Democracy vouchers: a better campaign finance reform

In January, Democrats will take full control of the New York state Senate for the first time in a decade. After years of the GOP blocking progressive initiatives, particularly political reforms that would weaken the party’s grip on power, the new majority might finally overhaul New York’s weak campaign finance laws. A coalition of unions and progressives organizations are gearing up to push for a public matching funds system with contribution limits for state candidates modeled on the existing program in New York City.

Here’s how the city’s program works: Candidates for city office can see their small donations matched $6-to-$1 with public money (soon to be $8-to-$1), if they participate in this generous system in return for accepting strict limits on fundraising and spending. Participating City Council candidates can’t receive donations from individuals greater than $2,850 and cannot spend more than $190,000 during a primary. (There is no requirement to participate in the system, however, and self-funding candidates like the billionaire former mayor, Michael Bloomberg, are able to still spend whatever they want.)

A state-level system would follow city’s example, with a $6-to-$1 match, and would lower astronomical donation limits while closing of the notorious LLC loophole, which allows businesses and wealthy individuals such as real estate developers to evade contribution limits by using limited liability corporations to donate to candidates. This proposal would be a vast improvement on the status quo, arguably one of the very worst state systems in the country. (There is no agreement yet on what state donation limits would be lowered to – candidates for state Senate currently can accept up to $18,000 from an individual, while the governor is able to rake in $65,100 from an individual.)

State lawmakers, however, should consider another, even better option for fixing our campaigns in New York: democracy vouchers. Instead of public matching funds, state lawmakers should attempt to create a statewide democracy voucher program, the first of its kind in America, giving every resident in New York state a chance to donate to chosen candidates and incentivizing candidates and elected officials to appeal to ordinary people instead of those who can afford to donate their own money.

The program would be modeled on Seattle’s, where a democracy voucher program was successfully implemented for municipal elections last year. Eligible residents received a voucher worth $100 to donate to local candidates of their choice.

Candidates who participated in the program had to agree to strict guidelines on how to spend the money received, such as $75,000 for a city council primary and $400,000 for a mayoral primary. A city council candidate in the voucher program can only receive up to $250 from individuals.

The idea behind the program was pretty simple: Give money to residents, including the many who would normally not be able to donate campaign cash, creating a much bigger well of potential donors to combat the influence of big money in politics.

One early analysis of the program found it greatly diversified the pool of people who donate to elections, increasing political giving by younger people, people of color and those who have low incomes. The program has not necessarily been a panacea for solving the big-money-in-politics problem – but neither has New York City’s campaign finance system, either.

Without a repeal of the Citizens United U.S. Supreme Court decision, corporations, labor unions and super PAC’s will still be able to spend unlimited outside money on local and national races. Any attempt locally to restrict their spending would run up against the Supreme Court.

So why should the coalition of progressive groups and labor unions gearing up for a public financing push look at democracy vouchers?

First, it should be stated again that any public financing system would be a vast improvement over the state’s current laws. As a former candidate for state Senate, I know this firsthand – donation limits for my race were higher than races for New York City mayor and Congress. The state Board of Elections barely enforces campaign infractions.

While the public matching funds system in New York City has represented a step forward for local democracy, it remains flawed. A well-wired donor class still drives political giving in local politics. Powerful lobbyists, real estate developers and those who seek to buy influence continue to drown out the voices of ordinary people.

Despite a robust matching funds system, New York City Mayor Bill de Blasio has repeatedly shown his top donors still buy far more access to him than everyone else. Pay-to-play allegations haven’t disappeared. The real estate industry still drives policy in City Hall.

Four years ago, City & State investigated the downside of New York’s set-up. Because the city is doling out public money, the New York City Campaign Finance Board maintains stringent oversight of participating campaigns – the exact counter-image to the state’s lax Board of Elections. The problem, though, is the CFB has evolved into an unusually punitive body, regularly doling out devastating fines while creating barriers to entry for first-time candidates.

This is the irony of running for office in New York City: While the matching funds encourage people who are not wealthy or politically connected to run, any campaign must immediately hire a highly experienced treasurer or accountant to wrangle with reams of potential violations that, years later, can saddle a candidate with tens of thousands of dollars in debt.

Due to its power to dole out funds, the unelected CFB can effectively determine the outcomes of campaigns. Candidates denied matching funds are handed a de facto death sentence.

This is what happened to John Liu when he ran for mayor in 2013. Liu, then the city comptroller, had been ensnared in a straw-donor scandal that led to the convictions of his campaign treasurer and fundraiser. Liu himself was not implicated.

Late in the campaign, the CFB denied him matching funds, curtailing his ability to spend during the most crucial phase. What irked Liu and his defenders was a lack of due process – once the CFB makes a decision, there is little reasonable recourse in the midst of a campaign.

At the same time, matching funds are occasionally abused or handed out to campaigns that don’t need them – or maybe never deserved them in the first place. New Yorkers may be unhappy to learn that their taxpayer dollars went to support stunt New York City Council campaigns of the blatantly anti-Semitic Thomas Lopez-Pierre and the Donald Trump-supporting, climate change-denying Republican Bob Capano, who received nearly $89,000 in public money to net 579 votes.

Letitia James, running in a noncompetitive re-election campaign for public advocate last year, made a mockery of the system when she received more than $750,000 in public matching funds to defeat a little-known, underfunded Republican opponent. James spent a half million in a single day, funneling the public cash to one powerful consultant, Global Strategies Group.

A democracy voucher program would eliminate many of these pitfalls. Public money would be sent directly to voters. The political consultant-lobbyist-industrial complex would be disrupted. Public money wouldn’t be spent on campaigns that don’t need or deserve it.

Next year, state lawmakers should look to Seattle – not just New York City – for the future of campaign finance reform.