavory enough deal at the time of its creation in 2000. The campaign bids to be one of the most expensive in history, certainly in dollars spent per day, fueled by money that will be harder than ever to keep track of. When it’s over, our political parties and our governor -- a new one or the old one -- may well owe a long roster of benefactors a whole new basket of favors.

“This race is going to be a demonstration of the bankruptcy of Proposition 34,” says Craig Holman, a campaign finance advocate who was active in the California reform battles of the 1990s and is now a lobbyist in Washington for the public interest organization Public Citizen. In this he sees, hopefully, a silver lining of his own: “There’s going to be so much money spent on this recall that the voters will come out of it very ready to support some sort of finance reform.”

Readers with short memories (and, candidly, without my access to the Times archives) may need to be reminded of the corrupt maneuvering that predated the passage of Proposition 34. The ballot measure was hastily worked up in Sacramento after it became apparent that the courts might uphold its predecessor, Proposition 208, which voters had passed overwhelmingly in 1996.

Proposition 208 featured truly meaningful campaign donation limits -- no more than $500 per donor for any candidate in a gubernatorial race, for example. It provided for voluntary spending limits supported by real incentives: The per-donor limits would be doubled for any candidate who agreed to stay under the ceiling, which was set at $8 million in a general election for governor.

That this was an unwelcome threat to the torrent of political cash available in the state was evident from the steps taken to head it off at the pass. Written by Republican and Democratic party lawyers -- who says there’s no bipartisanship at the statehouse? -- and passed after a 15-minute committee hearing, the new initiative sharply raised the donor limits. Donors to gubernatorial campaigns, for instance, could each contribute up to $20,000 to a single candidate, or 10 times the amount they would be permitted in a presidential race. (Because of inflation, the limit has already been raised to $21,200.)

Proposition 34 also diluted the incentive to comply with the voluntary spending cap, which is set for this election at $10.6 million; candidates who comply now get only a notation next to their name on the ballot and the right to place a campaign statement on the official state ballot pamphlet. And Proposition 34 carved out a huge “soft money” exemption, designed to enhance the power of the major political parties by giving them access to unrestricted donations. This provision alone will attract millions of unaccountable dollars to the present campaign.

The ultimate scandal, as my colleague George Skelton wrote at the time, lay in how Proposition 34’s supporters misrepresented the “against” argument when the measure was placed before the voters. In the official ballot pamphlet, voters were led to believe that opponents wanted no contribution limits at all; in fact, the opponents were holding out for the stricter limits embodied in Proposition 208.

The harvest of this subterfuge will be reaped in the next eight weeks.

It’s hard to say whether Proposition 208’s incentives for complying with a spending cap would have worked in this election. But it’s certain that Proposition 34’s meager incentives are useless.

If nothing else, it has been obvious since before Arnold Schwarzenegger’s arrival that several candidates would blithely blow through the $10.6-million voluntary ceiling.

To start with, as the defender in a recall, Gov. Gray Davis himself isn’t subject to the limit. Then there’s the presence of at least three multimillionaire candidates capable of heavily, if not totally, funding their own campaigns -- Schwarzenegger, fellow Republican William E. Simon Jr. and Peter Ueberroth, who is running as an independent. There are never any limits on a candidate’s right to spend his or her own money.

But Schwarzenegger’s entrance has altered the terms of the race even beyond that. As is becoming depressingly more clear with the passage of time, this is not because of the inherent power of his political vision. Other than the slavish coverage bestowed on Schwarzenegger by the national TV guys and gals and his apparent inability thus far to find California with a road map, his campaign has been most notable for his pledge to be “the people’s governor” (without actually bothering to meet any people).

The advent of a candidate with a huge personal fortune, and no need to overspend it on television ads to get his name before the voters, drove the price of the game sky-high for all the other players, like the appearance of a suited ace in a hand of stud poker. Television advertising, long the sine qua non of any statewide California campaign, will be even more important for any candidate hoping to match Schwarzenegger’s Q rating.

For the record, of the putative leading candidates in the recall, Lt. Gov. Cruz Bustamante, a Democrat, Green Party candidate Peter Camejo and independents Ueberroth and Arianna Huffington all accepted the spending cap when they filed to run. Schwarzenegger, Simon and state Sen. Tom McClintock, all Republicans, rejected it.

None of this means anything, because under Proposition 34, once one candidate in a race exceeds the cap, it’s lifted for all the others. This suggests that we stand today on the edge of a fund-raising free-for-all.

Bustamante, for instance, has indicated from the start that his fund-raising goal is $15 million. He would need 500 donors contributing the maximum $21,200 each to build a war chest of $10.6 million, and 700 to meet his target. In his most recent campaign finance statements, he disclosed cash on hand of about $441,000 on June 30, plus $174,000 contributed since then. But to the extent some of that money came from donors in excess of the $21,200 cap, according to officials at the state Fair Political Practices Commission, it can’t be spent on the forthcoming race.

That leaves him facing a big hurdle, especially in the compressed time frame of the recall. “Bustamante’s almost at the point where he has to stand on a freeway offramp holding a sign that says, ‘Will govern for food,’ ” says Frank Schubert, a political strategist with expertise in initiative and referendum campaigns. (Schubert isn’t involved in the recall.)

There’s no restriction on the money that can be spent by the parties or special interest groups in an independent campaign on behalf of -- or against -- any candidate. State employee unions and other labor groups, whose close relationship with Gov. Davis in the past is now regarded as a strike against him, have plenty of money to deploy; just one week ago Davis went to the AFL-CIO’s annual meeting in Chicago and asked for $10 million to beat the recall.

Labor’s participation could well be dwarfed by that of the casino-owning Indian tribes, which have shown plenty of skill at mounting advertising campaigns to get initiatives passed, and which have not been shy about putting their newfound wealth to use in Sacramento. The received wisdom is that the tribes will back Bustamante, who has backed the Indians on all their issues since he won his first Assembly seat in 1993, and who has collected $1.5 million in campaign contributions from them since then.

“If it were a popularity contest, Cruz Bustamante would be supported by all the tribes,” Michael Lombardi, a spokesman for Indian gaming interests, told me this week.

The only thing staying their hand from putting up the cash so far is that there’s still too much uncertainty on the Bizarro planet.

The tribes, like other interest groups, have a lot at stake in this election. Several are in the midst of renegotiating the state compacts that govern their business -- a process that might well have been completed by now had the Davis administration not been addled by the recall. With the chance that the process will end up in another governor’s hands, it’s hard to know which way to tip.

Once the fate of the recall vote becomes clearer, look out for the dam burst.

“These are really treacherous waters,” says Ray McNally, a campaign strategist who numbers several Indian tribes among his current and former clients. “You have a sitting governor who still has power over what does and does not become law. If he were to beat the recall, he would have three years to be very vengeful. No one’s had to navigate anything like this before.”

Golden State appears every Monday and Thursday. Michael Hiltzik can be reached at golden.state@latimes.com.