Still the same old "shakedowns"

Prior to the sweeping campaign funding reforms enacted in 2002, lawmakers and the major political parties were said to have shaken down corporations and other entities for contributions. The reforms - better known as 'McCain-Feingold' - were supposed to have put an end to that.

It didn't. While political players at the national level are no longer allowed to solicit soft money, they still solicit hard money. "Shakedowns" still happen. (A note on definitions: soft money is meant to finance party-building activities. Hard money is meant for elections.)

Actually, shakedown is too strong a word. Critics of the old campaign finance system frequently use that word as well as "corruption" to describe what was going on. A shakedown is when someone threatens to inflict harm on you if you do not pay up.

Did policymakers engage in this activity? There certainly weren't any 'hard core' shakedowns, of the kind that happens in some other countries. In South Korea during the 1980s, for example, if corporations did not pay, they were forced out of business. That's what the chairman of the Kukje group, then one of South Korea's largest conglomerates, found out after he balked at giving $2.6 million to one of the First Lady's favorite "charities."

Many allege that shakedowns took place here, albeit in subtler forms. The Committee for Economic Development stated, "The malign and corrupting nature of the soft money system is demonstrated by the fact that corporate executives have felt coerced into giving ever-escalating soft money contributions with ever-increasing frequency by subtle threats of retribution that accompany soft money solicitations."

Thomas Mann and Norman Ornstein of the Brookings Institution and American Enterprise Institute, respectively, wrote that "Reformers did want to end the shakedown schemes and access-peddling officeholders and parties used to raise money from corporations, unions and wealthy individuals. This was real corruption, not just the imagined 'appearance' of it."

Sounds ominous. But one has to be careful to make clear what one means by "shakedown." It could take the form of a benign, "Donate to me, or else our political opponents will harm us." Or it could be a sinister, "Donate to me, or else I'll harm you."

Here in America, fortunately most shakedowns (if you can call them that) carried out by elected officials and political parties take the benign form. It's what happens every time you receive a fundraising letter in the mail. Clearly, that's not "corruption."

What about the sinister form? I contacted several industry representatives on this point. Most of them said they've never in any way felt pressured or coerced into donating.

One source, however, said what irks him is that prior to a major vote or hearing affecting his industry, certain members of Congress will just happen to schedule a fundraiser. While there are no overt threats involved, it does put subtle pressure on a company to donate.

Of course, refusing to donate poses no risk of being put out of business as in South Korea. But it could conceivably prompt an unprincipled member of Congress to change his or her vote.

And assuming that's the case, BCRA has done nothing to curtail it. To make up for the absence of soft money, political players simply ask for more hard money.

But genuine shakedowns perpetrated by elected officials are rare. If they were endemic, then you would see corporations mainly donating to Democrats, and labor unions mainly to Republicans; i.e. Democrats would extort money form corporations by threatening them with unfriendly legislation, and Republicans would do the same to labor unions.

To be sure, corporate shakedowns are common in America, but not vis-a-vis members of Congress (at least not directly). Trial lawyers are well known for coercing corporations into handing over millions or billions of dollars. And some advocacy groups, like that of Jesse Jackson, have refined the art of whipping up bad press for corporations, and quieting down as soon as the corporate donations start to flow. BCRA certainly has not put a stop to these practices.

The best way to root out the mild shakedowns that do occur on Capitol Hill is for prospective donors to just say no to politicians. That's what Time Warner, Hasbro, Allied Signal, Monsanto and other companies did, and to my knowledge they didn't suffer any retaliatory action. And that's just the way it should be.