The Worst Government Money Can Buy....

Whatever the outcome on Tuesday, let's hope it's at least marginally better than what we're continuing to suffer under Bush. We've seen the harm caused by Bush's many incompetent appointees, and now we're being, in essence, robbed by one of his few competent appointees.

The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.

These are dynamite facts that demand immediate action to halt the bailout deal and correct its giveaway terms. Stop payment on the Treasury checks before the bankers can cash them. Open an immediate Congressional investigation into how Paulson and his staff determined such a sweetheart deal for leading players in the financial sector and for their own former employer. Paulson's bailout staff is heavily populated with Goldman Sachs veterans and individuals from other Wall Street firms. Yet we do not know whether these financiers have fully divested their own Wall Street holdings. Were they perhaps enriching themselves as they engineered this generous distribution of public wealth to embattled private banks and their shareholders?

Meanwhile, bailout money is being used to fund astronomical "bonuses" for the employees who ran their companies into the ground. In the U.K. they saw that possibility coming, and thus forbade it as part of their bailout package. Here Paulson saw it coming as well, and made sure that the recipients of taxpayer $billions had a green light to shovel taxpayer money into their pockets.

I can only hope the next President tells companies like Goldman Sachs, "We appreciate that you needed to fritter away the bailout money we gave you in order to pay bonuses to the people who bankrupted you. And don't worry - we're still here for you. Yes, if you need an additional penny of taxpayer money to stay afloat, we'll help you be taken over by a competent institution in the manner of Merrill Lynch, or help you enter the bankruptcy process in the manner of Lehman Brothers. Feel free to ask, any time."

Is Campaign Finance Reform Possible?

You can't have an election without a campaign finance outrage, can you? Last election cycle, the outrage was 527's. This time, it's bundlers.

Ah, the good old days, when bundlers supported G.W. and were given cute names like "rangers" or "pioneers". Then some people bundled for Edwards and were called... criminal suspects. (Oh, I know... I'm assuming that some straw donations collected by Bush's bundlers were conveniently overlooked, and I should instead assume the purest of motives and methods....) Now McCain has a bundling scandal, and the New York Times is calling for reform.

Last week, The Washington Post disclosed that Harry Sargeant III, a prominent McCain booster in Florida and part owner of an oil-trading company with business in Iraq, had rounded up thousands of dollars in small donations from Americans of Middle Eastern origin. Many had not made political contributions before, and were of relatively modest means. The Times followed with a report that at least $50,000 of this had been solicited from a single extended family in California, the Abdullahs, by one of Mr. Sargeant’s business partners, a Jordanian named Mustafa Abu Naba’a.

Though it is unclear whether any of this is illegal — including whether the law forbids foreigners from soliciting contributions — the McCain campaign hurriedly announced that it was returning the money raised by Mr. Abu Naba’a. It also promised to review the money raised so far - about $500,000 - by Mr. Sargeant.

What can we assume about bundlers? If they were solely interested in raising money for a candidate, they wouldn't have to stick themselves in the middle - between the donor and the candidate. It's reasonable to assume that they expect something, whether it's a starry-eyed wish for a photo op with a newly elected President, some form of quid pro quo somewhere down the line, or something in between.

The Times looks at the situation and notes that neither candidate wants to come clean about their bundlers. Obama apparently comes closer, and "is sponsoring legislation that would require disclosure of all bundlers who raise more than $50,000." The fact that McCain isn't all over that reform suggests how important bundlers are to his fund-raising, and how important it is to some of his bundlers that their names not be made public.

The Times continues, "That could be a useful addition to the law, but it is not enough." Right. Why not have complete transparency, and require full disclosure about all bundlers? No, that's too logical a direction to take.

What is really needed is an overhaul of the public financing system for presidential campaigns, which has not kept pace with the actual costs of running for office.

Here's a sad truth: the public financing system can't keep pace with the "actual costs" of running for office. No matter how much money you toss into the system, it's just a matter of time before one candidate or the other, perhaps both, find it inadequate.

You want to complain about increasing college tuition costs? Colleges have nothing on political campaigns. Or even gas prices. I have the following (unverified) figures for the cost of the winner's campaign in the last few Presidential races:

• 1996 - $141.3 million (Clinton) out of $449 million total.


• 2000 - $256.4 million (Bush) out of $649.5 million total.


• 2004 - $457 million (Bush) out of $1,016.5 million total.

This election cycle looks like another bank breaker. Can you really expect public financing to keep up with that?

At this point, I think we need to be pushing for maximum transparency. It won't fix the system, but at least we'll get a sense of who's trying to buy the candidates favor.

Campaign Donations

I have been hearing some people express surprise that John McCain raised $22 million in June, given the state of his campaign. But really, he's committed to taking public financing for the post-convention campaign so, if people don't max out their direct contributions now, when else would he benefit from their donations?

Although McCain's "public financing" games during the primary still largely escape notice in the mainstream media, there's a glimmer of attention being paid to how outside groups will (massively) augment McCain's campaign spending and anticipated "soft money" contributions.

When you combine McCain's individual war chest with his party's bankroll, it turns out the Republican nominee has about $90 million currently burning a hole in his pocket, while Obama and the DNC weigh in at a relatively paltry $47 million, or half as much. And even though McCain has agreed to an $84.1 spending limit by accepting public funds - a decision he likes to portray as a principled stand against the corrupting influence of money on politics - at least double that sum will be dropped on his behalf before Election Day thanks to loopholes in the law that allow outside groups to effectively skirt such limits with largely unregulated "soft money" contributions.

* * *

Meanwhile, McCain campaign is stepping around federal spending limits by funneling cash through the state and national party machinery--and potentially benefiting from donations to a non-RNC organization that could boost his chances in key states. As the Wall Street Journal reported last Thursday, the Republican Governors' Association, a GOP group unrestrained by federal spending limits because it's designed to elect governors, is now "marketing itself as a home for contributions of unlimited size to help Sen. McCain."

This is defended as "the only way the Arizonan can stay competitive" with Obama's fund-raising from "his network of 1.5 (mostly small-sum) donors", but by the same token it was Obama's decision to reject public financing that enables him to compete with these fund-raising techniques - and you're deluding yourself if you think McCain would have stopped this third party activity had Obama accepted public funds.

Gerrymandering

David Broder has an interesting piece on gerrymandering and its effect on voter turnout.

In 2002 and 2006, the most recent off-year elections, about nine out of 10 congressional districts were won by more than 10 percentage points -- a clear sign that the game had been rigged when the lines were drawn in the state legislatures. In the first of those years, only eight incumbents lost; in the second, only 21.

As scholars have pointed out, the scarcity of real competition in nearly all districts has many consequences -- all of them bad. It makes legislators less responsive to public opinion, since they are in effect safe from challenge in November. It shifts the competition from the general election to the primary, where candidates of more extreme views can hope to attract support from passionately ideological voters and exploit the low turnouts typical of those primaries.

Gerrymandered, one-party districts tend to send highly partisan representatives to the House or the legislature, contributing to the gridlock in government that is so distasteful to voters.

I've written on this subject before. I would welcome reform.

Unfortunately, Broder dilutes his piece by opening with a silly attack on Barack Obama.

When Barack Obama decided last week to throw off the constraints on campaign spending that go with the acceptance of public financing, he was rightly criticized for rigging the system in his favor.

It's "rigging the system" to say, "I'll pay my own way instead of taking public money?" How so? Obama was rightly criticized, but not for rigging the system. The valid criticism is that he retreated from his prior commitment to public financing, and his promise to work with his opponent to stay within that system.

Did somebody attempt to "rig the system" (I would probably say "game the system", and perhaps "break campaign finance laws") in relation to public financing, using a commitment to public financing in order to get on a state primary ballot and to get loans for his campaign, then flip-flop on his entire record of "campaign finance reform", breaking his word, and declining public money? Absolutely. But that person was John McCain.

Campaign Finance Reform

Thanks to David Brooks, I know that unlike John "McCain-Feingold" McCain, Barack Obama's primary raison d'être is campaign finance reform.

But Thursday, at the first breath of political inconvenience, Fast Eddie Obama threw public financing under the truck. In so doing, he probably dealt a death-blow to the cause of campaign-finance reform. And the only thing that changed between Thursday and when he lauded the system is that Obama’s got more money now.

It's a good thing John McCain would never do anything like that, because he wouldn't want to end up on the wrong side of Brooks' poison pen. (What? You say Brooks would never write such a column? That he's a shameless partisan hack? How... cynical.)

McCain's Separate Finances

Josh Marshall notes that McCain has been paying a bargain rate for the use of his wife's private jet, then asks,

Reading the piece, one question that suggests itself is why go through all the roundabout? McCain's wife can give him as much free air travel as she wants. That's just self-financing, which lots of candidates do completely legally. John Kerry, remember, took a loan out on his home to pour money into his campaign during its nadir just before Iowa. But remember, this was also around the time that McCain was kinda sorta opting in to the public financing system. So I'd be curious to hear how these two things would have interacted, what the legal repercussions would have been.

I suspect this has less to do with public financing than it does with McCain's desire to keep secret his wife's wealth and tax returns. His campaign's claim, "Senator and Mrs. McCain have kept their personal finances separate throughout their 27-year marriage", becomes less viable if she's making him six figure gifts or loans to support his campaign.

Attacking Obama On Campaign Financing?

For the second time, the Washington Post has an unsigned editorial attacking Barack Obama for declining to take full federal funding for the general election. There's plenty of room for criticism, given Obama's history of statements in favor of campaign finance reform and public funding. But talk about a free pass for John McCain....

We praised Mr. Obama last year when he asked the Federal Election Commission to let him raise private money for the general election but later give the money back and decide to participate in the public financing system if he were able to persuade the Republican nominee to do the same. In that circumstance, Mr. Obama's spokesman vowed, he would "aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election." Well, the Republican nominee turns out to be John McCain, who agreed way back when to Mr. Obama's challenge. Where's Mr. Obama's aggressive pursuit now?

Um... that would be the same John "McCain-Feingold" McCain who accepted federal money for his faltering primary campaign, used it to secure a loan for his campaign, and then flip-flopped the moment he discovered that his pledge would limit his spending?

It's also flat-out false that McCain has agreed to use only federal funding for his presidential campaign. Or, more accurately, he did make that pledge but then repudidiated it, adding a new condition that Obama has to commit to public funding first.

“It was very clear to me that Senator Obama had agreed to having public financing of the general election campaign if I did the same thing,” he said after a town hall meeting here. “I made the commitment to the American people that if I was the nominee of my party, I would go the route of public financing. I expect Senator Obama to keep his word to the American people as well.”

Asked if he would use public financing even if Mr. Obama did not, he said: “If Senator Obama goes back on his commitment to the American people, then obviously we have to rethink our position. Our whole agreement was we would take public financing if he made that commitment as well...."

As for Obama,

Mr. Obama did not rule out the possibility of accepting public financing, but declared on Friday, “I’m not the nominee yet.”

“If I am the nominee, I will make sure our people talk to John McCain’s people to find out if we are willing to abide by the same rules and regulations with respect to the general election going forward,” Mr. Obama told reporters at a news conference in Milwaukee. “It would be presumptuous of me to start saying now that I am locking into something when I don’t even know if the other side will agree to it.”

Do the members of the Post's editorial board read their own paper? Or does this fall into the category of the mendacious, embarrassing brand of editorial that is unsigned because nobody wants to associate their name with it?