Kill McCain-Feingold! Jude Wanniski September 29, 1997

Memo To: Senators John McCain and Mitch McConnell
From: Jude Wanniski
Re: Campaign Finance Reform

Normally I would be able to find a position somewhere between the two of you, both of whom I admire. In the case of campaign finance reform, though, I have to completely agree with you, Sen. McConnell, that there is no way to fix the McCain-Feingold bill, and it should be killed outright. It is of course a national disgrace the way the system of financing political campaigns leads candidates into temptation. It is no surprise to anyone that candidates of both parties at times succumb, cutting corners and worse as they go for the money they believe they need to be elected. There is nothing you can do about it, I'm afraid, as long as the present tax system exists. The corruption surrounding campaign finance is only a symptom of this central problem. It was not yet a serious problem when I first arrived in Washington in 1965 as a political reporter for Dow Jones. It became serious with each passing year and each series of additions to the tax code and regulatory apparatus. The democratic basis of our government is so efficient that the squeaky wheel always gets some grease, but it has now gotten to a point where all wheels squeak.

No major group or class of Americans now can afford to rely simply on the votes they cast to protect themselves against political disadvantage. Because the competition among business and industry groups is so intense, they all must pay in order to keep from being crippled by the elected officials of the executive and legislative branches. It comes to approximate the old insurance racket of the Mafia. Pay me off, or I will break your leg, or worse. It is much more gentlemanly, of course, but the net effect is the same. If you pass campaign finance laws that limit the ability of people to protect themselves against political predators, you give the advantage to those who are prepared to ignore the law or bend it out of shape. With survival at stake, people will do what they believe needs to be done, figuring they have no other choice. Their money will go under the table. I'm not even talking about vested interests which are eager to get a new tax or regulatory break. I'm talking about those who will pay not to be punished relative to their competitors. Your colleague, Sen. Bob Bennett [R-UT], is exactly right when he argues that all the attempts to date to clean up campaign finance have only made matters worse, and that all campaign finance regulations should be scrapped and replaced with a simple requirement of public disclosure. It is equivalent to the aphorism of the gun lobby: When you outlaw guns, only outlaws will have guns. When you make it illegal for citizens to express their views with financial support of candidates, you force them to resort to illegal means in financial support of candidates, you force them to resort to illegal means in their attempt to protect or advance their political interests.

A simplified federal tax system is the only antidote. If you take away the advantages everyone has in the tax system, nobody has a disadvantage. There would immediately be a dramatic decline in the money available for political campaigns, because neither the Congress nor the President would be in a position to sell big favors for big bucks. They would only have small favors. In order to preserve the democracy and the First Amendment, you have to permit all legitimate interests to have access to all elected officials to present their petitions. A new, simple tax system will not only reduce by 95% the number of petitioners. It will also cause the kind of private economic growth that makes it far easier for citizens to seek profits outside of Washington than to seek rents and favors in it.

Regulatory reform will naturally follow a successful tax reform. This is because a successful tax reform will lead to a long period of economic expansion in the United States — as opposed to the inflationary contraction of the past 30 years. During contractions, the people rush to Washington for protection against the strong, the greedy, the perverse, who are able to get more than their proportionate share of the nation's productive resources. Regulations multiply as a result, and so does the national need for lawyers and accountants. When the economic contraction is reversed, the opposite occurs, as the masses of ordinary people find the regulations getting in the way of upward mobility and opportunity. It is only in that kind of atmosphere that the regulatory apparatus can be peeled away, leaving only those which are necessary for the national welfare. Senator Bennett does not seem to have many visible supporters in the Senate for his idea, but that is because his proposal to scrap all campaign finance laws should come second to tax reform. Once you do tax reform, there will be popular support for the Bennett idea.