(photo: The Governor's Office on Flickr)
Business money and New York politics
The New York Joint Commission on Public Ethics, an oversight panel, recently proposed legislation to increase the requirements for lobbyists to disclose their political fundraising. The recommendation would help show the ways in those seeking to influence policy by day are raising money for policy-makers by night.
Blair Horner, legislative director for the New York Public Interest Group, one of several groups critical of New York's loose campaign finance laws, said recently that during this time in the legislative session in Albany, "It's pretty much pedal-to-the-metal when it comes to [legislators] hitting up lobbyists for campaign contributions."
The New York State League of Women Voters called for "a significant reduction of all contribution limits, special 'pay-to-play' limits on contributions by lobbyists and those who do business with the state and eliminating the LLC loophole." The Citizens Union, another reform group, has also called for campaign finance reform in New York.
In his annual message to the Legislature, the governor denounced "political contributions by business corporations" as "morally wrong....Their contributions are influenced by business and not by patriotism and, like other investments, are made in the hope and expectation of financial return or to avert threatened pecuniary injury." The governor recommended making political payments by corporations a criminal offense.
It almost sounds like Governor Andrew Cuomo last year and this year. But actually, it was Governor Frank W. Higgins, in 1906.
Concern with the influence of campaign contributions has deep historical roots here in New York.
Scandals led to New York's first campaign finance law
Governor Higgins was reacting to two scandals.
In the 1904 presidential campaign, the New York World alleged that business interests were funding the campaign of President Theodore Roosevelt, hoping to curry favor with his administration. His Democratic challenger, former New York Chief Judge Alton Parker, charged that TR was receiving large contributions from New York railroad magnate Edwin H. Harriman and Wall Street banker J.P. Morgan. "Would the public interest be safe in the hands of a party the greater part of whose campaign funds had been contributed by corporations and trusts?" Parker asked. Roosevelt denounced the charges as "unqualifiably and atrociously false."
Historians now know Parker was right but at the time he could not produce concrete proof. Roosevelt was dissembling. For instance, he had secretly asked Harriman to contribute to the Republican Party in New York State with the plea that its gubernatorial candidate, then-Lieutenant Governor Frank Higgins, needed help getting elected. Harriman complied, raising about $250,000.
But, as TR fully realized, supporting the party and Higgins in New York also meant indirectly supporting Roosevelt himself -- he was running for president on the same ticket. TR had directed that some business contributions be returned to their donors but campaign aides had not followed through and the president had not really checked.
On the other hand, Parker, too, received large contributions from business interests, mostly in New York City, though not as much as Roosevelt. There were rumors in the press, but nothing specific came out in public.
TR won in a landslide. But public concern about campaign finance was sharpened.
The next year, the Legislature investigated the management of insurance companies, uncovering a corrupt pattern of insider trading, fraudulent accounting, and deceptive sales practices. But the committee's counsel, Charles Evans Hughes (who would later himself be a reformist governor), dug deeper and got company officials to admit to providing large campaign contributions for state and federal offices. Hughes pressed U.S. Senator Thomas C. Platt, the long-time boss of the state Republican Party, about the real purpose of the contributions:
"Hughes: To see that the legislature, for example, did not enact legislation which they thought hostile to their policyholders?
"Platt: That is what it would amount to.
"Hughes: Is not that the way it really comes about, Senator, that they use of these contributions in the election of candidates to office puts the candidates in more or less of a moral obligation not to attack the interests supporting [them]?
"Platt: That is what would naturally be involved."
The contributions were not really bribes. They were more in the vein of what we now call building influence or access.
But the 1904 and 1905 scandals stirred public opinion. Higgins, whose 1904 campaign had benefitted from business campaign contributions as indicated above, did not mention that fact when he made his strong appeal to the Legislature for action in 1906.
After Governor Higgins' speech, the Legislature passed three pieces of legislation. One prohibited corporate campaign contributions. Another required candidates and political committees to make public a record of their campaign receipts and expenditures. A third redefined corrupt practices by defining what campaign expenditures were acceptable.
Closing one door, opening another
The campaign finance law was changed and updated in 1949 and 1976. It currently provides that corporations are limited to political donations of $5,000 a year, according to the New York State Board of Elections.
But there is a large loophole or exception, through Limited Liability Companies (LLCs). The New York State Department of State offers this definition of an LLC:
"A limited liability company (LLC) is an unincorporated business organization of one or more persons who have limited liability for the contractual obligations and other liabilities of the business. The LLC is a hybrid form that combines corporation-style limited liability with partnership-style flexibility. The owners of an LLC are “members” rather than shareholders or partners. A member may be an individual, a corporation, a partnership, another limited liability company, or any other legal entity. An LLC may organize for any lawful business purpose or purposes."
LLCs are flexible, versatile entities. But in 1976, the State Board of Elections decided that, when it came to campaign contribution, LLCs were more like individuals than corporations or partnerships. That meant they were subject to much higher limits on contributions, and much less stringent reporting requirements. The Board's decision was based on a since-changed federal definition.
This opened the way for huge contributions. The names of individuals behind LLCs are not disclosed. LLCs now routinely make large contributions to candidates for governor, other statewide offices, and the Legislature. It has become a way for monied interests to influence elections and gain access and influence.
Good government groups have called for the "LLC loophole" to be closed for several years. In 2015, the Board considered eliminating it but deadlocked, two to two, and issued a decision that it was up to the Legislature to change it. Governor Cuomo, a Democrat, and the Democratic Majority in the Assembly support the change but the Senate, which is controlled by Republicans, so far has balked. Cuomo and many legislators benefit from the contributions, so their efforts toward repeal look half-hearted.
In 2015, the Brennan Center for Justice at the New York University School of Law went to court to force the Board to change its ruling. Last year, State Supreme Court Justice Lisa Fisher dismissed the case, finding that the statute of limitations for challenging the Board's 1996 action has passed. She also characterized the issue as a “political question best suited for resolution through legislative action.”
Money and politics: what can citizens do?
One hundred and eleven years after New York's first campaign finance regulation, the state is once again searching for a solution to the issue. Good government groups and the Joint Commission on Public Ethics have set forth proposals, including closing the LLC loophole and increasing disclosure requirements. Governor Cuomo mostly seems to have given up. He has remarked that it is now up to the people to get the loophole closed.
As it turns out, the people may have a chance to do that this fall, when New Yorkers vote on whether to hold a state constitutional convention. A convention could alter the way we conduct and finance campaigns, including even proposing public funding of political campaigns.
Actually, an amendment to the constitution prohibiting corporate campaign contributions was proposed before in a constitutional convention:
"The idea of this section...is to prevent the great moneyed corporations of the country from furnishing the money with which to elect members of the legislature of this State in order that these members of the legislature may vote to protect the corporations," said its sponsor. "It strikes...at a constantly growing evil in our political affairs, which has, in my judgment, done more to shake the confidence of the plan people of small means in this country in our political institutions than any other practice which has ever obtained since the foundations of our government."
The amendment's sponsor acknowledged that the contributions were not akin to bribes. He said companies regarded them as "investments" made to get an "inexpressible sympathy between the candidate and the contributor."
Like the quotation from Governor Higgins in 1906, these words sound applicable to our situation today. But these were the words of New York attorney and statesman Elihu Root, a Republican, and the constitutional convention was in 1894.
Political insiders who were delegates to the convention opposed the amendment. It would cut off their campaign contributions. Democratic delegates derided it as a political charade. One Democrat said that "the whole business was buncombe, pure and simple, and [proposed] only for the sake of allowing Republicans to deliver patriot speeches for the record and their constituents." The proposed amendment was tabled and did not find its way into the constitution.
This year, New Yorkers have an opportunity to try again to get at the issue of money in politics. If the state's three branches of government -- governor, the Legislature, and the courts -- can't resolve the issue, then the voters may decide that is one strong reason to vote for a constitutional convention in November.
Of course, political insiders could bottle up reform amendments as they did with Root's proposal in 1894. On the other hand, with so much public interest and concern about the issue, publicity by good government groups and the media, and given the recent bouts of corruption in Albany, the prospects for changing the constitution to deal with the issue seem very good.
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Dr. Bruce W. Dearstyne's latest book is The Spirit of New York: Defining Events in the Empire State's History, published in 2015 by SUNY Press.
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(photo: Samar Khurshid/Gotham Gazette)
This is part one of a two-part series entitled Needed: Fresh Eyes to Improve New York’s Constitution. Read part two here.
New York’s Mandarin Constitutional Culture
During the last 500 years, a culture of innovation set off the West from the rest of the world, allowing it to achieve far higher living standards. Incentives for innovation have remained strong in the private sector but have greatly weakened in the public sector.
The United States and its most innovative state, New York, have led the West in innovation. During the 18th and 19th centuries, this included leading the world in constitutional innovation, which is arguably the most important type of public sector innovation. But present-day New Yorkers and their opinion leaders are as allergic to such innovation as Chinese emperors and Mandarins were in the 18th and 19th centuries.
Symbolic of the decline are the stale ideas currently dominating New York’s debate over whether to call a state constitutional convention. Every 20 years the state constitution mandates that New York voters be asked whether they want to convene another state constitutional convention. To date, New York has convened nine proposing and two ratifying conventions. On November 7, 2017, this question is next on the ballot.
The unique democratic function of a state constitutional convention is to provide a mechanism to bypass the state Legislature’s veto power over constitutional amendment when the Legislature’s institutional interests conflict with those of the public. The result is that not only the Legislature but also the most powerful special interest groups that thrive exercising influence over the Legislature are implacable enemies of state constitutional conventions.
The current debate in New York has been dominated by opinion leaders who were already adults when New York’s last constitutional convention convened in 1967. They have much to bring to the current debate, especially a sense of history, and we are lucky to have them. But too often their and their allies’ reform ideas are from a different generation. Their ideas may be improvements over the antiquated status quo, but so were the now obsolete audio and video tape recorders from the second half of the 20th Century that replaced paper-based recording technologies.
In contrast, when Thomas Jefferson wrote the U.S. Declaration of Independence and when James Madison and Alexander Hamilton both participated at the 1787 national constitutional convention and then defended it in the Federalist Papers, they were all under 40 years of age. The three leading figures behind the design of New York’s first constitution in 1777 -- Gouverneur Morris, Robert Livingston, and John Jay -- were all 30 years of age or younger. They brought to the design of our federal and state governments fresh eyes and many innovations from which we have greatly benefited.
A better balance between the old and new is needed. Unfortunately, getting true innovators involved in democratic reform is one of the hardest parts of democratic reform, as the rewards for such innovation are often negligible at best. Consider just one reason: why do the immensely difficult and costly work of developing an innovation that has no chance of being implemented because of a legislature’s institutional conflict of interest?
A state constitutional convention is one of the few institutional mechanisms in our democracy with the potential to stimulate fresh thinking. It would be a tragedy to squander that opportunity.
My greatest worry is not, as convention opponents argue, that special interests will derail a convention by getting it to place harmful proposals on the ballot. If special interests do corrupt a convention—and they will certainly try—the people have shown they can be trusted to veto the resulting proposals. This, after all, is why New York’s and other states’ most powerful special interests hate the institution of the state constitutional convention and have spent so much to oppose convening one: they are more confident in their typical, ongoing control over legislatures.
A greater worry should be that New York’s opinion leaders, including its press, academics, advocates, and politicians, will continue to treat democratic innovators the way Chinese Mandarins did during the era when the United States was founded. New York needs to breed a new generation of Alexander Hamiltons, and the time to begin that effort is now.
New York, despite its vast human and material wealth, has become too much like 18th century China, when China was a vastly larger, more sophisticated, and more prosperous country than ours but became arrogant and thus complacent in its superiority. New Yorkers should look to democracies, including Estonia, Iceland, and Sweden—two of them about the size of New York when it drafted its first constitution—where a can-do culture of democratic innovation survives.
New York, like China thought it was for hundreds of years, remains at the center of the world. But it won’t remain there unless it proves capable of developing an outward looking culture characterized by both constitutional humility and innovation.
This is part one of a two-part series entitled Needed: Fresh Eyes to Improve New York’s Constitution. Read part two: Implementing First Amendment Values in the 21st Century. And, read other columns by J.H. Snider here.
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J.H. Snider, the president of iSolon.org, is the editor of The New York State Constitutional Convention Clearinghouse and author of Does the World Really Belong to the Living? The Decline of the Constitutional Convention in New York and Other US States, 1776–2015.
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President Donald Trump (photo: @POTUS)
In the weeks before Donald Trump’s address to Congress, the main topic of conversation among Democrats was not how to make the president look incompetent and unfit—it was how to best exploit the fact that he so clearly is.
We underestimated him.
In the biggest political rope-a-dope of all time, after setting the bar as low as he could during 40 days of tumultuous terribleness and a chaotic campaign, Trump delivered a well-crafted, coherent and populist-yet-serious speech on Tuesday night. His presidency re-started today, powered by its success.
In other words, this is the Democrats’ worst nightmare.
As unpopular a president as Trump is, a high percentage of American voters approve of his policies when they put aside their personal feelings about Trump himself. That means he may still be able to be a well-thought-of president—if he can just act, well, presidential.
And that’s what he did last night.
Trump will now undoubtedly get a bump up in polls. He may even get a bit of a honeymoon period here similar to what presidents normally receive when they are first elected. It’s even possible most of the country will temporarily forget just how badly he and his people bungled the beginning of his presidency.
But the really scary thing for Democrats isn’t the speech; it’s what was in it. Though there were plenty of the same divisive ideas that are sure to enrage the liberal base, there was also plenty of bi-partisan policy and sentiment that is tough to argue with.
Ironically, that was the same strategy as another Comeback Kid, who just happens to be the husband of the Democratic candidate Trump beat in November. Yes, in addition to the red meat he threw his base, President Trump attempted to triangulate his way out of trouble on Tuesday, using Bill Clinton’s method of marginalizing dissent by siding with the opposition party.
A few examples of Trump tacking left include:
--Immigration. The president seemed to indicate he would accept legal status for some undocumented immigrants, saying “I believe that real and positive immigration reform is possible.”
--Paid maternity leave. The president went way left on a favorite policy of liberals, declaring, “My administration wants to work with members of both parties to make child care accessible and affordable, to help ensure new parents that they have paid family leave.”
--Lowering the cost of prescription drugs. Traditionally an issue for Democrats, Trump announced (for the umpteenth time) that he would “work to bring down the artificially high price of drugs.”
Trump also made plenty of inarguable - and stereotypically presidential - statements in his speech. He decried hate crimes. He called for unity. He laid praise on the military. Sure, some of it sounded hollow and pandering. But he didn’t smirk or flub or appear indifferent. In fact, he delivered the lines believably.
You’d have to remember that he has said racist things, divided Americans for his own benefit, and criticized a war hero for getting caught by the enemy to be offended by his duplicity. A lot of Americans won’t.
And to be turned off by his false statements, of which there were plenty, you’d have to know they were false. For the record, these included the claims that Americans live in “lawless chaos” (American crime rates are near all-time lows), “Obamacare is collapsing” (20 million more Americans have health insurance now who didn’t before the health plan was passed), and our country is undergoing the “worst financial recovery in 65 years” (75 months of straight job creation and historically low unemployment).
And, by God, it was great TV.
Maybe that shouldn’t be a surprise. After all, Trump is the producer of a top-rated show. But maybe you would think that a Trump-produced address of Congress would be too over the top to be convincingly earnest. It wasn’t.
The most memorable moment of the evening – or of any presidential address of Congress in recent memory – was the moving memorial for Senior Chief William Ryan Owens, a Navy SEAL killed in a counter-terror operation in Yemen. His wife, Carryn, appeared to be speaking skyward to her late husband as the chamber stood and applauded. The applause lasted for several minutes. Then, the president quoted the Bible in eulogy.
Perhaps Trump’s communications team was thinking more about the effect that moment would have on its principal’s approval rating than the importance of it for the widow and the appreciation of the ultimate sacrifice of a soldier. Perhaps not. It doesn’t matter. It made the president look presidential.
But the Democrats do have one thing going for them: this was just a speech. Today may be a brighter day for Republicans and the White House—but sunlight is the best disinfectant, and only progress on the president’s promises will allow him to maintain his momentum.
Plus: Trump is Trump. If history is any guide, he does not have the discipline to stay on message for more than a short time.
So chalk one up for Team Trump. And Democrats beware. But leading a divided nation, convincing a cantankerous Congress and advancing a bi-partisan agenda is a lot harder than reading off of a Teleprompter.
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Evan Thies is the co-founder of Pythia Public Affairs. On Twitter @EvanRThies.
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