- The Washington Times - Wednesday, February 13, 2002

The campaign finance reform endgame begins this week. Today, the House votes on a bill sponsored by Christopher Shays, Connecticut Republican, and Martin Meehan, Massachusetts Democrat, that will ban so-called "soft money" (unregulated, unlimited contributions to the political parties).
The bill also prohibits unions, corporations, and nonprofit groups from running campaign ads that refer to a candidate unless paid for with so-called "hard money" (regulated, limited donations) dispensed by political action committees. The bill should not pass. And here's why.
First, the backers of new campaign-finance regulations believe the ongoing Enron debacle has put victory within reach. Mr. Meehan affirmed recently "the unfolding Enron scandal underscores the need for campaign finance reform."
Campaign finance "reform" is a perfect example of how, in politics, solutions go off in search of problems. Its backers argue that new limits on money in politics will solve every putative problem from rising income inequality to special interest provisions in the tax code. Therefore, we should not be surprised that Mr. Meehan thinks limits on campaign contributions would have prevented the Enron disaster. He also probably thinks banning soft money will cure the common cold.
Let's look at the facts of the Enron case. The company went bankrupt late last year when Wall Street learned that, previously, Enron had greatly overstated its profits. Investors lost confidence in the company, and its share value dropped through the floor. Enron's auditor, Arthur Andersen, has been accused of negligence and misbehavior. A recent report by a special committee of Enron's board concluded last week that a few top-level executives at the company had enriched themselves through financial manipulations.
As damaging as those allegations are, they hardly show a political failure caused by campaign contributions. We already know that, in their hour of need last fall, Enron's managers received no help from the Bush administration.
What about Congress' resistance to federal accounting standards in the 1990s? Doesn't that lack of action prove big money corrupted Congress and let corporations bilk the public? Well, no. Keep in mind that some of the supporters of new campaign finance restrictions, such as Connecticut Democratic Sens. Joseph Lieberman and Christopher Dodd also led the charge against imposing new accounting standards.
In any case, the question of federalizing accounting standards was and is a complex matter. It is foolish to believe Congress knew the right course of action in 1995 impose stringent federal accounting standards and refused to do so because of campaign donations.
The second reason why Shays-Meehan should not pass is because, late last year, the Federal Election Commission quietly released data showing that in the first nine months of 2001 the Democrats had raised 58 cents of soft money for every dollar raised by the Republicans.
That was a significant change. In the previous election cycle, the Democrats had reached parity in soft money fund-raising. Hence, in the summer of 2001 many congressional Democrats wondered whether a ban on soft money would serve their partisan interests. By the end of the year, they had their answer. If soft money were not banned, the Democrats faced an uphill battle in the election of 2002 and thereafter. Suddenly, the necessary votes appeared to bring Shays-Meehan to the floor of the House.
Politics deals in appearances rather than reality. This week's bottom-line is that Enron serves as a convenient focal point for Democrats to push purely partisan limits on campaign finance restrictions that will benefit only the Democratic Party and its candidates. To be fair, most Republicans probably oppose Shays-Meehan to avoid damage to their party's chances in the fall election. A few Republicans seem to understand, however, that restricting money restricts speech and runs counter to the Constitution.
Campaign finance reform is not a way to restore faith in government. On the contrary, it is one more powerful reason to doubt the good faith and good sense of Washington politicians.

John Samples is director and Patrick Basham is senior fellow of the Center for Representative Government at the Cato Institute.

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