Tuesday, February 7, 2012

Hypocrisy and Campaign Finance

I want to agree with Jonathan Chait, who argues there's nothing at all hypocritical about playing by the current campaign finance rules even as one attempts to change those rules in the future.

However...he (I take it) and I agree that there's nothing inherently immoral about any particular campaign finance regime, but it's not true that everyone agrees. Some people -- lots of people, many of whom write editorials for prominent newspapers -- believe that certain kinds of campaign donations are inherently corrupt and corrupting, whether or not they are legal. If you believe that, then taking such donations is presumably problematic, even if it's for the long-term goal of changing the rules and ending corruption. If, on the other hand, you simply believe that the current system is poorly designed or (unfairly) enhances the interests of some citizens at the expense of others, then there's nothing problematic at all with exploiting it while it exists. In other words, if you believe there's such a thing as legalized corruption and then participate in the activities that you've called legalized corruption, then it's fair game to ask whether you are, in fact, corrupt. I don't know whether or not Obama fits into that category; I did look back at his 2010 SOTU slam at Citizens United, and he did not talk about corruption.

Generally, I think the case made by Russ Feingold and others that Democrats have adopted a "corporate-dominated policy agenda" because of campaign finance is very, very weak. Democrats have never (regardless of the campaign finance regime, including the full presidential public financing of the 1970s) been a socialist party, and there are all sorts of understandable reasons for that having nothing to do with campaign donations.  And if you're not going to be a socialist party, you're going to...well, I don't know whether you'll necessarily be "corporate-dominated," but you're certainly going to care about what your corporate constituents think. Whether or not they count as "persons" or not. None of which is to say that different campaign finance regimes can't have at least marginal effects, but at least in my reading of the evidence there's a whole lot of myth surrounding this stuff.

While it's not quite relevant here, I'll put in another plug for floors, not ceilings: what I'd really like is sufficient public financing that both Republicans and Democrats could run real campaigns in all 435 House districts and for every Senate seat (and beyond that, for all state legislative seat). And above that, let them raise and spend what they want, how they want, with full and meaningful disclosure.

13 comments:

  1. If a practice is legal, if it conveys (or may convey) some sort of advantage, and if one side is doing it, then the other side it going to do it, too. That doesn't necessarily make it right, and the practice doesn't mean that one side can't fight against its future use while taking advantage of it today.

    Regarding the Citizens United notion that corporation "persons" have the same rights as human persons, I think it's flawed, although I'm willing to hear arguments. Corporations must have certain rights in order to function, for instance, to enter into contracts and to expect those contracts to be fulfilled. Obviously (I hope), they'll never have other rights, such as actually voting (or entering into marriages, either same-sex or opposite-sex).

    Now, here's where the analogy is really going to sound flaky, but hang on. The Constitution, as originally written, described slaves as 3/5 of a person for purposes of the census. Based on this, some people occasionally say that slaves were 3/5 people or had 3/5 rights under the Constitution. This is clearly wrong. Slaves had zero rights. What the Constitution did was to give slave owners (and other free whites in slave states) additional representation in Congress above and beyond that which people in free states had.

    The Supeme Court in Citizens United claims to be speaking of the rights of corporate citizens to free speech in the form of campaign contributions, but that assumes that a corporate entity can have an opinion separate from that of its owners and managers. I frankly don't see how that can be. What Citizens United does is to grant rights to corporate owners and managers above and beyond those granted to other citizens by allowing them to use corporate resources to pursue their own political agendas and masquerading these as the rights of the corporation. Am I getting something wrong here?

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  2. @Scott

    In which case I think Delaware and the Dakotas may be missing a few Representatives that are rightly theirs...

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    1. We can expect to hear calls for a new Constitutional Convention any day now.

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  3. I can't find how to send you an email so I'll send you a message here.

    I think I found a serious error from the NY Times last week. I googled around a bit and couldn't find any blog comments about it. if you find one you should give them a CotD:


    Connected to the highly-linked article about a guy who supposedly pays 102% in taxes is an "explainer" where the NY Times explains how a regular person could pay more than 100% of their taxable income in taxes:
    http://www.nytimes.com/interactive/2012/02/03/business/how-it-is-possible-to-pay-a-100-percent-tax-rate.html?ref=business

    It says that someone earning $75k gross, but with a taxable income (after deductions) of $11k would pay a federal income tax of $10k, and then state taxes would put them over $11k. How could that possible be right? Isn't the federal tax burden calculated using the taxable income? Why else would it be called taxable income? This is what the IRS says: "Income that is taxable must be reported on your return and is subject to tax. Income that is nontaxable may have to be shown on your tax return but is not taxable."
    http://www.irs.gov/businesses/small/article/0,,id=117613,00.html

    Based on my calculations, using the tax rates posted here: http://taxes.about.com/od/Federal-Income-Taxes/qt/Tax-Rates-For-The-2011-Tax-Year.htm , that hypothetical person should pay $1,231 in federal income taxes, not $10,315, as the NY Times says.

    The details for the 102% guy aren't presented in detail but they have to be wrong too. In paragraph 7 the author explains why Ross's taxable income is so different from his AGI: "That’s because Mr. Ross has so many itemized deductions." But then in paragraph 14 the author explains why Ross's tax rate is so high, it's because "Unlike me, he can’t make any itemized deductions". Which is it, he has so many itemized tax deductions or he doesn't have any? The real reason appears to be that Ross is hit by the AMT, which ignores deductions. So this suggests that his "taxable income" is really low because he has a lot of deductions on the standard tax form, which is the whole point of the AMT - to prevent people like this guy earning over $1m from avoiding his fair tax burden. Someone earning $75k, on the other hand, shouldn't be slammed by the AMT.

    I found a couple blogs pointing out that the 102% thing is misleading, for example http://mindlessphilosopher.net/blog/2012/02/whats-your-definition-of-taxable/ and http://theincidentaleconomist.com/wordpress/tax-whiners/ , but neither of them mention that the federal tax rate in the explainer box is totally wrong, unless I'm not understanding something.

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    1. When the Alternative Minimum Tax was implemented, $75,000 was considered rich, and no provisions were made for adjusting that.

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    2. No provisions were made at the time (it should have been indexed to inflation) but there have been annual fixes. According to this study, 99.9% of households with income from $50-75k were completely unaffected by the AMT: http://www.taxpolicycenter.org/briefing-book/key-elements/amt/who.cfm
      I'm not sure what "affected" means, but I doubt it means that the household ended up paying AMT rate on their whole income. My understanding is that the first $74,450 is exempt from AMT rates.

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  4. Generally, I think the case made by Russ Feingold and others that Democrats have adopted a "corporate-dominated policy agenda" because of campaign finance is very, very weak. Democrats have never (regardless of the campaign finance regime, including the full presidential public financing of the 1970s) been a socialist party, and there are all sorts of understandable reasons for that having nothing to do with campaign donations.

    This is too simplistic. The problem isn't that the Democratic Party should be full-on socialist, but that it should be open to government ownership and control of things that the government does well and the private sector does poorly.

    For instance, one of the Democratic Party's finer hours in recent years was putting student loans in control of the government and cutting the banks out of the process.

    The critique is that we don't get more of this sort of thing because rent-seeking corporations pay a lot of money to Democratic politicians to prevent it from happening.

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  5. @ Scott Monje:

    Corporations must have certain rights in order to function, for instance, to enter into contracts and to expect those contracts to be fulfilled.

    My understanding is that those minimal rights were granted right from the outset, with the legal fiction of "personhood" invoked to explain how an organization of many people could function for some purposes as a unity. Then, after the 14th Amendment was passed post-Civil War, clever corporate attorneys noticed that it spoke of Bill of Rights protections for "all persons," and even though this clearly (in the context of the Amendment) means all natural persons, they convinced the federal courts to conflate this usage of "person" with the very limited usage attached to corporate charters. So began a long trajectory (culminating, for now, in Citizens United) in which rights were extended and solidified for corporations even as they were (effectively) withdrawn from the actual persons -- African-Americans -- that the 14th's framers had intended to protect. Is this a great country, or what?

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  6. Am I going to have to spend the rest of my activist life on a crusade, against the idea that our good host here and many, many other established media voices offer, the idea that, as Jonathon put it, "full and meaningful disclosure" of campaign spending somehow makes it OK to poison the air of civilization with completely false from-one-end-to-the-other advertisements that also rely on tested appeals to bile, hatred, and ignorance.

    In today's world, how far is "full and meaningful disclosure" going to go? Not darn far enough to ensure the American people a voice in their own democracy, IMHO. What is "full" disclosure when one obscure 501-something-weird with a purposely misleading name gives a $100 mill to another obscure 501-something-malevolent with a purposely misleading name? How much does the public learn from that?

    And what is "meaningful?" Meaningful to me means full names and addresses of all corporate stockholders over 1/2 of 1% from all donations coming from profit-making corporations, full names and addresses of all partners/over 1% owners in privately-held profit-making businesses, and even stiffer regs, enforced by meaningful penalties of 10 to 20 years in prison and million-dollar fines, for all the strange slew of non-profits Congress and the IRS have allowed: names and addresses of every donor of more than $1000.00, one thousand dollars. That's a nice threshold to separate the working class from the toffs.

    In my opinion, it is a serious mistake to assume that "disclosure" is going to prevent the plutocracy from crashing democracy through lies, nepotism, and other forms of stupidity backed by billion-dollar advertising campaigns, which know how to use your precious personal attitudes against your own best self-interest. Let's Occupy our own minds first, and understand the war we need to undertake to rescue democracy from the lies of the advertisers.

    Otherwise our kids won't have a "full and meaningful" democratic republic.

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    1. I absolutely agree that we fall way short of "full and meaningful" disclosure right now. IMO, a ceilings-not-floors regime would make disclosure easier, but it is true that Citizens United makes it harder. Anyway, I support reforms that would make disclosure work better.

      OTOH...look, you can't get much better disclosure than Newt has had this time, and it's hard to see evidence that voters care. Perhaps because they don't find Adelson problematic, but more likely because they just don't care much.

      And, yeah, I'm mostly OK with letting candidates tell lies in their ads, so we disagree on that part of it.

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  7. Are all these 501(c)4's and 501(c)6's required to name each and every one of their donors? Are they allowed to get away with legalistic tricks to hide their donors, such as allowing other organizations donating to hide their donors? If it's a trust doing the donating, do we have a disclosure of who set up the trust, the attorneys/others administering the trust, and all persons benefiting from the trust (over $1000/yr or over 1% of trust distributions)? If it's a privately-held business, do they have to disclose anything, sales, profits, ownership, business activities? Do these disclosures include the main residence of the individuals behind the organizations? Or are they allowed to use corporate addresses & P.O. boxes & names of attorneys in tax haven nations?

    All this loose money can be tracked back to human beings, either the owners & executives of corporations, owners & execuitives of privately-held businesses, donors to non-profit shells, or originators/administrators/beneficiaries of trusts and estates. I don't believe that task is being required in any meaningful way under current law, though I'm not a campaign finance lawyer.

    Check it out, the current status of free speech clause interpretation does not give privileges to deceptive advertising (although there are not currently any meaningful regulations or enforcement against them, either). And I will continue to say that false, deceptive, exaggerated advertising (i.e., 99% of all video advertising for products, services or political campaigns and issues) is indeed deceptive, it is a form of pollution, and it extremely destructive to the interests of the 99% who do not have the resources to mount deceptive video advertising campaigns. And it is also extremely destructive to trust and legitimacy in a democratic republic.

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    1. One big problem is that you're never going to get a meaningful legal definition that distinquishes a lie from an opinion or an interpretation or a philosophical tenet in a way that relevant actors will agree on. Look at the trouble Politifact has stirred up.

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    2. I do have a very long answer to that, which I'll try to summarize here. I do believe there's one true physical reality (in terms of all the movements of all the molecules), and while human disagreements are infinite, nevertheless I say that innovative legal solutions empowering consumer complaints can be found. I have a number of proposals in my year-old article, "Is There a Talking Lizard in Your Subconscious Mind? Hope Versus Advertising."

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