Wednesday, October 25, 2006

When is a campaign donation not a campaign donation? Apparently if you spend the money to run a radio program instead of paying for campaign ads that run on that same program. Just look at Air America. With $41 million in losses since 2004, and $9.8 million owed just to Robert Glaser, RealNetworks chairman, Democrats who bankrolled this “company” weren’t so much investors as campaign contributors. The losses are seen as simple business ineptitude,but Air America effectively, and perhaps intentionally, cleverly avoided the campaign finance limits which Democrats had worked so hard to pass.

With McCain-Feingold’s “hard money” donation limits of $2,000 per candidate and “soft money” limits to party campaign committees of $57,500, there is no way that Mr. Glaser or other wealthy Democratic donors could have legally given such large sums directly to Democrats. But Air America provided a vehicle for their multimillion-dollar political campaigns.

Take Al Franken’s show last Friday, the very day the network was declaring bankruptcy. The program devoted two-and-a-half hours to “Meet the Democrats,” where five U.S. House and Senate candidates explained why they were the people for the job. Two-and-a-half hours straight of candidates talking is hardly stirring radio, but it is the Democrats’ version of religious radio. Hardly meant to make a profit, but there to inspire the troops. After all, when the network started in 2004, Al Franken announced that: “I’m doing this because I want to use my energies to get Bush unelected.”

Since Air America started, successful radio entrepreneurs — most notably Rush Limbaugh — have argued that Air America never had a business model that made sense. But perhaps it had a model that made political sense.

It’s hardly a coincidence that Air America debuted in time for the 2004 presidential campaign or that the bankruptcy filing was put off long enough so that creditors actions won’t stop broadcasts before the Nov. 7 election. As if the willingness to lose money weren’t already obvious, over a year ago the network started asking listeners to donate money to keep the programs on the air.

Air America merely follows a grand tradition of circumvention by the very people who have supported campaign-finance regulation. George Soros donated millions to help pass McCain-Feingold, but was quick to work around it so that his big dollars could keep flowing. During the 2004 presidential campaign,Mr. Soros was prohibited from giving money directly to his preferred candidate, Howard Dean, so he gave $15 million to so that it could raise the money for Mr. Dean.

The big innovation for Air America was using the bankruptcy laws to turn non-Democrats into involuntary campaign donors. Not only are Democratic “investors” out in the cold, but landlords, limo services, law firms, stations that sold Air America air time and state governments are owed money. Apparently, the network still owes the Gloria Wise Boys and Girls Club, a New York City program for poor kids, a whopping $875,000 — money that was transferred from the club by its former director. But even while these people are being stiffed, since the bankruptcy Air America’s founders brazenly announced they are starting a new left-wing radio network.

More importantly, though, Air America shows what a mess campaign finance regulations are in. As Justice Anthony Scalia noted during the oral arguments on McCain-Feingold’s constitutionality: “if history teaches us anything, [it] is that when you plug one means of expression, the money will go to whatever means of expression are left.” One such means is the press: broadcast stations, magazines and newspapers are exempt from the law.

But the term “news media” is difficult to define. When McCain-Feingold first passed in 2002, the National Rifle Association generated outrage when it talked about buying a TV station, so that like other media, it could mention a candidate’s name during the 60 days before the general election. Sen. John Kerry demanded that the Federal Election Commission block any attempt by the NRA to get a media exemption, stating, “We urge you to prevent the NRA from hijacking America’s airwaves with the gun lobby’s money.” There is no record of Mr. Kerry objecting to Air America’s expenditures.

Unfortunately, the contradictions may soon be getting a lot worse. Recently two Seattle radio talk-show hosts were found guilty of violating the Washington State’s campaign finance regulations. The monetary value of their commentary on an initiative exceeded campaign contribution limits.Their sin was apparently to fight for lower taxes. What’s next? A monetary value assigned to positive news stories in newspapers?

News organizations will rightly claim that they cannot do their jobs if campaign-finance regulations are applied to them. Hopefully even the majority on the Supreme Court, which supported McCain-Feingold, will realize that regulating the content of news stories and regulating who is part of the media goes too far.

How to solve this problem? One solution — we’ll call it the First Amendment solution — is to deregulate the system, let the voters hear what people (even those with “big money”) have to say, and trust the voters to choose wisely. The alternative is to extend restrictions to the press. If the latter course is chosen, Mr. Soros and his friends risk finally bringing to America the strict government control of the news he witnessed firsthand as a boy growing up under Nazi and communist dictators.

John R. Lott Jr., the dean’s visiting professor at SUNY-Binghamton, served as an unpaid expert witness for the plaintiffs in the McCain-Feingold case.Bradley A. Smith, chairman of the Center for Competitive Politics, is a law professor at Capital University Law School and a former chairman of the Federal Election Commission.

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