Another Approach to Anonymity: A Voluntary System Offers Advantages over Mandatory Donor Anonymity. (Campaign Finance)

By Tawil, Jack J. | Regulation, Winter 2001 | Go to article overview

Another Approach to Anonymity: A Voluntary System Offers Advantages over Mandatory Donor Anonymity. (Campaign Finance)


Tawil, Jack J., Regulation


IN LAST SUMMER'S ISSUE OF REGULATION, Yale Law School professor Ian Ayres suggested that campaign finance laws be reformed to require that contributions pass through blind trusts ("Should Campaign Donors Be Identified?"). That way, a candidate would never know for certain who contributed to his campaign, or how much the contributor gave. The lack of knowledge would hamper campaign finance corruption; accommodating candidates would not know to whom they owe favors and donors would not be certain that they successfully "purchased" access and influence.

As Ayres noted in his "Readings" list, he is not the first to propose an anonymity scheme. I, myself, suggested a voluntary system in a 1996 article ("Campaign Finance Reform," Chronicles, Vol. 20, No. 3). Under that scheme, candidates who opted into the anonymity system would be exempted from other campaign finance rules, including limits on the size of donations. Donors, in turn, would contribute to their candidates through a single private institution that I call the "Campaign Finance Bank" (CFB). I believe such a regime offers several advantages over Ayres' mandatory system.

PROBLEMS WITH MANDATORY ANONYMITY

Perhaps the most serious difficulty for Ayres is constitutional uncertainty: Would the courts permit government suppression (or, at least, a 10-year government delay in the release) of campaign finance information? Perhaps, in order to prevent "corruption or the appearance of corruption," the courts would accept the regime, but that is far from certain. However, under a voluntary system, the constitutionality question would be moot. Because the candidate volunteers to participate in the system (in exchange for avoiding other campaign finance regulations), he would have no legal grounds to challenge its rules.

Secondly, Ayres' regime likely would face challenges outside the courtroom, from civil libertarians. For them, government-required suppression of campaign finance information would be worrisome, to say the least. A voluntary system would raise fewer concerns because candidates would not have to opt into the system. If they do, they would gain other freedoms that civil libertarians likely would endorse, including no limits on the size of contributions or on the type and size of otherwise-legal campaign expenditures. Free speech opportunities would be expanded. Political action committees (PACs) and other organizations would be free to make unlimited donations to participating candidates. And candidates who participate in the voluntary system would be free from the intrusive hand of the Federal Elections Commission (FEC).

A final problem for Ayres' mandatory scheme is that it would offer wrong incentives to candidates and the private financial institutions that operate the blind trusts. Candidates would want to know the identity of donors and institutions would want the candidates' business, so there would be significant mutual benefit from illicit disclosure. By having just one CFB, there would be less incentive for disclosure.

HOW VOLUNTARY ANONYMITY COULD OPERATE

A candidate who agrees to receive all of his campaign contributions through the CFB would be said to "participate fully" in the system and would thus not be constrained by the FEC's current regulations. Full participants could receive contributions from PACs, provided that the PAC contributions are processed through the CFB. In-kind contributions other than labor would be prohibited.

To deter cheating, fully participating candidates would have to agree to make all campaign expenditures on debit cards issued by the CFB. That would ensure that expenditures do not exceed donations, and would enable vendors of campaign goods and services to detect and report violations.

Candidates would receive a copy of their account balance from the CFB at the end of each accounting period -- typically monthly, but more frequently as the election nears. …

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