Post-Watergate campaign finance limits undercut by changes

June 16, 2012

The money poured into Richard M. Nixon’s reelection campaign from all corners: Six-figure checks flown by corporate jet from Texas; bundles of payments handed over at an Illinois game preserve; a battered brown attaché case stuffed with $200,000 in cash from a New Jersey investor hoping to fend off a fraud investigation.

During four pivotal weeks in spring 1972, the president brought in as much as $20 million — about $110 million in today’s dollars — much of it in the form of illegal corporate donations and all of it raised to avoid disclosure rules that went into effect that April.

“The decision was made that it was time to put the hay in,” John Dean, Nixon’s counsel at the time, recalled in an interview last week. “A lot of us believe Watergate might never have happened without all that money sloshing around.”

Four decades later, there’s little need for furtive fundraising or secret handoffs of cash. Many of the corporate executives convicted of campaign-finance crimes during Watergate could now simply write a check to their favorite super PAC or, if they want to keep it secret, to a compliant nonprofit group. Corporations can spend as much as they want to help their favored candidates, no longer prohibited by law from spending company cash on elections.

The political world has, in many respects, come full circle since a botched burglary funded by illicit campaign cash brought down an administration. The excesses of the Nixon era ushered in a series of wide-ranging restrictions on the use of money in campaigns, including limits on individual campaign contributions that remain in force today.

But the intervening decades have also brought changes that have undercut many of the political financing rules put in place in response to the Watergate scandal, including a Supreme Court case that freed corporations and unions to spend unlimited money on elections and a public-financing regime that has collapsed into irrelevance.

‘Money corrupts’

The result is a frenzied rush to raise money, with echoes of that spring 40 years ago: President Obama and Republican challenger Mitt Romney spend much of their time crisscrossing the country to collect as much cash as possible, while political groups run by their former aides solicit donations of seven — and eight — figures from sympathetic billionaires.

Last week, Las Vegas casino magnate Sheldon Adelson contributed $10 million to Restore Our Future, a super PAC dedicated to helping Romney win in November. Adelson, one of the richest men in the world, and his relatives have spent more than $35 million to help Republicans in the 2012 elections.

“I think we’re in the middle of a scandal that hasn’t quite gelled yet,” said Roger M. Witten, who worked in the Watergate special prosecutor’s office and now handles campaign-finance cases at WilmerHale in New York. “A tremendous amount of ground has been lost. We’ll have to relearn the lessons of Watergate — that money corrupts the system.”

Many conservatives and civil-liberties advocates take a different lesson, however, saying stricter rules would have done little to stop Nixon political operatives intent on breaking the law. Bradley J. Smith, a former Federal Election Commission chairman who is one of the leading voices for deregulating the campaign finance system, said many of the limits enacted after Watergate were ineffective and intruded on First Amendment rights.

“It’s not bad or good in and of itself to spend more money in politics,” Smith said. “We’ve got to shake off the bugaboo, the ghost of Watergate, that somehow justifies never-ending regulation of people’s free-speech rights.”

At the dawn of 1972, Nixon campaign aides, fueled by their boss’s legendary paranoia and scheming, set out to ensure his reelection by taking advantage of a window of opportunity — a loophole that let them raise unlimited, secret funds for about a month between the expiration of one election law and the enactment of a new one. The frenzy began March 10 and lasted until April 7, when legislation went into effect requiring disclosure of political donors.

In the months and years that followed, prosecutors and journalists unraveled a mind-boggling array of bank accounts and revolving political committees used to launder the money. Overseen by Nixon’s finance director, Maurice Stans, the effort featured a half-dozen “pickup men” roaming the country gathering checks and cash.

The volume was so great that some donations that had been offered went uncollected, while others came in late. One New Jersey lawmaker showed up in Washington on April 10 with a briefcase filled with $200,000 in $100 bills, money eventually traced to indicted financier Robert L. Vesco; the contributions were treated as if they had been received prior to the deadline.

Overall, Nixon’s 1972 reelection effort raised an estimated $60 million — “the largest amount of money ever spent in a political campaign,” as Stans later bragged.

By 1975, prosecutors reported that 32 individuals and 19 corporations were convicted or had pleaded guilty to violations of campaign-contribution laws, including household names such as Goodyear, Minnesota Mining and Manufacturing, Northrop, American Airlines, Gulf Oil and Phillips Petroleum, records show.

Former Watergate prosecutor Frank Tuerkheimer, who now teaches law at the University of Wisconsin, said he and his colleagues viewed the cases as the beginning of a crackdown on campaign-finance violations.

‘We were wrong’

“Unfortunately, that didn’t happen,” Tuerkheimer said. “We thought it would result in serious enforcement. We were wrong.”

Congress responded to Watergate by amending the Federal Election Campaign Act in 1974, which implemented contribution and spending limits, created the FEC and provided a system of public financing for presidential contests. The Supreme Court soon struck down the spending limits and other restrictions on free-speech grounds in Buckley v. Valeo.

But donation limits and public financing remained, and, for a time, money seemed to play a smaller role in national politics. In 1984, President Ronald Reagan ran for reelection without holding a single campaign fundraiser because he and Democratic challenger Walter Mondale each accepted $40 million in public funds.

The next crack in the wall constructed by reformers came in the 1990s, after a series of FEC rulings led to the rise of unlimited “soft money” donations to parties, an atmosphere that spurred several major financing scandals during Bill Clinton’s presidency. Reformers pushed back again in 2002 with a major campaign finance law sponsored by Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.), which banned unlimited donations to parties, imposed new restrictions on ads and attempted to limit the impact of self-funding millionaire candidates.

Many of the McCain-Feingold provisions, however, were struck down in a series of decisions culminating in the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission , which jettisoned a long-standing ban on corporate and union spending on elections. The court ruled 5 to 4 that corporations had the same rights as people when it comes to political speech, upending restrictions on election spending by businesses that stretched back a century.

‘Brought back to life’

The rulings have led to a proliferation of super PACs and other groups and have made it easier for wealthy individuals to spend unlimited money on politics.

“The pieces that created the Watergate scandal — secret money, unlimited donations — have been brought back to life by the Citizens United decision,” argues longtime activist Fred Wertheimer, who helped draft many of the reforms put in place in the 1970s. “The Supreme Court’s idea that you can let all this money into the system without leading to corruption is absurd.”

The long-running debate has been complicated by shifting politics and allegiances. Those in favor of more restrictions on campaign spending now tend to be Democrats, who have been pushing unsuccessfully to enact new disclosure laws for secretive nonprofits and other reforms. Leading Republicans, meanwhile, have adopted a no-regulation posture: Senate Minority Leader Mitch McConnell (Ky.) said last week that Obama’s push for broader disclosures amounted to a “Nixonian” attempt to intimidate conservatives.

But 40 years ago, the lines were scrambled, and many proponents of fewer restrictions came from the left. Joel M. Gora, now a professor at Brooklyn Law School, worked with the American Civil Liberties Union to help advocacy groups resist donor disclosure requirements and was on the legal team that rolled back many restrictions in Buckley.

Gora views Citizens United and other anti-regulation decisions as victories for free speech and says that many regulations are part of an “incumbent protection racket” aimed at quashing dissent. One of the plaintiffs in Buckley was Eugene McCarthy, whose insurgent Democratic presidential bid in 1968 was heavily funded by six-figure donations from antiwar donors.

“These laws are restricting outsiders, whether liberal or left-wing outsiders or conservative and right-wing outsiders,” Gora said. “The difference between the Adelsons of today and the people who wanted to support Gene McCarthy is really just a matter of the amount.”

Research editor Alice Crites contributed to this report.

Deputy editor, National politics
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