Facing the most severe budget crisis in state history, New York governor David Paterson has wagered his political future on a dubious idea: that voters will think it’s wise to funnel millions of taxpayer dollars into the campaigns of scandal-ridden politicians. In Wednesday’s State of the State address, Paterson announced an extremely broad political “reform” package. The laundry list includes a new, all-powerful ethics oversight commission; expanded reporting of outside income for lawmakers; a constitutional amendment enacting term limits; reducing the maximum individual campaign contribution by 97 percent, with even greater reductions on campaign contributions by lobbyists; a ban on contributions by any corporation or limited liability partnership; a prohibition on “bundling” campaign contributions (that is, delivering multiple individual contributions from one source, such as a company or advocacy group, to the campaign at one time, to emphasize the source and reason for the support); new regulations for the state comptroller’s office; and an increase in civil fines for campaign-finance violations of up to 250 percent, plus the criminalization of some violations.

Above all, Paterson’s package would institute taxpayer funding of political campaigns—increasing bureaucratic control over what should be a fundamentally nongovernmental activity. Private political activity is protected by the First Amendment and should be encouraged, not regulated. Yet self-styled reform groups, including Common Cause and NYPIRG, are gushing over Paterson’s proposal, seeing it as a way to prevent future corruption and citing former state senate majority leader Joseph Bruno’s bribery, former governor Eliot Spitzer’s prostitutes, and former comptroller Alan Hevesi’s misuse of state employees for personal services.

Bruno’s case shows how misguided this outlook is. Bruno was recently convicted of fraud for concealing payments for outside work that he’d received from business interests seeking legislative favors. His ethical violations, that is, consisted of good old-fashioned bribery. The public surely deserves to know if state pols are on the payrolls of people seeking government contracts or benefits; a reasonable requirement to disclose that information makes sense, and in fact that’s where the state legislature was headed. But Paterson risks sabotaging that reasonable measure with his instantly controversial manifesto of political-speech rules, which would regulate not the politicians themselves but the ability of ordinary New Yorkers to participate in the political system. (Spitzer’s cavorting with prostitutes, of course, is unconnected to any such legal reform, and Hevesi’s conduct was also a violation of existing law, explaining why he is no longer state comptroller.)

One can’t help but note that the governor’s proposals have political implications that just happen to benefit him. Limiting the amounts that citizens can contribute to campaigns tends to insulate incumbents from political criticism, which is often expressed when like-minded citizens associate with each other in business groups, unions, and advocacy organizations to lobby and contribute to their preferred parties and candidates. For Paterson, whose fund-raising has been anemic, having the state take over funding of campaigns could also have obvious political benefits in future runs for governor.

Without seeing the details, it is hard to tell if Paterson’s taxpayer-financing proposal is unconstitutional or merely bad policy. His fact sheet describes “a 4:1 public matching system with enhancements to encourage participation.” In a 2008 decision, Davis v. Federal Election Commission, the U.S. Supreme Court struck down a federal law based on the “leveling the playing field” rationale. Since then, federal judges in Connecticut and Arizona have held that “enhancements,” aimed at equalizing candidates’ financial resources, violate the First Amendment.

But even if Paterson’s proposal passes the constitutional bar, taxpayer-financing systems in other states have a lousy history. Last month, the Phoenix New Times, Arizona’s leading alternative liberal newspaper, declared the state’s taxpayer-financing system one of the “worst ideas of the decade.” Far from getting rid of corruption, the system provides new ways to abuse the taxpayer; for example, Arizona candidates have colluded to obtain taxpayer funding for third-party candidates to undermine their major-party challengers. In Connecticut last year, State Senator Joseph Crisco was fined for, in the words of the New Haven Register, breaking “almost every conceivable part of the public campaign finance law in a failed attempt to get $85,000 in public money.”

Does public financing make politicians less dependent on private interest groups? Apparently not. Preliminary research conducted by the Center for Competitive Politics (CCP) in Connecticut following the state’s adoption of taxpayer financing in 2008 shows that lawmakers voted with interest groups in virtually the same patterns as before. In fact, since the advent of so-called “clean elections,” some powerful interest groups, such as the Connecticut Business and Industry Association, have enjoyed greater legislative support for their agendas. Studies by the CCP also found that New Jersey’s taxpayer-financing system didn’t make candidates any less reliant on organized interest groups, which they now needed to help raise qualifying funds for the taxpayer funding, as well as to engage in get-out-the-vote efforts. (New Jersey has since abandoned the public-financing scheme.)

Similarly, in Arizona, research by the Goldwater Institute found that former governor Janet Napolitano and other candidates relied on interest groups and unions to provide the qualifying contributions for taxpayer subsidies. Other CCP research has shown that taxpayer-financing programs also fail in their goals of producing more lawmakers with diverse backgrounds and increasing the number of female lawmakers. The only measurable success, if one can call it that, is the percentage of candidates, mostly incumbents, who agree to take free taxpayer money. These programs do not reform our system of representative democracy; they hand over the keys of the treasury to candidates.

Not every idea in Paterson’s grab bag is wrongheaded. But considering that his own advisors can’t seem to comply with current lobbying regulations—advisor and lobbying-firm head Bill Lynch was recently fined $10,000 for not complying with filing requirements—the governor’s proposal to add multiple layers of regulation to the state’s campaign-finance, lobbying, and ethics regulations deserves the strictest scrutiny.


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