Political Hay

McCain-Feingold Gave Us the IRS Scandal

"Too much money in politics" is never the problem.

By 5.21.13

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During Friday morning's House Ways and Means Committee hearing on the IRS targeting scandal, Liberal Congressman Jim McDermott (D-WA) at least had the honesty to say "I don't like the right."

Each committee member had his own axe to grind. McDermott's was campaign finance reform, and his view was shared by several Democrats.

He argued that the beginning of the "problem" of "secret money" going to politically motivated groups was the Supreme Court's Citizens United decision, which eliminated restrictions on independent campaign expenditures by organizations.

McDermott and many others who share his view are wrong. Though it was not our first major campaign finance legislation (FECA 1971), the problem began in earnest with the unconstitutional McCain-Feingold "reform" law, passed in 2002.

McCain-Feingold, whose official name is the Bipartisan Campaign Reform Act (BCRA), would have been more appropriately named the Bipartisan Incumbent Protection Act. And it was indeed more bipartisan than it should have been, gaining support from about one quarter of the Republicans in each chamber of Congress. After all, politicians of both parties support restricting fund-raising abilities of their potential challengers.

By limiting contributions to political parties, BCRA is the reason we have 527 groups, PACs, and the ever-demonized Super-PACs.

Those who argue that restricting campaign contributions will stop money going into politics are arguing that throwing a boulder into a river will stop the flow of water. No, the water just finds its way around the boulder, perhaps then merging back into the river’s prior path, or sometimes making new tributaries.

The bigger point, but one which no Democrat and few Republicans ever make, is that money will find its way into politics as long as politicians involve themselves in money. While the federal government is picking winners and losers, crushing competitors, giving earmarks (even if just called stimulus spending), it will be in the interest of many to try to influence the process.

The answer to "too much money in politics" -- and the answer to so many problems caused by the federal government -- is to substantially reduce the federal government's involvement in the private sector and in the lives of Americans.

What would this look like?

The list of potential reforms, which would involve an unlikely-in-my-lifetime reimagining of the American federal government toward something closer to the vision of the Founders, could fill a book. (Actually, at the Cato Institute, it does fill a book.)

But here are a few top-line suggestions:

  • Implement a flat income tax for both individuals and corporations (or, less preferably, the “Fair Tax” -- a national sales tax which would replace, not supplement, the income tax) and eliminate the vast majority of the IRS staff.
  • Repeal Obamacare, and free health insurance from most federal regulation including all prohibitions against interstate purchase of insurance.
  • Repeal McCain-Feingold and most restrictions on political contributions to and spending by political parties. (I could live with enacting disclosure requirements for single or cumulative contributions above a certain amount since it is important to know that our politicians are not owned by a small number of large donors.)
  • Reform entitlements so that they are a true “safety net,” including provisions that aim to make younger Americans more responsible for their future health care and retirement costs. Nothing inspires concern about the behavior of government like actually being impacted by its behavior, something that a cradle-to-grave Nanny State aims to minimize.
  • Pass the REINS Act in order to strip the ability of regulatory agencies to make “economically significant” regulations without a vote of Congress. (The EPA is in particularly desperate need of restraint.)
  • End federal subsidies. The list is too long to enumerate here, but would include everything from crops to free cell phones to flood insurance to too-big-to-fail banks.
  • Elminate public sector, especially federal government, unions

This is just a sample, but imagine the transformative nature of such reforms -- and therefore why the opposition to any of them will be so strident. Somebody’s ox will be gored: Accountants, health insurers, lobbyists, farmers, union hacks, moochers, rent-seekers, and free-riders. And of course government employees and power-craving politicians.

The beneficiaries, always the “forgotten man” in politics, are the other 300 million American citizens whose cost of living (and complying with millions of pages of regulations) will drop, while our freedom and economic choices will expand.

If the ongoing IRS scandal shows anything -- even without the gasoline of the AP and Benghazi scandals being dumped on the fire -- it shows that government is not benevolent, not mom or dad, not trustworthy. Government is force.

As the recently departed Nobel laureate James Buchanan explained in his development of Public Choice Theory, decisions are made by people, not by organizations, and people have their own personal motivations no matter where they work. If anything, government employees might have different, conflicting, and more damaging-to-the-country motivations than private citizens since what they often aim to maximize is power rather than money.

James Madison, 225 years ago in Federalist 51, offered a similar insight, the second part of which, though arguably more important, is often neglected: “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.”

Fear of government is a strong motivator for reform. It also poses a substantial electoral threat to the party that generally supports larger government.

Meanwhile, Democrats decry "secret" contributions to organizations that engage in political activity.

But with the wide public acknowledgment of the Obama administration's targeting of conservative organizations, of the many stories of audits by multiple agencies of conservative private citizens who were foolish enough to support Mitt Romney or Tea Party groups, the past week’s news can only increase the desire of Americans to be able to be involved in politics anonymously.

In a nation founded on robust, public political debate, that, my fellow Americans, is a true tragedy.

Photo: UPI

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About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Saturday mornings from 6 AM to 9 AM. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.