[House Hearing, 104 Congress]
[From the U.S. Government Publishing Office]


[[Page (i)]]

                  CAMPAIGN FINANCE REFORM LEGISLATION

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                            HOUSE OVERSIGHT
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED FOURTH CONGRESS

                             FIRST SESSION

                               __________

         NOVEMBER 2, 1995 AND NOVEMBER 16, 1995, WASHINGTON, DC




        Printed for the use of the Committee on House Oversight
                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE                        
                           WASHINGTON : 1995              

[[Page (ii)]]

                      COMMITTEE ON HOUSE OVERSIGHT

                 WILLIAM M. THOMAS, California, Chairman
VERNON J. EHLERS, Michigan             VIC FAZIO, California                
PAT ROBERTS, Kansas                    SAM GEJDENSON, Connecticut           
JOHN A. BOEHNER, Ohio                  STENY H. HOYER, Maryland             
JENNIFER DUNN, Washington              WILLIAM J. JEFFERSON, Louisiana      
LINCOLN DIAZ-BALART, Florida           ED PASTOR, Arizona                   
ROBERT W. NEY, Ohio                                            
                                 ------                                

                            Committee Staff

                     Stacy Carlson, Staff Director
                 Tom Jurkovich, Minority Staff Director

[[Page (iii)]]



 
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Thomas, Hon. William M., U.S. Representative from California.....1, 167
Fazio, Hon. Vic, U.S. Representative from California.............3, 174

                               STATEMENTS

Dunn, Hon. Jennifer, U.S. Representative from the State of 
  Washington.....................................................     6
Gingrich, Hon. Newt, Speaker of the House of Representatives.....     9
Gephardt, Hon. Richard A., U.S. Representative from the State of 
  Missouri, and House Democratic Leader..........................    24
Jacobs, Hon. Andy, U.S. Representative from the State of Indiana.    40
Kanjorski, Hon. Paul E., U.S. Representative from the State of 
  Pennsylvania...................................................    42
Inglis, Hon. Bob, U.S. Representative from the State of South 
  Carolina.......................................................    52
Portman, Hon. Rob, U.S. Representative from the State of Ohio....    55
Whitfield, Hon. Ed, U.S. Representative from the State of 
  Kentucky.......................................................    63
Greenwood, Hon. James C., U.S. Representative from the State of 
  Pennsylvania...................................................    70
Smith, Hon. Linda, U.S. Representative from the State of 
  Washington.....................................................    88
Meehan, Hon. Martin T., U.S. Representative from the State of 
  Massachusetts..................................................    97
Smith, Hon. Nick, U.S. Representative from the State of Michigan.    99
Torkildsen, Hon. Peter G., U.S. Representative from the State of 
  Massachusetts..................................................   102
Wamp, Hon. Zach, U.S. Representative from the State of Tennessee.   106
Poshard, Hon. Glenn, U.S. Representative from the State of 
  Illinois.......................................................   110
Kaptur, Hon. Marcy, U.S. Representative from the State of Ohio...   115
Shays, Hon. Christopher, U.S. Representative from the State of 
  Connecticut....................................................   138
Maloney, Hon. Carolyn, U.S. Representative from the State of New 
  York...........................................................   175
Lewis, Hon. John, U.S. Representative from the State of Georgia..   184
Gutierrez, Hon. Luis, U.S. Representative from the State of 
  Illinois.......................................................   188
White, Hon. Rick, U.S. Representative from the State of 
  Washington.....................................................   194
Dickey, Hon. Jay, U.S. Representative from the State of Arkansas.   199
Gilchrest, Hon. Wayne T., U.S. Representative from the State of 
  Maryland.......................................................   203
Crane, Edward, president, CATO...................................   225
Stockmeyer, Steven F., executive vice president, National 
  Association of Business PACS...................................   243
Gora, Joel, associate dean, Brooklyn Law School, American Civil 
  Liberties Union................................................   247
Driesler, Steve, vice president, government affairs, National 
  Association of Realtors........................................   265
Parmele, Ken, vice president, government affairs, Rural Letter 
  Carriers Association...........................................   272
Baylin, Adrienne, employee, Baltimore Gas & Electric Co..........   286
Kavanaugh, John, Kavanaugh's Esquire Club, member, National 
  Restaurant Association.........................................   289
Dietz, Nancy, teacher, Frederick County School System, National 
  Educational Association PAC....................................   297
Kincaid, Kevin, fire fighter/paramedic, Fairfax County Fire and 
  Rescue Department..............................................   300

                           WRITTEN TESTIMONY

Clinger, Hon. William F., Jr., U.S. Representative from 
  Pennsylvania...................................................   159
Costello, Hon. Jerry. F., U.S. Representative from Illinois......   158

[[Page iv]]

Dietz, Nancy, teacher, Frederick County School System, National 
  Educational Association PAC....................................   298
Gephardt, Hon. Richard A., U.S. Representative and House 
  Democratic Leader..............................................    27
Gilchrest, Hon. Wayne T., U.S. Representative from the State of 
  Maryland.......................................................   205
Gora, Joel, associate dean, Brooklyn Law School, American Civil 
  Liberties Union................................................   250
Goss, Hon. Porter, U.S. Representative from the State of Florida.    39
Greenwood, Hon. James C., U.S. Representative from the State of 
  Pennsylvania...................................................    72
Inglis, Hon. Bob, U.S. Representative from the State of South 
  Carolina.......................................................    54
Kanjorski, Hon. Paul E., U.S. Representative from Pennsylvania...    45
Maloney, Hon. Carolyn, U.S. Representative from the State of New 
  York...........................................................   178
McBridge, Ann, common cause president, introduction of Smith-
  Shays-Meehan Campaign Finance Reform Legislation...............    95
Meehan, Hon. Marty T., U.S. Representative from the State of 
  Massachusetts..................................................    98
Poshard, Hon. Glenn, U.S. Representative from the State of 
  Illinois.......................................................   112
Portman, Hon. Rob, U.S. Representative from the State of Ohio....    58
Whitfield, Hon. Ed, U.S. Representative from the State of 
  Kentucky.......................................................    65
Smith, Hon. Linda, U.S. Representative from the State of 
  Washington.....................................................    90
Smith, Hon. Nick, U.S. Representative from the State of Michigan.   100
Stockmeyer, Steven F., executive vice president, National 
  Association of Business PACS...................................   246
Torkildsen, Hon. Peter G., U.S. Representative from the State of 
  Massachusetts..................................................   103
Wamp, Hon. Zach, U.S. Representative from the State of Tennessee.   108
Kaptur, Hon. Marcy, U.S. Representative from the State of Ohio...   117
Shays, Hon. Christopher, U.S. Representative from the State of 
  Connecticut....................................................   140
Lewis, Hon. John, U.S. Representative from the State of Georgia..   186
Gutierrez, Hon. Luis, U.S. Representative from the State of 
  Illinois.......................................................   190
White, Hon. Rick, U.S. Representative from the State of 
  Washington.....................................................   197
Dickey, Hon. Jay, U.S. Representative from the State of Arkansas.   201
Crane, Edward, president, CATO...................................   229
Driesler, Stephen, vice president, government affairs, National 
  Association of Realtors........................................   267
Parmele, Ken, vice president, government affairs, Rural Letter 
  Carriers Association...........................................   274
Baylin, Adrienne, employee, Baltimore Gas & Electric Co..........   287
Kincaid, Kevin, fire fighter/paramedic, Fairfax County Fire and 
  Rescue Department..............................................   303


[[Page (1)]]






            TESTIMONY ON CAMPAIGN FINANCE REFORM LEGISLATION

                              ----------                              




                       THURSDAY, NOVEMBER 2, 1995

                          House of Representatives,
                              Committee on House Oversight,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1310, Longworth House Office Building, Hon. William M. Thomas 
[chairman of the committee] presiding.
    Present: Representatives Thomas, Ehlers, Dunn, Diaz-Balart, 
Fazio, Hoyer, Jefferson, and Pastor.
    Staff Present: Stacy Carlson, Staff Director; Roman Buhler, 
Counsel; Jim Sivesind, Counsel; Chris Wright, Professional 
Staff; Samantha Kemp, Professional Staff; Janet Giuliani, Staff 
Assistant; Laura Buhl, Staff Assistant.
    The Chairman. Our House Oversight Committee will be in 
order.
    It is a pleasure to welcome the Members and the Speaker to 
the first in a series of hearings on campaign finance reform 
issues. I think in the past folks have tended to look at 
campaign finance reform as a partisan issue. We need to at the 
outset indicate to everyone that, at least as far as the 
Chairman is concerned, campaign finance reform is not a 
partisan issue. It is a political issue to be sure, and I will 
use that often used definition of politics: the process of 
determining who gets what, when, and how. If, in fact, it is a 
political issue, then it is an extremely important issue 
because it deals with the rules and the financing of people 
selecting democratically their elected Representatives to their 
republic, and, therefore, it is everybody's business.
    We are going to hold a series of hearings. They are going 
to be open. They are going to be public. Today, after the 
Speaker and the Minority Leader, we are going to begin focusing 
on Members who have introduced bills and the first subject 
matter will be the role of political action committees.
    After that, we will look at expenditures made by candidates 
out of their personal funds, independent expenditures, 
political parties and changing the role of political parties 
under the campaign finance laws, and a whole host of other 
subjects focusing on the question of what laws we currently 
have on the books in the area of campaign financing, and how do 
we propose to change it.
    Our examination won't be confined, obviously, to elected 
Members. It will be practitioners in the political arena. There 
will be public interest groups. There will be the general 
public. We will hold hearings until all of those groups who 
have an interest in the subject matter have been heard.

[[Page 2]]

    Let me, for just a minute, try to set a general tone and 
direction. Focus if you will to the charts over on the right. 
All of you have charts available to you in written form. I 
think it is useful to review where we have come from 
historically, and where we are now, especially since most of 
the reform that currently affects us was written over about a 
five to seven year period in the 1970s, or about 25 years ago.
    It started with the Federal Election Campaign Act of 1971, 
and the primary thought for us there was disclosure. It 
required candidates to disclose where they got their finances 
under particular rules of disclosure. Interestingly, it also 
limited the amount that candidates could spend on media 
advertising. That was repealed by 1974 amendments. The 1971 Act 
put a limit on how much individual candidates could spend of 
their own personal money. That was invalidated. And so we will 
focus, then, on the Federal Election Campaign Act amendments of 
1974, which today form the current basis of our campaign 
finance laws.
    Contribution limits were focused significantly in terms of 
the amount available for individuals to contribute, not just to 
candidates but to political parties and to political action 
committees. Political action committee contribution amounts 
were determined. Cash limits were also adopted.
    Spending limits passed by Congress in 1974, which were 
imposed on House candidates, were invalidated under the Buckley 
v. Valeo decision in 1976. Independent expenditures, limited by 
congressional action, were also invalidated under the Supreme 
Court decision of Buckley v. Valeo in 1976. Congress also in 
1974 established the Federal Election Commission, albeit the 
members of the commission selected by Congress.
    Those 1974 amendments were adjusted by the 1976 Buckley v. 
Valeo decision, the key Supreme Court decision in the area of 
campaign finance reform. Incidentally, when you look at the 
decision, I think one of the most striking things about the 
decision is that there were only eight Justices who rendered a 
decision. Justice Stevens had come on the Court too late to 
participate in the decision. But at that time, Chief Justice 
Warren Burger concurred in part and dissented in part. Justice 
White concurred in part and dissented in part. Justice Marshall 
concurred in part and dissented in part. Justice Blackmun 
concurred in part and dissented in part. Justice Rehnquist 
concurred in part and dissented in part. In fact, Justice 
Rehnquist is the only sitting member of the Court, sitting as 
Chief Justice today, who participated in the Buckley decision.
    But what the Buckley decision did was, first of all, uphold 
the contribution limits. In the words of the Court, the primary 
governmental interest served by the act is the preservation of 
actual and apparent corruption of the political process. But 
the Court decision overturned spending limits, both in terms of 
individuals and in terms of the limits that were imposed on 
candidates. The Court said that it was unduly burdensome on 
political expression with no overriding government interest. It 
also indicated that the Federal Election Commission could not 
be composed of members selected by Congress since it dealt with 
overseeing Congress.
    That was changed in 1976, reconstituting the Federal 
Election Commission with members selected solely by the 
President and 

[[Page 3]]
then basically enhanced disclosure and minor fine-tuning, both in the 
1976 amendments and in the 1979 amendments, and that leads to 
the current structure that we are functioning under today.
    So you can see that. Just very briefly, in a review, 
disclosure is the cornerstone of the system. And we just 
recently, by unanimous vote, passed out an additional fine-
tuning of disclosure, H.R. 2527, removing House incumbents and 
candidates of filing with the Clerk of the House and filing 
instead directly with the Federal Election Commission, thereby 
reducing the delay in public disclosure by one to three days.
    Contribution limits, as they have been defined over the 
1970s are there, and you can see them in terms of individuals, 
and in terms of PACs.
    Candidate personal spending has no limits because of the 
Buckley v. Valeo decision. Independent expenditures have no 
limits. They were invalidated in Buckley v. Valeo. We do not 
have a detailed examination of political parties on the chart 
because that is a subject for separate hearings, and I want to 
trace the history of political parties and what has occurred to 
them in terms of congressional legislation, modified by Supreme 
Court decisions, because I believe it has a significant impact 
on the direction that we have taken in the last 25 years.
    At this time, I would recognize the gentleman from 
California, the Ranking Member.
    Mr. Fazio. Well, thank you, Mr. Chairman. And I first want 
to congratulate you on initiating this series of hearings. Your 
interest in this subject area and your knowledge about it are 
well-known and well-respected.
    I look forward to trying to put together the kind of 
product you indicated that you wanted to make the hallmark of 
this committee. Since this is a leadership Committee, I think 
it will be also important that our leaderships be willing to 
work together, if we are going to report out anything that 
could resemble a bipartisan or consensus approach to campaign 
finance reform.
    I want to welcome the Speaker and later on our leader, Dick 
Gephardt, will join us as well. I think we value your marquee 
contribution to this effort today. I think it does bring 
attention to the fact that we are, once again, about to delve 
into one of the most controversial and difficult areas that we 
legislate in. We have 435 plus experts on the subject, all of 
whom have run successful for office, at least once.
    The need for campaign reform is increasingly obvious, with 
every passing election. The cost of communicating with our 
constituents, the citizens who elect us, is growing enormously. 
All of us struggle with the amount of time which we are 
required to devote to fund-raising alone. It probably is the 
greatest cost to our modern campaign ritual. But let me say 
that I think the biggest problem we face is the developing, 
perhaps it is already here, total crisis and confidence that 
has developed over not only the electoral process but also over 
the process of governing which flows right out of it. We have 
far too little trust of the public at the moment, and I think 
our efforts here today are on the part of all of us designed to 
see if we can do something to recover that.

[[Page 4]]

    But despite the general consensus that reforms are needed, 
the task of coming up with something that suffices is 
enormously difficult. Americans react to the way of financing 
campaigns in many different ways, but I think two are the most 
obvious and at the same time contradictory. On the one hand, 
people believe that campaign money buys elections that, in 
effect, public officials are bought in the electoral process. 
We hear a lot of rhetoric about special interests and PACs and 
fat cats and all the rest. At the same time, in most election 
years, 20 million Americans choose willingly to contribute to 
campaigns. They do so in many cases with strong feelings of 
virtue, because they, as groups and individuals, think that the 
money they contribute really does go to the furtherance, not 
only of what is in their interest but their ideals and their 
goals for the country. So at the same time that we bash 
politicians and dump on the system of electing them, we find 
many, many people willingly participating in them.
    So it is not clear today that this issue, which has grown 
increasingly difficult to deal with, can be resolved in terms 
of ways that really improve the system. We are all much better 
at describing the problem than coming up with a consensus, an 
alternative to the current system.
    So let me state from the outset that despite the very 
negative coverage that the media gives our system, and it is 
almost unanimously critical from differing perspectives on 
occasion, this is, as the Chairman has already said, the most 
discloseable, most accountable system of any government at 
anytime in history.
    Our constituents have available to them our official 
personal finances, our office accounts, our campaign finances. 
There is nothing about us or the political system we 
participate in that isn't available. And despite the claims of 
some so-called reformers, this body has not failed to take up 
the issue of campaign reform. In fact, as the Chairman has 
indicated, we are still operating with a much amended by the 
Court law that is 20 years old but we have attempted on many 
occasions to delve into this area. Three, as a matter of fact, 
times in the last Congresses we have passed reform bills. They 
haven't become law. I am sure they were imperfect in many ways 
and I know there were partisan differences over them. But they 
were the product of tremendous effort, some attempts to reach 
consensus and they were all, I think, a step in the right 
direction, even if they did not accomplish their ultimate 
purpose, a truly bipartisan breakthrough.
    So, Mr. Chairman, I think this series of hearings is the 
way we really ought to once again review the bidding on how to 
go about financing and conducting Federal elections. Hopefully, 
it will provide a real foundation for all of us to build the 
kind of legislation that I think would once again help restore 
some confidence in our representational form of government.
     Mr. Chairman, there are a lot of things that need to be 
said about the subject of today's hearing, PACs and related 
issues. I hope we will have a chance, in dialoguing with our 
colleagues, to make some of those points. I think it is fair to 
say that many of the ideas that we will hear today have been 
around the track before. This is not an area where there has 
been a lot of new and creative thinking. Perhaps it is too much 
to ask of the mere mor

[[Page 5]]
tals on this committee but perhaps we can break through and fully 
understand the implications of not only what we have done in 
the past but some of the panaceas we will have offered today 
about fixing the present.
     I hope people will think big thoughts and come up with 
some new concepts, because in the past, we have been victimized 
by Murphy's Law more often than not. In fact, all of the 
efforts to bring about the disclosure, the accountability that 
the PAC system personifies were done in the name of reform. 
This was a way of bringing middle management, white collar 
workers into the political process, equivalent to what the 
organized labor movement had brought about.
     When former Representative Clark MacGregor, Republican of 
Minnesota, led the charge to bring PACs into being, it was all 
about getting away from the Watergate problems of the 1970s, 
the under the table, the soft money and all of the large 
contributions that appalled the public. So when we look to 
fixing the problem, let's remember, we fixed it so many times 
before that we now have an even bigger one. Let's begin also by 
assuming that if we don't fully fund the FEC, whatever we put 
in place will not be adequately monitored and enforced.
     So, Mr. Chairman, we bite off a lot today, but I think it 
is time, and I think this committee has the capability to put 
together a product that might make us all proud.
    Thank you.
     The Chairman. Thank you.

[[Page 6]]
    
    


[[Page 7]]
    
    


[[Page 8]]
    
    

    
[[Page 9]]

     The Chairman. Now it is my honor and privilege to 
recognize the Speaker of the House, the gentleman from Georgia, 
Mr. Gingrich, for such time as he may consume.




   STATEMENT OF HON. NEWT GINGRICH, SPEAKER OF THE HOUSE OF 
                        REPRESENTATIVES

    Speaker Gingrich. Well, let me thank both of you for what I 
think is exactly the right tone in starting these hearings, 
which I think could be of historic importance. I came to the 
Congress with Chairman Thomas. We both came to serve on this 
committee, and I served prior to becoming Speaker on this 
committee with a great sense of contribution on a bipartisan 
basis and working with my colleagues on both sides, both in 
running the House but also in looking at election reform.
     I want to confess that frankly one of the areas--and I 
think what Mr. Fazio said is absolutely the hallmark of how we 
should be approaching this. In the 1970s we adopted a whole 
series of things we thought would work. We are now told that in 
many ways the reforms are the problems.
     We also--and I will give you an example in my personal 
experience. I once co-authored--or authored a preface to a book 
called ``A Nation of Associations,'' in which I praised the 
political action committee system because in the late '70s and 
early '80s, it seemed like the logical place to have people 
voluntarily organizing their effort in a manner you could trace 
and understand, and it fit what we thought in the late '70s 
were the problems of the Watergate period.
     Then I read Brooks Jackson's marvelous work on ``Honest 
Graft,'' which showed how brilliantly our former colleague, Mr. 
Coelho, came to dominate the PACs in Washington and how they 
became an instrument of Washington. And I would say to all of 
you with a certain cheerfulness and a wry sense of amusement 
that now that we are the majority, it turns out that everything 
Mr. Coelho did works; and that, in fact, to a discouraging 
degree, the political action system has become an arm of the 
Washington lobbyists, and in fact simply follows power without 
ideology; and is, in fact, not an appropriate system for the 
expression of citizen concern, although I think on a 
constitutional basis it is probably not something we should 
ban, but rather something we should rethink from the ground up.
     But the point that Mr. Fazio made is where I want to 
start, that all too often when we have someone who has their 
single magic solution which will cure everything because they 
don't have any historic understanding of it, they haven't been 
through it, they haven't thought about it over a long period of 
time, and they may be asking the wrong questions.
     I believe we need a very profound overhaul of our 
political system. I think we have to look at lobbying, at 
campaigns, at parties, at the behavior of incumbents, of the 
nature of Washington, what is happening as we shift into an 
information age. I think candidly there are grave threats to 
the survival of American freedom and self-government as we know 
it.
     But the threats aren't necessarily those that Common Cause 
targets. The rise of media oligarchies, including Mr. Rupert 
Murdoch--who many of you have attacked me about--but all the 

[[Page 10]]
media oligarchies, including my hometown favorite Ted Turner, whose 
Braves just did a wonderful job, but who now is part of a huge 
system at Time Warner--including the rise of Disney/ABC.
     We have to look at the rise of foreign money. When Hong 
Kong closes down, there will be a whole wave of new 
billionaires who arrive in America. What will their power do? 
Rome collapsed in part because it couldn't cope with the money 
that came out of Asia as the Roman Empire expanded.
    And what do we do in a world market where people can 
transfer billions of dollars into this country from anywhere on 
the planet, whether it is cocaine dealers in Colombia or it is 
Russian Mafia or it is legitimate honest Chinese businessmen 
afraid of what may happen to Hong Kong? What do we do about the 
rise of millionaires and billionaires?
    I have to say with great candor, I think it is very 
dangerous for this country to have the dramatic increase in 
purchasing offices, whether it is Mr. Perot's effort to 
purchase the presidency or it is good friends of ours who want 
to purchase Senate seats or it is honest reasonable Members who 
want to purchase House seats. And the fact is, that is in part 
a reaction to the collapse of the parties and to the fact that 
we have all too many--the incumbents have too much power and 
only millionaires are competitive.
     We also have to look at the decay of political parties, 
which I will return to. But I think this is the core place 
where Common Cause is just plain wrong. To focus on election 
campaign reform, without putting it in a political party 
systemic approach, is a profound mistake. And I will come back 
to that.
     I also think we have to recognize that all of the growth 
of our society, 260 million people, a worldwide system of 
commerce and military power, an information age explosion of 
data, means that the average citizen today feels more alienated 
and more isolated, and there frankly I found most sobering 
reading Peter Green's ``From Alexander to Actium'' and his 
description, his vivid description of the collapse of civic 
life in Greece and its parallel in Greek drama, as it went from 
serious plays about serious public policy to soap operas and 
light comedies, because Greek citizens just psychologically 
withdrew from the process of self-government because it became 
too hard.
     Senator Dole and I have discussed and will propose a 
commission. This is my response which I promised after New 
Hampshire. I believe we should have a commission on power and 
political reform on the information age, not narrowly on 
campaigns. I believe that commission should have eight members 
from each side, eight recommended by Senator Dole and myself, 
eight recommended by the President, Mr. Gephardt and Mr. 
Daschle.
     I believe that commission should meet regularly and have 
adequate funding. I think it should have exhaustive hearings 
and I think it should report by May 1st. I think the report 
should be in two parts. On any item in which two-thirds of the 
commissioners agree, I believe they should come to the Floor of 
the House and Senate, much like the Base Closing Commission.
     On any item which gets a simple majority, I believe it 
should come up as a recommendation which we would have an 
obligation to hold hearings on and consider in a second bill. I 
would like us 

[[Page 11]]
to spend the summer of next year restoring honest self-government and 
have passed a bill before the end of the session so that we 
could go into the fall campaign knowing that we have done our 
job.
     Now, let me outline a few things.
     In parallel to the commission, which I hope the President 
will accept and sign and I hope we can frankly offer on a 
bipartisan basis and pass on a bipartisan basis, my hope is 
that this committee will hold a series of hearings of historic 
importance over the course of the next four or five months. And 
I want to outline what I think you should look at.
     Let me start by citing David Broder talking about our 
current political situation. And this is a direct quote from 
Broder.


    The governmental system is not working because the 
political parties are not working. The parties have been 
weakened by their failure to adapt to some of the social and 
technological changes taking place in America, but even more, 
they are suffering from simple neglect, neglect by presidents 
and public officials but particularly neglect by the voters.


     He goes on to say,


    What we have is a society in which discontent, disbelief, 
cynicism and political inertia characterize the public mood; a 
country whose economy suffers from severe dislocations, whose 
currency is endangered, where increasing numbers of people and 
even giant enterprises live on the public dole, a country whose 
two races continue to withdraw from each other in growing 
physical and social isolation, a country whose major public 
institutions command steadily less allegiance from its 
citizens; whose education, transportation, law enforcement, 
health and sanitation systems fall short of filling their 
functions * * * and a country still far from reconciling its 
international responsibilities with its unmet domestic needs. 
We are in trouble, and now, unlike a decade ago, the people 
know it. The question is: Can we still save ourselves from 
deadlock without sacrificing our democracy?


     Eloquent words, written in 1971 in a book called ``The 
Party is Over,'' which is, I think, a superb introduction to 
the decay of the American political party, which I think is one 
of the keys to re-establishing where we are going.
     The reason I say that is that power has to be mediated. 
Somebody has to be able to bring together the long-term 
responsibilities of where we are going with the immediate 
requirement of running for office. Somebody has to say to 
average citizens of average wealth, with an average amount of 
time: Here is a rational way to organize your involvement as a 
citizen. And that structure has been for 200 years the 
political parties, first invented by Jefferson and Madison and 
Burr in the origin of the longest-lived and greatest of our 
parties, the Democratic Party, which is the longest existing 
political organization in the world.
    Because the parties have collapsed, the opportunity for 
middle class people to rise has gone down. When I entered the 
House in 1979, 24 of my fellow Members were millionaires. That 
number today is 61, every seventh Member of the House. That is 
profoundly disturbing. The Senate is far more dominated by 
millionaires.
     And we see around the country, on a bipartisan basis, 
millionaires who buy office, and that's what it is. The writing 
of a large enough check to hire the modern version of political 
bosses, hired hacks who go from state to state often using 
literally the same ad, simply redesigning it for the newest 
shot, almost always negative, almost always irresponsible, and 
often totally dishonest, on a bipar

[[Page 12]]
tisan basis. And we produced a campaign system none of us can be proud 
of and which serves the country ill.
     One minor suggestion I am going to suggest to you, and I 
have a number of suggestions as I go through this, but one for 
you to consider is that, one, we look at the degree to which 
incumbent protection leads to the rise of millionaires in 
public office.
     Two, we look at the degree to which the decline of parties 
inhibits the rise of people of average means; and three, we 
consider seriously dropping all campaign contribution limits to 
a candidate whose opponent spends in excess of $100,000 of 
their own money, thereby at least evening out the field so that 
both candidates have equal resources.
     Let me also state----
     The Chairman. Would the gentleman yield for just a moment?
     Speaker Gingrich. Yes, I would be glad to.
     The Chairman. I will announce to the Members that the vote 
is on the journal. The Chairman and the Ranking Member will 
purposely not cast our votes on the journal so that the 
committee hearing can proceed. Any Members who wish to go cast 
their votes may do so.
     Thank you, Mr. Speaker.
     Speaker Gingrich. When I say, as I did a while ago, I 
think it is important to understand that most modern campaign 
critique comes from the left, starting with the distrust of the 
private sector, a dislike of private resources, an assumption 
that money from the state is good, that money from individual 
citizens is bad, and a belief that it is the campaigns that 
matter, not the larger system of the parties.
     One of the results has been federally funded campaigning, 
which had exactly the result conservative theorists would have 
suggested, that is, if you make money available people will 
find a way to get there.
     My favorite example is Lenora Fulani. Lenora Fulani--
because what happens is you have sort of a nut class of 
politics. Lenora Fulani has received $3.5 million from the 
taxpayers in the 1984, 1988 and 1992 campaigns because she has 
found an industry. Her industry is to get enough people to 
support her to be eligible for tax-paid funds so she can then 
earn a living getting tax-paid funds. It is a terrific racket.
     Lyndon LaRouche received matching funds, according to a 
George Will column of June 4th, 1995, even while he was in 
jail. So what happens is when you set up a socialist model of 
government-paid campaigning, people learn how to get on the 
dole. The dole this time is not welfare. This is political 
welfare. So I would say that this is part of why I think Common 
Cause has been at a dead end, frankly.
     What we need to look at is that candidates and parties 
need money to introduce themselves to the public and yet today 
we have an inappropriate system of finding the money.
     Frank Sorauf, a professor at the University of Minnesota, 
wrote a very interesting paper in 1987 in which he compared the 
mass media of the United States today as a version of the 
progressive political outlook which dominated American society 
from the 1890s to the 1920s. The progressives saw the American 
public as being 

[[Page 13]]
decent people, yet prey for rapacious special interests intent on 
buying elections and corrupting the political process.
     This is what Professor Sorauf wrote in the Political 
Science Quarterly of spring of 1987.


    [C]ontemporary investigative reporters are in many ways the 
grandchildren of the Progressive muckrakers. * * * Very few 
aspects of the American political process reinforce the 
Progressive world view as effectively as the American way of 
campaign finance. Its cash is an easy measure of influence and 
its PACs are perfect embodiments of the special, vested, or 
selfish interests.
    It is indeed usual for newspapers to define PACs as, 
``special interest groups,''. If one makes the simple 
assumption that public officials defer to their campaign 
contributors more easily than they do to their party, their own 
values or their own voting constituency, one has the perfect 
scenario for the triumph of the wealthy special interests over 
the will of electoral majorities and the general or public 
interest.

    That summarizes the guilty-until-proven-innocent approach 
that candidates are confronted with in today's highly charged 
atmosphere. Sorauf illustrates how this inherent bias affects 
campaign finance coverage, often resulting in sloppy and 
inaccurate stories.
    That is, ABC News owned by Disney is not a special 
interest. So a multimillionaire broadcaster on ABC News being 
given free access to the American people doesn't represent 
political power. On the other hand, a thousand dollars written 
by the broadcaster's spouse is political power. It is simply a 
nonsensical socialist analysis based on hatred of the free 
enterprise system, and I think is fundamentally false.
    The three networks spent $1.1 billion on news in one year, 
with profits of nearly $200 million. By comparison, the total 
spent in the 1992 presidential campaign is $550 million on all 
sides. The Disney/ABC merger by itself is worth $19 billion.
    So when we talk about money and politics, let's put it 
contextually where it is. Campaign spending rose from $109,000 
per congressional race during 1978, the first time I won, to 
$440,000 last year. That represents about $3 per eligible 
voter. It is less than $1 per citizen in the district. And one 
of the greatest myths of modern politics is that campaigns are 
too expensive. The political process, in fact, is underfunded; 
it is not overfunded, the political process. But I would 
emphasize far more the money in the political system--I mean in 
the parties.
    Let me also say, I think we have to look at political 
freedom against the state. I was told this summer by a 
corporate CEO for a Fortune 100 company, and my guess is that 
Mr. Fazio has had similar conversations as a leader of his 
party, that he could not be a co-sponsor of a congressional 
campaign committee fundraiser because he has to do business 
with Ron Brown. This is not an attack on Ron Brown. It is a 
statement of fact.
    I suspect there are occasions, now that we are the 
majority, the old people who used to be your friends tell you 
they can't give you money. But my point is to say this: It is 
not--the state has power. It is good on the one hand to list 
everybody's contributions. On the other hand, we ought to 
understand, in the long run that means to dissent is to put 
yourself at risk.
    And so I think, again, you have got to come back and ask 
some very fundamental questions about what should the rights of 
the citizen be, what is their ability to protect themselves, 
and in what way if you have an aggressive state does it punish 
or coerce those 

[[Page 14]]
who dissent, and how do we protect the rights of individual freedom? 
How do we make sure that citizens can run?
    Don't think of candidates as much-maligned politicians. 
Think of candidates as potential elected citizens. Just use the 
term ``elected citizen'' for a little bit. See how different it 
sounds and how different the implication is. And ask yourself, 
what does it cost a citizen who wishes to seek election to 
market one's self, given the scale of the modern media?
    Let me give you an example I live with. The Cox sisters own 
the largest television station in my area, the largest radio 
station in my area, and the only major daily newspaper in the 
state of Georgia. They have all three. Now, they don't give any 
contributions to my opponent, but I would guess that over half 
the money I raise is spent offsetting the weight of their 
newspaper. I think any Republican from Iowa would tell you that 
the Des Moines Register so dominates the politics of their 
state that they have to spend a third to half of their campaign 
offsetting the Des Moines Register.
    Now, it is perfectly natural for the news media to want 
campaign spending limits. That means more power for editorial 
writers, more power for columnists, more power for reporters, 
but it means less ability for citizens outside that newspaper's 
biases in order to answer and respond to the publication.
    Let's also be honest about what it costs to communicate in 
America. Three antacids, Pepcid AC, Tagamet and Zantac spend 
$300 million a year. So on the concept of what should you put 
in your stomach if you need an antacid, we spend $300 million a 
year. Microsoft '95's national launch cost over $250 million. 
Tiger Electronics, the third largest toy manufacturer, during 
the Christmas season, spends $30 million.
    By contrast, in 1992, a major political party spent $110 
million. That is, the Democrats or the Republicans nationally 
in the general election of '92 spent one third what we spend on 
antacid. Ross Perot personally--or spent $68.3 million, I don't 
know how much of that was personal--but he spent $68.3 million.
    Congressional spending for all the congressional seats was 
$600 million. That's 435 House seats and 33 Senate seats, was 
the equivalent of two antacid campaigns, all of them. Every 
idea, balance the budget, gay rights, abortion, national 
defense, all of them was the equivalent of two antacid campaign 
ads, and yet we are told politics is too expensive.
    We cheat our system. We don't communicate rationally. We 
don't have enough information. People don't get enough data. 
There is a report--there is a suggestion in Kentucky that 
turnout will be down because the campaign limit is so low that 
people literally aren't getting the message there is an 
election underway. And I would commend to the committee that 
you look at the effect of state campaign limits and how much 
citizens actually know about the campaigns.
    I also want to suggest that the current campaign law has 
some profound weaknesses, and that the Federal Election 
Commission in its current form is, frankly, profoundly 
destructive. The current Federal regulatory system makes it 
harder for an average citizen to get involved in politics 
because you have to hire a lawyer and you have to hire an 
accountant to meet Federal regulations. 

[[Page 15]]

    The current system also, I believe, encourages every 
presidential candidate to cheat. I mean, if you were to hold a 
hearing and ask in any of the last three campaigns, how many 
campaigns arrived in Omaha to rent the car--I mean, just think 
about it. The Iowa primary, the Iowa caucus, because of the 
state level limits, we basically say to every presidential 
campaign, in the name of honest politics, why don't you rig 
your expenditures if you are going to be competitive. So you 
break the spirit of the law, although technically being legal. 
And there is something profoundly wrong with reforms that 
encourage cheating.
    In addition, the laws have stagnated. A thousand dollars in 
1974, the limit for primary and general election campaign 
contributions per individual, in constant dollars, is worth 
$356. That is, if we were to allow citizens today to contribute 
a thousand dollars in 1974 money, the limit would be $2,808. 
And one of the things I want to recommend to this committee is 
that you reverse the limits, give individuals a $5,000 limit, 
give PACs a $1,000 limit and then index both.
    I also want to suggest you create an entirely separate 
limit for giving to parties, any party. That would include 
independent and third parties, but that giving to a party 
should be a separate limit from giving to candidates, because I 
think we consciously want to strengthen the parties.
    I am also willing--and this may surprise some of you since 
I am now the Speaker--I am also willing to have us establish a 
principle that the parties should be able to offset the 
incumbent's office expenses at least up to some limit. 40 
percent, 50 percent, but in some way. It is profoundly unfair 
for me to have all the advantages of office and go back home to 
take on a challenger who starts out with zero. I don't think it 
ought to be 100 percent, because as Barney Frank once pointed 
out, there are a lot of things we have to do that don't 
necessarily help us.
    But there should be some party offset that allows the 
opposition party to spend a larger amount as a party than the 
incumbent party in order to have a fair campaign. I'm willing 
to do that even though it clearly is to the Republicans' 
disadvantage.
    I also want to recommend we relook at revisiting the 
individual tax credit which we had in the '70s, and which I 
think was a step in the right direction to encourage individual 
contributions at the small dollar level.
    But there is a deeper part of this, and this is why I 
emphasize not just looking at campaigns. Power flows somewhere. 
You never kill power. You just distort it. If you hide it, if 
you force it underground, the tighter the limits on the 
campaigns, the more independent expenditures there will be. The 
tighter the limits on the parties, the more money will grow up 
under 501(c)(4)s and a variety of grotesque institutions.
    One of the challenges I would like to make to this 
committee is, early next year when we have time to truly gather 
the information, take a look at this fall on both sides, who 
raised money, who spent money. I mean, our side believes, for 
example, that at least $20 million is being spent by the unions 
in an ad campaign naming by name members of the House. Now, if 
we have campaign limits, would that go under the limit or would 
that be outside the limit? 

[[Page 16]]

    I suspect you all believe that we have friends who are 
putting together ad campaigns designed to strengthen our 
position, but we need to put in context the totality of what 
happens in American politics and not simply look at it in a 
narrow, isolated way.
    And let me say to you: I believe the rise of irresponsible 
money, outside the parties and outside the campaigns, is a much 
greater threat to America than the monies spent in the 
campaigns.
    And, again, without being too academic, I would encourage 
you to at least have your staff talk with experts around the 
country about what happened in Greece, in Rome and the period 
from the English Civil War up through our Constitution, and to 
look at the works of Jefferson and Madison, Lincoln, Theodore 
Roosevelt, Henry Cabot Lodge, and Wilson, because this is not a 
new problem. This problem of how do you organize power so 
people can be free has happened over a very long period of 
time.
    Let me just say, in closing, and I appreciate your allowing 
me to offer you this broad overview, I really am--and I have 
had a fair amount of experience. I first got active in politics 
in the late 1950's when I was in high school. I was a volunteer 
for the Nixon-Lodge campaign in 1960, Muscogee County, Georgia. 
I have run a congressional campaign. I have been a state leader 
of my party. I was a--worked on presidential campaigns. I ran 
for office, obviously, and I lost twice and I have won office a 
number of times.
    I am deeply troubled by what I think are the dangers to 
American self-government. I'm frankly not nearly as troubled by 
the Common Cause news media versions of those problems, but I 
do think in the next 20 or 25 years, if we are not careful, we 
will have so alienated our citizens, we will have so lost 
touch, the individual candidates will be either rich people or 
people who are supported by independent expenditures on a 
grotesque scale.
    And I think we need a thorough review of the American 
political system, and then frankly we need a system's approach. 
We need a set of principles to be articulated by this 
committee. How should government work in the 21st century? How 
should power work in the information age? What is the role of 
the political parties? And within that framework, how shall we 
redefine incumbents, lobbyists, candidates, volunteers?
    And I can pledge to you that on the part of my office, we 
will cooperate on a bipartisan basis, because if we do it 
right--and we have been through several rounds that have 
failed. So I think we have some experience here. Everybody who 
is senior on this committee has been through several 
experiences that failed, beginning I think in 1980 when we were 
freshman. We have a chance now, I think, if we are honest about 
it, to produce by early next year a much deeper understanding 
of what we need to do and in a genuine bipartisan way to move 
forward.
    And I would also frankly be interested in the committee's 
reaction to the concept of having some kind of bipartisan 
commission, because I suspect this is the committee that any 
bill that we would introduce with the President's support would 
be sent to.
    So thank you for letting me testify.
    The Chairman. Thank you very much, Mr. Speaker.
    It has been very helpful to have you initiate the 
discussion because most of us believe that the subject matter 
is far more com

[[Page 17]]
plex, far more reaching than most people initially assume. The context 
of your speech put it exactly where it should be, and that is, 
we have made a number of mistakes in the past and tried to 
correct them. These mistakes have led to unintended 
consequences which, as the gentleman from California said, we 
now have some folks offering corrections to the corrections. It 
is time to stop, to take a look at where we have been 
historically, and ask more fundamental questions as you have 
posed to us. Based upon your reading list, I expect three units 
of college credit for this.
    Speaker Gingrich. Since you are a political science 
professor, I will let you lead the course. I will just come as 
a guest lecturer.
    The Chairman. But it is not a simple black and white easy 
solution problem, and for that I very much appreciate your 
testimony in the context in which it was delivered.
    We have the ability to ask some questions, if any of the 
Members wish. The gentleman from Arizona?
    Mr. Pastor. Mr. Speaker, good morning.
    Speaker Gingrich. Good morning.
    Mr. Pastor. You talked about the limitations that we have 
today are not realistic because of inflation, et cetera. There 
is some thought in this country, that possibly the issue of 
limitations is--should not be discussed, but rather it is the 
disclosure that is more important. And people feel that in 
today's technology, through E-mail and faxes and all of that, 
that you can almost report immediately and should be required 
to report immediately any donation that you receive.
    My question is, basically, would you be willing to consider 
taking the further step and saying there should be no 
limitations but disclosure should be immediate and you could--
--
    Speaker Gingrich. Well, I would--I am not sure I would go 
to no limitation, although I would certainly entertain that. I 
don't think the limitations in the long run are particularly 
helpful because what happens is people who really want to be 
involved find other ways to spend money and it is less easy to 
discover and less easy to be directly involved with.
    The only thing I would suggest--I have no problem because I 
think you could technically literally have every night filing, 
but I think we ought to be honest about it. Again, it is one of 
the things that our friends in the news industry never cover 
accurately and that Common Cause doesn't understand at all.
    You have campaign volunteers. You receive checks during the 
day. You may receive 200 or 300 if you are having a big event. 
An honest, sincere person enters all the data but makes 3 
mistakes out of 1,500 items being entered. When that--if that 
is filed that night, and I have had this experience, if that is 
filed that night, is that now legally binding? Or is that, in 
fact, an initial filing subject to review within 30 days?
    I would just say to my friend we need to think it through. 
I have no problem, frankly, having much more immediate filing, 
particularly in the last month before an election, when you 
could have a sudden infusion of cash. I would just commend you 
to think it through and to have hearings and to not criminalize 
honest behavior by sincere people who may miss--you know, may 
enter them wrong.

[[Page 18]]

    The FEC's adversarial attitude is exactly wrong and what it 
does is it creates a very harsh environment in which everybody 
deals with the FEC as though they were the IRS of politics. 
That is exactly the wrong attitude to have if you have to have 
citizens and amateurs involved because they care about their 
country.
    Let me say one other thing about the limits. In 1974, the 
average House campaign spent $109,000. In 1994, the average 
House campaign spent $440,000. In 1974, it cost $32,000 to buy 
a 30-second ad on a national network. In 1995, it cost between 
$150,000 and $178,000 to buy the same ad. So network television 
advertising went up at a rate faster than politics.
    Again, I am just trying to make the point here that we 
ought to put in context the limits that were set in the 1970s 
and ask ourselves realistically: Do we truly want to starve the 
American people of information?
    Mr. Pastor. Thank you, Mr. Speaker.
    The Chairman. Does the gentleman from Florida wish to 
inquire?
    Mr. Diaz-Balart. Thank you, Mr. Chairman.
    Thank you, Mr. Speaker, for your presentation. I think that 
it is so important to realize that this is a--such a larger 
issue than is usually thought of.
    I am an American citizen of the American middle class, and 
I could not participate in the political process, and it was so 
succinctly brought to light and I was thinking about it when 
you were talking, if I depended--if campaign spending in my 
campaigns were more than simply a peripheral way for me at 
election time to communicate my message. In my community we are 
very fortunate that there are some fair and objective people 
that happen to own a small newspaper or a radio station or that 
happen to manage a television station and permit the message to 
be communicated to the people. If I had to depend on the Knight 
Ridder newspaper in my community to cover what we are doing up 
here, I really don't think that come campaign time it would be 
possible to counter, not only the editorials but the slants on 
a continuous basis of the articles that the newspaper produces 
throughout the two years.
    So I want to commend you for pointing out that what we are 
dealing with are not trees here but really a major forest and 
that also we need to look at the historical context.
    I think it is very important that you brought out that one 
of the great--one of the great problems that we are facing is 
the ability for people with a tremendous amount of money to 
purchase--to purchase seats in Congress, and one thing, Mr. 
Chairman, that I think that we really have to focus in on in 
these hearings, as we look at these issues brought before us, 
such as limiting further campaign contributions, is precisely 
the issue of the effect of such a limit when one's opponent has 
no limits. I know that the Supreme Court has held that that is 
a freedom of speech issue.
    So, Mr. Speaker, let me commend you not only for bringing 
forth the big picture but for your courage and for, I think, 
setting a framework here that will be very, very helpful, as we 
proceed in these months in further hearings.
    The Chairman. Does the gentleman from Maryland wish to 
inquire?

[[Page 19]]

    Mr. Hoyer. I don't wish to inquire, Mr. Chairman. I want to 
commend the Speaker. I think his comments were very useful, 
very helpful.
    I think that the American public, would, be surprised in 
the commonality of perspectives, perhaps not the answers but 
the commonality of perspectives that exist among those on both 
sides from various different ideologies who have been in this 
campaign finance system for a long period of time.
    I became active in the Kennedy campaign; you, in the Nixon 
campaign. We were on opposite sides. I then was elected to the 
State senate in 1966. I was interested in your quote of the 
Broder book, because in my opinion the decline of parties, in 
your favorite phrase, has, in fact, had a profound impact on 
the practice of politics and the financing of politics and the 
disintegration of focus of politics and a sense in the American 
public that where divided; where we have gridlock; that we 
cannot act.
    I also think that you reiterated the comments made by so 
many; that relatively speaking, the communication of political 
thought is relatively underfunded in America, not overfunded. 
Whether it is parties clearly or candidates. And also that 
since 1974, the value of the limits provided, and you and I may 
have a disagreement as to whether collective groups ought to be 
able to contribute more heavily than individually wealthy 
people. Obviously, there are few people in the country who can 
contribute $5,000 to you, to me, or to others. That is not true 
of the collective. So we may disagree on that.
    But relatively speaking, you mentioned 350 some odd dollars 
as the contribution that now the thousand dollar limit 
reflects. It is about $1,200 that the $5,000 reflects. So that 
by operation of time and inflation, we have substantially 
reduced the value of the contributions to be made either by 
collective groups known as PACs or by individuals.
    But I think the comments that you made, I think on our side 
you probably have an awful lot of agreement, and I think, in 
fact, if we can pursue this in a bipartisan fashion, as we have 
done some other things, dealing with millionaires and salaries 
and things that are very controversial, but are made less so if 
in a partisan context, the American public understands that we 
can very substantially disagree on the policies that we want to 
pursue but not necessarily disagree substantially on the 
context in which those policies ought to be put forward to the 
American public, decided and resolved. And so I think it was a 
useful presentation.
    I thank you for it.
    Thank you, Mr. Chairman.
    The Chairman. Does the gentlewoman from Washington wish to 
make a comment?
    Ms. Dunn. Thank you, Mr. Chairman.
    Mr. Speaker, it is always a pleasure to hear you speak. I 
think you often elevate our perspective and broaden our 
perspective. In this case, I realize now more than ever that we 
have a big chore to do as we look at the broad picture of 
finance reform. I think we have an historic opportunity if we 
go about reform in the way that you suggest.

[[Page 20]]

    I also like the combination of the time line that you have 
laid out, so that by the end of this Congress we can come up 
with a set of reforms that really will solve some of the huge 
problems into which we have run. So I am going to be working 
toward this end.
    I would like to ask you one question, because it has been 
something of a problem for the Congress in the past. How do you 
envision working with the Senate so that we can put together a 
really good, solid bill on campaign finance reform and prepare 
it to go to the President?
    Speaker Gingrich. I think, first of all, as I said a little 
while ago, Senator Dole and I have discussed the idea of 
creating a commission which I think is an important first step. 
If we can get bicameral bipartisan support for getting that up 
and running, I would hope that the Senate would consider a set 
of parallel hearings to what you are going to be doing because 
I think you can create a new context for reform. And if the 
Senate could agree in their appropriate committee to hold 
similar hearings at some point, I would like to suggest you 
actually have some meetings that are joint.
    As you know on the budget, for example, we have had 
substantial success in working in a bicameral way. We have a 
meeting every morning at 9:00 a.m., that is, a joint House-
Senate leadership meeting. I think that this--recognizing the 
complexity of our own constitutional system that there is 
actually an advantage to occasionally reaching beyond--the 
building doesn't have to be--as somebody said, it is really 
further from the House to the Senate than you think because you 
go around the world to come in the other side of the building 
to get there, and our cultures are sometimes that different. 
They don't have to be.
    So I would hope--and I think Senator Dole is committed to 
working on a campaign reform approach that really is bicameral 
and bipartisan. And as I said, I hope this will--the President 
feels this meets the conditions we set back in New Hampshire in 
the spring and that he will agree to support and to sign in 
creating a bipartisan commission to look at the totality of 
political reform.
    Ms. Dunn. Thank you, Mr. Chairman.
    The Chairman. The gentleman from California.
    Mr. Fazio. Thank you, Mr. Chairman.
    I wanted to simply say as relates to the commission that we 
do need to talk about this. I think the idea that you present 
is a provocative one, and I think it does require that we take 
a larger perspective than simply campaign finance reform, 
because that is a part of a total breakdown in the American 
political system.
    I wanted to simply get more information from you on two 
things: One, I think most of us realize that we have 
contributed greatly with the money we raise and spend in 
campaigns toward the negative attitude that people have about 
us, the process, and governing itself. Would you be willing to 
enter into the thicket, it is a first amendment problem, of 
trying to in some way regulate what television ads are run so 
that we avoid the relentless negative which turns off everyone 
even while it may drive people back to their political core, 
which has probably contributed not only to a lack of 
participation but even by those who participate to a disgust 
with the choices they have to make?

[[Page 21]]

    Speaker Gingrich. I am certainly willing to look at how you 
could do it given our constitutional right of free speech. I 
mean, I do think there is something inherently wrong with a 
system where you have the right smear for the last four days 
you undo two or three years of hard, sincere work, and somebody 
who doesn't have a clue what they are doing can buy an office 
for--with 50.1 percent of the vote because they had the best 
hired gun. And this is a problem we see across the board.
    You see the same thing, frankly, with trial lawyers in 
terms of who can hire the best guy to go into court, and I 
think it is a problem of a money society, that when commerce 
becomes dominant values tend to decay. So if we can find a way, 
whether it is, for example, requiring the candidate to appear 
in the same ad, and I don't know if that would be legal or not 
legal, but I mean some device that reestablishes a sense of 
responsibility.
    It does--the other point I would make, I guess, Mr. Fazio, 
which I have been struck by because of my interest in what is 
happening to the Information Age, about the point we figure out 
what we would do with the world that had three networks, there 
are going to be 500 channels. And I have not got a clue what 
that is going to be, but probably it is going to mean that no 
single ad ever hits anybody anymore. You are going to have this 
very divergent----
    Mr. Fazio. We are targeting our TV spots like we do direct 
mail.
    Speaker Gingrich. I used to think it would be a good idea 
to have some kind of a time requirement, like the British and 
Canadian model. The problem that you have now is that between 
going to Blockbuster to rent the movie and flipping channels, 
you know, people would simply manage to find a new way to avoid 
the information.
    So it is--one of the things you may want to consider, and I 
don't know what the financing would be or how we would do it 
ethically or whether a foundation could do it in a way that was 
ethical, it would be very interesting to have a series of focus 
groups that just--that asks citizens how do you get 
information, how would you--how would you like to get 
information and would you actually do it? And maybe even as we 
begin some primaries next year, looking at it in a kind of 
real-time way because I think sometimes we sit up here, we are 
fascinated with politics and we read the Post and the New York 
Times and the Wall Street Journal and the Washington Times and 
everything we can get our hands on, all of our back home 
papers, so we are drowning in data.
    But if you look at this morning's paper that says 60 
percent of graduating high school seniors fail any knowledge of 
American history, it is sort of a grim reminder that there is a 
growing noncivic population that, frankly, doesn't learn much 
about anything. They know about O.J. but they don't know much 
about Bosnia and they sure don't know much about the budget, 
and they don't have a clue what the word ``reconciliation'' 
means.
    I would just suggest to you that we ought--I would like to 
visit all of that, even having a constitutional lawyer standing 
near us nodding yes and no. But I think we could be more 
creative in moving towards an information-filled campaign 
rather than a smear-filled campaign, and I would like to see 
that on the table very much.

[[Page 22]]

    The Chairman. Does the gentleman from Michigan wish to 
inquire?
    Mr. Ehlers. Thank you, Mr. Chairman.
    First of all, Mr. Speaker, thank you, once again, for your 
excellent testimony and bringing the larger perspective, as you 
always do. As a relative newcomer here, I appreciate the 
historical perspective you laid out, too, and I want to tell 
you that.
    I also appreciate your mention of the self-funded 
campaigns. I, as the gentleman from Florida indicated earlier, 
am not a person of means. In fact, every job I have ever had in 
my life paid me less than the job I had before, until I came to 
Congress. I went from teaching at Berkeley to teaching at 
Calvin College to the State Legislature, and it was downhill 
all the way. So when I ran for Congress, I obviously did not 
have a great deal of personal wealth; I had virtually nothing.
    I faced four millionaires, three in the primary and one in 
the general, each of whom spent $400,000. I spent $140,000 and 
won. I think part of it is the volunteers. I had 1,000 
volunteers. They each had a handful. You can win without money, 
but it is difficult when you face opponents who have unlimited 
checkbooks and pocketbooks and don't even have to go to the 
people for their money. And that is an issue I believe has to 
be addressed.
    The other question I have for you relates to the commission 
that you suggested, which I know you had previously discussed 
with the President and with Bob Dole. My question is 
specifically, and you mentioned the main one, what is the 
timetable for the commission, which is perhaps equivalent to 
our timetable, maybe even a little faster, and then the real 
question is how is their work going to meld with our committee 
work?
    Speaker Gingrich. Well, I would hope ideally if we could do 
this that if we could work it out--as I said, I think this will 
be the committee of jurisdiction so obviously Chairman Thomas 
and Mr. Fazio would play a lead role if we went down this road, 
if the President thought it made sense.
    But I would hope that the Senate committee, the House 
committee, and the commission would work as a team, think 
through the work to be done and share information and resources 
and ideas so that you would have all spring a blending together 
and a dialogue. I mean, I don't think they need to be out here 
in some separate track on their own and then magically appear 
on around May 1st.
    I think it ought to be--you know, as you know from the way 
we work together, I really believe in building bigger and 
bigger teams and getting more and more people in a common 
dialogue and in the Information Age. There is no reason with 
bulletin boards and conference calls and teleconferencing that 
you can't do it. So I would hope that they would be 
supplemental to and also would draw upon the expertise of the 
committees.
    I mean, a number of us have been through this three or four 
times already. We know it won't work. We can be of great advice 
to the committee in saying, let me tell you, you go down that 
particular alley, you haven't got a prayer of getting it done.
    Mr. Ehlers. I guess my concern is that it sounded as if you 
were saying this would be like the Base Closing Commission, 
that their 

[[Page 23]]
recommendations would go directly to the Floor and not to the 
committee.
    Speaker Gingrich. I think my proposal here, and I think the 
President would have to sign off and we would have to see if 
the House and Senate leadership would sign off, my proposal 
would be that if you had eight on each side, if they--if there 
was an idea so popular that two-thirds of the commission voted 
for it, that it is reasonable for that to come straight to the 
Floor, much like the Base Closing Commission, but I also think 
you would see that emerging through drafts and through 
dialogue, and, again, I don't think it can be done in a hidden 
room somewhere and then thrown over the door.
    But it does seem to me, on the other side, if you are going 
to ask somebody serious to be on this commission, they have to 
have some knowledge, some guarantee that their work is not just 
going to be one more report filed and not done. So I think--but 
that would mean you would have to have several Democrats join 
with the Republicans or several Republicans join with the 
Democrats or some mix in order to get to a two-thirds vote for 
the commission to work. That would be my only point.
     Mr. Ehlers. Thank you. I think it would be very important, 
once again, to establish the rules for the open meetings 
requirements and so forth. Frankly, I would feel more 
comfortable with the normal constitutional requirement of a 
three-fourths majority.
    Speaker Gingrich. That is negotiable, I think from both 
sides.
    Mr. Ehlers. But I seriously want them to mesh carefully 
with what we are doing, because I think that the Chairman has 
outlined an ambitious program and we are all very serious about 
doing this and doing this right. Thank you.
    The Chairman. I thank the gentleman.
    Let me tell the gentleman from Michigan that although this 
committee clearly has jurisdiction over the Federal question, 
the idea of moving a commission which is bipartisan, looking at 
the larger question in the larger context is, I think, a 
positive one, because all of the discussion that has been 
carried on this morning by the Speaker is going on at the State 
level as well.
    Just for an example in California, which has tried to pass 
some kind of spending limits, some of them less wise than 
others, we currently have virtually no limits and we are in the 
process right now, because of the recall structure in 
California, of having folks who get elected have to get elected 
inside of the election cycle with millions of dollars spent 
because of no limits. Some of the material and background 
discussion that would go on at the commission level, which 
would probably be primarily focused at the Federal level, could 
have, I think, a very beneficial effect in shifting the debate 
not just at the Federal level but at the State level as well so 
that people can better understand the question of dollars in 
the system and, in fact, power as the Speaker described it.
    So I think elevating it to that level would be very 
beneficial not just for us at the Federal level but for those 
of us who are struggling about those same questions at the 
State level.
    Just let me say that I am now prompted to indicate one of 
my biases because I do not want to have it go unnoticed.

[[Page 24]]

    When I was in the Minority, I was very concerned about what 
was happening to political parties and I accepted co-
Chairmanship on the Committee for Party Renewal, which is 
American political science and a number of political people who 
were interested in strengthening our parties.
    I chose not to move away from that position as Chairman, 
and so if anyone finds out that I am co-Chairman of the 
Committee on Party Renewal I am going to stay there because I 
do think we need to focus on that. So if anybody discovers 
that, I have already made it public that I am involved and 
concerned about our political parties.
    Mr. Jefferson, do you have any questions for the Speaker?
    Mr. Jefferson. No.
    The Chairman. All right. All of us thank you very much for 
not only the tone but for the content of your message as we 
begin these very important series of hearings. Thank you very 
much, Mr. Speaker.
    The Chair wishes to announce that we are currently waiting 
for the Minority Leader. We will hear from him before we begin 
our panels consisting of more than half a dozen Members who 
have bills that have been introduced on the subject matter of 
PACs, running a relatively broad gamut of approaches to PACs, 
frankly.
     The committee now welcomes the Minority Leader, the 
gentleman from Missouri, Mr. Gephardt. You may discuss with us 
your ideas for as much time as you wish to consume.




  STATEMENT OF HON. RICHARD A. GEPHARDT, A REPRESENTATIVE IN 
   CONGRESS FROM THE STATE OF MISSOURI, AND HOUSE DEMOCRATIC 
                             LEADER

    Mr. Gephardt. Thank you, Mr. Chairman. I deeply appreciate 
this opportunity to appear here. I know that this group of 
Members has worked very hard in the past on campaign reform and 
I look forward to working with you in the days ahead as we try 
to get something finally done on this subject that will be very 
positive for our people and our country.
    I want to begin by borrowing a few words from the report 
that accompanied H.R. 3 in the last Congress, which I believe 
was a tough campaign financing bill that passed the House 
overwhelmingly but was killed by the Senate Republicans. I 
quote:

    . . . The presumption of fairness has been seriously eroded 
. . . by the large sums of money raised and spent in today's 
elections. And it is futile to try to sort out how much of this 
erosion is justified by reality and how much of it is simply a 
perception. . . . For as the sense of legitimacy of our 
elections is eroded, so too is the fundamental legitimacy of 
government itself.

    Mr. Chairman, regardless of which party is in power in the 
Congress, I would like to be able to say that in the 104th 
Congress that dangerous reality has been changed. In fact, in 
the eyes of most Americans the problem has gotten even worse. 
We see reports of bills written from start to finish by 
lobbyists. We have heard of back door giveaways of billions of 
dollars to special interests. We see tax bills that are special 
interest smorgasbords offered in the same budget that raises 
taxes on working families. Let's be honest. The American people 
are sick of it and want change and it is time for massive, 
radical change.

[[Page 25]]

    In the past, we have made a lot of good faith efforts to 
reform the current system. These were valuable and can be the 
basis for today's debate. But at the same time, I think we have 
to use this occasion to step back from these kinds of narrow 
nuts and bolts reforms and start to think more broadly and more 
boldly about the entire system, about the way people see the 
system and what would possibly change the system so that in 
reality and in substance and in perception the American people 
really believe that the system has been changed dramatically 
for the good.
    I don't think we should limit our thinking by the scope of 
existing laws or court decisions, such as Buckley v. Valeo. I 
think we need to open our minds to dramatic fundamental change 
in the very nature of political campaigns.
    First of all, campaigns themselves are far too long. The 
American public is exhausted by the length of campaigns. In the 
House, many Members have to begin campaigning for reelection 
the day after the last election. If you are spending virtually 
all of your time in a never ending election, how can you do 
your best to serve the people who elected you in the first 
place? That is why we should look at a serious limit on the 
length of campaigns, such as in Great Britain, where there is a 
strict time frame for all electioneering. I think we should 
consider this idea.
    Second, candidates need more opportunities to discuss the 
real issues that people care about and get beyond the slogans 
and sound bites that too often dominate our politics. The 
public simply doesn't believe that their views make any 
difference, and how can we talk about the real challenges that 
our country faces, such as falling family incomes or the 
complexities of health care policy, through a dense fog of 
political slogans, short sound bites, and bumper stickers?
    We need reform that puts candidates in direct contact with 
people as often as possible. I have found, in my own 
campaigning, whether I was running for the city counsel or 
Congress, that door-to-door, person-to-person contact with 
voters is the most effective way to hear what they have to say 
and to explain what I would like to do to try to address their 
concerns. It lets them express themselves in a forum that is 
not intimidating to them and allows me to give thoughtful 
answers. We must increase these opportunities for a true 
dialogue with the voters if we have any hope of restoring their 
faith in the system.
    Third, it is time to take a serious look at the role of 
paid advertising in campaigns. Advertising has become a major 
part of the way most campaigns for Congress are run today. And 
we are seeing more and more ads by groups that are not even 
connected with the candidate's campaign. This sea of angry 
voices threatens to drown out all the seriousness and 
substance. We have got to begin to explore ways to limit or to 
at least counter the impact of all of these kinds of ads.
    Fourth, voters need to become more involved in the 
electoral process. Our turnout in elections is a national 
disgrace. Less than 40 percent of all eligible voters went to 
the polls in the last election. How can any of us claim a 
mandate to govern when so few Americans are even part of the 
basic decision of who will go to the House of Representatives? 
I think we have got to be open to a new 

[[Page 26]]
variety of solutions; different days for voting, regional primaries, 
mail-in ballots, and other ideas should be considered in this 
reform process.
    I think all of us are disappointed with Congress when it 
comes to campaign reform. To be perfectly frank, it is hard for 
me to even understand why there has been so much delay on our 
most basic reforms, reforms that already passed the Senate by a 
broad bipartisan margin. Our political system, as has been said 
by many, is in near crisis. Too many people simply don't think 
we work for them; that we are too closely tied to special 
interests and to lobbyists. That is why we need immediate 
bipartisan attention to this issue. It won't be enough to 
simply put curbs on the supply of campaign money. We have got 
to reduce the demand, by fundamentally restructuring the ways 
in which campaigns are run and organized.
    We have got to replace the mudslinging with more 
substantive and serious discussion of serious issues. If we 
cannot convince people that their voices really will be heard, 
that their votes do, indeed, make a difference, then in my 
opinion we are virtually begging them to abandon our political 
process and that would be the greatest disaster of all for the 
Congress, for the country, and for the future of the democracy 
itself.
    I understand in previous testimony the Speaker suggested a 
bipartisan commission to be appointed by the leadership and the 
Congress and the President to report some time in the late 
spring. I think that is a good idea, and I would be happy to do 
my small part in cooperating with that idea, and I just hope 
that if such a commission comes about that that commissioners 
will go into an analysis and open their minds to the new 
thinking and new ideas that are out there.
    Senator Bradley put some ideas on the table the other day. 
They may not be all worked out in great detail. There are other 
ideas that have been out there. We ought to cast a wide net to 
get every possible idea. We ought to open our minds to the 
greatest extent possible, and we should, in a bipartisan way, 
try to find the very best approach that, in reality, in 
substance and in perception, will bring about dramatic change 
in the way we run political campaigns in this country, 
certainly for the Congress of the United States. And I pledge 
to you that I will do everything in my power, within my party 
and with my colleagues, both Republican and Democratic, to try 
to reach that conclusion.
    I thank you for letting me be here and I look forward to 
answering any questions.
    The Chairman. Thank you very much.
    [The statement of Mr. Gephardt follows:]

[[Page 27]]
    
    


[[Page 28]]
    
    


[[Page 29]]
    
    

    
[[Page 30]]

    The Chairman. In fact, the Speaker went on a far broader 
basis, that in terms of talking about political power in a 
broader sense outside of even the elected political arena and 
the finances of campaigns to the question of political dollars 
spent, and that oftentimes the amount of money spent inside the 
political arena pales in comparison to money spent in other 
areas. I can assure you, as a member of the new Majority, and 
through circumstances Chairman of this committee, that we will 
not move issues that create cynicism among the public on narrow 
partisan basis. Frankly, I have a number of examples in 
previous campaign finance legislation that passed the House 
under the previous Majority, and I am not going to go into them 
at this point because I don't think it serves a positive 
purpose.
     I think what we ought to do is look to the future, look to 
new ideas, as you indicated, and frankly seek out a number of 
sources to comment on what we ought to do. That probably ought 
not to be the criteria to meld the structure, and that is why I 
am interested in more details of the Speaker's suggestion of a 
commission with both Republicans and Democrats, participation 
by House Senate and the President, which would cast a far 
broader net than we usually deal with in making those 
decisions.
     Anyone wish to inquire of the Minority Leader? The 
gentleman from California?
     Mr. Fazio. Thank you, Mr. Chairman.
     I know from lots of contact from the Leader that he is 
religious in his dedication to spending his weekends walking 
his district. I am sure when he was an alderman in St. Louis it 
was a smaller district and an easier one to get around than his 
current congressional district, but I think it is typical of 
Members who struggle to somehow connect with people, despite 
the fact that we live in a mass society, that we have so many 
people to represent and have to rely so much on the media, and 
on paid advertising to really impact.
     You know, our country has seen a decline in the civic 
culture--the Norman Rockwell painting of the New England town 
meeting is really not the reality of what we have out in our 
constituencies these days.
     Let me ask you, and this is really a blue sky question, 
some have advocated that despite the fact that 435 of us are an 
unwieldy number in the best of circumstances, that we try to 
shrink our districts even more and somehow get closer in 
absolute numbers to the real people we represent, because in 
fact when you are talking 600,000 people, you are an awfully 
long way from having the kind of contact with them that I know 
you work so hard to get in any spare moment.
    Is there a way we could somehow scale down our districts? 
Is there a way we could find--you know, we are cutting back on 
franking and things that we used to think helped make that 
connection. How do we bridge the gap, the yawning gap, between 
the public and their elected Representatives, where people 
think it doesn't matter what I do, including voting or 
contributing?
     Mr. Gephardt. Well, I think we are in a day when we have 
technology available that will allow us to have more contact, 
more input. We are not far away from the day when people can 
register 

[[Page 31]]
their opinion in a survey through their television or their computer 
that would give us lots of instant data from people about their 
opinions on particular issues. We have had, obviously, the 
advent of television now for a long, long time. I don't think 
we have ever used it properly in the political sense. We don't 
have the kind of interactive town hall meetings, the kind of 
abilities that I think are even there today that we ought to be 
thinking about doing something about. It could be that the 
House of Representatives could make available to Members the 
ability, through technology, to have interactive television 
town hall meetings, with lots and lots of their constituents on 
a regular basis while they are doing their duties here in 
Washington.
     I don't think, to answer your question specifically, that 
we could seriously entertain the idea of increasing the number 
of representatives. I think that would not be met with a lot of 
acclaim. I think we have to use the number we have with the 
number of constituents we have, but increase the use of 
technology to actually reach people and deal with people.
     I feel very strongly that we have got to find a way to get 
more people to participate in elections. I think increasingly 
people are beginning to understand that elections have 
consequences but we make it difficult for them to vote.
     I just have to seriously question, why do we insist on 
having a vote on a workday when, in many, many industrialized 
democracies, they have gone to Saturday and Sunday voting in 
order to give people the maximum opportunity to actually go and 
vote and participate.
    Finally--and this is the reason I hope we are in a new day 
here with campaign reform--it really troubles me that people 
have such an incorrect vision of what this body is about. It 
really bothers me, because I know my colleagues, I know how 
hard you work, I know how serious people here are, I know how 
well-intentioned people here are.
     And to see the perception of the public that this place is 
absolutely run by special interests and lobbyists really 
bothers me, because I know it is not true. I also know that if 
people believe it is true it probably is true; perception 
becomes reality. If we break the faith of the American people 
in their representative government, we have really lost 
something that is very, very valuable and hard to get back.
     So we have got to search--none of us has a corner on 
knowledge here--we have to search for everybody's best judgment 
and best ideas on how to reconnect the representatives here 
with their people in any way that that can be done, even to the 
point of shrinking districts and having the ability to do more 
door-to-door and more town hall meetings and more individual 
communication.
    The Chairman. Thank you. I thank the gentleman.
     The Chair would invite the Minority Leader, in the most 
sincere manner, based on the statements he just made, to 
examine his opening remarks in regard to the way in which 
things are occurring around here. I have some concern 
reconciling the two statements.
     Does the gentleman from Michigan wish to inquire?
     Mr. Ehlers. Thank you, Mr. Chairman.
    
[[Page 32]]

     First of all, I want to reassure the Minority Leader that, 
thanks to this committee, that technology is now there. First 
of all, your citizens can watch the Congress on C-SPAN. If they 
are interested in a particular bill or amendment being 
discussed, they can get on the computer and actually scan the 
text of it and then, using E-mail, send in their opinion, all 
within the space of a half hour while the debate is still in 
progress.
     That, of course, assumes they have a computer, and that 
means there is some demographic selection going on. But I 
anticipate within a decade or two everyone will have that 
capability.
     Your other suggestion of interactive town meetings raises 
an interesting point, however, because that is also available 
right now. In fact, I just conducted one this morning, not a 
town meeting with my constituents but a give-and-take meeting 
with a group of scientists meeting in Ann Arbor. The cost for 
the satellite time was roughly $1,000 for a half hour, which 
they paid as part of their conference fee. We can do the same 
with our constituents, but who pays the $1,000? And if the 
House pays it, then of course your potential opponents would 
cry that we have an advantage from our incumbency. If we pay it 
personally, we have to raise the money somehow.
     The question is, where does the money come from?
     That gets back to the crux of the matter. I think the 
problem with connecting with our constituents is not so much a 
matter of either technology or our will or desire, it is the 
other issue you raised earlier, 40 percent participation in 
voting, which is the easiest act of citizenship. The more 
difficult ones are participating in the process.
    With the town meetings I hold in my district, altogether I 
probably have 500 in attendance over the course of the year, 
which is less than 1/1,000th of the population of my district. 
So I think what we have to do is try to address the citizen 
interest factor in every way possible.
     Getting back to specific questions, you mentioned you 
would like to replace mud slinging with reasonable voices. I 
certainly agree with you on that.
     Do you have any suggestions of any legislation that we 
could pass that would control negative campaigning without 
infringing on First Amendment rights? That is something I have 
struggled with for years.
    Mr. Gephardt. It is very difficult. I think if you were, in 
a dramatic way, going to affect the kind of communication that 
goes on in campaigns, you would have to do something in the 
Constitution with the First Amendment as it relates to 
political campaigns. There are a lot of Americans who wouldn't 
want to even entertain that idea, much less do it. So you have 
got to be very careful about it.
    But I think it is time for a real soul-searching discussion 
among all of us about what is happening in campaigns and 
whether 30-second spots are appropriate to a political 
exercise.
    Maybe we will decide, as I suspect we might, that the First 
Amendment should not be changed in any way for the purpose of 
political campaigning. But we have to approach that question. 
We have to have a serious discussion of whether or not we think 
that 

[[Page 33]]
Amendment should be altered with regard to political campaigns because 
of the extraordinary nature of them, and what is happening in 
them, and what we might want to have happen in them.
    When I say open our minds, I mean that has got to be 
entertained, at least looked at, by this group and this 
commission if it happens.
    Mr. Ehlers. Thank you.
    I personally have never used any negative campaigning, but 
I have been a victim of it. I think Congress is largely 
responsible, certainly partly responsible, for the poor 
reputation we have with the public.
    I would also like to pick up just briefly, Mr. Chairman----
    The Chairman. Briefly.
    Mr. Ehlers [continuing]. On the comment you made about the 
public perception. If you look in the history books, it is not 
much worse now than it was a hundred years ago.
    Mr. Gephardt. I don't take a lot of heart from that.
    Mr. Ehlers. I agree, but I suspect----
    The Chairman. Or 200.
    Mr. Ehlers. Like the Lord said, we will always have the 
poor with us, I think politically we will always have the 
skeptics with us.
    Mr. Hoyer. Would the gentleman yield just a moment?
    Mr. Ehlers. Just a second. Mr. Fazio used the term--``and I 
know he is religious''--I know you are a deeply religious 
person. I don't think you are influenced by the contributions 
you receive. I am not. Yet the public somehow perceives we are. 
The question is trying to discern what is really the problem 
here. Is this a problem of perception, or is it a problem that 
is real, as you implied in your opening comments? I happen to 
think not.
    I will be pleased to yield.
    Mr. Hoyer. I think the issue is today not that the opinions 
that are expressed about the Congress or about Presidents are 
necessarily more harsh. Certainly you can read descriptions of 
Thomas Jefferson that all of us would now be reviled by because 
we revere him.
    However, the very marked change is the powerful projection 
of those negative views through television which has 
geometrically increased the disquietude in the American public 
and the level of animus.
    It is not that the views have changed for those who know, 
who write the journals and all that sort of stuff, but what has 
happened is, the public has been inundated.
    I agree with the gentleman from Michigan, and I have said 
this in our committee before in years past, we all spend a lot 
of money to denigrate the institution and the participants in 
the institution on an annual basis, and I think that is the 
difference. It is not that the views have changed, they are 
projected more widely and more powerfully.
    Mr. Gephardt. Can I take a second to chime in on that? This 
is an important point.
    The Chairman. Sure.
    Mr. Gephardt. I think what we have to begin to look at is 
the power of television in the whole business of public 
persuasion. I un

[[Page 34]]
derstand the Speaker was talking about that here today when he was 
talking about the ability of groups to influence public opinion 
outside of the election process just on issues, and to make an 
impact on legislation ultimately by impacting public opinion 
through the use of television.
    I just throw this out. I may be wrong.
    I don't think there has ever been an instrument of public 
persuasion that is nearly, nearly as powerful as television 
and, in particular, 30-second spots. If it weren't a powerful 
tool, the great corporations of our society would not spend the 
amounts of money they spend using it to drive public opinion in 
particular ways. We need to really examine its role and what it 
has done to the political atmosphere.
    The Chairman. Just let me add that everything that has been 
said is, I think, correct, and it is focused through the 
magnifying lens of single-issue politics, which intensifies all 
the aspects we have been talking about.
    Does the gentleman from Arizona wish to inquire?
    Mr. Pastor. Thank you, Mr. Chairman.
    I thank the Minority Leader for sharing his thoughts with 
me.
    As an observer in different countries during the elections, 
I have seen where they have had limited time for campaigning, 
but one of the things I have also seen is that they stop 
campaigning a few days before the election, like a cooling off 
period, so the concentration is to get out the vote and get 
people to get ready to vote. So that may be something that we 
may have an interest in.
    I agree with you, we make it very hard for voters to 
participate, and I would hope that we look at not only the 
mailed-in ballots but also the whole question of registration, 
and make it easier for people to register and vote, beyond the 
motor-voter idea but maybe on-site registration. I think those 
are things we need to look--at how we make it easier for people 
to vote.
    One of the themes that the Speaker had this morning--and I 
would like to have your comments and your thoughts--also dealt 
with how independent groups now are the more threatening factor 
because they push their idea or their issue through the media 
or through volunteers. Somehow we connect that with the demise 
of political parties. I saw this morning as I was walking by 
one of the bookstores, a cover story in one of the national 
magazines that deals with the demise of the Democratic Party.
    What would you do to strengthen the participation of 
political parties so that we may again use that as a vehicle 
for citizen participation and for the recruiting of potential 
candidates?
    Mr. Gephardt. Let me say that I think this great diverse 
democracy has been greatly helped through history--and we are 
now the oldest democracy in the world--by having a large tent 
but a small number of political parties.
    What I am afraid is happening because of all the phenomena 
we are talking about today is we are seeing a proliferation of 
parties and I think it is going to continue unless we can bring 
about, as I have said, dramatic campaign reform.
    If you look across the history of other democracies, in 
many of them there has been a real atomization of parties, 
special interest parties, parties representing very narrow 
groups within the society. 

[[Page 35]]
That is beginning to happen in this society. I think it will continue 
unless we can bring about very effective, dramatic campaign 
reform.
    That is not the only thing, we have got other problems that 
are causing this, but this is part of the reason this is 
happening.
    So one of the things I think we have to look at in campaign 
reform specifically, to answer your question, is that we cannot 
starve parties of the ability, the financial ability, to 
operate as parties: their ability to register voters, their 
ability to get voters to vote, their ability to help campaigns 
be mounted, their ability to go out and find good people to run 
for political office.
    If we are going to have successful, large-tent political 
parties that are effective in what they are doing, they have 
got to have the resources to be effective in doing it. So in 
writing campaign reform, we don't want to make it impossible 
for them to raise the resources they need to run their 
campaigns and to be an effective political unit.
    The other thing, when you only have two parties, what I 
think we benefit from is you get public servants who are 
willing, because they have had help from that party to get 
elected, to represent the broadest view. They are then not 
beholden to this special interest or that special interest and 
another special interest to get elected. They can rely on the 
party to help them get elected, which has the broader view of 
the good of the whole society.
    I think that is an extremely important reason to keep the 
large political parties that we have had in mind as we go 
through campaign reform.
    The Chairman. I will tell the Minority Leader, who was not 
here for my opening remarks, that we are planning to hold a 
series of hearings focusing on funds availability to the 
candidate. One of the hearings will clearly be on the role of 
political parties. Perhaps the 1970s legislation defined 
political parties as even less than PACs in some ways. We have 
to go back historically and take a look.
    I appreciate your comments on political parties.
    Does the gentleman from Maryland wish to get in on his own 
time?
    Mr. Hoyer. Mr. Chairman, I just wanted to make an 
observation, because the Speaker brought up Broder's book with 
reference to decline of parties. Of course in Broder's book he 
spoke of the consequences of that, which, in my opinion, was 
largely accelerated by the 1974 election and, frankly, by 
campaign finance reform.
    Let me make an observation. GOPAC is very controversial 
obviously, but GOPAC was used as a unifying force by the 
Speaker, where he reached out to a lot of people of like 
philosophical mind and objective and created a cohesion that he 
now displays as the Speaker. Historically, parties did that.
    With the limitation on parties' ability to fund the 
candidates, we may want to think about going the other way in 
campaign finance reform of $10,000. That is for most of us an 
inconsequential sum, making parties relatively irrelevant. They 
can give other in-kind services, but as we have diminished 
parties' ability to impact on elections, it is not surprising 
that we have seen a disintegration, which the public has seen 
as gridlock and the lack of consensus and the inability of 
leaders to lead.

[[Page 36]]

    In fact, GOPAC to some degree replaced the party. In fact, 
leadership PACs to some degree attempt to give leaders--this is 
in State legislatures who are doing it, at the Federal level--
attempt to give leaders the ability to impact on policy by 
promoting candidates who shared their views and will cooperate 
with them in pursuing policies. People obviously respond to 
that. That is bad, because what it does is, it centralizes 
power.
    Since 1974 there has been, and before that, a great 
suspicion of centralized power, but we have paid a price for 
the disintegration of centralization. Frankly, I am an admirer 
to some degree of the Speaker's centralization to impact 
policy. While I may disagree with many of the policies he tries 
to promote through that mechanism, it is, in my opinion, a 
problem that our party experienced in the 1974 post period 
where we diminished the Speaker's power and diminished 
leadership power and enhanced, frankly, committee power. But we 
had a lot of power centers and were, in some respects, through 
campaign finance mechanisms but other mechanisms as well, 
unable to focus on policy promotion.
    Mr. Gephardt. Let me just make an idea here: that is, 
always, throughout the history of our country, we have run 
somewhere between chaos and very centralized power, almost a 
totalitarian system. We are kind of looking at the green grass 
on the other side of the fence.
    The great genius of this system that we have, I think, is 
that it is somewhere between what is a more parliamentary 
system, with a more centralized power and something that really 
requires consensus building.
    I happen to believe that while I get terribly frustrated, 
as we all do, with the consensus building that has to go on 
around here, that it is the only way a diverse country like 
this can really operate. People really do have to feel like 
they have an oar in the water and they have a say.
    But when you go so far toward consensus that you have 
chaos, and you have no ability to make decisions and move the 
society, then you have gone too far in that direction. I think 
we have achieved that golden mean.
    One of the ways we have done that is through these two 
broad-tent parties, and I think that if we go towards very 
narrow parties and lots of them, we are going to pay a very 
heavy price in terms of our ability to get anything done in 
this society.
    The Chairman. Last to inquire, the gentlewoman from 
Washington.
    Ms. Dunn. I thank the Chairman.
    I just want to bring a note of irony to our discussion 
today. First of all, I want to commend everybody on the 
discussion. I think we are finally getting into this topic, and 
it is very interesting for me to sit here and to hear debate 
that will be educational for anybody who takes the time to 
listen to C-SPAN on this issue.
    Mr. Chairman, I want to commend you for having these open 
hearings. I will simply tell you that two and a half years ago 
when I came as a new freshman to this Congress, I wanted to be 
on this committee because I was a former party Chairman, and I 
brought some expertise to the subcommittee that I then sat on, 
which was the Elections Subcommittee. 

[[Page 37]]

    I will remind the Chairman, however, that all the work of 
that committee on campaign finance reform was brought directly 
by the Majority to our full Committee, with very little input 
by any of us, so very little opportunity for folks watching C-
SPAN who wanted to understand thoroughly the issues to really 
have that opportunity. So I think it is great that we are 
holding these hearings now. I want to thank you for that great 
chance to get involved.
    I enjoyed Mr. Pastor's question of the Leader, and, Mr. 
Leader, I enjoyed your answer. I think the discussion that has 
gone on about parties and the need to strengthen them is very 
important. Regarding Mr. Hoyer's contribution to that 
discussion--I was a former party Chairman for 11 years. I 
shared the frustrations that all of you have been through in 
trying to find candidates to run for office and to try to get 
people interested in voting. It is just a terribly 
dissatisfying feeling, in trying to raise money to help 
candidates, get the word out, send the mailings out, all the 
things we have had to do in our various political backgrounds.
    So I am very sensitive to that, and I am very eager to find 
the answer as to how we strengthen the two-party system in the 
United States because, I agree with you, Leader, that is what 
we have to do.
    I am now a member of a different committee, the Ways and 
Means Committee, and my question to you is: Do you see ways in 
which we could use the Tax Code to encourage participation by 
individuals in political campaigns? For example, what are your 
thoughts on incentives like giving a tax credit to a 
contributor who is willing to give $100 or less?
    Mr. Gephardt. Well, we had that at one time, as you know, 
in the Code, and I thought it was a sensible thing to have.
    Obviously, as with all issues, everything is complicated in 
the world, so I am, along with Mr. Armey and others, now 
advocating a flat tax, or a flatter tax, that has no deductions 
and no credits. So we all wind up meeting ourselves coming 
through the door on issues like this, and I have to put in that 
disclaimer.
    But if we can find a way that is sensible, that meets our 
other objectives, to encourage ordinary citizens to become 
involved in the political process with small contributions and 
to be part of the system, I think it is a very, very, very 
positive thing to do.
    Part of the reason I think Americans have not been 
particularly political or ideological or interested is, 
frankly, our country has been a huge success, things have gone 
well, the economy has been growing, people feel like they are 
okay and they don't need the political system. It is kind of, 
``Leave me alone and I'll be fine.''
    I think as the economy has contracted for a lot of middle-
income Americans over the past 25 years, I think people have 
gotten more politically charged and interested and maybe in a 
way that is good, but it has to be channeled and they have got 
to find ways that they feel they can be effective. One way is 
to contribute and participate in local campaigns, campaigns for 
people for Congress, for city council, for mayor, whatever.
    Obviously, if we can encourage those small contributions 
that gets them involved, people tend to follow their money. 
They put money in a campaign, then they do other things in a 
campaign, and that is very positive.

[[Page 38]]

    Ms. Dunn. Thank you.
    The Chairman. Once again, I want to thank the Minority 
Leader for his willingness to share his ideas and to join with 
the Speaker as the opening witnesses for what hopefully, this 
Chairman believes, will be a series of very positive 
discussions about the options available to us. Whether or not 
we are able to form a commission with the President's 
participation, I want to indicate that, as Chairman of this 
committee, my goal is an open examination of real issues 
leading to real solutions. I want to thank the gentleman for 
participation.
    Mr. Gephardt. I thank the gentleman very much. I look 
forward to working with all of you in the next months.
    Thank you.
    The Chairman. Thank you again.
    It is now time to move to the panels consisting of Members 
who have introduced legislation in the general area of campaign 
finance reform and, more specifically, dealing with PACs.
    I believe with us is--I see the gentleman from South 
Carolina, Mr. Inglis--come on up--and the gentleman from 
Indiana, Mr. Jacobs; Mr. Portman; the gentleman from 
Pennsylvania, Mr. Kanjorski. I believe Porter Goss may not be 
able to join with us because he is, ironically, in the Rules 
Committee engaged with activity on gift reform since that was 
transferred from the Committee on Standards of Official Conduct 
to the Rules Committee. Our other Members are on the way.
    [The statement of Mr. Goss follows:]

[[Page 39]]
    
    

    
[[Page 40]]

    Our schedule will be to proceed through this panel and the 
second panel. However, I am informed there may be a vote 
momentarily on the Floor, so we will begin this panel; In all 
likelihood, since the panel consists of all Members, we will 
recess for the purpose of voting, and then come back and 
proceed through this panel and then on to the next panel.
    I hope we could have each of the witnesses' testimony and 
then have the panel interact between themselves, too, if that 
is possible.
    I would tell the Members, as I just indicated to the 
gentleman from Maryland, if it would be possible to have your 
testimony and if you are able to stay so that we can carry out 
the discussion with you, it would be helpful. Obviously, given 
your busy schedules, if you feel that you must leave, we 
understand.
    Let's begin with the gentleman from Indiana, Mr. Jacobs.




  STATEMENT OF HON. ANDY JACOBS, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF INDIANA

    Mr. Jacobs. Thank you, Mr. Chairman.
    Under Federal statute it is now not permissible for any 
private interest to finance any part of the operation of a 
congressional office. That is a fairly recent statute. I think 
it was about the mid-1970s that that happened.
    My view is that the selection process should be raised to 
the sanctity of the serving process. In Robert Bolt's play, ``A 
Man For All Seasons,'' Thomas More is emerging from court as a 
judge, and someone tenders a basket of apples to him, and he 
declines and replies, ``To sweeten my judgment?''and declines 
the apples.
    I am a former police officer. If anybody had given anything 
of value to me in the discharge of my duties, the result would 
have been rather simple; it would have been, ``Good afternoon, 
Sheriff; good morning, Judge; and good evening, Warden.'' That 
would be about all there was to it.
    I think the Congress of the United States deserves that 
dignity, that objectivity.
    I hear it said that contributions don't influence people. I 
am not prepared to argue whether they do or not, but I am 
prepared to argue this: If you are into bench pressing, there 
are two ways you can do it, you can do it with dead-weighting, 
or in latter days they have invented hydraulic mechanisms, and 
the harder you push on the mechanism, the more weight you are 
pushing away. You can deceive yourself. If you do it at 7:00 
o'clock in the morning, then it might really be 180 pounds, but 
if you use the same mechanism at 5:00 p.m., you might think you 
are doing 180 pounds but in fact be doing about 130. Very 
subjective, and subconscious.
    So I think it is with PAC contributions. Do they influence 
you or do they not? Or do you even know, or do I know 
subconsciously whether they influence me?
    Now there is one way you can know that they don't influence 
you, and that is if there isn't any. That way, not only you--
that should be important--but the public can know that they are 
not influencing you because they don't take place.
    Now, I don't think you can do this in a vacuum. I am among 
those who believe the British system is the best, and that is 
what I have proposed. Outlaw private contributions altogether, 
the same 

[[Page 41]]
as we do in the operation of the congressional offices. The richest 
rancher is not going to buy the sheriff his gun.
    I don't think that the scheme should involve one nickel to 
any campaign committee. I think we should recognize that the 
primary legitimate function of a campaign is to communicate 
ideas.
    I think that the public would be buying itself two things: 
assurance that money is not influencing or sweetening the 
judgment of public officials, and, second, the opportunity to 
hear all candidates, splinter parties or whatever, independent 
candidates, whoever achieves ballot position by the requisite 
procedures of the several States. You have the opportunity to 
hear ideas you never would hear otherwise because the lobbyists 
no longer would be the gate keepers of the television camera. 
And you might be surprised.
    Our Minority Leader, Mr. Gephardt, spoke about the 
importance of maintaining the two parties. Well, I am in one of 
the parties, and Jennifer is in the other one, and I expect we 
would both be sympathetic with that idea, but the fact is, a 
splinter party may well become the majority party if it were 
ever heard from. The better mousetrap, the better idea.
    The precedent, of course, for public financing of 
campaigns--which, by the way, lobbyists loathe; they were the 
very first ones to give the argument, why should I pay? Why 
should I pay to facility the expression of an idea with which I 
do not agree? The public does that every day with Members of 
Congress in the bully pulpit at the White House.
    George Burns and Gracie Allen used to have an old show, and 
they had the governor of California on one night. His name was 
Goodwin Knight, and his nickname was Goodie Knight. Gracie, in 
her penetrating, Socratic method, said to the governor, ``Now, 
governor, are you a Democrat or a Republican?'' and he said, 
``Well, I am a Republican.'' ``Well, now,'' she said, ``do the 
Democrats have to pay taxes to help pay your salary?'' and he 
said, ``Well, yes.'' She said, ``Now, is that fair?''
    That is my answer to whether it is fair for the public to 
buy the opportunity to hear all the candidates in equal 
measure. My scheme would do nothing more than that. The 
taxpayers would buy the blocks of television time and radio and 
space in newspapers, and each candidate who is on the ballot in 
equal measure could go in and say what, if anything, he or she 
stands for during his or her 10 or 15 minutes that night.
    I was about to say, and I will conclude by saying, the 
precedent for this is the New England town meeting. The 
taxpayers paid for the means of communication, which was the 
New England town hall. Now, it is pretty hard to crowd half a 
million or more people into one room anymore, probably always 
was something of a trick, but unless you believe in angels 
dancing on the head of a pin, that sort of thing, it is 
possible, but it is what they used to have years ago, the town 
meeting of the air; it was over the radio. Now we can have town 
meetings of that kind.
    I think, as my mother would say, that the world would go 
around much faster if we let the lobbyists come in and use 
their arguments, and nothing more, to influence legislation. 
That is precisely what they ought to do.
    The year I was elected----
    
[[Page 42]]

    The Chairman. The gentleman has concluded.
    Mr. Jacobs. I am concluding.
    The year I was elected to the committee on which your 
Chairman serves and on which my good friend serves, the Ways 
and Means Committee, I was elected in January by the Democratic 
Caucus, and about five minutes later the phone started ringing 
off the hook. Every PAC in town wanted to give me money. The 
election was over, I didn't have any debt, but they still 
wanted to give me money.
    One guy came in about two years later, and he was 
representing a big corporation, and he said in the omnibus tax 
bill an unintended consequence was happening to his 
corporation. Before he said that, he unsheathed a check for 
$5,000 to my committee, and I said ``No, I don't take PAC 
contributions.''
    And I asked him, ``What were you here for really?'' He told 
me the problem. I said, ``I think you are right. I think it's 
an unintended side swipe at your corporation, and we will have 
technical corrections in five weeks, and I'll offer the 
amendment.''
    I did, and it was adopted immediately, a matter of course. 
I don't think his feet touched the floor when he left the 
office. The very idea that to gain elemental justice didn't 
have to cost his company $5,000 kind of knocked him out.
    That is the kind of world I think we learned in high school 
civics, and that is the kind of world we can achieve if we get 
together on it.
    Thank you.
    The Chairman. The gentleman from Pennsylvania.




   STATEMENT OF HON. PAUL E. KANJORSKI, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Kanjorski. Thank you, Mr. Chairman.
    I like Mr. Jacobs' world. I think it is slightly idyllic 
with regard to some of the questions it raises and would result 
in the delay of passage of legislation in this area. I think it 
is very important we put a bill together that is acceptable to 
both parties.
    I am here because over the last five years in every 
Congress I have introduced a campaign finance reform bill, H.R. 
296. I would appreciate it if the Members would look at it. It 
was not written from a partisan perspective, and, frankly, it 
is quite bipartisan.
    I think we have a problem with PACs. I think they have to 
be limited, but they do serve as a way of raising small amounts 
of money from less affluent people who want to give in a very 
efficient fashion.
    The experience of raising money from groups that PACs 
generally represent, whether labor unions, industries, as you 
know, is overwhelmingly expensive, and most often we are 
supporting the restaurant industry or the catering industry, 
and a large portion of the funds that we do raise actually end 
up being costs.
    So PACs in some way, if controlled, limited, and 
understood, and with full disclosure, have some relevant 
importance. But under my bill I reduce them by 60 percent to a 
maximum of $2,000. The major part of my bill is to encourage 
local contributions.
    It was interesting, I listened to Ms. Dunn's comment on tax 
credits. I believe we should have a credit for in-State 
contributions, a 

[[Page 43]]
maximum of $200 and a direct match for that amount up to a total 
maximum of $300,000. You want to put a limit on it.
    My bill includes a checkoff to provide matching funds to 
match the funds contributed by local people in small amounts.
    I would limit the use of personal wealth to $100,000. No 
one should have a need in our society to hunt and market a seat 
in Congress, and we now see this in both parties.
    We have an uncanny number of individuals in this country 
who have not come through the political process, who in middle 
age, after great, successful business careers, merely look 
around the country and identified 1 of 20 or so districts, and 
they have $1 million or $2 million they want to spend and 
become a Member of the United States Congress.
    I don't think they have gone through the undergraduate 
school or graduate school of politics, and it does count, 
because they tend to arrive with a very simplistic approach. I 
am glad the former Chairman of a state legislative committee 
for the State of Washington is now a Member of Congress. That 
background comes with a wealth of experience. All of us know 
many of our colleagues come with that kind of experience.
    On the other hand, I also speak from the perspective of a 
former Republican, so I am very bipartisan. I moved into the 
Democratic Party when portions of the Rockefeller-Scranton 
Republican Party no larger existed, when oxygen was no longer 
attainable for them in the fifties and in the early sixties, 
and I saw the Republican Party move a little too far to the 
right from where I was philosophically, and so I find myself 
now in the Democratic Party.
    I hasten to say, I am the first Democrat in my family in 
more than 120 years, so it is very difficult to adjust to the 
extreme left of my current party. I sometimes find myself 
wishing we had a multiple-party system.
    But I agree with Mr. Gephardt that our system is structured 
in a two-party mode and if we change we have to merely change 
identifications of people to bring us within the party.
    But in respect of having changed parties and run for 
office, I come as a virgin to the Congress. I was never elected 
to a public office before. I ran against an incumbent in the 
Democratic Party in 1984, if you will, defeated him, one of two 
in the entire decade that was defeated, went on to the General 
Election of 1984 which was dominated by the Reagan landslide, 
and succeeded in winning nonetheless along with a very small 
class of new Democratic members.
    Immediately upon my swearing into the office of 
Congressman, my 1986 Republican opponent had already raised 
$400,000 and went on to finance either the second or third most 
expensive campaign in the United States, outspending me two to 
one, with somewhere in the neighborhood of $1.2 to $1.4 million 
in his campaign fund.
    So immediately upon my election to Congress I had to raise 
money in a very fast way, which was very difficult; I was not, 
and am not, used to it. I know the experiences of the lady of 
the night, and I don't think politicians should be attuned to 
that nor is that the best experience. Those of us fortunate 
enough to gain the con

[[Page 44]]
fidence of our constituents know what you have to do to come to 
Congress. We have to find a middle ground.
    My legislation was worked on with Dr. Norman Ornstein of 
the American Enterprise Institute. It covers a lot of issues 
that we have raised in our system. We worked closely to tailor 
those issues. I think you will find it both balanced, allowing 
for needs of the Democratic Party and our center city problems 
to raise funds, it works to the benefit of the Republican Party 
in that it encourages participation, but, most of all, it works 
to the benefit of challengers by allowing them to get in and to 
address the issues that Mr. Jacobs referred to.
    The most crying problem facing our country is the fact if 
we don't get able people to run for Congress or other elected 
offices, who are willing to talk about issues and substance 
rather than simplicity, we are going to lose more respect in 
the public than the little the Congress has now, and I don't 
know whether that is possible, but I suspect we may accomplish 
it.
    I would urge my colleagues on the committee to look at H.R. 
296. It is bipartisan. I think it could be passed. People with 
open minds could, in a bipartisan way, say this is a tool we 
could use in 1995 and 1996 to make some of the corrections 
which we all recognize are needed.
    Thank you.
    [The statement of Mr. Kanjorski follows:]

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[[Page 50]]
    
    


[[Page 51]]
    
    

    
[[Page 52]]

    The Chairman. Thank you.
    The gentleman from South Carolina, Mr. Inglis.




STATEMENT OF HON. BOB INGLIS, A REPRESENTATIVE IN CONGRESS FROM 
                  THE STATE OF SOUTH CAROLINA

    Mr. Inglis. Thank you, Mr. Chairman, for this opportunity. 
I, too, congratulate you on holding these hearings. I think it 
is a great beginning.
    I was interested in the discussion earlier that the 
committee had with the Minority Leader, very interesting 
discussion I think, very helpful in identifying for me two 
areas that need some help. One is the fact that we have got 
this pervasive impact of television on the process, and the 
other is the impact of single-issue orientations in this 
process. It seems to me both of those can be addressed by 
simply eliminating political action committees. Let me explain 
why I think both of those we will get to if we simply eliminate 
the PACs.
    I should tell you, to begin with, that I ran for Congress 
in 1992 the first time, having never run for office before, 
challenged an incumbent in a situation where nobody expected us 
to win. I had sort of an unusual approach, I believe, in term 
limits, and therefore I will limit myself. I believe we should 
abolish PACs. Therefore, I refuse to take any PAC money.
    At one eventful press conference in my campaign, I hung 
this sign on the podium, and I said, ``If you send me to 
Washington, I'll hang this sign on the door in Washington.'' It 
says, ``Notice to all PACs: Remember, you didn't give me a 
dime, and I don't owe you a thing.''
    It has had a way of warding off evil spirits now that I am 
here. They seem not to come around too much. It works fairly 
well, I think.
    The exciting thing I think that we--the opportunity we have 
in abolishing PACs is to get at this thing of this pervasive 
impact of television, and where does it come from, of course, 
but the enormous sums that we raised and spend on campaigns.
    The reason we must raise those funds is the opponents on 
television. If we sort of put the pin in the balloon and out 
comes the money from the PACs, I believe there would be less 
television, less purchases of those 30-second attack adds, and 
that will help significantly.
    The other part of this is that single-issue orientation. I 
think there are several critical differences between PAC giving 
and individual giving. Individuals, unlike PACs, give for a 
variety of reasons. PACs give for a very focused agenda. They 
are after something in particular for their little industry or 
their particular need. They give without much emotion. They 
give solely in order to advance that very narrow agenda.
    Usually when we talk in terms of single-issue orientations, 
we are talking about issues like abortion or other things like 
that. But in the PAC area we have to open our minds to the 
single-issue orientation of the PACs. They are after small 
changes in law, they are not after massive changes. They are 
after small changes that affect their industry significantly. 

[[Page 53]]

    So by eliminating PACs, what we have is the process opened 
up to a much more complex reason for giving rather than a PAC 
giving with something of a contract for voting, as some of them 
have moved towards in recent years. You would be passed on 
individuals who give for very complex reasons. Individuals may 
agree with you on nine issues, disagree on one. That one may 
cause him not to vote or contribute to you.
    Individuals are complex, PACs are simpleminded; they simply 
give for a very narrow purpose. That is one critical difference 
between PACs and individuals.
    Another critical difference, of course, is the amounts of 
money involved. Individuals, at the maximum, can give $2,000 
per cycle, PACs did get $10,000, and we know a string of PACs 
can be organized, and if you get 10 PACs together in the 
string, the leader of the pack of PACs can give you $100,000. 
That is a whole lot of money. So this is a very significant 
difference in that quantitative way between PACs and individual 
contributions.
    I believe that that is the way that we really can change 
this process, by eliminating the political action committee and 
freeing up Members of Congress to go, rather than to those 
narrow interests, to go more broadly to their individual 
potential contributors and ask for money. It would be a very 
different system and a system that involves much less money.
    At that point, we would have more candidates relying on 
door-to-door afternoon town hall meetings and that sort of 
thing in order to get out their message, and everyone would 
address their expectations that that is how I must learn about 
the candidates, not from the 30-second attack adds.
    Lest you think it cannot be done, it can be done that way, 
and I know a number of Members of Congress, including Mr. 
Portman to my left, who doesn't take PAC money. In fact, now in 
the House there are 24 of us who do not take PAC money and 
believe we should abolish political action committees, and we 
are here. It does work. It is possible. Of course you run your 
campaigns with a whole lot more shoe leather and a whole lot 
less television buys, but the result, I think, is a more 
informed electorate and more involved electorate and an 
electorate that can see the opportunity for a very different 
kind of Congress.
    Thank you, Mr. Chairman, for the opportunity to testify 
today.
    [The statement of Mr. Inglis follows:]

[[Page 54]]
    
    

    
[[Page 55]]

    The Chairman. Thank you very much, Mr. Inglis.
    Mr. Portman, you have the option of trying to get your 
testimony in before we go vote--I see five lights are on, and 
we are going to have a series of votes--or join us when we 
finish with this series of votes.
    Mr. Portman. Mr. Chairman, I think I can do it in three or 
four minutes.
    The Chairman. It is your time.




  STATEMENT OF HON. ROB PORTMAN, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Portman. Thank you, Mr. Chairman, for having this very 
important hearing. I commend you for doing this, and I commend 
the Members for spending time on this matter.
    It seems to me we have come to a real opportunity to pass 
serious campaign finance reform, given the opportunity in these 
hearings this afternoon and given the focus the Speaker and the 
Minority Leader have brought to this.
    I am here to talk about my legislation regarding a PAC ban. 
I would associate myself with a lot of the comments made by the 
previous speakers with regard to the pervasive influence of 
PACs and the problems with it. I would like to focus on two 
fundamental problems I see in the campaign finance area 
generally and suggest that a PAC ban is the best way to solve 
it.
    Number one is undue influence of special interests. My 
friend from Indiana, Mr. Jacobs, talked about the sweetening 
influence. It is there, and I think that should be one of the 
primary goals of any campaign finance reform effort.
    Second is the obvious advantages incumbents enjoy in this 
system. Even with turnover in the House, which is primarily due 
to retirements, I would argue we still have a situation where 
there are enormous advantages enjoyed by incumbents which keep 
the system from being a truly open and competitive process for 
challengers.
    The best way to approach those two is through a PAC ban. 
The PACs have grown enormously, from 608 in 1974 to over 4,000 
today, and the influence they have has increased greatly as 
well.
    Today PACs contribute, as most of you know, over half the 
money in the congressional races. They also contribute 
substantially to the advantages incumbents enjoy. According to 
the FEC 20-year report, in recent years more than 70 percent of 
PAC contributions have indeed gone to incumbents.
    In my State of Ohio, for example, PACs supported, on 
average, incumbents by a margin of 10 to 1 over challengers. So 
by doing away with PACs I think you are going to put money and 
influence back where it should be; that is, in the hands of the 
individuals and in the hands of the voters.
    Rather than funneling individuals' contributions through 
the Washington PAC, I would rather encourage individuals to 
contribute money directly to candidates they believe in. I 
think you would get a different result. This increases 
candidate accountability directly to the voters and not to the 
special interests that, again, have too much influence over the 
process. 

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    Over the years a lot of concerns have been expressed about 
the constitutionality of a PAC ban, and I assume we will get 
into that during the discussion, and I am looking forward it. 
They cite the Buckley v. Valeo case, where in 1976 the Supreme 
Court upheld the Federal Election Campaign Act limitations on 
contributions. Under that reasoning, they were limited as 
appropriate weapons against the reality or appearance of 
improper influence.
    Three points of clarification. Number one, the Court has 
never directly addressed the issue of banning political action 
committees. We should remember that. Whether or not PACs are 
constitutional has not been explicitly cited in Buckley or 
other constitutional cases by the Supreme Court. I would argue 
there is helpful language in the Buckley opinion with respect 
to the apparent or real corruption.
    Number two, there are other forms of association that are 
recognized under the Federal Election Campaign Act; for 
example, partnerships. It is very interesting to me that if an 
individual gives money to a partnership and that partnership in 
turn donates contributions to any of us on this panel this 
morning, that individual's contribution is attributed to the 
individual, not to the partnership as a whole.
    Again, of course this isn't the case with PAC 
contributions. Individuals can give to PACs, and it is not 
attributed back to them for purposes of their own contribution 
limits. In essence, I don't know that there is a constitutional 
right to give an enhanced contribution merely because one 
affiliates. I think if PACs are banned the problem is cured.
    In any case, it is clearly wrong for corporations, labor 
unions, and trade associations to use money that would be an 
illegal contribution, if made directly to a campaign, to 
subsidize PACs, particularly administrative costs of PACs. I 
believe banning those subsidies or those PACs that receive 
subsidies would clearly stand up to the constitutional test.
    This has to do with the issue of connected PACs. I believe 
that that clearly is something that would survive 
constitutional muster and that constitutes the majority of PAC 
contributions. So at the very least I think we should be in a 
position of coming together on legislation that would ban 
connected PACs.
    For all these reasons and the fact that the makeup of the 
Supreme Court has changed dramatically in the 19 years since 
the Buckley decision, I think it is not clear that a ban on 
PACs would be found unconstitutional.
    Furthermore, I think the other alternatives that have been 
discussed here today and in the debate generally are 
problematic. Halfway measures, I think, don't work, we have to 
go all the way. I think raising the amount individuals can 
contribute does not fundamentally solve the problem. I think it 
is a short-term fix. It will make one side more or less 
valuable as a funding source, but it is temporary.
    Aggregate limits on PAC receipts is a mistake. It will 
place emphasis on early contributions, thus enhancing the 
advantages of incumbents who traditionally get these 
contributions, as lobbyists anticipate what are the best 
contests to fund. 

[[Page 57]]

    There are ownership problems. I think raising the 
individual limits from $1,000 to $2,000 or $1,500 would 
diminish the role of PACs. True, but few individuals can afford 
a contribution of that size. It doesn't really open the 
process. Aggregate spending limits further institutionalize the 
general bias against challengers. So I am not a supporter 
generally of the limitations. I think we need to level the 
playing field until the alternatives are good to do so.
    I would be concerned about other measures that would be 
attached to a PAC ban that are major campaign finance reforms. 
It will bog down the process. As a practical matter, I think we 
have an opportunity to ban PACs and get that done. I would hate 
to see us get bogged down again.
    In conclusion, Mr. Chairman, let me say that I think H.R. 
356 or any other clean PAC ban legislation is the way to go 
this year. It is clean, it is tough, it is fair. By banning 
altogether the activity of the PACs, we can make progress in 
making elections more competitive and getting the undue special 
interests' influence lessened in this city. I would encourage 
this committee to support that kind of a bill.
    I am pleased to join you later for questions.
    [The statement of Mr. Portman follows:]

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    The Chairman. If you are able to join us--we have about 
five minutes left on the current vote and a five-minute vote 
following--about 10 minutes after the last vote, the committee 
will reconvene.
    The committee stands in recess.
    [Recess.]
    The Chairman. The committee will reconvene.
    And the gentleman from Kentucky, Mr. Whitfield.




 STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF KENTUCKY

    Mr. Whitfield. Mr. Chairman, thank you for this opportunity 
to present testimony on campaign finance reform.
    My name is Ed Whitfield. I represent the First 
Congressional District of Kentucky. No fewer than 42 bills 
addressing campaign finance reform have been introduced this 
year. These bills limit campaign spending, place limits on out-
of-State, out-of-district contributions, subsidize postal and 
broadcast rates for campaigns, and eliminate PACs.
    One thing is certain about these proposals. The Federal 
Election Commission will soon become one of the largest Federal 
agencies, this at a time when we are trying to limit the role 
and size of government.
    However, I do agree campaign finance laws are not perfect 
and changes should be initiated to make them more equitable for 
challengers.
    In spite of the incredible turnover in Congress last 
November, 80 percent of those elected were incumbents. The 
primary reason was the advantage incumbents have in obtaining 
campaign contributions from political action committees. This 
is the only part of campaign finance laws which needs to be 
changed.
    Political action committees, far from being an evil force 
that will destroy our Democratic political process, as some 
allege, are the essence of our democratic system.
    Today, there are nearly 4,000 political action committees 
representing every faction of our society. Some represent 
teachers, farmers, attorneys and miners, others represent 
religious denominations or veterans, others represent causes 
such as opposition to flag desecration, or whatever.
    James Madison, in writing in Federalist No. 10, talked 
about the importance of factions in our country. He basically 
said they are the essence of American freedom and liberty. So I 
come to the conclusion there is no need to fear political 
action committees.
    PACs represent the various interests of the American 
populace, and PAC representatives bring important information 
to bear on the process of government for better decision-
making. Exaggerating the evil of campaign money derived from 
political action committees and the amount of money spent on 
campaigns does a disservice to our system of government.
    In 1968, the cost of political campaigns was three-one-
hundredths of 1 percent of the gross domestic product. Today, 
it is only six-one-hundredths of 1 percent.
    The Smith-Shays bill, and most of the other bills, raise 
serious questions about infringement on constitutional rights, 
by not allow

[[Page 64]]
ing citizens to exercise their freedoms of speech, association and 
petition.
    A basic premise of our Constitution as set out in the 1976 
Supreme Court case of Buckley v. Valeo, is that the First 
Amendment applies with special force to political campaigns.
    The bill that I have introduced, H.R. 1865, increases the 
contribution limits for individuals to $3,000 per election, or 
$6,000 per cycle, and decreases the amounts for PACs from the 
current $5,000 to $3,000, or $6,000 per cycle. The objective is 
to level the playing field between challengers and incumbents 
by reducing the contribution levels of PACs and raising the 
amount of individuals.
    My personal experience as a challenger last year was that I 
was unable to raise PAC money. I had to go to the individuals. 
They were limited. Many of them would have given more money if 
they could, but under the Federal laws they could not.
    Had the contribution limits been indexed 20 years ago, the 
individual limit would now be over $3,000, and the PAC limit 
would be over $15,000. My proposal brings the individual limit 
in line with inflation, while reducing PACs' limits by 40 
percent. Increasing the individual limit recognizes that, in 
effect, over the past 20 years, we have had static contribution 
limits without price controls on the cost of campaigns.
    My bill avoids the constitutional implications of 
completely banning PACs or placing limits on geographical 
contributions. It is achievable this Congress, while proposals 
such as Smith-Shays face a certain filibuster and 
constitutional challenge.
    My bill avoids public subsidies necessitated by the 
spending limit approach, and as we know, subsidies will 
ultimately be paid by the American taxpayer.
    Most important, my bill creates equity for incumbents and 
challengers.
    Fundamentally, we have a good campaign finance system. I 
urge Members of the committee to enact a simple common sense 
campaign finance reform that creates equity for incumbents and 
challengers. But most important, we do not want a Federal 
bureaucracy micromanaging our campaign system.
    Thank you.
    The Chairman. Thank you very much. We appreciate your 
testimony.
    [The statement of Mr. Whitfield follows:]

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    The Chairman. The gentleman from Pennsylvania, Mr. 
Greenwood.




   STATEMENT OF HON. JAMES C. GREENWOOD, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Greenwood. Thank you, Mr. Chairman. Thank you for 
holding the hearing.
    The committee has my testimony so I will simply briefly 
summarize it.
    I was invited here because of my introduction of House 
Resolution 1432, which bans all PACs of any kind. It is one of 
the extreme positions.
    Let me tell you three reasons why I think this is a 
reasonable thing to do, and why it is good for our country and 
for the future of our country.
    I think there are three problems associated with political 
action committees: The first of those is that regardless of how 
each of us as a Member of Congress conducts ourselves and how 
much we know about the source of our finances and how we manage 
the relationship between contributions and our positions on the 
issues, what is not debatable is that the PAC system does 
undermine confidence of the American voters in our system. It 
is simply unreasonable to expect Members of Congress to stand 
before their constituents and say, yes, it is true, I received 
$50,000 of contributions from the pharmaceutical industry; yes, 
I voted with them yesterday. You need never trouble yourself 
about the correlation of those two events. It simply is too 
much to ask the American people to accept that there is not at 
least the appearance of a conflict there. And for that reason, 
more than any other, I think we need to eliminate the PAC 
system.
    The second evil that I think is associated with PACs, or 
the second problem, is the way in which they, I think, 
undeniably favor incumbent retention and protect the status quo 
and mitigate against change. We all know how the process works.
    And the example that I use is somewhere out in the farm 
belt there may have been a fellow who ran for Congress 20 years 
ago because he didn't like the way Federal policy affected 
farmers. And so he ran for Congress and he got elected and he 
didn't get on the Agriculture Committee, he got on the Fish and 
Marine Committee. And next thing you know he is the Chairman of 
some subcommittee that has to do with exports, and 20 years 
later he is a powerful exponent of everyone who is not 
necessarily in favor of the farmer back home because that is 
where his money is coming from.
    The challenger, 20 years later, finds himself in the same 
place this fellow did 20 years ago, says I am tired of 
Congressman X, he is constantly voting with the exporters and 
the shippers and not the farmers, and it is time now to mount a 
challenge here. By the time that young farmer raises a few 
thousand dollars from his fellow farmers, the big powerful 
incumbent, with his PAC contributions from all over the 
country, that have nothing to do with back home, enable him to 
finance a television campaign against the challenger that wipes 
the challenger out before he gets started. Resources can be 
focused from around the country based on a Member's position 
and other special interests. Because of this, I think 

[[Page 71]]
the system is corrupted as it undermines the ability of a challenger to 
get off the ground.
    And thirdly, I think that the PAC system causes American 
citizens who contribute to PACs to become far too narrowly 
focused in terms of the issues that they consider when 
supporting a candidate. The doctors are told by their 
association, this candidate is good for doctors, this candidate 
is not good for doctors, and the member makes his contribution 
and usually his vote on the basis of that, and doesn't consider 
the wide array of issues that each of us deals with in 
Congress.
    I think that if we change to a system in which individuals 
contribute writing their own personal checks, to the candidate 
of their choice, it will cause them to consider all of the 
issues at stake in an election and not simply the issue that is 
related to their profession or a narrow interest.
    I understand that some people worry about whether they can 
survive without PAC contributions. I will tell you that when I 
challenged a 14-year incumbent in 1992, he spent $1.25 million. 
We spent $750,000. We both took PAC money. I had challenged him 
not to. He didn't agree, so we both took PAC money.
    When I was elected, I decided I would not take PAC money, 
haven't taken any PAC money since, and what we managed to do is 
bring the cost of the campaign in our district down by about 75 
percent. There are four United States Senators and I think 24 
house Members who don't accept PAC contributions. I think this 
brings about a fair fight in each district.
    Wealthy districts have expensive campaigns, financed by 
individuals. Low-income districts have low-cost campaigns 
characterized by a lot of door-knocking and speech-making and 
less TV, and I think in each district it brings about a fairer 
fight.
    Finally, I would say that on the question of 
constitutionality, based on my understanding of the Buckley 
case, I think the door is open to ban PACs. Because clearly the 
Buckley case talks about the appearance of corruption. Although 
the word ``corruption'' is rather a strong word, I think that 
there is enough room constitutionally for us to ban PACs and 
have it hold up in court.
    And I yield back the balance of my time.
    [The statement of Mr. Greenwood follows:]

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[[Page 75]]

    The Chairman. I thank the gentleman for his testimony.
    With those of us that are here, it appears to be pretty 
close to a fair fight. Because Mr. Kanjorski, Mr. Whitfield, 
although modifying the amount of money that PACs have, believe 
they ought to exist. And Mr. Greenwood and Mr. Inglis do not. 
Andy Jacobs doesn't think there should be any private money, 
PAC or individual, in the system. So we have got a relatively 
even discussion opportunity.
    Obviously, then, those of you who believe that PACs should 
not be allowed to exist in terms of voluntary associations, 
combining information and money to assist candidates, that you 
don't think there is a First Amendment problem with (banning) 
PACs. Obviously, you wouldn't have offered it.
    Do you believe the question is open, that it could go 
either way, or that you are pretty comfortable that there is no 
First Amendment problem with banning the free association and 
the combining of money for participation in the system?
    Now, Andy's position would seem to be that you would simply 
ignore--pass law that says you can't do any of that. Now, what 
are you going to do?
    Mr. Jacobs. No, no, I propose a constitutional amendment.
    The Chairman. Excuse me, correct. A Constitutional 
amendment to make sure that there is no individual money 
involved.
    Mr. Jacobs. Yes, I think that is necessary. Of course, I 
will just elaborate slightly on that. Who was it, Teddy 
Roosevelt said that what is constitutional depends on whether 
the fifth Justice comes down heads or tails. And I think we 
have that problem here.
    As near as I can tell, the theory must have been the old 
American slang expression ``money talks,'' and therefore it was 
entitled to First Amendment privileges.
    The amendment, Mr. Chairman, that I have proposed, does two 
things: It states that neither physical desecration of the Flag 
of the United States, nor political contributions of money for 
the purpose of electing people to public office, shall be 
speech under this article.
    As I say, I think you have to stretch your imagination a 
long way on both of those, and all I want is a little 
correctional navigation.
    Mr. Greenwood. The Buckley, in the Buckley decision, as I 
understand the rule, was that the government can restrict 
contributions only--the only purpose recognized by the Supreme 
Court to justify such restrictions is the prevention of real or 
apparent corruption.
    As I said in my testimony, corruption is a strong word to 
apply here. But I think the use of the word ``apparent'' 
clearly makes it--I think if you ask American citizens if they 
think the special interest contributions to congressional 
campaigns corrupt the process, I think clearly you would get a 
rather overwhelming affirmative answer. I think that the--that 
that gives us more than ample room to sustain constitutional 
challenge. I am not an attorney.
    The Chairman. A proposed discussion might be that the same 
decision removed the limits on individual personal money being 
used in the campaign. Congress in the 1974 amendments to the 
Federal Campaign Act said there were limits on personal money, 
and the Court removed them.

[[Page 76]]

    Is there any general feeling that unlimited personal funds 
have the appearance of corruption in the system as well? 
Perhaps they could be banned on that same constitutional basis, 
or is that stretching it too far?
    Mr. Kanjorski. Mr. Chairman, not to get into the 
Constitutional question, because I really think we get off the 
point, and will never accomplish campaign reform if we get into 
that. But PACs existed in the United States for hundreds of 
years in one form or another. In some instances, we called them 
country clubs, in some instances we called them union halls. In 
Pennsylvania, we used to call them the Pennsylvania Railroad 
and United States Steel.
    We have seen the abundant ability of a few people to put 
resources together that affect gubernatorial elections, 
senatorial elections, congressional elections, on down to 
legislative and local elections.
    You know, maybe the Congress made a big mistake. On the way 
over, I was thinking about it. If only we had not called them 
``political action committees'' which became known as PACs, 
became Pacman, we said instead Democratic Action Committee, and 
everybody is for democracy, it may be a nomenclature problem.
    The fact of the matter is most people do not realize what a 
PAC is. So many people have campaigned against PACs, they do 
not realize that you have more accountability and disclosure 
now in the law, since the campaign reforms of 1970s were put in 
place, than we ever had.
    I come today with a unique perspective. There are only two 
Members of the current Congress who served in the Congress the 
last time it was controlled by the Republican party. I served 
in the 83rd Congress of the United States as a Page. I saw the 
makeup of the last Republican Congress. And things have changed 
a great deal since then, and those people that didn't have the 
perspective.
    There wasn't a Member's office then that you couldn't go 
into at that time, where there wouldn't be a safe. As a matter 
of fact, this very building was designed with the safes in the 
Member's offices. I hope you don't think they were putting 
their chess sets in there. They were putting their campaign 
funds in those safes. And they had bank accounts downtown, in 
the largest banks, with hundreds of thousands of dollars, 
totally unaccounted for.
    It seems to me the corrections of the 1970's, like 
political action committees (PACs), was quite a revolutionary 
correction. And it has allowed many industries to have an undo 
influence on some particular pieces of legislation. And I think 
you have to worry about that, the pharmaceutical industry, for 
example, wants some special provision, tax benefits for 
operating in Puerto Rico.
    But the PACs I receive money from on the Democratic side 
are the carpenters in my district, the plumbers in my district. 
And the major difference is they give five bucks a month or two 
bucks a month each to a PAC and they get all of these small 
contributions together and they send me a check for $1,000 or 
$2,000 to represent 1,500, 2,000 people.
    If I had to solicit them under our normal process, we would 
probably spend 50, 60 percent of the funds raised on expenses, 
running to restaurants, selling, doing advertising, for that 
amount of money. Would that make it any better money?

[[Page 77]]

    You feel it does make it better money? Well, we differ----
    The Chairman. Paul, let somebody get in on that in terms of 
if they do feel it is different, why is it different?
    Mr. Inglis. I think it is considerably different.
    The Chairman. What is negative about it?
    Mr. Inglis. In fact, that is what we want you to do. We 
want you to go to somebody and ask them: Will you come to my 
baseball event and pay $25 per family and commit to this thing, 
that endeavor? Rather than having the union hall or the 
corporation basically impose upon employees or members. And 
there is extortion, I mean, it is a fairly strong word----
    Mr. Kanjorski. That is enforcement, that is a question of 
enforcement. If that is occurring----
    Mr. Inglis. Well, but again if--maybe extortion is a little 
too strong a word. We all know, for example, in an United Way 
Campaign, everybody in the accounting firm is expected to give 
``X'' amount of dollars, because they want 100 percent. Now 
that is not extortion, it is just a social norm. So the social 
norm at the union or at the office is that you will give to the 
PAC.
    Mr. Kanjorski. Having lived in both parties----
    The Chairman. Let me ask a question to try to focus on, 
because, Paul, I think I agree with you, if you ask the 
constitutional question, you are all over the place.
    If we can set the constitutionality question aside, is 
there a logical argument for individuals who come together in 
an association having the ability to contribute more to a 
candidate in a particular election cycle, than individual?
    Mr. Inglis. If I may address that.
    The Chairman. Mr. Whitfield's legislation goes directly to 
that. He says, no, the same amount should go to either. He said 
since limits were not indexed, the $3,000 amount seems to bring 
it up to date. Ed's legislation goes directly to that.
    Those of you, even though you may feel you can ban PACs 
constitutionally, do you believe that if you are wrong there is 
a rationale for having a different amount for collections of 
people versus an individual?
    Mr. Kanjorski. I think it is a degree of sophistication and 
knowledge. And what you are running against--there was a famous 
Senator who----
    The Chairman. I really--if somebody has got a specific 
response, especially those who are opposed to PACs, because I 
am trying to follow a line of questioning here?
    Jim, you had your finger up.
    Mr. Greenwood. The question you asked earlier was is there 
an argument for not having a limit on individual contributions? 
I think there is--there should be a limit on individual 
contributions.
    The Chairman. I am not speaking of personal money, the 
Court has said personal money has no limit. Should there be?
    Mr. Greenwood. I think there should be a limit. I think it 
makes some sense to take that $1,000 limit and inflate it up to 
$2,600 or $2,500 or 3,000, whatever inflation would have done 
to it. But I think that the distinction here is if--if Mr. 
Kanjorski goes to his district and he invites as many 
carpenters as he can find who like him in his district and they 
all come with $20 or $50, and 

[[Page 78]]
to his beef and beer, I don't care whether that adds up to $500 or 
$15,000, if that is how many carpenters he has who live in his 
district who support him.
    Mr. Kanjorski. And that gets down to the argument----
    Mr. Greenwood. If I may, what is problematic is when 
carpenters or when plumbers from all over the country send 
money to Washington, and a district has very few, if any, 
carpenters, this can funnel thousands upon thousands upon 
thousands of dollars in against a challenger who may be 
completely consistent with the views on labor management 
relations in his district.
    The Chairman. That gets to the point of dealing with the 
majority-in-district concept or another approach to where the 
finances come from, but we are going to get into that in 
subsequent hearings.
    Mr. Greenwood. Clearly, the PAC system answer is for you. 
It says that money will flow from the 434 districts to the 
435th.
    The Chairman. I understand. Are there ways to deal with it 
without banning PACs?
    Mr. Whitfield. In 1994, the National Journal did a survey 
before the 1994 election and only 2 percent of the American 
people even felt campaign finance reform was a significant 
issue.
    Second of all, the most important thing about campaign 
finance laws, which we have plenty of, is disclosure and that 
the voters know who gives money to whom and they can raise an 
issue if it is out of State, in State, or however they want to 
do it. I think that micromanagement just creates additional 
problems for the system.
    The Chairman. And with disclosure, timeliness is required 
and adequate resources to let folks know what was disclosed. My 
time has expired.
    I will recognize the gentleman from California.
    Mr. Fazio. Thank you, Mr. Chairman.
    I want to apologize to some in the sense I didn't hear your 
statements and others in the sense I have not been able to 
engage in the questioning. Porter Goss was just listening to me 
talk about gift and lobby reform over in the Rules Committee 
and he took my remarks for the record there and I told him we 
would take his here. He would like to join this panel but has 
not been able to do so.
    There is no question that PACs have become the symbol of 
special interest giving, but I think we all realize that before 
PACs a lot of people gave a lot of money for special interest 
purposes and that was never evident to anybody. It wasn't 
visible. Wasn't disclosed. It wasn't above the table. 
Therefore, perhaps the public felt better about the process 
but, in fact, they were not being as well-served by it.
    I do think it is important to put on the record that the 
average rank and file union member puts in about 6 cents a week 
and even the corporate PAC contributor contributes something 
like $3.65 a week to a PAC. Whether we like it or not, it 
involves some 12 million people who give to 4,000 PACs, some 
more than one.
    When we go to simply allowing individual donors to 
dominate, I think we do tend to go back, one, to an era where 
disclosure was not as prevalent and as useful, where putting 
down ``lawyer'' or ``homemaker'' didn't really indicate why you 
had given.

[[Page 79]]

    And I think it also would tend, depending on how we would 
do it, to advantage people of means over people who have little 
to contribute or choose to contribute little. I am well aware 
of people who have been giving $25 for 20 years, immune somehow 
to the ravages of inflation. Many of my givers fall in that 
category.
    I would like to think we could if we do less with PACs in 
terms of what they can contribute, we would also perhaps think 
in terms of limiting what individuals could give. Yet I hear 
some say, and maybe some of you on this panel, who think we 
need to reverse it. I think the Speaker said that earlier. 
Limit maybe to a thousand what PACs give and let individuals 
give $5,000.
    I think we have to be fair to people of means but not 
disadvantage people who have little opportunity to contribute 
and who sometimes in their collective wisdom, whether it be a 
pro-life pack or teachers group, ought to be in a position to 
speak louder than their financial wherewithal would normally 
permit them to. I would be interested in anybody's reaction.
    The Chairman. (To Mr. Greenwood:) You can respond to him.
    Mr. Fazio. Jim.
    Mr. Greenwood. First of all, the fact that the current 
status situation is an improvement over the past, I think, is a 
given, but I don't think that excuses us from taking the next 
step towards reform.
    I think that if you wanted to have disclosure of every 
single contribution of any size I don't have a problem with 
that. We itemize them all anyway. I don't have a problem if 
they itemize all the occupations.
    But on the issue of people of means versus people of lesser 
means, I think that that is a distraction, frankly. They are 
the same people giving to the PACs. The union member who gives 
the average of 6 cents, I am sure that is average, not an 
average of people who give to PACs, but it is an average of the 
unions. But the union PAC member whose total contribution over 
the course of the year may be $25, $50, $100 or $200 is still 
able to go to the union hall to an event for a candidate with 
his personal check and just as they do, as they magnify their 
power of giving through their PACs, they can certainly do that 
with their numbers. But then they represent the people in the 
district of like mind, people in the district of like mind, 
individually, freely coming and making a contribution. I know 
it is an organizational problem.
    Mr. Fazio. Sure.
    Mr. Greenwood. It is easier for the union to say, fill out 
the form and we will give you 15 minutes to do that, and then 
it is on automatic pilot. It is easier to do that than call 
them on the phone and say, come out and come to Kanjorski's 
fund-raiser. But the PAC individual can give at one time to the 
PACs, the same as people of means can give $1,000 to a PAC and 
so--and they also have the same organizational problems that 
managers would have, such as to come to an event for Greenwood 
or Kanjorski. So the means issue is not really pertinent.
    Mr. Fazio. Did you have your hand up earlier?
    Mr. Inglis. It is a mystery to me why someone would 
postulate that it is easier for people of small means to give 
through the vehicle of a PAC. I just don't understand it.

[[Page 80]]

    Mr. Kanjorski. I think I do.
    Mr. Inglis. Let me explain why I say that. It is very easy 
for someone of small means to write the check. Consider if they 
want to set up a PAC, though. They have to go hire a lawyer to 
establish the PAC, they have to have an accountant, all the 
structures. Clearly, it benefits structures and not 
individuals. Those are clearly designed, tilted in favor of 
either corporations or large labor unions. They are not tilted 
in favor of somebody at home who just wants to write a check. 
It is clearly harder to give through the vehicle of a PAC.
    The ownership is very important. I think that is what Mr. 
Greenwood was getting at, too, the sense of belonging to the 
Member of Congress and being part of his or her band is a very 
important part of America. We want people to believe in that 
candidate, to go and have the refreshments with the candidate 
and mix with him or her and their family and be part of it.
    Mr. Fazio. Let me say I think we are generalizing because I 
know there are corporate PACs and labor unions that are very 
closely tied to their members who are givers. For example, the 
postal workers will always have at your fund-raiser the people 
who are members of their union in the community to make sure 
that it is just not a check from some lobbyist. They want you 
to know who is there. The Farm Bureau will typically have 
people at the meeting who are actually contributors to their 
PAC.
    Now, I have to say not everyone operates the way those 
entities do. There are some far more impersonal but you may 
want to go to the questions of democracy with a small ``d'' 
within the PACs or whether or not they ought to be able to use 
corporate or treasury union money to solicit for funds.
    Some organizational structures do lend a great deal of 
background and financial substance. The overhead for fund-
raising and others are much more dependent on the interests of 
the individuals to give. That is also true of PACs that are 
created for single issue purposes where there is a tremendous 
amount of fervor and therefore no problem raising the money to 
hire the accountants and lawyers, and, remember, that is there 
because we believe so strongly in disclosure and it does remove 
it from the amateur category but for a purpose more important 
to the public.
    The Chairman. We are operating with timing lights here and 
there will be an opportunity for a second round of questioning 
if we adhere to the lights. Obviously Members will pursue lines 
of questioning which may or may not coincide.
    Does the gentleman from Michigan, Mr. Ehlers--before you 
inquire let me mention the gentleman from Ohio, Mr. Portman, is 
back with us, and regardless of the argument of the 
constitutionality of PACs or not, he did in his testimony bring 
up a couple of what I consider to be anomalies perhaps where 
individuals in contributing under one structure, partnerships, 
are counted as individual contributions whereas under a PAC 
structure they are not.
    So you have ways to multiply your ability to influence the 
system notwithstanding the $1,000 limit on individuals. We are 
going to have to focus on that problem whether or not--
obviously, if you assume PACS are unconstitutional you can 
eliminate them. But that 

[[Page 81]]
is a problem that no one else focused on and I want to bring that into 
the discussion.
    The gentleman from Michigan, sorry.
    Mr. Ehlers. Thank you, Mr. Chairman.
    It seems to me based on the testimony I have heard that the 
reason individuals want to ban PACs is somehow they either do 
illegally influence the behavior of Members of Congress, or 
putting a better cast on it, they give the perception of having 
an influence on the behavior of Members of Congress.
    I happen incidentally to think that is not true. It would 
be a blatantly illegal action to do so.
    But I want to mention something that I have not heard at 
all in terms of influence of PACs. That is not influencing the 
behavior of individual Members of Congress but rather in 
determining who gets elected to Congress.
    That is an issue that I think should be addressed as being 
far more pertinent to the matter of PACs. Clearly, I am much 
more likely to get contributions from the Chamber of Commerce 
than from the unions, although I do get contributions from 
both. The Democrats are more likely to get contributions from 
unions than from the Chamber of Commerce.
    Why is that? It is not because of any individual qualities. 
It is because they want a Democrat or a Republican elected.
    So, in a sense, I think if you are talking about the 
dangers of PACs, it is not in changing individual votes or 
individual behaviors, it is in determining who gets elected in 
the first place.
    Mr. Whitfield. Mr. Ehlers, I brought that issue up in my 
testimony. That was what I perceived to be the most significant 
problem. In 1994, 80 percent of the people elected were 
incumbents. That is basically because of the disparity in the 
system. PACs can give $10,000 in the cycle and individuals can 
give $2,000. If you are a challenger, you are simply not going 
to receive PAC money.
    Mr. Ehlers. That may be a factor, although I think there 
are many, many factors in incumbency retention, and the last 
two elections gave the lie to most theories of why incumbents 
get reelected. I am sorry I missed your testimony and did not 
hear that point.
    The other thing that concerns me a little bit about the 
testimony of those who want to eliminate PACs is there is no 
discussion of the influence of individuals. I don't know if 
your experience is different from mine, but I have never, ever 
had a PAC approach me and in any way imply they wanted my vote 
in return for a contribution. Never. I have had quite a few 
individuals talk to me and say ``I gave you $50 and I want you 
to vote this way on this issue.'' We have all had that.
    What is so terrible about PAC contributions and what is so 
good about individual contributions? In that regard, I commend 
Mr. Jacobs. He will get rid of all of them. But that creates 
yet another problem because in your proposal the incumbent and 
challenger are treated equally and the incumbent has better 
name identification. Each is given the same radio, TV and 
newspaper space, but the incumbent still has the advantage.
    Mr. Jacobs. May I respond?
    
[[Page 82]]

    Mr. Ehlers. What I am simply pointing out is I am not 
convinced as to what your motivation is; you are still going to 
have problems remaining. You may respond.
    Mr. Jacobs. If I may, I wonder how many people know the 
name Kato Kaelin. He was on the witness stand fairly briefly 
but everybody in the country knows who he is.
    The greatest equalizer I can imagine is when the public 
comes to paying attention after the World Series is over, and 
if both people, the challenger and the incumbent, are on an 
equal measure, the TV, and they both can be seen and judged 
that way it is a great equalizer.
    There is another thing, I don't know what makes anybody 
think the challengers automatically are the ones who are going 
to get a lot of money if you take the strictures off. Clearly, 
that is not the case.
    There is an old saying, who pays the fiddler calls the 
tune. If you let the American public pay the fiddler, they will 
come a lot closer to calling the tune. With all due respect to 
my friends from tobacco growing areas, how in the world do you 
suppose tobacco subsidies passed year after year if it weren't 
for the fact there are two kinds of cigarette packs? Packs and 
PACs.
    Mr. Kanjorski. May I suggest we are looking at the wrong 
thing again. What we should be looking at is comprehensive 
reform and how to encourage the broadest possible participation 
in the Democratic process, particularly in getting elected to 
Congress. That means challengers have to have an opportunity 
for access to the voter.
    How that is attained--we wouldn't be talking about PACs 
here today if we didn't have private enterprise running our 
licensed TV stations, because as a matter of fiat, we can issue 
stamps or give candidates time. All of us know that is two-
thirds of our costs in our districts. Clearly, if we opened up 
the radio and TV stations for an allotted number of hours to be 
used by candidates at their will, that sounds like a great 
thing for probably 300 of us. But those poor characters in Los 
Angeles, they are never going to get heard. So we know there is 
no way of putting into force the ideal system.
    We are so diversified and so broad a country. So why try 
and change the private ownership of the airwaves? Why go 
through all the machinations? Why not just try and find a way 
that we can get equality of accessibility for ideas, knowing 
full well we will not get to perfection?
    But there isn't any doubt in my mind that the last election 
did prove something to me, the winners other had less money 
then the losess. Obviously, issues prevailed.
    Mr. Ehlers. Mr. Greenwood.
    Mr. Greenwood. I appreciate that may be a rosier picture 
than I have drawn, and I don't think you were here for my 
testimony, Vernon, but PACs tend to give to Members of Congress 
because they want Republicans to win or Democrats to win. And 
there is a certain amount of truth to that. But when I ran 
against an entrenched incumbent in 1992, I called PACs who were 
business PACs who always supported Republicans and their 
response was, God, we hope you beat him but we have to give our 
money to him because he is on the Commerce Committee. That is a 
reality.

[[Page 83]]

    PACs simply went in the direction of whether Republicans or 
Democrats tend to support their positions. We must assume the 
subcommittee Chairman must be a super Republican or a super 
Democrat and the full committee Chairman must be a super-duper 
Republican or a super-duper Democrat because they sure get a 
lot more money than the average Republican or Democrat. One 
might be that it has something to do with access, if not 
influence.
    The Chairman. The gentleman's time has expired.
    We can have another round of questioning if we can go 
through The first by honoring the clock. I would tell the 
gentleman from Pennsylvania he missed the Speaker's initial 
statements in which he said he believed that PAC money followed 
power and that you could see the change from Democrats to 
Republicans.
    Does my friend from Arizona wish to inquire?
    Mr. Pastor. Yes, Mr. Chairman.
    It is interesting because I have had the opportunity to 
oversee in several countries, mainly Central America, elections 
and there was always the complaint of the minority party or the 
opposition party of the state that the state party always had 
all the perks and benefits. It is interesting, the incumbent 
will always benefit just by being in office, whether it is 
franking, or any time that person wants to make a statement, 
they will get the media, the TV and the radio, to follow them, 
or newspapers will write about them. Incumbency brings with it 
some status that provides a benefit. I think as much as we want 
to do away with franking and all that, I think we will always 
have that situation.
    Maybe things are different where I come from, but at least 
with the political action committees that I participate with 
there always has been some type of local presence, meaning that 
if it is the cotton growers, it is the cotton farmers in 
Arizona. And in the district I represent, these people are the 
ones who basically have to say this is someone that can 
represent me well, does represent me well, and I feel that we 
can endorse him, we will endorse him in his campaign. This 
applies to the unions as well.
    I have lost support probably from very strong unions 
because of my positions, especially on NAFTA. I voted for NAFTA 
because my district aligns with Mexico and I felt it was good 
for the district. So there were local union members who went to 
their national boards and said, we are not going to support his 
campaign.
    So at least in my situation there has been a local presence 
and also the local people have been able to influence whether 
or not the contributions will come to me.
    Since I have been in Congress, one of the arguments that I 
have heard, and it is mainly from Minority Members and in many 
cases women who are our peers here in Congress, is that they 
come from districts or represent districts that have very 
little wealth or very few individuals that can write the checks 
in a number such that they can have effective campaigns. They 
are willing to accept PAC money from those organizations that 
they are philosophically in tune with. I would like to hear a 
response from you gentlemen to that argument. If you want to 
start with Mr. Jacobs and move down, that is fine. I would like 
to hear your response.
    Mr. Jacobs. I think you have my answer in my chief 
statement. If everybody in the country contributes to the 
process as in fact 

[[Page 84]]
they do to the serving of the process, no private money is allowed in 
congressional office operations. If you did that, you would 
have an equalization, and the general public would not only 
have the opportunity to hear people regardless of whether rich 
or poor, people like them and give them money, but also would 
have the reassurance that one of the panelists talked about a 
moment ago. Whether those contributions influenced a person or 
not, public perception is clearly that they do, and the 
public--Caesar's wife was a pretty important aspect to all 
this.
    Mr. Pastor. Yes.
    Mr. Portman. Mr. Pastor, I think this is an interesting 
issue that has to be dealt with. But I will make a statement 
that someone who is in a rural district that is poor or poor 
urban district is not running against someone who represents a 
rich suburb, in other words, it is always interesting, I hear 
the argument, there is never focus on the fact that the 
incumbent's competition faces the same fund-raising challenge.
    By moving from PACs to more individual contributions, it is 
my view if done properly you will still have a lot of 
individuals giving, more giving from that area. You are going 
to have people giving because they believe in the candidate one 
way or the other and you are not going to have the undue 
influence, I think. If you look at the facts you have to see 
that they have given to incumbents, whether Democrats or 
Republicans, they give to incumbents for access, not because 
they believe in them.
    You can argue in the poorer districts you would have better 
representation and you would still have the same level playing 
field that you don't have now because the PAC money is coming 
in from Washington to a district where there is not resources 
for that challenger.
    Mr. Pastor. The Speaker earlier talked about another factor 
he is very concerned with, and some of you, I think, talked 
about it as well. You have people who have the means, who are 
wealthy, and they go shopping to districts and say, I can win 
here or there. I will put my money in and I will buy it.
    Now, this has happened in some districts where people with 
money are able to go in there, at least they think they are 
able to go in there and, with their money, buy the election.
    Mr. Whitfield. I would say if you eliminate PACs, you end 
up with a worse scenario. Because in that situation, people in 
rural districts where it is difficult to raise money anyway, 
are going to become more dependent upon individuals with 
wealth. Those people are going to have more influence on the 
candidates than if you take PAC money where you generally do 
not know your contributors except the few workers who live in 
your district.
    Mr. Kanjorski. Can I add something to that?
    The Chairman. Briefly, because the gentleman's time has 
expired.
    Mr. Kanjorski. Some of us would like to emulate the English 
system but we forget that system nominates the members of 
Parliament from a central core. They don't get selected from 
the constituency.
    The second thing is, I have to answer that directly, I 
would not have been able to run for Congress against a sitting 
incumbent 

[[Page 85]]
Democrat except I was able to finance the campaign myself. It was 
physically impossible to raise the kind of money to mount a 
campaign to get access over TV and radio that is necessary to 
strike the issues to win a primary.
    When you talk about minorities and women, certainly very 
often if they don't have great personal wealth, they may be the 
best candidate in the world, they will just never get out 
there. On the other hand, you may have a clinker as a Member 
but he will be the candidate.
    I go back to what Ms. Dunn said, all of us who have tried 
to solicit candidates, you know how difficult it is at every 
level of government because no one wants to run who would 
surely lose. To have the opportunity to win does take money in 
our position.
    The Chairman. Does the gentlewoman from Washington wish to 
inquire?
    Ms. Dunn. Thank you, Mr. Chairman. I do wish to inquire and 
to say a special hello to Paul, whose sister is my precinct 
committee officer in my district in Bellevue.
    Mr. Kanjorski. I am truly bipartisan.
    Ms. Dunn. That was a good point.
    The Chairman. His sister hasn't backslid yet? She is still 
a Republican?
    Ms. Dunn. No. She is a Republican.
    Mr. Jacobs. Glad you said yet.
    The Chairman. Ever. I stand corrected.
    Ms. Dunn. We discussed in talking about PAC contributions 
the pluses, the minuses; we talked about the correlation. I 
think Mr. Inglis brought up the correlation between incumbency 
and PAC donations.
    I was interested in Mr. Portman's comments that the Supreme 
Court has never, really never directly addressed the issue of 
banning PACs. Is that correct?
    Mr. Portman. I believe that is correct. If you look at the 
seminal decision, Buckley v. Valeo decision, it does not 
address it. I would argue by addressing the apparent or real 
corruption issue, it is a decision that can be used to support 
the constitutionality of banning at least connected PACs.
    Ms. Dunn. I think that is very interesting information, Mr. 
Chairman, since that is an issue that often comes up, the 
unconstitutionality of limiting a PAC's contribution unless it 
is supported by Federal funding of campaigns. So that is one we 
need to spend some time going into to get at what is really in 
there.
    A couple of issues are intriguing to me. Bundling is one of 
those. It is a way that organizations are able to direct many, 
many checks from individuals to contributors. I think that is 
something that we have to question as we look into means of 
funding political campaigns in this Nation.
    But, Mr. Whitfield, I wanted to ask you a question. I agree 
with you that one of the major problems in dealing with PACs 
right now is the perception that people at home have that we 
sit back here dialing for dollars, huge contributions, $5,000 
per election, $10,000 in a two-election cycle, rather than 
going back home and talking to our constituents where we should 
be; that the connection is no 

[[Page 86]]
longer there, that we are wooed by these huge donations that PACs are 
able to give.
    My approach to that is that you equalize PACs with what an 
individual can contribute which is what you say in your 
proposal, but I would bring the PACs down to $1,000 as the 
individuals are now.
    Let me just ask you, how do you--how would you explain to 
the public, your constituents back home, that you would 
actually be raising the individual limit of these huge major 
donors to $3,000 as you limit the PACs to $3,000?
    Mr. Whitfield. First of all, a lot of people in my district 
really do not know what a PAC is. They think corporate funds 
are involved in PACs, which they are not.
    But I would simply say that West Vaco, for example, their 
employees number 2,000 in my district. They have a PAC. They 
can give $5,000 each. An individual can only give $1,000. So I 
would simply raise the amount, as you suggested, from $1,000 to 
$3,000, and I would make the argument that $3,000 is a 
reasonable amount for an individual to be able to give as long 
as the PACs cannot give any more than that. I have talked about 
that a lot throughout my district, and most people really agree 
with that.
    I don't think that this money corrupts necessarily. I think 
that disclosure is the important thing, whether it is bundling 
or whatever it is. We have adequate disclosure laws today so 
that people are aware of where your money is coming from.
    Like everybody else, I do not need a Federal law telling me 
that it is going to be to my benefit to raise as much money in 
individual contributions in my district as possible. I make an 
effort to do that.
    Ms. Dunn. Thank you.
    I think really what we have to do here as we redesign 
campaign finances, we have to bring the individual into the 
process to a much greater degree. Earlier before your panel 
began, we talked about how you could use the tax code to do 
that. For example, giving some sort of credit as we used to do 
to donors of $100 or less money.
    How in your thinking on this issue, with your bills that 
address PAC contributions, how would you see that we could 
successfully encourage more people to be involved on the 
funding end of things? I am looking at anybody on the panel.
    Mr. Jacobs. I would be glad to answer that.
    Ms. Dunn. Other than public funding.
    Mr. Jacobs. By my system. The public is going to be more 
interested if they can hear a variety of opinions, and if the 
law is lobbyist is the gatekeeper to communication, to a 
considerable extent they are not going to hear that variety 
because some people don't like what the lobbyists want. Some 
candidates want to talk about something else.
    If you really got in and had these various points of view, 
I think it would be more attractive to the public. If it is 
more attractive to the public, the public is more likely to 
participate, even if you go with private contributions, more 
likely to get interested, more likely to go vote, more likely 
to write that $5 or $10 check and undergo the excruciating 
burden of digging down and getting 32 cents and sending it 
directly to the campaign of the person the citizen favors. 

[[Page 87]]

    Mr. Kanjorski. May I suggest, in the tax credit concept 
everyone, other than those people on welfare or the working 
poor that don't pay taxes at all, pays some sort of tax, and if 
you construct--I give up to $200 tax credits, I did that favor 
of my Republican friends because you have to recognize there 
are more higher donors on the Republican side. It would be more 
work for the Democrats to raise that money. If you tell people 
you are taking money paid in taxes to the government and 
directing them to the candidate of your choice, it is a hiatus 
until you get the three or four months' tax credit between 
elections. That is not making an onerous contribution on the 
part of these people.
    It would seem to me any reasonable candidate who should 
stand for Congress would have 500 or a thousand people in his 
district that he could go and ask them to stand the interest 
lost for that four, five, six month period until they recoup 
the money from the Federal Government.
    Finally, you want a filtering process. The one mistake we 
don't want to make is publicly finance anybody who runs for 
office, because I can give you examples in Pennsylvania. We did 
that in the judicial system and we started to get 30 and 40 
candidates running, for only three spots on the Supreme Court 
or Commonwealth court, and the persons who drew the first three 
ballot lines won. You can't run issue elections in judicial 
rates like this. So we have to have a filtering mechanism, but 
we have to have accessibility to funds to buy the private 
sector time and not disturb the TV, radio or newspapers and 
force them to run political ads or not pay them for it. We are 
taking on a much larger task than necessary.
    The Chairman. The gentlewoman's time has expired. I believe 
the gentleman from Michigan had a question he would like to 
ask.
    Mr. Ehlers. Not a question, simply a comment. It was 
intended for Mr. Jacobs on the first round. I have a comment 
that concerns your suggestion for free TV. I suspect Abraham 
Lincoln would not have been able to be elected if it were based 
on TV contests.
    Mr. Jacobs. That is mainly because they didn't have TV. It 
was easy to get to all the constituents in those days.
    Mr. Ehlers. But the other thing, it seems to me the panel 
identified PACs as a problem and incumbency as a problem. We 
can solve both in one shot by saying no PACs for incumbents, 
only for challengers.
    The Chairman. With that, I would like to thank very much 
the panel both for your testimony and your willingness to come 
back and begin the process of questioning each other.
    If there is a vote immediately following this vote, it will 
be 10 minutes after the last vote. The committee will stand in 
recess until 2:20.
    [Recess.]
    Mr. Ehlers [presiding]. I would like to call the hearing to 
order.
    I apologize for the interruption for a few votes but it is 
nice that we have now solved all of the problems of the 
District of Columbia, and we can return to campaign finance 
reform.
    We have a second panel before us. The Chairman of the 
Committee, Mr. Thomas, has another meeting which requires his 
attendance. I will be presiding until he returns. 

[[Page 88]]

    We have, first of all, the Honorable Linda Smith from the 
State of Washington. And I understand you have decided to share 
your time somewhat differently. The time limit is five minutes 
per person. The arrangement you have described is fine so we 
will proceed accordingly.
    I will recognize the gentlewoman from Washington.




  STATEMENT OF HON. LINDA SMITH, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF WASHINGTON

    Ms. Smith of Washington. Thank you, Mr. Chairman and other 
members of the Committee. This is a great opportunity to 
restore the American people's confidence in this system. I am 
going to summarize my comments and share my time with Mr. 
Meehan and give you my complete statement for submission.
    It has been clear, listening to the testimony today, that 
there are a lot of people that agree that special interest 
money holds an undue influence on the political process. But I 
think something I want to tell you is this: I helped run the 
grassroots organizations in our state. People don't believe 
they count anymore. They believe special interests counts and 
they don't. We must change this perception.
    One way we can do this is by dealing with the influence of 
Political Action Committees. Earlier this year, Representative 
Brownback, myself and several freshman reformers, introduced a 
bill that abolished PACs outright. This was the same position 
that was advocated by Speaker Gingrich last November on the 
MacNeil-Lehrer Report. More recently, I have joined a national 
coalition with Congressman Shays, Meehan and others and we are 
testifying before you today on a bipartisan bill, H.R. 2566.
    This bans PACs and has a fall-back position and we have 
decided that this is more defensible, but the people want PACs 
removed. And I would say that again, because I don't believe 
the American people want a reduction of special interest power. 
They want an elimination of special interest power.
    I ask this committee to resist leaving PACs at all, and I 
do this for a very clear reason. When I got here, I was amazed 
at the evening fund-raisers and that we had to talk about them 
not affecting us even though we were going between votes. I 
know that it doesn't affect some of you. You have said that. 
But it troubles me deeply that the impression is that we are 
taking money while we are voting and that we are holding fund-
raisers and getting the money from special interests.
    We do know for sure that this process does lock some of us 
in here. We can get the money easily. It comes to us. The 
challenges are at home trying to raise it out of people. It 
gives us a four-to-one advantage in PAC money.
    Finally, I would like to close with this: We have to have a 
bipartisan solution. History has shown that when you start on 
this and you come out with a partisan solution, that all you do 
is use it in the campaign year to beat each other up and never 
accomplish anything.
    I would encourage this committee to adopt a bipartisan 
solution. We have brought you a bipartisan bill. We would ask 
that you use it or come up with your own, but please don't wait 
until the next 

[[Page 89]]
campaign cycle and work on campaign reform. Do something strong now.
    I commend you for taking this very, very difficult issue. 
And I give the rest of my time to Representative Meehan.
    [The statement of Ms. Smith follows:]

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    Mr. Meehan. Thank you very much.
    Mr. Ehlers. The gentleman from Massachusetts is recognized.




    STATEMENT OF HON. MARTIN T. MEEHAN, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Meehan. Thank you very much, Mr. Chairman and members 
of the Committee. I want to thank Congresswoman Smith and 
Congressman Chris Shays for allowing me portions of their time. 
We have been working. Congressman Shays and Congresswoman Smith 
and I have been working together on a bipartisan bill, campaign 
finance reform bill for some time. It is not a perfect bill, 
but it represents compromises from both sides of the aisle.
    Traditionally Democrats have been unwilling to abolish 
PACs. At the same time Republicans traditionally have been 
unwilling to go along with spending limits. The truth of the 
matter is, if we have real campaign finance reform, we have to 
have both. Our bill does both, limits the overall expenditures 
to $600,000. It also eliminates PACs. It eliminates bundling. 
It calls for legitimizing the process of soft money and it 
holds lobbyists contributions in and caps them at $100 per 
election cycle.
    You know, we have been talking about campaign finance 
reform on the Hill for a long, long period of time. The cost of 
running campaigns is going through the roof and the American 
people demand action. This bill mirrors the bill--the historic 
bill that was filed in the United States Senate that is picking 
up support every day, Senators McCain and Feingold's bill. It 
also limits large contributions to 25 percent of the overall 
amount.
    Day in and day out, Members of Congress are being asked to 
make very difficult choices, choices about how to balance the 
budgets, choices about what to do about tobacco, and as long as 
we have a system of campaign finance that requires Members of 
Congress to be raising political money 24 hours a day, 365 days 
a year, we are going to have a system that the American public 
isn't going to have confidence in.
    This bipartisan bill is a bill that I believe both sides of 
the aisle ought to be able to support. It is extremely 
important that we not let this bill die as other bills have in 
conference committee because of the partisanship and the 
partisan nature that the debate has taken in past years. I 
would hope that this committee would work and look very 
seriously at this bill, not only is it a bipartisan bill, it is 
a bicameral bill.
    We are working with the United States Senate right now to 
get a bill that won't die in conference. Both political parties 
have been very good with coming up with campaign finance reform 
bills that die in conference. In this Congress, let's make a 
difference. Let's get a bill that won't die in conference, that 
the President will sign, that will result in real reform.
    Thank you.
    [The statement of Mr. Meehan follows:]

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    The Chairman [presiding]. Thank you. We haven't had much of 
an effort to have our bills die in conference because we 
haven't been in the Majority. Once we start, it won't happen.
    I understand there are some folks who have a time pressure 
on planes and, if that is the case, if the other members of the 
panel wouldn't mind, we will go first to the gentleman from 
Michigan, Mr. Smith.
    Mr. Smith of Michigan. Mr. Chairman, thank you.
    The Chairman. That having been said, any written testimony 
that you have will be made a part of the record and you have 
five minutes to address the committee in any way you feel would 
enlighten us.




STATEMENT OF HON. NICK SMITH, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF MICHIGAN

    Mr. Smith of Michigan. Mr. Chairman, thank you very much. 
Back in 1979 when I first entered the Michigan legislature, 
multi-client lobbyists came with envelopes before key votes or 
after key votes as a very overt means of persuasion.
    In the United States Congress, that persuasion is much more 
subtle but just as real in the minds of individual Americans, 
and perception becomes reality. It diminishes the opportunity 
of this body to lead with any legislation that we pass in this 
country.
    Campaign finance reform is very important. Here is my 
suggestion: You shouldn't leave it up to leadership, the 
Speaker, task forces or anything else. I would suggest that you 
consider developing a resolution on how you think we should 
proceed with campaign finance reform, bringing the different 
task forces and groups into play, and finalize what comes back 
to this committee at a date certain.
    I appreciate the opportunity to testify. I hope we can move 
ahead aggressively on this issue, that I think is as important 
as the question of term limits, in having the respect of the 
American people.
    I would yield the balance of my time to Peter Torkildsen, 
the gentleman from Massachusetts.
    [The statement of Mr. Smith follows:]

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    Mr. Torkildsen. Massachusetts.
    Mr. Smith of Michigan. Massachusetts. Sorry.
    The Chairman. The gentleman from Massachusetts.




  STATEMENT OF HON. PETER G. TORKILDSEN, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Torkildsen. Thank you, Mr. Chairman, members of the 
Committee. Because of a time conflict, I will be very brief and 
submit a longer statement for the record. I have filed two 
bills dealing with campaign finance reform. The first one is 
the one I am going to address today. It simply eliminates PAC 
contributions to House and Senate candidates.
    I think the time has come for us to take that very bold 
step. If we can do nothing else, at a minimum we should reduce 
contributions from PACs from 5,000 to 1,000 per election, but I 
would hope the committee would take the needed and bold step of 
banning PAC contributions altogether.
    If you just look at the statistics, they are staggering. 
Fifty-five percent of candidates for the House received more 
than half their funds from PACs in the last election. Some 
Members receive over 70 percent of their funds from PACs. 20 
years ago, there were only 600 registered PACs. Now there are 
over 4,000. And in the last election cycle, nearly one-third of 
all contributions to House and Senate candidates came from 
Political Action Committees.
    I think when you have individual contributions, people can 
see those have to be reported. That has to be continued. 
Individuals should be required to raise money from individuals. 
So I would hope this committee looking at the broader campaign 
finance reform package and I have a bill on that--we can 
discuss at another time--would include that very important step 
of eliminating PAC contributions.
    I think that this more than any other step will help 
restore confidence in how all of us seek election and 
reelection and allow us to really act in the public interest.
    With that, I would be happy to yield back whatever time I 
have not consumed.
    [The statement of Mr. Torkildsen follows:]

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    The Chairman. I thank the gentleman.
    I would tell him as well as others that earlier today we 
indicated that this was obviously the first series of hearings 
dealing with PACs. We will look at the court decision to allow 
individual--personal contributions to be unlimited, the 
question of independent expenditures, political parties and a 
number of other areas.
    And some of our friends may want to come back and join us 
when another important part of a broader based piece of 
legislation that they may have introduced is focused on in a 
specific hearing.
    Mr. Torkildsen. Thank you.
    The Chairman. The gentleman from Tennessee.




STATEMENT OF HON. ZACH WAMP, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF TENNESSEE

    Mr. Wamp. Thank you, Chairman Thomas, for calling us here 
to discuss what I think is one of the most important challenges 
facing all the Members of the 104th Congress, especially the 
new Republican Majority.
    I come here as an expert today in one specific area of 
campaign finance and that is how you run a campaign without a 
dime of PAC money. I have done it twice, once narrowly losing 
to a long-time incumbent and another time battling through a 
tough primary and a tougher general election, each time 
refusing to take any PAC money even though my opponents had the 
advantage of using PAC dollars.
    My election is proof that it can be done, but that doesn't 
mean that I have lost my commitment to changing our system. 
Beyond the tilt that PACs put in the electoral process, there 
are at least two other evil influences, the perception that our 
elected leaders can be bought and the reality that big money 
special interests do in fact affect the process and outcomes in 
government here.
    Since arriving in Congress this year, I have seen that some 
of our constituents' worst fears may actually be true. Even our 
freshman class of the 104th Congress, which I consider to be 
the purest, most worthy group of leaders elected to this body 
in my lifetime, is not immune from the bad influence of PACs. I 
believe that PACs are the Achilles' heel of this freshman 
class' effort to reform business as usual in Washington.
    I have taken this on as a personal challenge and I ask the 
members of this committee to join me to reduce the influence of 
PACs in our election process so that newly elected Members 
don't have to feel that their first duty of office is to have a 
PAC fund-raiser so that legitimate challengers can still have a 
chance to make our elections competitive, so that special 
interests don't even think that they can buy votes, and so most 
importantly of all the people of our country can be assured 
that their elected representatives represent them and no one 
else. Our Members deserve to have the public trust, but we will 
enjoy that only when we make real strides to reform the 
election process.
    Here is what I propose in my bill, the Wamp Congress Act of 
1995. First, reduce the PAC limit from $5,000 to $2,000 per 
election, bringing it into line with individual contributions 
by raising the personal limit from $1,000 to $2,000 per 
election.

[[Page 107]]

    Secondly, require that a majority of the candidate's money, 
50 percent plus $1, be raised from individual contributors 
residing in that candidate's home state. These two simple, 
straightforward reforms will do wonders to bring the election 
process back home, because no longer can a candidate ignore his 
constituents by holding fund-raisers out of state in 
Washington, D.C. or other financial centers, gaining tremendous 
leverage over the individual contributors back home.
    The individual limit, as the Speaker said earlier today, 
was set 21 years ago at $1,000, and if it were indexed for 
inflation would be more than $2,800 today. You can more than 
justify the increase to $2,000. My bill restores some of that 
value but, more importantly, makes PACs and individual 
contributors equal under the law.
    The majority in-state requirement further limits the 
influence of outside special interests by acting as a floating 
cap on what a candidate can raise from outside sources. Every 
dollar must be matched at least one for one from an individual 
contributor back home.
    My bill enjoys the support of more cosponsors, 63, than any 
other campaign finance reform measure Congress has considered 
in a number of years. The recent focus that this issue has 
received because of the Majority Leader's press conference last 
week on reform has caused an increased interest in this bill 
among our colleagues. But this support was not late in coming. 
I got 50 cosponsors in the first two weeks my draft was 
available, and I have spent months talking to my colleagues 
about this issue from the very first week I got here.
    I considered at least 17 options for fixing our campaign 
system and boiled it down to the two most significant reforms 
that would both make a difference and build a majority of 
support.
    I applaud the work of Congressman Hoekstra and the 
Speaker's task force in identifying all the possible options. I 
have been participating with them very actively. We must move a 
good bill through Congress and on to the President in the 104th 
Congress. For too long we have not passed any campaign reform 
at all. Yes, we should ban PACs, but let's face it, that is not 
very likely.
    I am also a cosponsor of other bills introduced by my 
colleagues to ban PACs, but we must be realistic. I know that a 
ban might not pass a Supreme Court challenge, and I know that 
PAC trying to get a majority of both houses to agree to a PAC 
ban may leave us with nothing to show for our efforts.
    Mr. Chairman, the road to heck was paved with good 
intentions, but good intentions have left us for 21 years with 
nothing to show in campaign finance reform. Let's pass 
something this Congress, and I respectfully submit to you, 
Chairman Thomas, that my bill has the necessary support to make 
it to the Floor and pass this Congress.
    With your guidance and the expertise of this committee, I 
believe we can make this the best campaign finance reform 
legislation to come out of Congress.
    Thank you again for allowing me this time.
    [The statement of Mr. Wamp follows:]

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[[Page 110]]

    The Chairman. Thank you very much. I will tell the 
gentleman that the road to heck is spelled differently in 
different states. Apparently in Tennessee it is spelled H-E-C-
K.
    Mr. Wamp. The point is well taken, Mr. Chairman.
    The Chairman. I will also tell you that earlier today, and 
I invite everyone to take a look at the testimony of both the 
Speaker and the Minority Leader, who asked us to get outside of 
the usual lines that we draw when we talk about campaign 
finance and look at it in a much broader way society-wide, as a 
matter of fact, and not always directly in campaigns but in 
other areas. It was a lot of food for thought for the committee 
and, I think, everyone who is interested in this area.
    The gentleman from Illinois, Mr. Poshard.




 STATEMENT OF HON. GLENN POSHARD, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ILLINOIS

    Mr. Poshard. Mr. Chairman, thank you for allowing me to 
appear before your committee. I will just share an anecdotal 
experience with you, I guess, with respect to my views on the 
PACs.
    When I ran my first campaign for Congress eight years ago, 
I went through, I think, the same experience that most freshmen 
go through. The national party sets you up with meetings out 
here with the various PACs and special interest groups and you 
come out and meet with them and ply your wares, so to speak. 
You either explicitly or implicitly agree with their agenda or 
you don't agree with it.
    Many times, in my experience, eight years ago, I don't know 
how it works today, but they would ask you to sign their 
questionnaire so that they could come back later and say, well, 
you know his signature is on this saying he would be one way or 
another on this particular issue. And I won my election eight 
years ago and came out here as a freshman and in the course of 
that campaign season, having gone through the things that I 
just described as most people do, I had made basically my 
stance very clear on a lot of issues.
    I mean, that is why you get the support from the special 
interest groups. They don't give you their support, if you tell 
them you don't agree with their issues. And when you are going 
through that initial campaign season, as all of us know, you 
have a very parochial viewpoint of the world, mainly it is 
formed around your own district and the awareness you have of 
the issues there and when you get out here, and the bills are 
assigned to your committee, and you listen for six months to 
the testimonies on a particular issue, that comes from all over 
this country, from all kinds of professional groups, it is very 
possible that your views on any one given issue may very well 
change.
    That happened to me on several occasions, and I found 
myself going to the Floor of the House time and time again, 
being literally torn up inside from the position that I had 
established with respect to my interviews with the PACs and the 
special interests on their issues and my now changing views 
because now I am beginning to see that issue from a broader 
national perspective.
    So many times I went to the Floor of the House with a war 
going on in my guts. I had given my word. I had even signed 
questionnaires saying this is where I stand on this issue, and 
by the time 

[[Page 111]]
subcommittee and full committee and debate on the Floor ended, I really 
wasn't there anymore. And I remember many times walking over to 
the Floor of the House with that war going on in my guts 
thinking to myself, now what in the world am I going to do 
here? I gave these people my word. They gave me their money. 
Some of them gave me five, maybe $10,000, and they didn't have 
50 people in my district. They were national PACs.
    Am I going to keep my word to them or am I going to make 
this decision in light of the broader picture now that I have 
come to believe in as a result of what I have seen here in the 
national Congress? And you just never got past the battle in 
your inside.
    I think that is the influence and it is money that is the 
underpinning of that commitment. It wasn't that they had so 
many members back in my district that I feared their votes if I 
didn't go along with keeping my word. It was the idea that I 
needed two or $300,000 to run a campaign because I so feared 
somebody coming out in the last two weeks of my campaign and 
bashing me around with negative advertisement, if I didn't have 
money in the bank to respond, I would lose. Money is the 
security blanket. Every one of us here know that.
    I don't know how we are going to do this, but I know in the 
first few months that I was here, I made the decision I did not 
want to contend with the war any longer, and so I haven't taken 
any PAC monies for seven years. Every year I have sponsored a 
bill to eliminate PACs entirely. I have kept my individual 
contributions at half of what the law allows, $500, and I have 
never sent out a newsletter because I believe that is a 
superior incumbent advantage that we use politically. So I have 
sponsored legislation from the first time I have been here to 
accomplish those three things.
    I am glad to be an original cosponsor of the bipartisan 
Clean Congress Act. I applaud the Members here at this table 
for what they have done. But we have a problem here, a problem 
that impacts upon our ability for independent thought, and I 
just think that the money is overwhelming with respect to its 
influence and that we ought to do whatever is necessary to curb 
that.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Glenn.
    [The statement of Mr. Poshard follows:]

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    The Chairman. The gentlewoman from Ohio, Ms. Kaptur, with 
an international perspective, I believe.




 STATEMENT OF HON. MARCY KAPTUR, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Ms. Kaptur. Thank you, Mr. Chairman, and Members of the 
Committee.
    I am going to focus on a bill that I introduced first in 
the 102d Congress, but let me, just in the way of opinion at 
the beginning, indicate that I have another set of measures 
that I personally prefer compared to others that have been 
introduced.
    One is a measure that I have introduced that would 
literally amend the constitution to permit the Congress to set 
Federal campaign spending limits, and also for States and 
localities to do that in our various States. I think that is 
the cleanest way to do it. It is the one I am most comfortable 
with and then companion legislation that has been sponsored 
here in the House to, as a condition of granting licenses over 
the public airwaves, grant candidates free time.
    Now, that is where I am the most comfortable. I know that 
others have other measures that try to somehow weave their way 
around the various court cases and so forth, that deal with 
campaign spending, but I really think this has gotten way out 
of hand, and I think that though I am not one to amend the 
Constitution every other day, I really don't see a cleaner way 
of getting at this problem of putting a lid on spending.
    I find it incredible that people here are raising ten times 
more money than the job pays. And it is completely wrong. The 
bill I come before you on today is H.R. 2499, as I mentioned, 
originally introduced in the 102d Congress. Our office is 
really not a ``Johnny Come Lately'' to this issue, but I want 
to focus today on the influence of foreign money on our 
campaigns.
    As you know, the law does not permit foreign nationals to 
contribute to U.S. political campaigns. And that includes 
foreign governments, foreign political parties, foreign 
corporations, foreign associations, foreign partnerships, 
individuals with foreign citizenship, and immigrants not 
possessing a Green Card.
    However, every year foreign interests are spending millions 
and millions of dollars to influence our political process. 
This money comes in the form of PAC contributions from foreign 
controlled corporations or their trade associations. Foreign 
controlled PACs contributed over $3 million just in the 1992 
cycle alone, and today in The Washington Post, at least four of 
those corporations are listed as massive givers of what is 
called soft money, Brown & Williams, a tobacco corporation, 
British Petroleum, Ciba-Geigy and Glaxo, Incorporated. So this 
is a problem that is not small in nature.
    The amounts they are giving are well over $250,000 for some 
of the individual ones. The issue of foreign influence on U.S. 
elections is a serious one, and I believe that just as foreign 
nationals are prohibited from contributing to our campaigns, so 
should PACs that are controlled by foreign corporations and 
trade associations that they have formed also be barred.
    Further, our bill recognizes that no coherent system exists 
today to track the millions that are currently being spent by 
these PACs 

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on the lobbying before this government. The data system that is 
available is truly disjointed and our bill, which we call the 
Ethics in Foreign Lobbying Act, would also make this process 
more transparent and accountable.
    It would bar all foreign contributions to U.S. political 
campaigns, including PAC contributions, and would make the 
disclosure of related expenditures available and visible at a 
central source by establishing a clearinghouse for data that is 
currently collected but scattered among various government 
agencies, including the FEC and the Department of Justice.
    The U.S. is one of the very few countries to allow foreign 
interests to contribute to campaigns. Most of our major trading 
partners, including Japan, Mexico, China, Thailand, et cetera, 
all strictly prohibit foreign campaign contributions. However, 
because of a loophole in the current law, business entities 
that are organized under U.S. laws and maintain their principal 
place of business in the United States are not classified as 
foreign principals under Section 611(b) of the Foreign Agents 
Registration Act, which is the governing act.
    The result is that currently, American subsidiaries of 
foreign-owned companies or trade associations may operate PACs. 
Some of the names are very familiar to us, including the ones 
that I have already read, and additionally Toyota, Shell Oil, 
British Petroleum, the Bank of Tokyo, etc.--and these interests 
all exert influence on our election process.
    I believe the current system is a very confusing one 
whereby it is illegal for foreign nationals to contribute to 
our elections, but foreign-controlled or owned corporations, 
subsidiaries and trade associations can do so.
    Our bill would prohibit campaign contributions from PACs 
sponsored by corporations that are more than 50 percent 
foreign-owned, and would prohibit such contributions by trade 
associations that derive 50 percent or more of their operating 
funds from foreign corporations, and it would set up a complete 
data collection and clearinghouse system.
    The bill requires no new reporting, Mr. Chairman, and 
members of the committee, and I thank you for the opportunity 
to testify. I will provide ample materials supportive of this 
position for the record.
    Thank you.
    The Chairman. I thank the gentlewoman. If you are able to 
stick around, I would love to ask some questions during the 
question period.
    [The statement of Ms. Kaptur follows:]

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    The Chairman. I would like to go to the gentleman from 
Connecticut who has had a long-time interest in this area, Mr. 
Shays.




   STATEMENT OF HON. CHRISTOPHER SHAYS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Mr. Shays. Thank you, Chairman Thomas and Congressman 
Fazio, and others, and Dunn. I have total confidence, given the 
makeup of this committee, particularly those who are here right 
now, that you are taking this issue very seriously and that we 
are going to see some strong campaign finance reform come out 
of this committee and to the Floor. And I just want to express 
gratitude that you are holding these hearings now and not next 
year.
    I would say to my colleagues on the other side of the 
aisle, it has to be bipartisan. We are not going to have 
meaningful legislation if it doesn't include the input of 
Democrats and Republicans. I would say to my colleagues on my 
side of the aisle, let's do it under our watch. We have for 
years said that if we were in power, that we would act. Let's 
do it under our watch. It needs to be bipartisan, but let's do 
it under our watch.
    As important as gift ban and lobby disclosure are, and they 
are very important, I believe campaign finance reform is far 
more important. We need to find a way, if we can, to 
voluntarily limit the amount that is spent. We need to find a 
way to eliminate PAC contributions, particularly leadership 
PACs and the kind of PAC contributions that happen in 
Washington, where Members call up lobbyists and say, ``Will you 
attend my PAC fund-raiser and, by the way, you know, I haven't 
seen you for awhile and I would like to see you there, and I 
know it has gone up from $200 now to $500, in some cases even 
more, but I really want to see you there.''
    We need to find ways to eliminate or reduce the impact of 
soft money. These are corporations, unions, individuals giving 
unlimited sums to our political parties. There has got to be a 
way to at least cap that kind of expenditure. And I might just 
say to you that we have got to find a way to eliminate the 
bundling of campaign money. We have done that in a bill that 
has been introduced by Linda Smith; Marty Meehan, a Democrat; 
David Minge, a Democrat; Glenn Poshard, a Democrat; Bob 
English, Republican; and myself, a Republican, bipartisan.
    We call it the Bipartisan Clean Congress Act of 1995, but 
we really could call it the bipartisan and bicameral, because 
it is really designed after what John McCain, a Republican from 
Arizona, and Russ Feingold, a Democratic, have introduced in 
the Senate.
    It looks to limit the amount that we spend on campaigns. It 
looks to eliminate PACs, eliminate soft money, eliminate 
bundling and, in the end, I think we will have a tremendous 
impact.
    I just will finally end by saying I am grateful as well 
that you are holding this hearing, but that our Speaker came 
and testified and has fulfilled his commitment. He made a very 
sincere pledge with the President of the United States. They 
shook hands on it and it is important that that pledge be 
honored.
    I would just add that it be speeded up a bit, that it not 
come in May, the results of the Commission, but that it come 
sooner, to give us a little more time to deal with this issue 
before the summer 

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time when, candidly, we are all in a campaign and where I think things 
could get lost.
    Again, I just want to say that I have total faith in this 
committee. I am not saying I would risk my life for this 
committee or my election, but I do have a sense that you will 
treat this very sincerely and that we will see some action and 
an opportunity to vote on the House of the Floor.
    [The statement of Mr. Shays follows:]

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[[Page 142]]

    The Chairman. I thank the gentleman very much.
    I was very pleased as well that not only the Speaker but 
the Minority Leader----
    Mr. Shays. I should have said that.
    The Chairman [continuing]. Would both come and address the 
opening of these hearings but, frankly, in the last several 
Congresses, we have come up with campaign finance reform, but 
it has almost always done--it has been done behind closed doors 
and on a partisan basis. We had tried to work in a bipartisan 
way.
    I have been remiss in not mentioning yet today the name of 
a gentleman from Washington who I worked with for more than a 
decade in trying to resolve various issues and that was Al 
Swift. Both of us entered into that relationship in a very 
honest way but, frankly, we were overcome by the circumstances 
in which we found ourselves.
    I am very pleased, therefore, that we started this series 
of hearings off with the Speaker and the Minority Leader both 
urging us to move forward.
    Mr. Shays. And as Chairman of the Committee.
    The Chairman. Well, that is a little different. Maybe that 
is why it is being done the way it is being done. I would like 
to think that. Let me just ask a couple of questions before my 
colleagues do.
    Marcy Kaptur indicated that she has a series of bills that 
she is interested in, the ones that give her the most comfort 
are those that directly deal with a constitutional amendment to 
move around what we consider obstacles in large part based upon 
legislation passed in 1974, 1976, and with the Supreme Court 
decision of Buckley v. Valeo.
    Anyone else here feel uncomfortable trying to move 
legislatively, for example, to ban Political Action Committees? 
Obviously, the highest comfort level would be a constitutional 
amendment but, oftentimes, that places the bar so high that you 
may not be able to achieve it.
    Any reaction at all in terms of a legislative ability to 
ban PACs or is there a First Amendment freedom of association 
and contribution aspect here?
    Mr. Wamp. Mr. Chairman, I want to say that I commend the 
framers of the bipartisan Clean Congress Act of 1995 for their 
look-back provision in the event you have a constitutional 
question because that is the cure, from my perspective, and I 
support that component of their bill. I don't support the 
public financing component or I would be a cosponsor of their 
bill, but that is a very ingenious way to approach this, and I 
think if you do ban PACs, make sure we have got a built-in 
look-back provision so we can fall back to $1,000 in the event 
you have a constitutional question.
    Mr. Poshard. Mr. Chairman, with respect to the cases that 
you just referenced, there is some real honest debate as to 
whether or not the PACs have been ruled unconstitutional by the 
Supreme Court.
    The Chairman. No, ruled constitutional.
    Mr. Poshard. I am sorry?
    The Chairman. Ruled constitutional. They may not have been 
a central focus.
    Mr. Poshard. Banning PACs, I am sorry.
    
[[Page 143]]

    The Chairman. Correct. I am with you.
    Mr. Poshard. I think there is a real question as to whether 
or not that banning PACs would be ruled unconstitutional, and I 
certainly would support Marcy's efforts and others were that 
the case but, again, this bill does have a fall-back provision 
in it.
    The Chairman. And the additional discussion would be that 
if, in fact, PACs are constitutional, does coming together 
voluntarily to contribute money allow you to contribute more 
than a single individual necessarily as a constitutional right 
as well? And there are a series of questions that I think we 
have to kind of place in hierarchial relationship and make 
decisions from that.
    Marcy, in terms of your foreign corporations, you indicated 
that PACs were controlled by foreign corporations. By that, I 
assume you mean that because the Federal Election Commission 
and others have indicated that the administrative costs of a 
PAC can be borne by a corporation that it doesn't have to be 
paid for out of the donations collected by that PAC, that that 
is the way in which they are controlled because, basically, we 
are dealing with employees of a corporation who voluntarily 
come together and contribute their own money, except for the 
administrative costs that are paid for by the corporation.
    Ms. Kaptur. I think if you read the bill, Mr. Chairman, the 
key to our definition goes to the ownership of the parent 
entity, and the way we have defined it in our bill is that a 
``foreign-owned corporation'' means a corporation that is at 
least 50 percent controlled by persons other than citizens or 
nationals of the United States.
    The same is true for the trade associations, where it goes 
to the ownership and the amount of money, who is really paying 
for that entity to be incorporated and operating. Even though 
it may be true that U.S. citizens can contribute here in the 
United States to a PAC controlled by one of those corporations, 
the fact is, those corporations are owned by corporations from 
other lands, individuals from other lands. That is the issue we 
are probing here.
    The Chairman. So you are focusing on the ownership of the 
corporation notwithstanding whether the administrative costs 
come out of the contributions of the individuals or not?
    Ms. Kaptur. That is correct.
    The Chairman. I wanted to clarify that.
    Ms. Kaptur. Because it would be the interest of the foreign 
corporation, the international markets that would govern its 
interest in our marketplace.
    The Chairman. Thank you.
    Does the gentleman from California wish to inquire?
    Mr. Fazio. Yes. I am kind of interested to get a reaction 
across the panel on a couple of things. First of all, I just 
thought for the record, since most of you are interested in in-
state or in-district contributions as a way to clean up the 
system, the CRS has done an analysis that shows in the 1994 
election cycle, using only what they could learn from the FEC, 
those who donated over $200, the percentage of out-of-state 
contributions constituted 15 percent of the Senate and 7 
percent of the House.
    Now, that does exclude PACs, and the question, of course, 
is where are PACs from? And they are not all from K Street 
because I think most of us believe that 90 percent of all the 
PACs we re

[[Page 144]]
ceive money from at least have people in our district, Teamsters, 
teachers, farmers, you name it. I am sure there are some 
corporate PACs that don't have much tie to our districts, but 
their interests go across the spectrum and they are not only 
interested in what may apply to one corporation.
    It means that we would need to go, if you feel that we 
would have an inadequate amount of money to spend and certainly 
there are those who think we can barely compete with the rest 
of the marketing that goes on in our society. At the levels we 
spend today, we would need to go to some other sources if PACs 
were outlawed and we were limited in our individual fund-
raising to in-district or in-state.
    How do you feel about, one, the influence of personal 
wealth, which we see increasingly in the Congress? The Speaker 
pointed out today that we have three times as many millionaires 
as when--in the House, as when Mr. Thomas and I were elected, 
along with him.
    And as an alternative to individual wealth, how do you feel 
about political parties having more fund-raising capability and 
more donating capability as would fill in where we have reduced 
the influence or eliminated the ability to give of other 
entities? How do you see the shifting potential of one sort of 
money to another?
    How would you rank those alternatives in your list of 
acceptable to less-acceptable methods of funding campaigns?
    Mr. Wamp. I will take that.
    The Chairman. Why don't we start with Zach and go down the 
line. That is an easy way to organize it.
    Mr. Wamp. Quickly, on your first point, I would point out 
that in my bill, which I think you need to address that 
majority in-state is not just majority, it is majority of your 
money has to come from individual contributors from your home 
state. By definition, PACs can only contribute less than half 
of your money, and I do that on purpose because that 
combination reduces the influence of PACs.
    Wealthy contributors is a real problem, and I think you are 
right on target there, and I think you have to address it two 
ways. One, that they can't repay themselves but a certain 
amount of the money that they loan themselves after the 
election. It is absurd that multi-millionaires can spend money 
and then turn around and ask the very people that they are 
working on behalf of in the Congress for the money back to pay 
themselves back.
    So we should limit somehow the amount of money that they 
can repay themselves or even possibly have a provision which I 
have heard Brian Bilbray recommend, that if an individual 
spends a lot of their own wealth in their election, that as 
soon as they go above a certain threshold, that other rules 
would apply to their challenger, so that they can somehow tap 
into sources to equalize the playing field.
    But I don't think spending limits is the solution. I think 
these other options are.
    Mr. Fazio. Glenn.
    Mr. Poshard. I guess, in addition to what Zach already 
referenced, it seems to me that if we even the playing field 
and give more people an opportunity to run for the Congress of 
the United States, right now, unless you do have a considerable 
amount of per

[[Page 145]]
sonal wealth, or you have worked in the party structure for a number of 
years so that you have got the party machinery behind you when 
you run, you are just eliminated from competing for a 
congressional seat.
    How do you do it? Well, 99 percent of the people in this 
country don't participate in day-to-day operations of party 
machinery. They are not precinct committeemen. They are not 
ward captains.
    Mr. Fazio. In many parts of the country, the party 
machinery is in deep rust, if it exists at all.
    Mr. Poshard. Exactly. So to the extent we even the playing 
field, we lessen the chance of people with a great deal of 
personal wealth taking front and center stage in our political 
process.
    Mr. Fazio. Marcy.
    Ms. Kaptur. Yes, Congressman Fazio. I have a great 
prejudice against personal wealth being used in political 
campaigns, certainly campaigns for Congress, and would seek to 
have the lowest dollar amount possible imposed. That is why I 
like the idea of the constitutional amendment where we first 
fix a ceiling and, hopefully, the individual then could be 
limited to whatever the maximum amount would be.
    Let us say it is $250 that would ultimately be established 
in that system. But I remember in my first race, my opponent 
raised more money, I think, in the first two months than our 
entire family and all of our relatives were worth, but he could 
hold one fund-raiser and in one evening raise $40,000.
    It took us six months, through very small donor events, to 
even come close to that. So I understood what we were up 
against. And I think that is unfair. It advantages those who 
have a lot. This isn't a plutocracy or an oligarchy. This is a 
country where we want people to run on the basis of their 
ideas. So if some of that money could be donated to political 
parties, I have no problem with that as a way of screening 
candidates and helping people learn a little bit about voter 
registration, what it is really like to run in campaigns.
    But I have a strong objection to the kind of self-funding 
that we see, by the way, operating at the presidential level 
now, even in New Hampshire, when you see who can buy television 
time and who can't, just because you happen to have been 
especially blessed with wealth, you are more valuable than the 
people who have spent their lives serving their communities and 
serving their states? So I think that we have to severely limit 
the amount of self-funding that can go on.
    The Chairman. Linda.
    Ms. Smith of Washington. When the Chair runs out, it is 
still okay, right?
    The Chairman. No, no, we will finish the question. I think 
it is a worthwhile one.
    Ms. Smith of Washington. I was just teasing you.
    This was real hard for me because I ran campaign reform in 
the State of Washington and I actually ran an initiative with 
the title that said, there will not be spending limits or 
public funding and won with that title, three to one.
    I have always been against spending limits and yet I have 
always been troubled with the fact that people can walk in more 
and 

[[Page 146]]
more and buy an election. So I collided with myself this year working 
with the bipartisan group, and the reason the bipartisan bill 
has become the bill that I am helping with is that it does deal 
with the wealthy in a responsible way, in voluntary limits, and 
it does not use public funding. And that was important to me 
because I don't support public funding.
    What it does, though, is it says, you sign in to an 
agreement and there will be an embarrassment factor if you 
don't. That is editorializing. But you sign in to an agreement, 
and as long as the limits are high enough, which they are in 
this bill at $600,000 in the House, you end up inhibiting a 
wealthy person from buying the election.
    This says you can use up to 10 percent of your own money 
and, if you do not buy in, you have consequences. When you buy 
in, you do have discounted media.
    Now, that was a little hard for me, too, but discounted is 
quite different than mandatory or government paid. And we 
believe under Buckley v. Valeo that will give us reasonable 
limits, balanced by an elimination of PACs, an elimination of 
special interest PACs here having their lobbyists become 
individuals, the individual lobbyists getting $400,000 and 
spending half in individual donations and ending up with the 
same problem we have now, large contributions.
    So this should work for the wealthy; voluntarily, yes; not 
as tight as what Marcy says, but I would love to run against a 
wealthy person that refused to sign a reasonable agreement when 
we have that now as a part of a law.
    So I think it is time that we deal with the issue of wealth 
buying elections.
    Mr. Shays. I am told that 25 percent of the Senate are 
millionaires and 14 percent in the House and that is a pretty 
alarming figure. That is certainly not representative of what 
the makeup of our country is.
    To me, the biggest challenge with Political Action 
Committees is that lobbyists use them in their attendance at 
fund-raisers down here, and I think getting rid of PACs ends 
that, what I think is the pretty obscene process of Members of 
Congress inviting the lobbyists to contribute to their 
campaign. Maybe I am overstating the obscene part, but it just 
causes me concern.
    In terms of Mr. Fazio, your comment about political 
parties, soft money has become an addiction to political 
parties. I mean, a corporation can literally give $100,000, 
$200,000. The largest and most successful campaign--excuse me, 
casino in the country, in my state, has given $400,000 to the 
political parties. It shouldn't--you know, I don't think we 
need to be rocket scientists to understand what that means and 
why it is happening. So I think that our parties need campaign 
contributions, but they shouldn't be so dependent on the soft 
money and you need to get at the soft money problem.
    And I would just say----
    Mr. Fazio. Chris, can I interrupt at this point?
    Mr. Shays. Sure.
    Mr. Fazio. My intent was not to deal with soft money 
although it is a very important issue. It is to say how much 
more should you 

[[Page 147]]
give parties the ability to give to candidates, in other words, hard 
dollars, but increasing their share? In other words, are we 
interested in strengthening parties?
    Mr. Shays. I am interested in strengthening parties, but I 
am not interested in having a party end up getting hundreds of 
thousands of dollars through soft money and basically passing 
it on to the candidate, and that is where the trouble is.
    Mr. Fazio. They really can't pass it on to the candidate, 
but it does provide more of their overhead, thereby freeing up 
money to give to the candidate.
    Mr. Shays. I should have said it that way. It covers all 
their other costs and then they should just dedicate the rest 
of it to people. But I do think the political parties should 
have some money to share with candidates that are important to 
that political party. I think that has to fit in your mix.
    I just want to express, again, my conviction that a 
voluntary limit on campaigns done in the way the bicameral and 
bipartisan reform group has done, has tremendous merit, because 
if I run against somebody wealthy, I sign up for that $600,000 
requirement, I am able to get media at a discount.
    I am able to get free mailings to my district at the lowest 
cost. My opponent who then goes above the limit is not able to 
get that benefit, but then we have a provision in our bill that 
allows us to spend 50 percent more to go to $1.2 million--
excuse me, to go an additional $300,000, to go to $900,000.
    The Chairman. Just let me, because I may be remiss if I do 
not say it, Chris, in the 103d Congress, the Republican 
conference had a campaign finance reform bill in which we 
prohibited any soft money. We said any money not raised under 
Federal campaign rules could not be used to influence, not just 
give directly to candidates, but to influence Federal 
elections. It was a very controversial, very difficult 
position, but in discussing with the national committee and 
others, we felt very strongly and your position was well 
represented.
    Mr. Shays. Could I just comment?
    The Chairman. If you will recall, the Republican Conference 
went against soft money.
    Mr. Shays. But the key will be now that we are in power.
    The Chairman. I understand that, and that was nice 
groundwork.
    Mr. Fazio. If the Chairman would just briefly yield, you 
know the Democratic bill also did away with soft money. That, 
of course, didn't come to fruition either.
    The Chairman. Was that the one President Bush vetoed or the 
one that----
    Mr. Fazio. The one that almost got to President Clinton as 
well as the one that President Bush vetoed. But I must say, 
part of that was a desire to increase hard dollar giving to the 
campaign committees to replace a very small amount of what 
would have been eliminated through the elimination of soft 
dollars.
    The Chairman. And then just finally, just to give you an 
idea that we have read the bills, I have some concern in terms 
of your third-class mailing availability and the way in which 
it is funded because, basically, as I understand the bill, and 
correct me if I am 

[[Page 148]]
wrong, it says that the post office is supposed to absorb the cost. And 
preliminary estimates from the post office are in the 
neighborhood of 40 to 60 million. They are going to refine them 
for us.
    That is, I think, a kind of a secondary public financing 
because, frankly, the costs of delivering the mail will go up 
if that is accepted. I understand the way in which bills go 
together but, as we move through the process, I think we have 
to be more up front in terms of how we provide various benefits 
and just to show you.
    Mr. Shays. Can I comment on that?
    The Chairman. Just to show you how I have been thinking 
about it, because I have advocated this in the past and it is 
nothing new, we already have incumbents who have money 
available for mailings and it is possible that we might--and 
that is already covered in terms of taxpayers' dollars--we 
might figure out a way to share in, any bona fide primary 
opponent to share in the franking costs that incumbents already 
have built into the system. That would be no new dollars to the 
system.
    Ms. Smith of Washington. Yes, I like that.
    The Chairman. For instance?
    Ms. Smith of Washington. I just like it. You are going to 
take some of our franking and give it to our opponents.
    The Chairman. Any qualified primary opponent would be able 
to share in the funds available already paid for by taxpayers 
for informing voters. That is no new money.
    Mr. Shays. What I would----
    The Chairman. Radical, but no new money.
    Ms. Smith of Washington. Not radical.
    Mr. Shays. But what is exciting is you are thinking about 
these issues and I think it is very important. I just make the 
point to you that the rate that would be provided to a 
candidate would be the rate that we provide for the cheapest 
nonprofit. So it is not something that we don't give other 
citizens in this country. I just want to make that point.
    The Chairman. I understand, but it is a cost in the bill 
absorbed by the post office.
    Mr. Shays. Definitely a cost, clearly.
    The Chairman. Does the gentleman from Michigan wish to 
inquire?
    Mr. Ehlers. Thank you, Mr. Chairman. Most of those I wish 
to question have left the room, perhaps wisely, but perhaps we 
also can't consider their bills then.
    As president of the sophomore class, I do have to take 
issue with the gentleman from Tennessee when he describes the 
new freshman class as the purest and best class elected during 
his lifetime. I think we should set the record straight on 
that.
    The Chairman. Would the gentleman yield?
    Some of us don't remember which class we were in but we 
take offense as well because we think ours was best, whichever 
one it was.
    Mr. Ehlers. Correct. I do have one question for the 
gentleman from Tennessee, and that is you described at some 
length why you thought PACs are not good, almost evil, and yet 
you continue them in your bill. You simply reduce the limits.

[[Page 149]]

    How do you balance that out? If they are that bad, why 
shouldn't we just get rid of them?
    Mr. Wamp. Well, again, I am a cosponsor of, I think, three 
other bills that ban PACs and I am all for banning them. But I 
tell you this, I don't want to go one more Congress without 
doing something on campaign finance reform. It has been 21 
years while we have been trying to--you know, some people are 
pure and want them banned and some people don't want anything.
    You can't get 218 people and 51 people in the Senate to 
agree on anything. So I boiled it all down to something I 
thought we could move forward. I want some progress. We can 
come back later and try to ban them. Let's at least bring the 
limit down to the same level as individuals in the 104th and 
then come back in the 105th and try to go the whole way.
    Mr. Ehlers. So your bill basically is a pragmatic approach 
saying this is the best we can do at this point?
    Mr. Wamp. Yes, sir.
    Mr. Ehlers. In your judgment?
    Mr. Wamp. Yes, sir.
    Mr. Ehlers. Good. Thank you for clarifying that. I have no 
further questions, Mr. Chairman.
    The Chairman. Does the gentleman from Arizona wish to 
inquire?
    Mr. Pastor. Mr. Chairman, this is not really a question. It 
is interesting sitting here most of the day listening to 
various ideas, and I want to thank all of you for sharing your 
thoughts and your ideas. We started with the Speaker and went 
with the Leader and a number of panels, and one of the comments 
that stuck in my mind, from the Speaker, was that this is not a 
new problem.
    Financing of campaigns and reforming campaigns has been 
going on for many years. In fact, Political Action Committees 
in the 1970s were an answer, in the sense of reform, so that 
individuals could form these committees and they would not have 
the problem of individuals, wealthy individuals, dictating 
campaigns.
    But it is interesting because some people want to get rid 
of PACs because, like Mr. Ehlers stated, they could influence 
the winner of an election. Then they influence the person, once 
they are in Congress, and give an unfair advantage to 
incumbents. So there are many reasons why we feel as we do 
about Political Action Committees.
    It is interesting because we had one panelist talk about 
total public financing, that the route to go is total public 
financing. That way you don't have to worry about any 
influence. Anyone who qualifies would have access to TV, radio, 
et cetera.
    Earlier I asked the question, do you have any problems with 
unlimited donations by individuals, only that disclosure be 
immediate and frequent. So there is a whole spectrum of ideas. 
But I would agree with you that we need to look at campaign 
reform, lobbying reform and all of them together, to see what 
we can do to ensure that the image of elected officials is a 
little better than it has been in the past.
    So I look forward to working with you in a bipartisan 
fashion to see what is practical and what will--what can--solve 
the many in

[[Page 150]]
terests that we have in this effort. Thank you for participating and I 
look forward to working with you.
    The Chairman. Does the gentlewoman from Washington wish to 
inquire?
    Ms. Dunn. Thank you.
    The Chairman. It has been a long day.
    Ms. Dunn. Yes.
    Mr. Wamp, I want to reassure you, I think your position on 
PACs is the right position. I happen to believe personally that 
people do have a right to gather together and make their impact 
felt, whether it is a local business organization from one of 
the towns that I represent, or a larger group that has some 
particular interest, or simply a group who believes in electing 
people who are going to support good government and a good 
conservative agenda. I think that is just fine.
    I like your energy on this issue, and I think that element 
of your plan, plus the other element, which is requiring a 
certain number--a percentage of donations from within your 
State--is very wise. Those are two of maybe four elements that 
I think must be involved in some plan that we put together, to 
change the current finance system, the others being taking a 
look at bundling and creating incentives for small donors to 
come on board.
    I have in the past, in my bill, provided incentives, a tax 
credit for $100 donors or less. So I think that is great.
    Chris, it is great to work with you again. Your vision, 
your credibility, the work we did on the Contract, make you a 
great headliner for this issue because you are absolutely 
right, we must take action.
    This morning the Speaker promised us that by the end of 
this session, we would have a bill. It is very important for us 
to move forward knowing that is the deadline. I believe every 
single one of us wants to accomplish this, certainly because of 
the difficulty in the number of important changes that we must 
make in government right now. It can't be the top item on the 
agenda and wasn't at the beginning of this year, but should be 
between now and the time we finish.
    Ms. Kaptur, it is always good to hear from you. You are 
very thoughtful and I am very much interested in what you are 
proposing and will be interested to see what the Judiciary 
Committee says on your constitutional amendment.
    But I am going to take special consideration here, Mr. 
Chairman, if I may, because we have a person from my home State 
of Washington who has done a lot of work in campaign finance 
reform. She was, in fact, part of a very effective team in the 
State of Washington that began in 1991 to write an initiative 
to qualify it for the ballot, to send it to the legislature and 
then, in 1992, to pass campaign finance reform in our State of 
Washington. So I would simply like to ask our Congresswoman, 
Linda Smith, to give us a review.
    How do you think it is working, Initiative 134, and should 
we have done anything different on this issue, Linda? Are you 
pleased with the results?
    Ms. Smith of Washington. That is pretty broad, but I 
appreciate the question because often when you start something 
you want to know if it is going to work. We are now three years 
into com

[[Page 151]]
prehensive reform and we started in the 1980s drafting it and the 
coalition had Common Cause in it. It had some of the other 
groups, and very diverse conservative and liberal groups with 
the same goal, and that was to take the money out of the 
process in Olympia.
    We started, first of all, Olympia being our capital, with 
eliminating fund-raising at the source. So we can no longer 
raise money from any source while we are voting. Now, we only 
vote half a year--but the emphasis was to take the money away 
from the voting process.
    It has been very effective in a lot of ways. The confidence 
level, the sleaze factor, the bad reports that we got are just 
not--they have not been for a couple of years. We then debated 
whether we would eliminate PACs or limit them. I wish we had 
eliminated them. I think now, looking at Buckley v. Valeo after 
20 some years, we could have. We have upheld--been through one 
Supreme Court case and won.
    But we did leave $500 involvement over a four-year Senate 
race, and so a group can do that. We eliminate what they can do 
in the month of the election to very, very little, and we 
stopped the transfer of money between candidates and the buying 
of leadership. We abolished leadership PACs and said, if you 
get the money, you have to use it for yourself.
    What that ended up doing was something we call now term 
limits. The old-timers that didn't like that very well, because 
they couldn't sit there and let the money come to them, didn't 
run. We ended up having a flip of 60 some percent to 30 some 
percent. We nearly had 50 percent new members in the full 
election cycle.
    The voter turnout went up substantially more than it had 
ever been and the involvement of the citizens' groups and the 
individuals went up. So what we saw was a one-third drop in the 
overall spending. The incumbents had more trouble getting the 
money. Challengers had greater ability. We had more start-up 
campaigns than we had in the history of our State and 
grassroots politics took over.
    So I guess what I am going to say is it has worked. The 
third that came out, came out of the top 15 giving groups, you 
all know what they are. They are the same ones here. And when 
it dropped out, it did drop out of incumbents.
    And the reason we had so much trouble running it was 
incumbents were getting that money and they would never pass 
anything. When we finally took it out of the legislature to the 
people, they passed it three to one and, yes, the money dropped 
out of incumbents, but challengers had a greater chance.
    And I think, Jennifer, that it is working. The only ones 
that don't like it are the biggest ones. The rest of the 
lobbyists like it now. Most of the groups like it now because 
they can compete. Before, if you were not at the top of the 
pile, you could never get enough money to compete and so the 
older lobbyists that even fought it now seem to like it. The 
old incumbents, I will tell you, though, the older the 
incumbent, they either dropped out or still don't like it 
because they have to go raise money from people.
    Thank you, Jennifer.
    Ms. Dunn. Thank you, Mr. Chairman. I see my time has run 
out.

[[Page 152]]

    The Chairman. Thank you. I thank all of you. This is the 
first hearing on campaign finance reform.
    The gentleman from Connecticut.
    Mr. Shays. If I could just say for the record, that my 
staff has reminded me that the bill that we introduced--that 
what we have is H.R. 2566 includes a provision that any savings 
of unfranked mail would go to pay, in part, for the costs, and 
it also bans unfranked--unsolicited franked mail in the 
election year.
    And I also just want to say I didn't notice Mr. Pastor when 
we started out. I just appreciate his interest in this bill. I 
addressed everyone else. I didn't see you tucked away in that 
corner.
    The Chairman. I think there has been an unusually high 
interest in campaign finance reform in this Committee. It is 
just that all of us have schedules to keep, and I appreciate 
you folks staying when today's Floor session has already ended.
    And what I was saying was that this is the first in a 
series of hearings on campaign finance reform. We will have 
another one on November 16th, beginning at 10:00 a.m., which 
will be dealing with PACs.
    The Members who appeared today have legislation. They are 
interested in change. There are a number of Members who think 
the current system works okay and they are not here because 
they don't have bills for change. We will have other Members on 
November 16th and we ask practitioners, those who actually 
involve themselves in the PAC structure, to come and testify in 
front of the committee, which probably will be the other side 
of the story, because what we want to do is inform ourselves in 
all of the aspects of how our current system is working.
    I think one of the problems in the past has been that we 
hadn't fully appreciated what we did before we started trying 
to change it and it produced unintended circumstances which 
then required us to go ahead and make additional changes and we 
have been chasing the changes.
    What we are going to try to do is to get as much broad-
based information as possible so, when we move forward, we try 
to educate as well everyone about the consequences of the 
changes. I want to thank you very much for your participation 
in this committee and I will probably be seeing some of you in 
additional hearings as we move on to other subject matters as 
well. Thank you all.
    This hearing is adjourned.
    [Whereupon, at 3:50 p.m., the committee was adjourned.]

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                        CAMPAIGN FINANCE REFORM

                              ----------                              




                           NOVEMBER 16, 1995

                          House of Representatives,
                              Committee on House Oversight,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:10 a.m., in Room 
1310, Longworth House Office Building, Hon. William M. Thomas 
[Chairman of the Committee] presiding.
    Present: Representatives Thomas, Dunn, Ney, Fazio, and 
Hoyer.
    Staff present: Stacy Carlson, Staff Director; Roman Buhler, 
Counsel; Jim Sivesind, Counsel; Chris Wright, Professional 
Staff; Samantha Kemp, Committee Clerk; Janet Guiliani, Staff 
Assistant; and Laura Buhl, Staff Assistant.
    The Chairman. The Committee on House Oversight will come to 
order. This is the second hearing in a series of hearings on 
campaign finance reform.
    As you recall, at the first hearing the Speaker of the 
House and the Minority Leader both gave us a broad perspective 
of campaign finance; perhaps far broader than most people 
normally associate with campaign finance.
    They went to the heart of the political process and 
discussed power. I had said at the first hearing that a 
definition of politics that I think is very useful is an old 
one. It is the process of determining who gets what, when and 
how. Power in that context is who are those who help determine 
who gets what, when and how.
    Unfortunately, in this process oftentimes individual's or 
group's political power is enhanced if other individual's or 
group's political power is diminished. It sometimes tends to be 
a relative power struggle.
    When we look at the period from the time the campaign 
finance laws that are currently in effect were initially passed 
and amended, it roughly corresponds to the period that the 
Chairman and the Ranking Member from California have been 
actively involved in elective politics.
    We both were elected to the Assembly in the State of 
California in the 1974-1975 period. I preceded the gentleman by 
a matter of a few months. We both came to Congress at the same 
time. That was the period when the current campaign finance 
laws were passed and put into shape.
    It also roughly corresponds with the era, if you will, 
sometimes called the PAC era, the growth of PACs. There is a 
chart there which I think fairly graphically illustrates why 
you could rightfully identify the period from the mid-1970s to 
today as the period of the growth of PACs.

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    The Chairman. PACs, as we heard earlier in testimony and I 
am sure we will hear today, have been around for a long time, 
oftentimes focused on one of the original political action 
Committees, the Committee on Political Education or COPE of the 
AFL-CIO. But it wasn't until the 1970s, with legislation, court 
decisions, and subsequent rulings by the Federal Election 
Commission that you got this enormous growth of the PACs.
    Beginning in the early 1970s, with less than 1,000 PACs and 
peaking out at around 4,000 total PACs--there hasn't been a 
continuous growth of new PACs, they have been ebbing and 
flowing, but a continuation in number. The chart shows the 
dollar amounts contributed by the political action Committees.
    It is interesting; if you take the number of PACs and the 
dollar amounts that are contributed and simply divide one into 
the other, which would give you the average dollars contributed 
per PAC, if you look at the 1974 period, the average amount is 
$57,000. These are figures not adjusted for inflation.
    If you look at the 1994 number of PACs and dollar amounts 
contributed, it turns out to be $45,000. In 1974, the average 
PAC gave $57,000, not adjusted for inflation. In 1994, the 
average PAC contributed about $45,000.
    Most of the focus has been on what happens in terms of 
elections, and the impact of PACs in electing people to office. 
At the same time you had the growth of the PAC era, you had 
legislation passed which redefined political parties.
    While PACs have gone from 600 to over 4,000, during the 
same period you had two major political parties, the Republican 
Party and the Democratic Party. The 1970s legislation limited, 
with minor inflationary adjustments, the amount that the two 
parties and other minor parties could contribute to the 
political process. A multiplication of the number of PACs, was 
in essence natural response to a political limitation on the 
number of political petitions.
    At the same time in the 1970s, the legislation capped the 
amount of money that individuals could contribute, $1000 in the 
1970s, $1000 today. Today's $1,000 is roughly equivalent to 
about $325.
    But when you listen to the debate over PACs--and I am going 
to let the witnesses talk about what they like or dislike about 
PACs, that is the purpose of the hearing--it basically runs the 
gamut from a position that PACs as a concept will destroy 
American democracy as we know it, to a position that PACs are 
the very epitome of the American democratic process. I think it 
has to do with the perspective from which you view power. If 
politics is who gets what, when and how, then an important 
consideration is where are you relative to others?
    When you talk about campaigns and you look at PACs, the 
immediate association is with incumbents. Indeed, as the 
Speaker said, it has been a slightly different world since 
Republicans have become a Majority. PACs in fact are interested 
in the decision-making process, not so much in who makes those 
decisions. So naturally, since incumbents are already in 
office, the argument is that the PAC dollars flow to 
incumbents.
    A better way of looking at that chart, because when you 
look at it initially you see bars, but when you do it in a line 
graph, I think it becomes far more interesting. The solid line 
is a representation 

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of the bar graph over the same period of the amount of money 
contributed by PACs to incumbents. The broken line is the 
amount of money contributed to incumbents by individuals.
    For those who might argue that we are in an era of ever-
increasing control going to the PACs, if in fact contributions 
of money are defined as power, then I think you have seen a 
period in which PACs perhaps had the upper hand. But obviously 
the flow of money it is changing, and this is to incumbents.
    When you examine it in the larger context of all 
candidates, both incumbents and nonincumbents, you get a chart 
which looks like that chart. Once again, when you see bar 
charts like that you react to the numbers and you say okay. But 
when you turn it into a line graph, I think it does give you a 
better perspective on the political process. This chart 
represents all contributions to candidates, incumbents and 
nonincumbents.
    The solid line represents political action Committees. The 
broken line represents individuals. Indeed, there was a period 
where you saw PACs moving in the direction of being the primary 
contributors to the political process. That is a historical 
period and the trend lines, if you carry the amount, will 
continue to move us away from that historical period.
    Notwithstanding the ebb and flow of political dollars, and 
notwithstanding the absolute limit both legislatively and 
politically on the number of political parties--and the reason 
is of course it is a mutually exclusive game with political 
parties, you either belong to the Democratic Party or you 
belong to the Republican Party--you can't belong to both--and 
as you multiply parties in our system, there is a natural 
structure which compresses them back to the two major parties.
    If you look at the history of political parties in our 
country, it hasn't always been the same two, but for a long 
time and for reasons perhaps we will examine in later hearings 
focusing on political parties, there are trends and structures 
in the system which I think will basically define the two 
political parties for a long time.
    During that same period the amount that individuals can 
contribute has been capped. The growth of PACs has been 
primarily over the multiplication of the number of PACs and 
that clearly we have seen the beginning of the tip; that is, 
probably as many PACs as probably are going to be formed are 
formed.
    And with that as simply a factual background of the recent 
period known as the rise of PACs and the dollar amounts 
associated with PACs, I yield to my friend and colleague, the 
gentleman from California.
    Mr. Fazio. First of all, Mr. Chairman, I want to tell you 
how much I enjoy Professor Thomas' tutorials. They are 
enlightening and I think legitimately break through a lot of 
the rather simplistic nostrums that float around as relates to 
what is wrong with this system and how we might fix it.
    I would want to underscore the point that individual money, 
however it may be perceived to be free of special interest 
bias, in my experience, is far from that. That doesn't mean 
that there aren't a lot of people who give simply out of party 
loyalty or ideological commitment, but as you go up the scale 
of dollars in $25 to $250 to $2,000 per primary in general per 
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creasing interests that co-lie more with PAC giving than with civil 
virtue and support for political campaigns.
    So I hope as we enter into the fray of campaign reform, we 
are willing to for a moment abandon some of our firmest 
positions and try to understand the environment we are truly 
in.
    As was said at the first set of hearings, there are 
problems with the political system, not just the campaign 
finance system. While I think we agree there are problems, the 
degree to which we share commonality of solution has eluded 
Congress, and I think general opinion.
    So I would thank the Chairman once again for convening 
these hearings. I think today we move not only to hear the 
diversity of views from our colleagues but we move on to hear 
from people active in the political environment both 
professionally and in terms of their citizen participation, and 
it will help us to understand the complexity of the problem and 
some of the pluses and minuses of various solutions that have 
been offered, and I truly believe that if we are honest and 
thorough in who presents information to this Committee, it will 
help us come up with something that might be conducive to 
bipartisan, at least broad political acceptance.
    I thank the Chairman.
    The Chairman. I thank the gentleman.
    The first panel today is, and I don't mean this in any 
derogatory way, represents in part of a spillover from the 
first hearing because it was a hearing from Members of Congress 
having gone through the process and their view on the way in 
which the process might be modified. It is also useful for us 
to start today's hearing off with what I think is a relatively 
representative smorgasbord of approaches to the questions of 
PACs.
    So if you will allow me, gentlemen, we will begin on my 
right, your left, with the gentlewoman from New York, Mrs. 
Maloney.




STATEMENT OF HON. CAROLYN MALONEY, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF NEW YORK

    Mrs. Maloney. Thank you very much, Mr. Chairman, for 
calling this hearing.
    I would like to thank my good friend, Mr. Fazio.
    First of all, I am not new to the issue of campaign finance 
reform. As a Member of the New York City Council, I authored 
the campaign finance law which was called by the New York 
Public Interest Group, ``The finest in the Nation.''
    In my freshman year in the 103d Congress, I served as 
Cochair of the Freshman Task Force on Campaign Finance, on 
Congressman Gephardt's Task Force on Campaign Finance, which 
offered and passed H.R. 3. And I am working with Congressman 
Fazio on a Democratic Task Force for Campaign Finance Reform.
    First, I would like to address the idea of establishing an 
independent commission to write campaign finance reform 
legislation. I support this idea, and in fact introduced a bill 
March 1, 1995, calling for an independent commission.
    You have before you a packet of material that includes a 
letter from the President endorsing the concept and mentioning 
my bill. This bill was patterned after the Base Closing 
Commission bill, a problem similar to campaign finance.

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    We all agreed that something had to be done but we couldn't 
agree on how to do it. If Congressman Armey never does another 
thing, he contributed a great deal toward solving a problem in 
this Nation by putting forward the commission idea. It has 
outlined the specifics, and it would come back to the House for 
an up or down vote and we would have a vote and move forward 
hopefully on campaign finance.
    I differ with the Speaker's suggestion that it needs a two-
thirds majority. I think it should have a simple majority, like 
Congressman Armey's bill.
    One of the problems with campaign finance is that it will 
make it more difficult for incumbents to be reelected; 
therefore it is very difficult to have incumbents vote on a 
bill and put forth a measure.
    It appears there is not a great deal of support for a 
commission idea. Several other bills have been put forward--the 
Smith-Meehan-Shays bill is a very thoughtful proposal and 
Congressman Farr has put forward what was the Gejdenson bill, 
which has a great deal of support and has passed this body 
before.
    I am working on my own proposal and would like to testify 
about certain ideas in my proposal that differ from other 
legislation that is being considered.
    First of all, since what we want to do is limit the 
influence of special interests and money in the political 
process, I propose that we confront Buckley v. Valeo head on 
and put forward a bill that has a spending limit of $600,000 
per election cycle and let the courts decide. If they decide 
that it is unconstitutional to have a spending limit, then fall 
back to a voluntary spending limit. But that decision is two 
decades old and things have changed dramatically.
    Many constitutional scholars believe that a spending limit 
would win if we were to get to the Supreme Court with one. In 
the Buckley v. Valeo decision, the Court said that all 
meaningful political communication must be paid for. It did not 
take into account free media or the tremendous influence of 
independent expenditures that in many cases decide elections.
    The court said that independent expenditures don't work if 
they are not connected to campaigns. We all know that that is 
not true. There are many examples, such as the Willy Horton 
example and many others that, in some cases, the independent 
expenditures have decided elections. So I think that it is time 
that if what we want to do is to influence the amount of money 
in the political process, let's confront Buckley v. Valeo, 
let's go to the Supreme Court; as Speaker Steingetz from the 
New York State Assembly used to say, ``Decide what you think is 
right and then let the courts decide.''
    We are addressing PACs today. I would like to talk about 
that. I have my own proposal of how the PACs should be 
reformed. Some say that PACs are the bad guys. I say that money 
is. Money is money, whether from a PAC or from an individual.
    For example, my own campaign I raised a million dollars, my 
opponent raised a million dollars. I accepted PAC 
contributions. My opponent did not. My opponent severely 
criticized me for accepting PAC contributions from unions. Yet 
he would accept a check from executives in the same entity.

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    So I ask you, why is an executive's check more meaningful 
than a number of union workers who come together, pool their 
resources and make a contribution.
    Another graphic example is law firms. He attacked me for 
taking a contribution from a PAC in a law firm; yet from other 
law firms he would go to them and literally get $20,000 in 
individual contributions. So I suggest that we have a $500 
limit per election for PACs. I am also proposing that we create 
a new type of PAC, a citizen Committee of small donors that 
would contribute $25 or less, and that this small donor or 
citizen Committee PAC could contribute up to $1,000 per 
election.
    I also feel that you need to be able to lift the spending 
limit, the voluntary spending limit if your opponent does not 
opt in in order to level the playing field.
    The Chairman. I must tell the gentlewoman, your time has 
expired. You can go ahead and wrap up. If we have an unlimited 
time for each Member, Vic and I are going to get old here.
    Please go ahead but focus on the key points. Basically, I 
am telling the other Members that since you went first, you get 
the privilege.
    Mrs. Maloney. I also think that we should ban contributions 
from current lobbyists and limit contributions from individuals 
to 75 percent in your home State.
    I would like to close with a statement from one of my 
constituents. This past weekend, I was at a meeting of business 
leaders in my district and one executive questioned whether 
campaign finance reform was really a serious concern of the 
American people. He insisted that reducing taxes was far more 
important to this particular group of people. But the way 
campaigns are financed has a lot to do with reducing taxes.
    The American taxpayer will have to cough up half a trillion 
dollars for the S&L bailout. The S&L crisis was caused by 
reckless deregulation of the S&L's adopted by many Members of 
Congress whose campaigns were financed by S&Ls.
    Now, the American taxpayer is picking up the whopping tab. 
Last fall, the voters issued a mandate for change, a mandate 
for us in Congress to do more and protect our chances for 
reelection.
    Mr. Chairman, I hope that they did not vote in vain and 
that you will move forward with a bipartisan campaign finance 
reform.
    The Chairman. Thank you.
    [The statement of Mrs. Maloney follows:]

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    The Chairman. We will go through the panel without asking 
questions so that we could get a general response. I know that 
your time is precious, but it would be helpful if we could do 
that.
    My friend and colleague from the Ways and Means Committee 
the gentleman from Georgia, Mr. Lewis.




STATEMENT OF HON. JOHN LEWIS, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF GEORGIA

    Mr. Lewis. Thank you for the opportunity to come before you 
today.
    The challenge and task that you are undertaking is 
formidable. Changing the way campaigns are financed is a 
difficult job, particularly because it is something that will 
dramatically impact all of our lives. But clearly something 
must be done. Too much time is spent raising money and the 
current system is one is that has been criticized about the way 
our democracy works.
    I commend you for holding these hearing and hope you can 
arrive at a formula which is fair, nonpartisan and 
nondiscriminatory and restores the American peoples faith in 
our democracy.
    In 1986, when I first decided to leave the Atlantic City 
Council and seek the open seat in Georgia's Fifth Congressional 
District, I was a grass-roots candidate. My background within 
the civil rights movement and my energies on the city council 
had been devoted to issues relating to low-income housing, 
neighborhood preservation and homelessness. I didn't have a lot 
of supporters who were able to write my campaign checks for 
$1,000.
    Faced with formidable opposition in the race, it was only 
with the support a Labor Union Political Action Committees and 
a few others, that I was able to mount a credible and 
ultimately successful bid for the Congress.
    If not for the support of these special interests, this 
former civil rights worker, this fourth son of a sharecropper, 
would not have had a prayer to make it to the United States 
House of Representatives. Thus, I was surprised and dismayed in 
recent years to see political action Committees under attack 
from so many different quarters, including many of my friends 
in the public interest communities.
    Political action Committees, especially those that are 
labor unions and ideological groups by those supporting or 
opposing abortion rights, gay rights or gun control, they give 
working people and people with little means the ability to 
participate in the political process. Many of these people who 
contribute with a ``checkoff'' or small deduction from their 
paycheck each week would effectively be denied participation in 
the process if not for their union or company PAC.
    Let there be no confusion, minority, women candidates from 
poor rural and urban districts are the beneficiary of political 
action Committees. PACs take power and influence out of the 
hands of the ``country club set'' and put it in the hands of 
the people who cannot afford to write $500 or $1,000 checks.
    This is one of the reasons PACs were established and this 
is an exactly why PACs should be protected in any campaign 
reform legislation. To do otherwise is to revert to a system 
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wealthy individuals and millionaire candidates who bankroll their own 
campaign.
    I know there are those who believe that this was a position 
taken by Democrats at the time they controlled the House, who 
were the beneficiary of a majority of PACs. Let me assure my 
colleagues that even in light of my party's new Minority status 
in this House, even in light of the fact that a majority of PAC 
funds are now flowing into Republican coffers, I am still 
supportive of political action Committees and their right to 
participate in the political process.
    I know there are various proposals before this Committee 
not to reduce or lower PACs contribution but eliminate them 
altogether. Such a move should be resisted. Federal election 
law today permits candidates to accept a contribution of $5,000 
in their primary and $5,000 in the general election. A 
reduction in the contribution limit will have a minimal impact 
on the contributions. It would have a disproportionate impact 
on minority candidates.
    I believe that it has been noted before this Committee that 
the individual limit of $1,000 per person, per election adopted 
in 1974 is worth only about $325 today when adjusted for 
inflation. Similarly, the $5,000 per election limit when 
adjusted, is worth about $1,625. Inflation with no adjustment 
to compensate for it have had the effect of lowering individual 
and political action Committee contribution limits year after 
year.
    In 1994, a Common Cause study showed that lowering the PAC 
contribution limits will cost candidates in competitive races 3 
percent of their PAC's contribution. Using the same numbers 
show that a reduction in the limit will cause Members of the 
Congressional Black Caucus more than twice that amount. 
Minority candidates have worked too hard and too long to gain 
equal footing in the political system.
    CBC and other minority candidates should not be 
discriminated against in any campaign finance formula. Indeed, 
Mr. Chairman traditionally one of the goals of reform has been 
to open the political process not to throw up roadblocks to 
minority participation.
    I believe that Congress should pass a strong campaign 
finance reform bill this year. But it cannot be considered true 
reform if it narrows the scope of who can participate and who 
can contribute in our political system.
    Minority and women have waited too long to have a voice in 
the Congress. We can not impede their gains by jeopardizing 
their future. To ensure that this is a fair process for all, 
this Committee should not lower the PAC limit by eliminating 
PACs.
    Mr. Chairman, PACs are people, too. Let's not pick on PACs.
    Thank you very much, Mr. Chairman and Mr. Fazio.
    The Chairman. Thank you very much, Mr. Lewis.
    [The statement of Mr. Lewis follows:]

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STATEMENT OF HON. LUIS GUTIERREZ, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ILLINOIS

    The Chairman. Mr. Gutierrez.
    Mr. Gutierrez. Thank you very much, Mr. Thomas, and Ranking 
Member, Mr. Fazio. Thank you very much for inviting me to share 
my ideas with you.
    Mr. Chairman, these are important hearings and your 
decision to open up your Committee room to those of us 
interested in this matter takes us a major step toward the day 
when the public feels confident that all the rooms of Congress 
are open to all Americans who have an issue to bring before 
their Representatives.
    Let's face it; at this point, whether it is based on 
perception or reality or a combination of both, many Americans 
believe that access to their elected officials is often 
determined by relationships cultivated during campaign season, 
particularly during the fund-raising phase of a campaign.
    Why is that the case? Because of the flawed campaign 
finance system that places too high a premium on raising and 
spending excessive funds. I hope that I can offer one possible 
solution today.
    I have drafted a bill and it is available in discussion 
form for anyone who wishes to see the legislative language that 
would decrease candidates dependence on raising huge sums of 
money while enhancing the ability of all Americans to 
participate in all elements of the political process.
    How do we reach that goal? For starters, I recommend that 
we make better use of a mechanism that many people seem intent 
on discarding altogether, the Political Action Committee. I 
know it is popular to bash PACs, and I agree that they often 
hold too much sway over candidates. However, before we throw 
them out, let's think about whether PACs in a reformed version 
can be used to cure some of the rest of the system. I believe 
they can and let me explain.
    My bill would establish something I like to call the ``PACs 
Tax,'' a pool of money we create by penalizing or taxing 
certain entities like PACs, wealthy candidates, bundlers, 
leadership Committees when they spend at excessive levels. My 
proposal sets up a voluntary limit of $1,000 in contributions 
per candidate from a single PAC during an election.
    Keep in mind, this does not replace or revoke the current 
hard ceiling of $5,000 that a PAC can give to a single 
candidate. That would remain intact. However, under my plan if 
a PAC chooses to give more than $1,000 to a candidate a PACs 
tax is then imposed. The resulting money would then be 
collected in a pool which I like to call the ``Electoral Equity 
Fund,'' that would administered by the Federal Election 
Commission.
    Next the money would then be available to candidates who 
agree to spend less than $600,000. He or she would be eligible 
to get up to one-third of his or her money from the PACs tax 
pool. To encourage low dollar contributions, the candidate 
would only receive a reimbursement equal to the amount that was 
raised in individual contributions of $200 or less.
    Despite the name, PACs tax, I would hope we could use it to 
target our sources whose influence should be decreased, on 
leadership PACs, on bundlers, on wealthy candidates who spend 
sizable per

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sonal fortunes to win a House seat. They would be under my proposal, 
allowed to spend $50,000 of their own money before the penalty 
kicks in. Any campaign that spends $1 million would also be 
penalized. The rates of the penalty would be 39.6 percent. That 
is the highest rate of corporate taxation. Any money raised or 
spent above the suggested limits would be subject to the tax.
    For example, let's say a PACs maxes out; that is gives 
$5,000 to a single candidate. In that case, the PAC would owe a 
penalty of about $1,584, in other words, 39.6 percent of the 
$4,000 on that contribution. Or let's say a campaign spends 
$1.1 million. The campaign would face a $39,600 tax.
    Mr. Chairman, let me air some of the concerns that you and 
others may raise. First, I am willing to concede that our bill 
contains a big loophole. And to be honest, I am kind of proud 
of this loophole. I think it is a good sign.
    The loophole is this: It is possible, it is easy for a PAC, 
a campaign or a wealthy candidate to avoid paying any penalty 
or tax. All they have to do is lower spending voluntarily. 
Either way, I believe we have accomplished our goal. Either PAC 
directors decide to limit their contributions in order to avoid 
the tax or we will be able to level the playing field thanks to 
the money that is generated by penalizing the excessive 
spending. I think it is a win-win situation.
    Let me also point out that I recognize that this bill 
presents some relevant legal questions; namely is it 
constitutional to impose a penalty on political contributions? 
I would prefer to leave this issue to legal scholars.
    However, I would at least argue if this constitutional 
question is applicable to my bill, then it should certainly be 
raised in connection with those proposals to seek to ban PACs 
altogether.
    I would also argue that my bill is in keeping with the body 
of legal precedence surrounding this issue because I see my 
bill as creating incentives to abide by the limits rather than 
simply creating penalties for those who break them. The 
candidate has the incentive to spend less to accept lower 
dollar contributions.
    Clearly, there is a real hunger in America for political 
reform and I think that this is a proposal that might just 
achieve that. It means that we must do more than simply keep 
what works or throw away what doesn't. It requires us to take 
the best elements of the current system, revise them, reform 
them in a way that helps us reach our goal of creating a 
political system that creates greater contact between all 
candidates and constituents. I think my proposal has some 
merits and would love to discuss it with you and others.
    Thank you.
    [The statement of Mr. Gutierrez follows:]

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    The Chairman. I thank the gentleman.
    We have a vote on on the Floor.
    The Committee will stand in recess until 11 o'clock.
    [Recess.]
    The Chairman. The Committee will reconvene.
    And now it is our pleasure to hear from a Member of the 
large freshman class about campaign finance reform, the 
gentleman from Washington, Mr. White.




STATEMENT OF HON. RICK WHITE, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF WASHINGTON

    Mr. White. Thank you very much, Mr. Chairman. And I thank 
the Ranking Member. You are very kind to allow me a little time 
to talk to you today, and I do have a written statement that I 
have submitted for the record. But what I would like to----
    The Chairman. Let me say at this point, that if any of the 
other Members have written statements, without objection, they 
will be made a part of the record.
    Mr. White. I thank you very much, Mr. Chairman.
    First of all, I would like to say, and this isn't in my 
written statement, but I am here with a great deal of humility 
this morning. I recognize this Committee, the Chairman in 
particular, has been at the forefront of efforts to reform the 
finance laws, to reform the franking laws, and many of the 
other problems we have in our political system that really need 
to be addressed.
    Personally, I am new to politics. This is my first elected 
office. I had never run for office before running for this 
office in 1994. So I really do come before this Committee with 
some humility.
    Having said that, I think being new I also bring a 
perspective that probably is useful in this procedure, and I 
would like to just spend a minute or two talking about my 
recent race. Because at least for me it shed some light on what 
is wrong with our current system.
    As I mentioned, I had never run for office before, and I 
can remember the day very clearly, it was Thanksgiving Day, 
1992, when I sat down with my dad after a nice Thanksgiving 
dinner, maybe we had had a little bit too much wine with our 
turkey, and told him that I was thinking about running for 
Congress. And as we went through the process and tried to 
figure out what we would have to do, we realized that we would 
probably have to raise about $500,000 to have a credible 
campaign. And we spent a lot of time trying to figure out how 
we would do that.
    Ultimately decided, like most people, to do that, we would 
have to start with the people who knew me the best, my family 
and friends, and that is exactly what we did. I raised money 
from my dad, from my Aunt Wanda, from my Uncle Brooks, from the 
guy down the street at the grocery store, from everybody who 
knew me the best. And slowly but surely we accumulated a little 
bit of a campaign treasury. I also tried to raise some money 
from PACs. And I can say we tried as hard as we could to get 
their attention and didn't have much success. Ultimately in the 
campaign, we raised about $550,000 during the election cycle; 
$40,000 of that came from PACs. The rest was from individuals.

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    Now I was running against an incumbent, and by contrast, I 
raised about $550,000 overall, including $40,000 from PACs. My 
opponent raised about $500,000 from PACs alone. And we did a 
little analysis of the PAC contributions after the campaign, 
and we realized that my $40,000 came primarily from the PAC at 
my own law firm, my dad's company's PAC, the PAC of a friend of 
the family who had been the best man at my wedding, those sorts 
of connections.
    With very few exceptions did any PAC that I didn't have a 
personal relationship with contribute to my campaign. By 
contrast, my opponent had maximum contributions at the $10,000 
level from at least 15 labor organizations. That is $150,000 
just right out of the box, and a number of major contributions 
from PACs all around the country for a total of about $500,000.
    Now, the conclusion I drew from this, Mr. Chairman, and I 
recognize this is only one example, but the conclusion I drew, 
and I draw today, is that PACs are vastly skewed in favor of 
the incumbent. At least in my case that turned out to be true. 
And having said that, as I sat down to think about the campaign 
finance reform system, I really concluded that every part of 
the campaign finance system is essentially skewed in favor of 
the incumbent, and I have come to believe that everything this 
House has done in the past is like--has been skewed in favor of 
the incumbent, and just about everything we can expect this 
House reasonably to do in the future will probably be biased in 
favor of the incumbent.
    It is really just asking a little bit too much, I think, of 
ourselves, to impose upon ourselves restrictions that are going 
to allow challengers a better chance of beating us. And so the 
conclusion I came up with was that the only way we are ever 
going to solve this problem and make sure the challengers have 
an equal chance is to come up with something like a commission 
that will look at the system in an unbiased way and propose 
something for an up or down vote.
    So on Tuesday of this week, I introduced H.R. 2635, the 
Fair Elections Act, which would call for a commission similar 
to the Base Closure Commission. It is a 12-member commission, 
four Republicans, four Democrats, four independents. It has 90 
days to come up with a plan. Congress has to vote on the plan 
within 30 days after it has been proposed.
    It has only three goals, only three directions in my bill 
would be given to this Committee: Number one, come up with a 
system that allows for fair and meaningful elections; number 
two, try to eliminate the influence of special interest money 
on the outcome of elections; and, number three, try to design a 
system that doesn't give incumbents an unfair advantage. It is 
a straight from the shoulder, simple and fair approach to 
trying to come up with a campaign finance system that really 
works for both challengers and incumbents.
    Mr. Chairman, I don't know what this commission would do 
with PACs. It might decide to expand their role; it might 
decide to limit their role. But I do know that about the only 
way we are going to end up with a fair campaign finance system 
is to let somebody other than Congress make the initial 
decision. And I hope this 

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Committee will take that into consideration as it moves through its 
work.
    Once again, I congratulate the Chairman and this Committee. 
You are doing a great job, and I hope we come to a very 
successful conclusion.
    Thank you for letting me testify.
    The Chairman. Thank the gentleman very much.
    [The statement of Mr. White follows:]

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    The Chairman. The next Member to testify before us in this 
area of difficult decision making comes from hopefully an 
optimistic location, Hope, Arkansas. The gentleman from 
Arkansas, Mr. Dickey.




STATEMENT OF HON. JAY DICKEY, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF ARKANSAS

    Mr. Dickey. Thank you, Mr. Chairman.
    My experience is this. I have had two elections and I have 
not taken PAC money at all, and I think because of that I can 
speak about some things that other people can, in fact, only 
look at and not actually--and not feel.
    What happens is that when a person doesn't take PACs, they 
identify more with the people who are on the lower end of the 
economy, the lower end of the income stream. And what those 
folks are saying is that we don't have any access to this 
system because you all are deciding all that according to how 
much money is given and who is giving it and the PACs are the 
ones that are leading the way.
    I think we need to somehow remember that if we can 
eliminate PACs giving money, that we will bring those people 
into the system where they will feel more like there is a good 
reason to vote, more like giving $10 or $25 or even $5, as in 
some cases I received. And I think it is something we ought to 
seriously consider as we move through this. They think that the 
sole ticket to participation in politics is money. If we 
eliminated that, it would be awfully good.
    The other thing that the people like who are on the lower 
end of this--on the scale of the economy is that candidates 
have to approach them, that they really need them, that they 
come and they do it through mailings as I do and through 
solicitations and even sometimes in advertisements in 
newspapers, that we are saying we want the little contribution.
    Right now I am working on a project called Project 39, 
where we are asking for people to give no more or no less than 
$39. And it is the sort of thing that I believe is necessary in 
the whole scheme of things to keep our system strong, because 
we need those people and we need to let them know about it.
    I thought that when I--when I fought the PACs like Rick did 
in my elections, I thought it was a philosophical conviction 
that was leading the people to, the PACs, to decide to support 
my opponent. I really did. I thought this is the sort of thing 
that we have a difference, and I was out pitching the theme 
about being a conservative and we have to save money and so 
forth.
    And then all of a sudden, the first three months of this 
year it came and I saw this money coming, overflowing from the 
Democrats to the Republicans, and I got a cheap feeling. I got 
a feeling like it is really--it really is going to be true, 
those people down there at the lower end of the economy and the 
stream of income are going to say, yes, see, that is exactly 
what is happening. It is not a philosophical conviction, it is 
not someone who is saying through the PACs this is our 
expression of our opinion about how you are doing. It is power, 
it is control, and it is a majority rule in Congress. And 
again, as we look at it from the standpoint of that lowly 
person who is saying, I have a choice to just get out of this, 

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I don't have to register, I don't have to vote, I don't have to do 
anything, I can't afford to give to PACs, I am just going to 
opt out.
    Now, I am saying if we continue like we are going, and we 
are watching these examples take place, then we can't deny it. 
We get to the point where we just actually can't deny it. I 
know this, that in my elections I have the freedom to say that 
there wasn't any PAC that I owed my election to.
    I heard Representative Lewis say, I couldn't do it without 
it. I don't believe that is the case. Representative Lewis 
actually came into my district and campaigned against me. I 
know how forceful he is. You understand? And I am just saying, 
he could have done it by himself. But if he had of and he 
didn't owe it to the PACs and he said, I relied on the people, 
just think about the constructiveness of that experience. And I 
think he is--we are deprived of it because we don't do it.
    PACs are needed. I want to say that for sure. We need the 
advocacy of PACs. We need people who are coming in who are 
squares, not well-rounded in information, but just squares, and 
say, look, we don't know about all these other issues but we 
know about this one and this is how this is unfair and this is 
how our position is needed. But we need for our influence to be 
influence information and not money. The influence of the PACs 
needs to be through information and through working hard, not 
through money.
    You see, what we are doing by promoting the PACs and by 
promoting the lobbyists and so forth, we are asking them to 
hire people who are experts and skillful in manipulation. And 
what happens is they want to manipulate us and they want to buy 
influence. Other than that, we wouldn't have this great swing 
over to the Republicans with this PAC money, millions of 
dollars. And don't think those eyes aren't watching us that 
make up the strength of this Nation. The small, middle-class 
individual.
    Now, I think it is essential that we pay attention to them 
and that we say no to the PAC money being given, and that way 
free them to be a part of strengthening our system, rather than 
destroying it with this PAC money going for access and for 
influence and blatantly saying, we expect something from you 
because we have given you this money, or we are going to 
withhold it next time and you will never get reelected.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    [The statement of Mr. Dickey follows:]

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    The Chairman. Our last witness, a gentleman who as much as 
anybody I have ever known actually practices what he preaches, 
the giant killer from the Eastern Shore, the gentleman from 
Maryland, Mr. Gilchrest.




   STATEMENT OF HON. WAYNE T. GILCHREST, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. Gilchrest. Thank you, Mr. Chairman. You just need a 
sling and a rock.
    I am going to be relatively brief. I want to just take a 
few seconds to give a little boring background which led me to 
this place, the U.S. Congress. Everybody, 435 Members of 
Congress, have fascinating stories to tell as to the road they 
took to get here.
    In 1986, I decided to quit my job as a schoolteacher and go 
live in the wilderness in the northern Rocky Mountains. A year 
later I broke my jaw in a horse accident, came back unemployed, 
started painting houses to keep the family together, decided it 
would be interesting to run for Congress.
    While I was painting houses, I ran in 1988 against an 
incumbent and got 49.6 percent of the vote. The primary 
election, against another Republican, I won with $300. The 
incumbent spent about $800,000. I spent $100,000. And it was 
pretty close. Certainly raised my status.
    In 1990, I won with 57 percent of the vote, still outspent 
about 8 to 1 in the second election. In 1992, I ran against 
another incumbent who was pretty good at basketball. He spent 
about $1.600 million; we spent about $300,000. We did take a 
little PAC money, but it was probably about 20 to 25 percent of 
the total cost of the campaign.
    Now, what I would like to--and I am not a evangelical 
preacher of campaign finance reform. But in an ideal world, I 
suppose, from my perspective, it would be positive to do the 
following: Take no money from anybody unless they can vote for 
you.
    Now, I didn't create that idea. Campaigning in 1988, I ran 
across a carpenter going from door to door, shopping plaza to 
shopping plaza, supermarket to supermarket, I ran across a 
carpenter who was sitting down eating lunch on a bench near a 
park and I introduced myself and I said, you know, talked a 
little bit about Congress and so on, and he said, I haven't 
voted since the Eisenhower days. I said, why not? He says, 
because money is the poison that has caused the problem in the 
political arena, and until that is changed, I won't 
participate. And I said, what would you do? And he said, the 
law should be that no one can give you money unless they can 
vote for you.
    Now I know this is sort of extreme, but like some of the 
other Members that are testifying, I did it, I tried it. What I 
think it has done has caused a number of things to happen. 
Number one, you better go out there and find people that are 
going to support you. Now I didn't go to my family and ask them 
for money. I said, I am going to run for Congress, can you help 
me pass out fliers? Now they gradually gave me a few bucks, but 
I didn't go to the family or friends. I didn't even go to my 
friends first because I was embarrassed to ask them for money 
unless I was going to paint their window or cut their grass or 
something. But it is a group of people that 

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recognize that you have something to contribute. So they surround you, 
they encourage you, you begin the process of raising a few 
funds, you get a little bit of credibility, you have a message. 
But the point is, you work very hard and you are dedicated to a 
position and people begin to recognize that.
    Now I know some of the people up here probably testified 
earlier about public financing, and I know to a large extent 
people feel that that is a perspective that would level the 
playing field. One of the reasons I don't--two reasons I don't 
think we should have public financing. Number one, if you are 
out there and you are an individual and you have the courage or 
the tenacity or the insanity to run for Congress, you have to 
spend a lot of time strategizing how you are going to do it and 
what your message is. I would think if you are going to get 
$60,000, a hundred thousand dollars from taxpayers' money, 
balancing out what you raise, you are going to count on that 
instead of going to another shopping plaza, going to another 
group of voters to talk to them, or raising some money in an 
ingenious way. It sort of takes away from the creativity.
    The other thing is, the perception of it to the public is 
we are trying to balance the budget, we are reducing Federal 
spending, and I just think across the board if people felt that 
their tax dollars were going to somebody that decided they 
wanted to run for Congress is not the thing we want to do at 
this particular time. So we have dropped the Voter Empowerment 
Act and we feel that--I feel, and we have done it several times 
now, it would be interesting if we pass the law that you can't 
take money from anybody unless they can vote for you.
    And I know there is some constitutional questions involved 
in that. But I do think, like the Members have testified here, 
that we need to do something for the perception of money and 
politics, and then we need to do something to actually clean up 
the system so that everybody has a fair playing field.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    [The statement of Mr. Gilchrest follows:]

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[[Page 209]]

    The Chairman. I want to thank all of the panelists, not 
just for your testimony and diverse positions, but for your 
willingness to return after you testified.
    To begin the series of questions of the Members, I would 
like to call on the gentlewoman from Washington, who prior to 
becoming a Member of Congress was in fact the Chairman of a 
political party in the State of Washington, and has been 
involved in this area for a long time. She has her own 
perspectives, and will be a major contributor as we go forward 
in this process. The gentlewoman from Washington.
    Ms. Dunn. I thank the Chairman, and thank all of you who 
came to testify. This has been a wonderful series of panels to 
discuss a very broad area of campaign finance reform.
    I am a supporter of those who believe we have got to look 
deeply into each one of these campaign finance issues so that 
we can put a package together that is well-integrated. PACs are 
simply one portion of that package. I suspect some of you on 
the panel would like to be addressing other parts of the issue, 
and as we go through these hearings between now and May, I hope 
you will feel comfortable to return and help us out with some 
of the other areas.
    I have dealt with this issue for many years as a party 
Chairman who helped other people collect money, be elected to 
office, and I dealt with interest groups and dealt with the 
issue from the position of a candidate, because of these 
experiences, my sense is that what we want to do is create a 
scenario that allows competitiveness, that allows the 
challenger to step into the ring and be able to work against an 
incumbent who is usually very, very well-financed for a number 
of reasons, who is additionally able to get his or her message 
out to the people in an effective way, not necessarily through 
the choice words of the media, and is able to present his or 
her point of view on issues in order to inform the public. So I 
think when it comes to PACs, I am not one who would outlaw 
PACs. I don't think that is the right way to go. I want to take 
a very deliberative look at this whole thing.
    I am going to spend the rest of my time, Mr. Chairman, with 
Mr. White, since he is from my home State. I recall on election 
night standing next to him as we watched the returns. He had 
run against a well-financed incumbent, a colleague of Ms. 
Maloney, who came to Congress at the same time Ms. Maloney did, 
and who was very much a favorite of the Speaker of the House.
    I really want to get to the core of this. Rick, tell us in 
your campaign how PAC money affected your race. Do you feel at 
this point that you are selling your vote to an interest group 
that has helped to elect you to office? And do you believe that 
there should be some influence cast by folks who belong to 
interest groups who live outside your congressional district?
    Mr. White. Well, Jennifer, number one, let me say thank you 
very much for your kind words and for all the help you have 
given me and also for being a leader on this issue. But I would 
say if there is an interest group that I feel beholden to at 
the present time, it is basically my Aunt Wanda. That is where 
my initial campaign contributions came from, from my family and 
my friends, and she does not have a PAC, but she has been very 
supportive. And that is the way my campaign had to start.

[[Page 210]]

    As I mentioned earlier in my testimony, we ended up the 
campaign begging, pleading, doing everything we possibly could 
to raise $40,000 in PAC money. My opponent seemed to have no 
trouble whatsoever raising $500,000 in PAC money, almost the 
total amount that I raised during that period of time. And so 
my conclusion was that, at least in my case, the PAC 
contributions worked very much in favor of the incumbent. And 
whether there are people who feel beholden to them or not, I 
don't know, but I do think that the main problem I saw is that 
they favor the person who is already in office.
    Ms. Dunn. Let me ask, since I still have a little time 
left, a question of Mr. Gilchrest.
    Wayne, you have got a unique situation, and talk about a 
Member with lots of different backgrounds and great interest to 
all of us, you are somebody that we have enjoyed so much 
working with here in the Congress. What I really want to get 
at, Wayne, you didn't take PAC money, you didn't take 
contributions from people outside the district. Was this 
because the incumbent was very unpopular? What I want to know 
is how did you get your message across to people and what can 
you do, if we limit or equalize PAC contributions to what an 
individual could give? How do you get the message out as a 
challenger? Is it impossible? Does it depend on a district 
where the incumbent is weak, or do you believe truly that we 
can do this considering all the advantages that an incumbent 
automatically has outside the realm of PAC contributions?
    Mr. Gilchrest. Those are good questions, Jennifer. Both 
incumbents had, whether it was Mr. Dyson or I forget the other 
fellow's name now, Tom McMillen, that is right. They had an 
enormous amount of radio ads, an enormous number of TV and so 
on.
    What we had to do was to be as creative with our message, 
knowing that we would have very limited time with it, to 
counter what the traditional dollars do for people that run 
rather large negative campaigns. And we, I think creative--
creatively created a message that people could grab ahold of, 
even though we had a radio ad, for example, in I guess my third 
campaign, and only ran about two weeks, maybe even a little bit 
less than that, but it caught on and started this prairie fire 
that people began to talk about.
    I understand how difficult it is to just do away with PAC 
money, to say that all PACs are corrupt, because there is a lot 
of good PAC communities out there, and to say that they overly 
influence a Member of Congress because I know they don't always 
necessarily do that. I just go back to the basics and say that 
if you think about what you believe in and you understand in a 
broad way and in some specific way what is good for your 
congressional district and what is good for the country, and 
you keep to that message, you are going to overcome an awful 
lot.
    Ms. Dunn. Thank you, Mr. Chairman.
    The Chairman. Thank you. The gentleman from California, 
Ranking Member, Mr. Fazio.
    Mr. Fazio. Thank you, Mr. Chairman. And let me apologize, I 
have to go run a caucus meeting. And I am just going to kind of 
throw out a couple of things and hope that you can respond. And 


[[Page 211]]
believe me, I will get the response even though I can't sit here and 
hear it directly.
    I think everybody is focused on the small donor issue. And 
I think it is something we all seek. It helps validate us. We 
have at the same time learned that direct mail is not the 
answer for Members of the House. That may be for Senators of 
great prominence. Certainly the only Members that I know of in 
the House who do well with direct mail or now telemarketing 
would be people on the ideological extremes. I know Bob Dornan 
has had some success; I think Ron Dellums used to. But there 
really isn't much that most Members can do in that regard. Some 
have looked at the checkoff on our tax form as a way of getting 
small donors to participate. I don't think that is a coercive 
use of public funds. It is a voluntary use of public funds. But 
we have been unable to move it from the Presidential campaign 
to Congress and some would even repeal it for the Presidential.
    At the same time, we all talk about how much time we spend 
raising money. Every one of you would say, I want to do the job 
I was elected to do, I hate to have to go down to the campaign 
Committee or over to the firm I have hired and spend my time 
dialing for dollars. But the implications are if we are going 
to raise individual money in small amounts, we are going to 
spend a lot of time raising it. And as we lower limits for PACs 
or individuals or whatever, we are going to be spending even 
more to get even less. So I would be interested in your 
comments about how we go about reconciling the anomaly of 
wanting to reduce the amount of what we receive and yet somehow 
reduce the amount of time we spend to raise it. Because I think 
they are in direct conflict.
    I would want to say in addition that I think while we talk 
a good deal about anti-incumbency in the current atmosphere, 
whenever we look at how we fix the campaign laws, we assume a 
great incumbent advantage. And yet as I look at this panel, 
most of you are rather recent arrivals. We have only turned the 
House over by 50 percent, plus, since 1990. It is not a long-
term assignment these days. I think most of us realize that the 
advantages of incumbency are far more related to the political 
atmosphere than to anything we give to candidates for office as 
a tool, whether it be to run the first time or to run for 
reelection.
    And let me just say in final comment, and I am interested 
in your reactions, many people have come and said, I have not 
collected PAC money, I have only run with individual money. I 
think you will find as a general rule, and I don't want to pick 
on the gentleman from Hope, but he is a good example.
    Mr. Dickey. I am from Pine Bluff. I represent Hope.
    The Chairman. He represents Hope.
    Mr. Fazio. I thought I would build on the Chairman's 
comment. He represents Hope; he represents charity and faith as 
well. And those who have given to his charity have contributed 
to the tune of 60 percent of his money from the people who 
contribute over $200. They are not necessarily the little 
people who would give $10 or $15 or $25.
    So while I give you credit, Jay, you certainly deserve it 
for hard work in fund-raising. I don't think we are free of 
having large interested givers as part of the mix, even when we 
eschew PACs as 

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a way to go. And there are ample examples of people who give to PACs 
who are giving $5 or $10 or what have you, whether or not they 
live in your district. They are contributing in small sums.
    So let me just conclude by saying, Carolyn, maybe you can 
help enlighten us as to how to get that small donor. You have 
got a new idea about small donor PACs limited to $25. It is 
probably typical of far more PACs than people here would 
understand or believe, given the talk about big money to PACs. 
But I do think we do all want to concentrate on how to get 
smaller donors back into the game. Matching funds have been 
suggested as a way to do it. Maybe there are other ways. Maybe 
people are more confident of in-district giving, as Wayne 
suggests.
    With that, Mr. Chairman, I would be interested to read the 
remarks of my colleagues and I have to run.
    Mrs. Maloney. Thank you very much. I propose creating a 
small donor citizen PAC that would be limited to $25. A citizen 
would not contribute more than $25. And this small donor 
citizen PAC would be limited to a contribution from this PAC 
per election of a thousand dollars. And the time to collect 
that money would be done by people who are affiliated with that 
PAC.
    To make Mr. Gilchrest's example of collecting only from 
your district, and in my proposal I propose that 75 percent of 
your money come from your district. But you could have a 
Citizens Committee that would then have fund-raisers and 
collect small donations.
    Again, I think that what we want to look at is limiting the 
influence of money in the system. And we all have our examples. 
In my first race, my opponent outspent me 6 to 1, $1.5 million 
to $250,000. And I had the example that you gave, that it was 
very, very difficult to raise money.
    In my last race, both my opponent and I were very 
successful fund-raisers. But if what we want to do is limit the 
influence of money, I don't see any difference between a 
contribution from an individual and a contribution from a PAC. 
Maybe we need to change the mix, limit a third to small donor 
PACs, a third to big donor PACs, a third to individuals. But I 
don't see the difference, whether a member of a union 
contributes $25 to his PAC that then gives a candidate $500, 
and the executive giving a candidate $500. So I feel that money 
is money, and what we need to do is limit the influence of 
special interest or money by limiting contribution limits and 
spending limits.
    The Chairman. The gentlewoman's time has expired.
    The gentleman from Maryland.
    Mr. Hoyer. Thank you, Mr. Chairman. I don't have any 
specific questions. I missed the first, and I am in the process 
of reading your statements now, while I also listen to the 
answers.
    Mr. White, you are in favor of a commission, is that----
    Mr. White. Yes, sir. I proposed a commission, yes.
    Mr. Hoyer. You mentioned in answer to Ms. Dunn's question 
about PACs and about how PACs had contributed very 
substantially to your opponent. But I take it you are not a--
you are a supporter of PACs?
    Mr. White. Frankly, I am kind of agnostic on the issue. I 
mean, I will say that one of the troubling things is that I 
have noticed--
    The Chairman. He used more aunts.
    
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    Mr. White [continuing]. I am much more successful at PAC 
fund-raising now that I am an incumbent than I was before, 
which really confirms my concern that there is an advantage to 
incumbents. As I say, I really don't trust us. I don't trust 
Republicans or Democrats or anybody in Congress to come up with 
a system that is really going to be fair. And I think your best 
approach to get a fair system is to come up with a commission, 
none of whom are currently elected Members of Congress, and let 
those people try to come up with a system that works. I think 
that is the best approach.
    Mr. Hoyer. My understanding of the commission proposal is 
that it has a mechanism for those items that had two-thirds and 
those that had 50 percent, and those that had two-thirds would 
automatically come to the Floor, those that had half of the 
commission would come and go through the regular Committee 
process, as I suggested, as the Speaker's suggestion. Is that 
essentially what you are suggesting?
    Mr. White. Actually, it is not. That was the Speaker's 
suggestion. Mine would require just a simple majority of the 
full commission to send a proposal to Congress, and then it has 
to get an up or down vote under a procedure kind of like the 
BRAC Commission. I would say my proposal is pretty similar to 
the Speaker's. Great minds work alike on these things. But we 
do have some significant differences.
    Mr. Hoyer. I won't make any comments about that. Such a 
great opening, Rick, but I am not going to take it.
    Mr. White. I appreciate that.
    Mr. Hoyer. Jay Dickey.
    Mr. Dickey. Hi, Steny.
    Mr. Hoyer. How are you?
    Mr. Dickey. Fine, thank you. How are you doing?
    Mr. Hoyer. Your essential position is you think PACs ought 
to be outlawed?
    Mr. Dickey. Yes, sir. It is a matter of perception, not 
necessarily reality.
    Mr. Hoyer. And what does that mean, Jay?
    Mr. Dickey. Well, what I am saying is I think what we--what 
is happening is we are leaving the individuals out. What Vic 
said a while ago is what can we do not to spend so much time, 
you know, raising money. If we are doing it to individuals--and 
particularly in our districts or in our State, we are 
participating in the forming of representation that is 
beneficial.
    You know, this business about coming back home is the 
number one issue with my people and if we are coming back. So 
it is a matter of perception and not reality that we are not 
convince--I don't think we are influenced by people who give 
money. Let's say the machinist group in Washington State giving 
money to my campaign, I don't really think I am influenced that 
much by it, but it is the perception of how it resonates with 
the individual voter at the lower end of the economy.
    Mr. Hoyer. Jay, one of the things that I have argued, you 
may not agree with, but in 1974, of course, when PACs were 
first adopted, they were adopted quite obviously to meet the 
Clement Stone issue, where he took 2 plus million out of his 
pocket and gave it 

[[Page 214]]
secretly to Nixon. And I am sure we had people on our side that gave a 
lot of money out of their pocket, because they had a lot of 
money in their pocket.
    So PACs were devised as an organization to allow relatively 
small contributors--Carolyn Maloney speaks to that, as to how 
small is small, how large is large--to collectively contribute 
in sums sufficient to make an impact. They were a great reform.
    Frankly, I think they are still a reform, personally, Jay. 
The reason is this. If Sam Brown, Sally Jones and Mary Smith 
each give $500 or $1,000 to my campaign and list their address 
as 1,000 East 22nd Street, et cetera, Hyattsville, Maryland, 
you see that on the list, you have no idea why they gave me a 
thousand dollars. They may even have given it because one of 
them was my aunt, as Rick has, or one of them may have given to 
me because they want me to vote X way and I agreed to vote X 
way. But the fact of the matter is, it is very difficult to 
determine.
    But when the Steelworkers give me $1,000 or $5,000, there 
is no doubt in anybody's mind what the Steelworkers are 
interested in, and the public can make a determination Hoyer is 
doing their bidding or Hoyer is getting support for them 
because he believes in the same things they do.
    Mr. Dickey. That is the perception. Yes, you are right.
    Mr. Hoyer. So I think it is complicated in terms of the 
ultimate reform was and continues to be, in my opinion, giving 
the public the information on which to make an informed 
judgment.
    Mr. Dickey. Well, what do you think we ought to do, Steny?
    Mr. Hoyer. I think we ought to limit expenditures, as we 
did in some of the bills that have passed, and limit the mix. I 
think that was a good strategy to do.
    I think there is obviously, as Wayne Gilchrest and others 
have proposed and the Republican Party has proposed I think 
more vigorously than our party has, greater reliance perhaps on 
contributions from your district. But there is, obviously, a 
downside to that, because in some districts one party, usually 
the Republican Party but not exclusively, has pretty much a 
corner on the wealth of the district. And that--Lewis has 
spoken to that, as I understand it, earlier; and that is a 
problem. And I don't know how we deal with that problem, and I 
have tended to believe that we ought not to limit to too great 
an extent just in district.
    Because, very frankly, what all of us do does not just 
impact on our district. It impacts on the entire country. Wayne 
Gilchrest's leadership on environmental issues impacts on my 
district as well as his district, and it impacts on California 
and Colorado and Montana as well as it does on the First 
District of Maryland.
    In any event, I thank the Chairman for the time; and I 
agree with Ms. Dunn, this has been an interesting and important 
hearing.
    The Chairman. Thank the gentleman. I am going to ask each 
one of you some questions based on your testimony, but if 
someone else feels the spirit moved them, obviously to go ahead 
and respond. I am trying to focus on what I consider in my 
opinion some of the important aspects of your testimony.
    Ms. Maloney, in the first hearing I indicated that there is 
only one judge on the Supreme Court today that actually 
participated 

[[Page 215]]
in the Buckley v. Valeo decision. He was an Associate Justice at the 
time. He is now the Chief Justice of the Supreme Court, Chief 
Justice Rehnquist. Although Justice Stevens was on the court, 
he did not participate in the decision.
    Your argument that perhaps we ought to test constitutional 
limits I think is shared by a number of folk, not just because 
the Court has changed but I think because times have changed to 
a certain extent. We have a better understanding of what we are 
doing.
    My assumption is that the dollar amounts that you provide 
for your concept of a small-donor, large-donor PAC are 
relative, they are not absolute. You mentioned a $25 amount it 
might be 50 or some other kind of a figure. You want to 
differentiate between people who contribute larger amounts and 
smaller amounts. Why is the dollar amount--if it is under 
whatever the prescribed limit, why does that make a qualitative 
difference, in your opinion?
    Mrs. Maloney. Well, one of the things that you are trying 
to do is limit the mix of contributors to campaigns, and one of 
the things that we are trying do is get more small donors, more 
individuals involved in the political process.
    The Chairman. Why?
    Mrs. Maloney. I think that that is a--it involves more 
people in their government, that they are having a direct 
contact, feel that they are part of the system, that are 
supporting people that they believe in. But, as all of us know, 
it is very, very difficult to organize fund-raisers and to 
organize outreach. As Mr. Fazio mentioned very eloquently 
earlier, most of us spend more time than we would like fund-
raising.
    Now there is one way we could do--we could just say we are 
going to limit individual contributions and PAC contributions 
to $25. Then that would mean all of us would have to spend all 
our time on the phone.
    The Chairman. I understand, but we have got to limit the 
responses. And, obviously, we can go into it. We are going to 
have a series of hearings on this. But it used to be the old 
saying that time was money and that to a certain extent if 
people couldn't contribute they could volunteer and that you 
could get services out of people without necessarily having 
them contribute.
    One of the concerns which we will bring it up as we focus 
specifically on political parties is that, in part, times have 
changed, in part, people have changed; but it is my personal 
opinion, and I want to explore it with a number of people who I 
think will come before us, it is perhaps the way in which the 
laws have been written which have also changed. The emphasis 
from the old time is money and, therefore, participation is 
valuable versus contributions.
    But I think your notion that a structure of ability to 
participate on a maximum level is governed by the amount that 
each individual contributes places a relatively high 
qualitative judgment on the size of the contribution, and that 
is something that we will obviously talk about. For the life of 
me, I am trying to figure out the qualitative advantage of 
being able to put more dollars in the system. That is the one 
thing that I was wrestling with in terms of your position.
    Mr. Lewis.
    
[[Page 216]]

    Mrs. Maloney. May I respond very briefly?
    The Chairman. Very briefly.
    Mrs. Maloney. I wasn't calling for more dollars in the 
system. I was calling, as you know, for a limit on spending and 
a diversification of the contributors to that limit.
    The Chairman. And I understand that. People who contribute 
less--people who contribute less individually get to contribute 
more collectively, under your system. Isn't that true?
    Mrs. Maloney. No, they would be limited to a third, a 
third, a third. A third for individuals, a third for----
    The Chairman. No, but each PAC. I thought your citizen PAC 
would contribute twice as much, $1,000, versus the large donor 
PACs, $500. That is incorrect?
    Mrs. Maloney. Well, I would drop to $500. I would drop to 
$100, $100 in individual----
    The Chairman. We are not yet writing limits. We will 
negotiate the amount later.
    Mrs. Maloney. And $100--I don't even have a bill in yet. I 
was just throwing out ideas. But I would fall to $100 in 
individual, $100 in small PAC, and $100 in big PAC. So my main 
point that I am trying to make is money is money, whether it 
comes from a large corporation, a union or a housekeeper who 
only makes $500 a week.
    The Chairman. I understand. But your original proposal, the 
proposal you presented in your testimony, was a differential in 
the total amount a Political Action Committee could contribute 
based upon the size of the contribution of the individuals in 
the political action Committee. And my reaction to that was why 
quantitatively different amounts of money of individuals allows 
a quantitative difference? You have moved away from that a 
little bit.
    My follow-up question would have been, it seems to me that 
you are basically favoring a particular type of PAC 
historically, and that would have been a union-based PAC versus 
a nonunion-based PAC. But the statement that you just made in 
terms of the amount of money is not as critical moves away from 
that qualitative difference.
    Mrs. Maloney. My main point is money is money; and I would 
support, just to make it very clear, a limit of $100 in 
individual, $100 in a large PAC; and I think it would be a good 
idea to create a smaller PAC for small contributions, $100 from 
a small PAC. But my main thing is we want to limit the 
influence of money, and by limiting it we can have a different 
mix. And, again, I think that we should challenge Buckley v. 
Valeo, go to the Supreme Court and have a fallback position if 
we don't win in the Supreme Court.
    The Chairman. I understand that. But then the follow-up 
question would be if you are going to limit to such a small 
amount individual contributions, would my contribution to a PAC 
count toward the total that an individual could give? In other 
words, if I gave individually I could give, under your scenario 
now, $100. But if I gave to 10 different PACs $100, which would 
be the amount that I could give, or $25, the cumulative amount 
of giving to PACs would be greater than the amount that an 
individual could give.
    So would you limit the contribution to PACs in that concept 
of yours to the total amount that could be given by an 
individual? In 

[[Page 217]]
other words, through PACs, could an individual give more to a candidate 
than they could individually?
    Mrs. Maloney. I think we should limit it to an individual 
contribution, whether you give to a PAC or your own individual 
contribution.
    The Chairman. Then the contribution to the PACs ought to be 
equal to the maximum contribution that an individual could 
give. Otherwise, if you give to a PAC, you are giving less than 
you could have given if you gave individually. That is the 
point I am trying to raise. When you try----
    Mrs. Maloney. That is a----
    The Chairman. Let me make the final statement, okay, so 
that I can move on to Mr. Lewis.
    When you began shifting numbers around to try to create a 
qualitative difference in terms of a giving situation, as we 
have seen from legislation that has come up since the early 
1970s, you create unanticipated consequences that you have to 
deal with. And although I will enjoy talking with you in terms 
of the mix and match of the size of contributions individually 
to PACs and to others, I will continue to come back at you with 
the consequences either qualitatively or quantitatively of the 
way in which we change the numbers. But I look forward to 
discussion.
    The Chairman. I would tell the gentlewoman that I would 
like to ask the gentleman from Georgia some questions.
    In your comments, Mr. Lewis, I think you bump up against 
the Court decision as well. Because, frankly, as you may know, 
in the early 1970s, Congress limited the amount that 
individuals could contribute; and the Court declared that 
unconstitutional; and, frankly, a number of us also think we 
could pursue that statutorily with the new Court. I am just 
wondering if you believe that the individual limit has a 
constitutional basis to it, or would you be willing to explore 
limiting individuals statutorily?
    I know your bill doesn't, but I wonder if you have any 
discomfort level from a constitutional point of view about 
telling someone that they would be restricted on how much they 
could contribute of their own money to their own election.
    Mr. Lewis. Well, I have some concern in that it may be a 
violation of people's rights to participate, a whole question 
of freedom of speech, to tell a person you can only use a 
certain amount of your own money. It is something that I would 
like to explore.
    The Chairman. The problem, of course, is that when we talk 
about freedom of speech, it is whether you do it with your own 
lungs or a megaphone; and, unfortunately, dollars are the 
determination, in part, of whether it is your own lungs or a 
megaphone.
    I was very appreciative of your focus on the relative value 
of the current limit, both on PACs and individuals, because I 
have tried to interview people who were involved in the process 
in the early 1970s and what they thought about how much $1,000 
was and how much $5,000 was. There were debates that went on 
concerning what the limit should be, and they came up with what 
they thought was an appropriate amount of money. It wasn't $325 
for individuals, and it wasn't $1,675 for PACs. It was $1,000 
for individuals and $5,000 for PACs. I have asked, why didn't 
you think 

[[Page 218]]
about indexing the limits? Their answer was, we thought that was a lot 
of money.
    Mr. Lewis. Well, Mr. Chairman, I guess back in 1974, $1,000 
for a lot of people appeared to be a lot of money, and $5,000 
appeared. But today, in 1995, we move toward 1996, it is 
really--you can't get that much for $1,000, $325 maybe, and for 
$5,000, $1,600 or a little more.
    The Chairman. Do you think--and maybe this is really almost 
a rhetorical question, because it seems to me that this is the 
attitude of people who want to keep contributions even 
relatively lower than they are now by dropping the amount that 
people could contribute--that apparently in the 1970s, $1,000 
was kind of a level, a corruptible level, let's say. Above 
that, you were worried about it. Does it really mean that today 
the corruptible level is the $325?
    Mr. Lewis. I am not so sure. I don't think we should 
limit--we should bring it down. Maybe the level that we have 
maybe should remain there.
    Mr. Chairman, I must tell you, I do accept PAC money, and I 
don't feel beholden to any organization or any PAC that I 
receive dollars from. And, as my colleague from New York 
suggested, money is money. You have little people pooling their 
resources. It may be a group of janitors coming together, 
working in a union, a group of businesspeople. But money is 
money.
    The Chairman. And, of course, the key is to disclose it; 
and that was the first and the basic principle of our current 
campaign finance.
    Mr. Lewis. And we must continue to disclose all our 
contributions.
    The Chairman. And I would just refer to you, and I will use 
your testimony as an example, the Wall Street Journal today has 
a very interesting editorial. It is titled, The Man Who Ruined 
Politics, and it has a picture of Fred Wertheimer, and an 
editorial about their view on the way in which campaigns should 
be run.
    Mr. Gutierrez, I read your--and we are going to visit over 
lunch a couple times. The idea--when you listen to the 
structure initially, it sounds, frankly, somewhat Rube Goldberg 
and rather complicated. But when you take a step back and look 
at it fundamentally, basically what you are saying is that if 
people are so itchy and anxious to participate in the system 
and it is above a fixed level and they are willing to pay a tax 
for it, then that will help money come into the system, and we 
can use it.
    Kind of like a gas guzzler tax. If you want the big car and 
if you want to be seen in the neighborhood, then you've got to 
pay for it with a gas guzzler tax. Is that a fair analogy of 
the way you are looking at where you are going to get some 
money with this tax on PACs?
    Mr. Gutierrez. Well, Mr. Chairman, let me just say that 
the--and we got this from the Democratic side, from the DCCC, 
the information. They said that the average candidate received 
$50,000 in PAC contributions and that approximately $30,000 of 
that $50,000 was above the $1,000 level. So that if we had my 
PACs tax on the basis of 2,593 candidates, at $11,888 per 
candidate, taxing the overexpenditure, we have got about $30 
million here in a pool.

[[Page 219]]

    Now I think the important thing is that I kind of take a 
middle road with this PAC tax. I don't say we are going to get 
rid of them together. I say we use them as a tool and an 
instrument and kind of rein them in as you suggest. If you want 
to give the big $5,000, you can still give it, but there is a 
tax that helps other people.
    So I thought, look, it helps us because, remember, under my 
proposal as currently drafted--and I look forward to having 
those lunches with you; we will make sure that no PAC picks up 
the tab as we do that--that $200 or less in contributions get 
maxed by this pool of money. That is not public money, because 
it comes from a tax on PACs. So it is not public money, and it 
would encourage a candidate--and only the candidates who say I 
will limit my campaign expenditures to $600,000 get to be in 
the pool.
    So I think it helps us do a couple of things. It says, go 
out and raise $200 and less contributions, and you are going to 
get matched by those contributions. And if the candidate spends 
a whole bunch of money, as in your imagery that you gave us, if 
you got that big old Cadillac out there, right, and you got the 
million dollar campaign, it gets taxed to help the--maybe the 
guy driving the--I am trying to think of the Saturn, because I 
want to mention an American car.
    The Chairman. There you go. And the other thing I like 
about it is that it shows some creative thinking in terms of 
looking for sources of money that could be utilized in the 
system that doesn't automatically go to the Treasury and 
utilize taxpayer dollars.
    Mr. Gutierrez. One other suggestion, Mr. Chairman, and you 
know you were very helpful in getting my proposal for three 
months before and for the franking, and if we could like look 
at--I know it doesn't deal specifically, but since I have you 
right here in front of me, if we could get that----
    The Chairman. You can go out of the box.
    Mr. Gutierrez. Another suggestion is if we could get that 
permanently as we discuss campaign finance reform so it is part 
of the mix.
    The Chairman. I tell the gentleman from Washington that he 
is new to politics and new to the House and part of the new 
Majority. One of the things we have done around here is we have 
broken most of the mold about what people think we would or 
would not do.
    As Chairman of this Committee, I am not inclined to create 
a system that favors incumbents beyond whatever an inherent 
advantage to an incumbent might be. There are some inherent 
disadvantages to being an incumbent, one being you have a 
voting record. But there are a number of noninherent advantages 
to incumbency currently in the structure, and I think those are 
the ones you are focusing on. I have no interest in 
perpetuating noninherent advantages to incumbency. So we have 
already broken some molds that we have done and some packages 
that we have put together, and I look forward to working with 
you in that area.
    Mr. Dickey, you talked about PACs being primarily a 
perceptive problem rather than a realistic problem. PAC 
proponents would argue I think to a certain extent that what 
PACs have done is brought people into the system through 
education and involvement 

[[Page 220]]
and perhaps even stimulated interest in elections through that 
education and through the shared contributions they might make.
    Do you have any feeling about whether, if you didn't allow 
PACs to participate, the dollars that the individuals now give 
through the PAC system would flow into the political system 
without PACs, or would there be possibly a diminishing of 
participation?
    Mrs. Maloney's concern is that we want to try to keep those 
people involved in the system, and if you do away with PACs, do 
you think the dollars and the individuals involved would move 
to another venue or avenue, or would they perhaps not be 
involved?
    Mr. Dickey. I think they would evaporate; some of them 
would. Maybe a substantial percentage would evaporate at first, 
because most of the people I talk to that give to PACs don't 
feel they have any access to decision-making at all. They feel 
that lobbyists have their own agenda, their own politics is 
going on and they are outside of the picture and they give to 
the PACs to keep their jobs or to buy a little peace. I think 
it would be up to us to find those people and get back with 
them and try to bring them into the system.
    One other thing, if we are trying to make better decisions 
in government, that is why it is important to go to the 
individuals and ask them for their support and when you ask 
them for their support and they say oh, no, I wouldn't dare 
support you because of so and so, and so and so, you are 
getting an opinion. Or yes, I am going to give this to you 
because of your opinion. Individual opinions collectively makes 
a stronger rope to carry our government with.
    The Chairman. I guess my response would be why aren't PACs 
individual connections delivered collectively, but we will 
pursue that.
    Mr. Gilchrest, when you talk about 100 percent of your 
contributions coming from people who live in the district, what 
role do you envision or believe political parties should play 
in that scenario? Would it be the political party helping you 
to structure those individual contributions, or would it be the 
political party could be involved through in-kind contribution, 
or would you prefer political parties not be involved, and 
could that be why you focus on individuals only.
    Mr. Gilchrest. We have, in my case, chosen not to take any 
party money, national party, State party. I do think, and I 
want to agree with Jay and some of the others, that it really 
does--we can't put aside the individual potential for creating 
and stimulating initiative on the part of the voters to 
participate in the political system. That is, in my mind, 
infinitely more important than all the dollars you could 
collect.
    If people feel that they are attached to a candidate or a 
representative then they are going to come out. And it is the 
responsibility of the candidate and the elected official to do 
that. I have no qualms with putting that aside.
    If the State political party, Democrat or Republican, 
wanted to participate through the existing laws right now, no 
more, but through existing laws to contribute to campaigns, I 
would accept that. I think I would also accept on the national 
level the Democrat or the Republican Party through existing 
laws as far as what they contribute to an individual candidate.

[[Page 221]]

    One other comment. As far as the $1,000 contribution, I 
wouldn't change what individuals can give as well. And I 
realize $1,000 doesn't go as far as it used to go.
    The Chairman. We are going to have a hearing on the role of 
political parties. Some of us think that political parties are 
unique institutions in the system. They are the only ones who 
recruit candidates and attempt to get them elected and also 
program public policy. I think all of those happen to be 
important functions and they are the only institutions that 
perform all three of them. Others are involved in other aspects 
of it----
    Mr. Gilchrest. Although, Mr. Chairman, I wasn't recruited 
nor drafted. I sort of dropped out of the sky on the poor 
Republican.
    The Chairman. I understand that, and the gentleman has a 
fascinating story. And I think our job is not to pass 
legislation on unique individual instances, but look at the 
larger collective.
    In terms of the question that Mr. Fazio posed about if in 
fact you favor smaller dollar amounts in the system, what about 
the time spent on raising those smaller dollar amounts, as he 
called it, ``dialing for dollars?'' I think there is a 
difference in terms of where you get dollars; not just how 
much.
    I think one of the concerns is that in the current system 
you get more dollars faster staying away from your district 
most often than you do by coming to your district. You can go 
to large urban centers where dollars are given in concentrated 
events.
    Mr. Gilchrest talked about 100 percent, which I think has 
some constitutional problems; Mrs. Maloney talked about 75 
percent. I think we have to go back to the criteria that 
Buckley v. Valeo established, I think is a useful one as we go 
through this pursuit, and that is does it assist us in dealing 
with either corruption or the appearance of corruption in the 
way in which we focus on the parameters of givers and giving.
    It seems to me that if we focus in terms of creating some 
kind of a system that focuses more on individuals who could 
participate in the process; that is in district, that the time 
spent interacting with people in the district wouldn't 
necessarily be seen as time wasted by most people, because 
after all, you are interacting with those people who you are 
supposed to represent.
    The fact you tend to represent people outside your district 
as well, constituents are the determiners of whether or not you 
return to office by virtue of being able to vote for you.
    Mr. Dickey. Mr. Chairman, I want to draw an analogy to the 
Wal-Mart system that has been so successful in merchandising. 
There was a definite turn of events, as I am told, when they 
went to their associates and said you give us your ideas. You 
are the ones who are actually, the rubber is hitting the road 
with you, we are here in an ivory tower, our ideas don't seem 
to work. What happened was Wal-Mart started saving money, they 
had innovations, they got an enormous number of ideas and 
support and structure from that experience.
    I don't want to bore this panel with this point, but I want 
to say that we are trying to get better decisions, we are 
trying to create a better working government. Why in the world 
are we trying to ignore the very people who come in contact 
with the mistakes and they can see ideas better if we set up a 
system where we are going 

[[Page 222]]
to them and asking them for their money, whatever it might be, we are 
going to get that strength of suggestions and creativity from 
them by the very system of raising money.
    Then we say the time we spend raising money is making our 
whole government better, and we turn this thing around so that 
we are on the flip side, rather than saying it takes so much 
time to raise money, which is your point; that if we get to the 
bottom of it and bring it up, we will be a lot better off.
    The Chairman. I thank the gentleman for his observation.
    Thank you.
    Mr. Lewis. The impression should not be left that money 
from Political Action Committees is somehow outside, that it is 
foreign, that it is not connected to the local district or to 
that State or to that indigenous community. When you get money 
from a political action Committee, they may be based in 
Washington or New York or California. It is that recommendation 
of the people in that district, that city or State or county, 
and many of those people have contributed, participated in that 
pool. So we shouldn't look at PACs as something that is foreign 
or something that is strange or weird about it. I think we have 
an obligation to say these people have a right to pool in 
resources to have the greatest impact.
    The Chairman. They currently are legally allowed to do so.
    I want to thank the panel and the Members for indulging the 
Chairman in trying to get to some basic concerns.
    The gentleman from Ohio might want to inquire.
    Mr. Ney. Thank you, Mr. Chairman.
    I have a quick question. I am sorry I arrived late. I had 
something else I was required to be at.
    Everybody has a story to tell. I defeated a former Chairman 
of this Committee against some incredible odds 15 years ago in 
the Statehouse, and I had mixed opinions at that time about the 
groups helping him and the groups helping me. He had a lot of 
PAC money and I had some PAC money, but I thought his were 
appropriate PACs and I thought mine were.
    I think if you start to pick, I like this PAC but not that 
PAC, I have had campaigns since then; I have had labor money, 
small business PACs, whatever the issue is, and in the last 
campaign I had more individual money. I think that is to each 
their own and how they view the system.
    I don't think that if you say PACs, and the PAC came from 
Washington and if a farmer contributes or a labor union 
contributes and money comes to Washington and they support you, 
it is still your local people, your local farmer, your local 
labor person, your local businessperson. I think some of the 
PAC has been sent to a hyper-level here over the airwaves and 
has been made worse than it is. I think it is how you approach, 
do you call and say I want contributions. I think that type of 
thing is wrong.
    Having said that, my real concern, and I would aim the 
questions to the people who want to ban PACs, but ask the 
panelists, my concern for the future of politics if we set 
campaign limits, which I have no problem to set limits, what 
about the millionaires? This week we have heard so many 
millionaire Members of Congress say let's stop the paychecks. I 
would be willing to do that if 

[[Page 223]]
they would stop their trust funds and all their money that they make on 
the outside that is legal or inherited.
    Sometimes it is easy to stand there and say let's stop the 
paychecks of the Members, or let's limit things, but what about 
the millionaires. I have heard today from panelists money is 
money. My concern is that we have limits on the groups that can 
give, we have limits on the individuals and that is fine, but 
what about the millionaires who can dump in as much money as 
they want. So the people who want to ban PACs, where do you 
stand on the millionaires?
    Mr. White. Let me address that, although as I said, I am 
not, I haven't decided that I necessarily would want to ban 
PACs. I think we need to leave that to a group that is not 
necessarily going to be biased the way we are because we have 
all been in the system. We talked a bit about the Supreme 
Court, how it might change some of its rulings in the Buckley 
v. Valeo case.
    I think we have to remember, one of the problems with the 
campaign finance system we have now is that half of the system 
enacted in 1974 was ruled unconstitutional. I think it is 
incumbent upon us to think about the constitutionality of 
things we do.
    My view as a lawyer is it is unconstitutional to restrict 
what an individual can spend, and frankly, I think it is 
probably also unconstitutional to restrict what an individual 
can give. I think one of the things I would like to have a 
commission look at is maybe whether maybe we should take all 
limits off but just require full disclosure. I think that would 
be one approach that maybe a commission with some academic 
empowerment and academic contributions to might be able to come 
up with a proposal like that better than we can.
    One idea about the concept of spending limits, really when 
you get down to it just about any limit on any kind of campaign 
finance in any direction is always going to disfavor the 
challenger, in my view, because you already have the incumbents 
there with the advantages that incumbency has, and of course 
the disadvantages, too.
    For example, the $600,000 number that people talk about, it 
just so happens that if you look at the academic studies, 
$600,000 was the threshold point at which a challenger in 1994 
started to become viable. So if you limit it at $600,000, you 
are basically already making it difficult for a challenger who 
isn't well-known to get beyond the threshold to where they can 
be well-known.
    We talk a lot about limiting campaign contributions to your 
own district. Well, you know, my Aunt Wanda lives in Indiana, 
so if I started my campaign solely from people in the district, 
I wouldn't have been able to get to the point where I could 
attract other contributions.
    So I just think we have to look very carefully at all these 
limitations, including the limitation on millionaires.
    Mr. Dickey. I am not in favor of banning PACs, just PAC 
contributions. The question of a millionaire if it favors the 
millionaire, I am against that. In fact, then they could come 
in and control a race just by their own resources. I think that 
is a valid point.

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    Mr. Lewis. Well, you know I support political action 
Committees and I have reservations about limiting the amount of 
money that an individual can put into his or her own campaign.
    Mr. Gilchrest. Mr. Ney, you talked about diversity, let 
each person do their own. I think we need biological diversity 
in our legislation to protect the environment.
    Two, I came here to contribute my perspective and I realize 
all of us need to contribute a perspective to unlock this 
problem. I would not mind a little bit of diversity depending 
on what one district needs, another is different. But 
diversity, to allow flexibility in a campaign finance reform 
bill I think would be the best way to go.
    My last comment is about Wal-Mart. Wal-Mart might be good 
for Arkansas, but Wal-Mart has used their dollars instead of 
creating fine little communities and little stores, they have 
pushed their way into communities that don't want them. I hope 
Wal-Mart stays in Arkansas and they are prosperous, but they 
have pushed their way around the country and into my district, 
and I think have gone too far. Campaign finance reform 
flexibility I think is the way to go, Mr. Chairman.
    Mr. Ney. Let me make it clear, and I am not opposed to 
millionaires, you ought to have people here of all backgrounds. 
That is what makes a great Congress. I am just concerned that 
they can buy elections if allowed unlimited amounts of money. 
So I have no personal problem with millionaires. Maybe I would 
like to be one. I won't be.
    The Chairman. We are going to have a hearing on the 
individual contributions, not just the amount, but the question 
of millionaires and the rest.
    Ms. Dunn. Mr. Chairman, I don't want to start a second 
round of questions, but I tend to agree with those of you on 
the panel who believe that people should have the right to 
contribute through PACs. I also would say that equalizing what 
PACs can contribute with what an individual can give might be 
the right way to go, but I think we are dealing with some very 
serious public perceptions.
    I always take the deliberative approach. Let's strip away 
the emotionalism and get to the real problem and the real 
answer to the problem. I am not sure we can solve the whole 
problem here, but it is true that the public perceives that we 
are sitting in Washington, D.C. picking up the phone and 
calling PACs to get $5,000 donations at one whack instead of 
getting home to talk to the individuals that we represent in 
the Congress. That is a big problem.
    We have got to figure out how to handle that. That is a 
problem that may be solved by equalizing PACs, but I think it 
has to be integrated program. The result that I would like to 
see is one that would make the situation competitive. A lot of 
times, again, another public perception, and also a reality, is 
that PACs give to a candidate, usually the incumbent, because 
of the almost guarantee that the incumbent will be reelected.
    At one point a couple of years ago the reelection rate was 
94 percent. So a PAC is going to be very risk-taking oriented. 
If they are going to give to a challenger, to an incumbent who 
will be there to deal negatively, PACs may proceed with the 
issues that PACs are interested in.

[[Page 225]]

    These are public perceptions and we have to figure out how 
to solve them. The answer is to make the field more 
competitive, make the incumbency less of a guarantee for 
reelection so that PACs can be truly a democratic 
representation of a group of folks who want to give money to 
the candidate who espouses an agenda that they approve of.
    The Chairman. I thank the, gentlewoman.
    I thank the panel once again.
    As the next panel comes up, as an editorial comment, I 
would refer you once again to ``The Man Who Ruined Politics'' 
in the Wall Street Journal, Fred Wertheimer, Common Cause.
    In my personal opinion, this is one of the primary reasons 
that the public perceives us the way they do and the distance 
between perception and reality.
    Our second panel is a group of individuals who are 
partially from academia and through real world involvement have 
as a part of their activities the involvement with the question 
of political action Committees. Edward Crane is President of 
CATO; Steve Stockmeyer, is Executive Vice President of the 
National Association of Business PACs; Joel Gora, Dean of the 
Brooklyn Law School, representing the American Civil Liberties 
Union; Ken Parmelee, Vice President Government Affairs, Rural 
Letter Carriers Association; Steve Driesler, Vice President 
Government Affairs, National Association of Realtors.
    I understand you all have pressing time engagements. I 
would love to interact with you all afternoon, but if you have 
to leave, I understand you do. I would try to get at least one 
panelist in prior to having to go vote and would begin with Mr. 
Crane.
    The Chair would indicate that if you have written 
testimony, it will be made a part of the record, without 
objection, and you may proceed any way you may wish to inform 
the Committee for five minutes.




    STATEMENTS OF EDWARD CRANE, PRESIDENT, CATO; STEVEN F. 
 STOCKMEYER, EXECUTIVE VICE PRESIDENT, NATIONAL ASSOCIATION OF 
 BUSINESS PACS; JOEL GORA, DEAN, BROOKLYN LAW SCHOOL, AMERICAN 
CIVIL LIBERTIES UNION; KEN PARMELEE, VICE PRESIDENT, GOVERNMENT 
AFFAIRS, RURAL LETTER CARRIERS ASSOCIATION; AND STEVE DRIESLER, 
 SR., VICE PRESIDENT, GOVERNMENT AFFAIRS, NATIONAL ASSOCIATION 
                          OF REALTORS




                   STATEMENT OF EDWARD CRANE

    Mr. Crane. Thank you, Mr. Chairman.
    I congratulate you and the Speaker on your principled stand 
on an issue that is not as popular as it should be at this 
point in time. I appreciate the opportunity to address this 
Committee.
    I have a few brief points to make. First, when we talk 
about PACs and their impact on the political process, we are 
talking, in my view, about a nonproblem. It is true the media 
don't like PACs but they tend to oppose any political force 
that can bypass their filter. And it is true that certain 
Members of Congress like to demagogue the issue when they go 
back to their district on white horses 

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and say I voted to clean up the system, I voted against PACs, as though 
that means something.
    Mr. Chairman, the average PAC gives less than $1,000 to 
House candidates and less than $2,000 to Senate candidates. The 
implication of those demagogues is that their colleagues will 
roll over and play dead or stand on their heads or do whatever 
they are asked to for these modest contributions. There is 
absolutely no evidence that that is the case.
    In the debate over PACs rhetoric and reality are two 
different things. PACs are a nonproblem. There is no evidence 
that they do anything other than enhance the Democratic 
process, and in my view, it is insulting to Members of Congress 
to suggest otherwise.
    Second, a Cato Institute study by Brad Smith cited in the 
Wall Street Journal article the Chairman mentioned and earlier 
in the week by David Broder of the Washington Post, cites 
empirical research showing that the top three factors 
influencing the way a Congressman votes have nothing at all to 
do with money. The first factor that influences votes is 
ideology. Most Members get into politics because they have 
strong views about various political issues, and that ideology 
stays with them through their careers.
    The second factor is party agenda. We have a two-party 
system in America and the leadership constructs certain voting 
strategies that affect the way Members vote.
    The third is voter sentiment back home. Members are very 
interested in what people back home in their districts think 
about many issues. So those are the major factors that affect 
the way Members vote and that has nothing to do with money.
    That also brings up an ancillary point, because whatever 
influence PACs do have is more likely----
    The Chairman. On the ancillary point, can you please hold 
it, because we have less than 10 minutes to get over and vote?
    I was hoping I could get your testimony in before we have 
to go vote.
    The Committee stands in temporary recess.
    [Recess.]
    The Chairman. The Committee will reconvene.
    When we were last in session Mr. Crane was making an 
ancillary point.
    Mr. Crane. The point dealt with the reason why Members vote 
as they vote, and my point was that it had little to do with 
money, mostly with ideology, with party agenda and with voter 
sentiment, which brought up an ancillary point because whatever 
influence PACs do have is more likely to be a function of their 
ability to mobilize their supporters than their ability to cut 
a check for up to $5,000. That is why groups ranging from the 
Christian Coalition to the NRA to the labor unions to the NFIB 
get the attention that they do; because they deserve it.
    They represent millions of Americans who happen to feel 
strongly about certain issues. What could be wrong with that?
    There is also the reality of PAC spending. There is plenty 
of competition for the attention of Members on any major issue 
and that competition often comes from PACs on the other side of 
the issue. Furthermore, Members are free to reject PAC 
contributions any 

[[Page 227]]
time they want to and those contributions are, in any case, fully 
disclosed.
    If the case for restricting or eliminating PACs is 
ultimately driven by a desire to get money out of politics, 
then that case is based on a faulty assumption. As the Speaker 
said the other day, we are spending too little money on 
political campaigns, not too much.
    For obvious reasons, it is in the electoral interest of 
incumbents to restrict spending and quiet the campaign. 
Incumbents invariably start the campaign with a huge advantage 
in name recognition; the less vibrant the campaign, the better 
their chances for reelection.
    As Brad Smith's study makes clear, the more money spent in 
a campaign, the better informed are the voters. Further, each 
additional dollar has more benefit for the challenger than for 
the incumbent.
    So, Mr. Chairman, we can very well see what Congress was up 
to when it passed the 1974 Federal Election Campaign Act. 
People forget that part of that act that was struck down by the 
Supreme Court involved $70,000 spending limits for House races, 
$100,000 spending limits for Senate races, or 8 cents per 
voter. What kind of disdain for the political process and 
contempt for the American voter is involved with saying we will 
allow spending on campaigns up to 8 cents per voter?
    Mr. Chairman, America spends more money today on yogurt 
than on presidential campaigns, about $3.00 per eligible voter 
on average in congressional races. How can $3.00 get Common 
Cause so apoplectic? Brad Smith estimates we spend in every 
two-year election cycle somewhere between $7.50 and $10 per 
eligible voter on all election campaigns, from dogcatcher to 
State legislature, to Congress, to the Presidency. So those who 
suggest we are spending too much on campaigns are either 
ignorant of the facts or pursuing some other agenda.
    Finally, I would address the constitutional question of 
banning PACs. The Chairman may be aware of Congressman J.S. 
Hayworth's efforts to create a Constitutional Caucus in the 
House. There are now, as I understand it, approximately 100 
Members of that caucus, the purpose of which is to take 
seriously a Congressman's oath of office to uphold the 
Constitution.
    We tend to think that oath is only taken by Supreme Court 
Justices and the President, but a Congressman is not supposed 
to vote for a piece of legislation that he or she feels is 
unconstitutional and should way the constitutionality of any 
issue before Congress before voting on it.
    I would urge Members to consider the First Amendment before 
voting on any legislation dealing with limiting or restricting 
PACs. Let me read briefly from the First Amendment. This is a 
short amendment, as you know.
    ``Congress shall make no law respecting establishment of 
religion or prohibiting the free exercise thereof or a bridging 
the freedom of speech or the press or the right of the people 
to peaceably assemble and to petition the government for a 
redress of grievances.''
    Mr. Chairman, free speech, the right of assembly and the 
right to petition Congress are sometimes interdependent. PACs 
are a excellent example of that fact.

[[Page 228]]

    As the Supreme Court said in Buckley v. Valeo, dollars are 
not stuffed into ballot boxes. The mediating factor that turns 
money into votes is speech. Advocacy cannot be proscribed 
because it is effective. It is estimated that some 12 million 
Americans contribute about $12 a month to PACs each year. I 
think that is a good thing. It is not a problem.
    I would respectfully suggest that Congress lift 
contribution limits for individuals and leave PACs alone. That 
would be real reform in the interest of healthy and vibrant 
democracy.
    Thank you very much.
    The Chairman. I thank the gentleman.
    [The statement of Mr. Crane follows:]

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[[Page 243]]

    The Chairman. Mr. Stockmeyer.




               STATEMENT OF STEVEN F. STOCKMEYER

    Mr. Stockmeyer. Thank you, Mr. Chairman. Good afternoon. 
Thank you for this opportunity to testify.
    This is the sixth time my group has been involved in 
testimony before Congress on this issue but it is the only time 
that two days of hearings have been devoted to PACs, with the 
diversity and balance that has been brought to this. And we 
appreciate that very much, and we think you are doing a real 
public service by examining this issue fully.
    Authorized fully in the 1976 amendments to the Federal 
Election Campaign Act, PACs today are the virtual embodiment of 
American pluralism and among the finest examples of Americans 
exercising their right to participate in the Nation's political 
process.
    Currently, over 4,000 PACs represent almost as many 
different interests, covering the total spectrum of citizen, 
economic issue and philosophical spectrum. PACs have educated, 
motivated and stimulated a rough estimated 12 million Americans 
in the political process voluntarily, and many of them for the 
very first time.
    In the last 20 years, PACs have become the premier way for 
Americans of average means to band together and support the 
election of candidates that they believe have their best 
interests at heart. Through PACs like-minded citizens can have 
more impact, be more involved in campaigns than they could 
acting alone. And far more than mere fund-raising and 
dispensing operations, PACs promote greater citizen 
participation in all elements of government through 
publications, seminars, vote drives and the like.
    What is more, PACs are one of the few reforms of the 1970s, 
if not the only reform which has worked as intended and worked 
very well. The PAC mechanism took what was under the table 
before and without limit brought it into the sunshine under 
tight limits and regulation.
    Since their creation, there have been no significant abuses 
attributable to PACs. The sanctioning of PACs thus helped clean 
up a major part of the old discredited system of campaign 
finance and continues to do so to this very day.
    Because of all these positive achievements, we submit PACs 
are a very healthy part of the current system and should be 
considered a model reform which could be applied to other parts 
of the system. As long as we have private funding of campaigns, 
something that is certainly more desirable than taxpayer 
funding and will always be guaranteed by the Constitution there 
never will be a cleaner or better form of involvement than 
political action Committees.
    Unfortunately, however, PACs have become the whipping boy 
of the campaign finance debate. For 20 years professional 
reform groups have engaged in McCarthy-like attacks on PACs and 
this narrow view has been repeated by an unquestioning media. A 
recent study showed that 98.4 percent of media coverage of PACs 
since 1980 is negative, a higher negative percentage than those 
for Oklahoma City bomber Timothy McVay or retired Los Angeles 
police detective Mark Fuhrman. These unprovoked attacks have 
created a false impression of corruption through innuendo, 
guilt by association and constant repetition.

[[Page 244]]

    As the most fully disclosed part of the campaign system, 
PACs are obviously and easy targets for this kind of attack. 
These attempts to smear PACs and the recipients of their 
support I believe are a part of a larger strategy to discredit 
all forms of private financing in order to build a case for 
forcing taxpayers to foot the bill.
    We are concerned that these tactics have been so successful 
in creating a political imperative, although I believe a phony 
one, that Members of the House have felt it necessary to 
introduce a record number of anti-PAC bills this year. We would 
urge that this Committee pause before getting caught up in this 
hysteria to consider the positive role of PACs and the very 
negative consequences of these proposals.
    Campaign finance has always been uniquely plagued by 
unintended consequences. And here are some of the things that 
would happen if we ban PACs or significantly reduce them: Broad 
citizen participation in funding campaigns would be reduced and 
the vital role that PACs have played to encourage involvement 
beyond funding would be lost.
    Number two, candidates would have to spend even more time 
raising funds than they do today, just the reverse of what 
people would like to accomplish.
    Three, an even greater advantage for and reliance on 
wealthy individuals would develop, and small minority groups 
would be shut down, leading to domination by the larger more 
well-heeled interests.
    Four, campaign money would be less accountable as interests 
are forced to channel their support in largely undisclosed and 
unlimited ways. Voter communication and education would also 
suffer.
    We think we should also consider the constitutional grounds 
which others will go into about the illegality under the 
Constitution of bank PACs. If it is the appearance of influence 
peddling that Congress seeks to correct, there are any number 
of remedial approaches the Committee should consider shy of 
trampling on the rights of average Americans to associate for 
political expression.
    Finally, we submit that there is almost nothing about the 
appearance problems of the current system that could not be 
solved by the conduct of the Members of Congress themselves. 
There is nothing that forces our representatives to raise more 
than they need for their campaigns, to raise funds all year-
round, or to solicit or accept funds from sources with business 
before their Committees.
    If voluntary restraint is not sufficient, then the House 
should pass mandatory restraints as a part of its ethics rules, 
as you are doing on gifts today. If the appearance problems are 
as severe as some suggest, then each Member needs to be part of 
the solution by examining and restricting demand.
    NABPAC believes there is a historic opportunity here to 
pass some constructive reforms, whether it is through the 
immediate work of this Committee or the broader agenda 
suggested by the Speaker in his Blue Ribbon Commission.

[[Page 245]]

    NABPAC supports both efforts. We think the challenge is 
restoring public confidence and increasing participation in the 
system while very definitely protecting precious constitutional 
guarantees.
    The Chairman. Thank you very much, Mr. Stockmeyer.
    [The statement of Mr. Stockmeyer follows:]

[[Page 246]]
    
    

    
[[Page 247]]

    The Chairman. As I introduce our next witness, Mr. Gora, 
truth in packaging requires me to reveal that I have just 
learned that he was a participant in the Buckley v. Valeo 
decision and somewhat shaped campaign finance in this country.




                     STATEMENT OF JOEL GORA

    Mr. Gora. Thank you very much, Mr. Chairman.
    I am Joel Gora, Associate Dean and Professor of Law at 
Brooklyn Law School, and I am privileged to appear before you 
today on behalf of the American Civil Liberties Union. I do 
bear some small responsibility for the fact we are all here 
this afternoon and I couldn't be more proud, because Buckley v. 
Valeo is a landmark of political freedom. The only problem is, 
the Court didn't go quite far enough.
    In that case the lawyers for the plaintiffs contended that 
the campaign reforms of 1974 were anything but, that they were 
bad constitutional law because they cut to the core of the 
First Amendment, and they were bad political reform because 
they would magnify the power of incumbency, increase dependence 
on monied interests and stifle political opportunity. And I am 
afraid we were right.
    In Buckley the Court ruled that any government restriction 
of political funding is a regulation of political speech 
subject to the strictest scrutiny. The Court further ruled that 
limitations on expenditures flatly violate the First Amendment.
    Nothing can justify the government telling the people how 
much they can spend to promote their candidacies or their 
causes; nothing. But the Court upheld contribution limits of 
$1,000 for individuals but $5,000 for political Committees 
based upon the concern with corruption, and that ruling has 
insured the two decades of frustration and unfairness that have 
ensued.
    With no limits on spending or on wealthy candidates, with 
independent Committees free to speak on politics, with issue 
groups and the media free to speak on politics without limit, 
and with less well-funded candidates hampered in their ability 
to raise money from family and friends, the stage was set for 
the two factors that have dominated politics for the last 20 
years, the advantages of incumbency and the dependency on PACs.
    The ACLU has long suggested that the way to solve these 
problems is to expand political participation by providing 
public financing for all legally qualified candidates and not 
to restrict contributions and expenditures which help groups 
and individuals communicate their messages.
    And that brings me to PACs. PACs, of course, have become a 
political dirty word, but PACs reflect the broad spectrum of 
groups that enrich our political life. Proposals to restrict or 
repeal PAC activity, I think are both unconstitutional and 
unwise.
    You have heard from Mr. Crane and Mr. Stockmeyer about the 
broad overview of the role of PACs, but I think nothing was 
more eloquent than Congressman Lewis' testimony this morning 
when he indicated the two things about PACs that the ACLU has 
tried to say: Number one, they do embody political speech and 
association; and number two, they are particularly important, 
many of them, to sparking new candidacies from divergent 
members of our 

[[Page 248]]
community, new and different voices and not the ones that are 
traditionally heard.
    So efforts to limit or ban PAC contributions, to restrict 
the amount of money that candidates can spend based on PAC 
contributions, to ban out-of-State PAC contributions all 
violate these principles of political freedom, of First 
Amendment rights and of political reform.
    There is a way out of this morass that the campaign reforms 
of two decades ago have caused. The way is the path that the 
Framers of the First Amendment charted for us a long time ago. 
The First Amendment answer to bad or corrupt or excessive or 
overinflated speech is more speech, publicly funded, privately 
funded, more speech, rather than enforced silence coerced by 
law.
    And the elements of this time-honored approach under the 
First Amendment are clear: Number one, raise individual 
contributions. Let Aunt Wanda write an even bigger check to 
Representative White. That alone would reduce the reliance on 
PACs and increase political freedom. Give a modest tax credit 
for political contributions. I think that was once in our law. 
I took it a time or two, and it was a pleasure to contribute 
and get a tax credit at the same time.
    Third, public and effective disclosure of large 
contributions leads to the democratic remedy for special 
interests. Let the people decide who is too cozy with those 
special interests.
    And finally, provide subsidies and benefits, perhaps the 
free frank, reduced mail rates, but do it on an evenhanded 
basis, not just for established candidates, not just for 
Republicans and Democrats.
    I am intrigued by the idea of a bipartisan Blue Ribbon 
Commission that will look into these difficult issues. I notice 
you are supposed to have eight Republicans and eight Democrats. 
Where is the Socialist Workers Party representative, let alone 
the Libertarian Party, or all of the other third and 
independent parties that enrich political life in America and 
who have been sources for the new ideas that we have come to 
accept as commonplace.
    Remember that leveling the playing field means that 
challengers will have a better chance to defeat incumbents. No 
one is born an incumbent. One of the collateral benefits of 
making it easier to raise money is that candidates will be able 
to spend less time raising money and more time raising issues.
    The problem is the strategies I have outlined which have 
one thing in common, expanding political opportunity without 
limiting it, have really never been tried. What we said in the 
Supreme Court in Buckley 20 years ago was, allow unlimited 
expenditures, unlimited contributions and have full disclosure 
so that the people can determine who is spending too much and 
who is giving too much. That approach was not permitted by the 
result in the Buckley case but it is the approach that is most 
consistent with the one part of the Constitution that speaks 
specifically to the issue of 

[[Page 249]]

Members of Congress writing the rules by which their own 
reelection futures are determined. And the part of the 
Constitution that speaks specifically to that was shared a few 
moments ago, and the first five words of it are: ``Congress 
shall make no law.''
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    [The statement of Mr. Gora follows:]

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    The Chairman. Mr. Driesler.




                  STATEMENT OF STEVE DRIESLER

    Mr. Driesler. My name is Steve Driesler. I am senior Vice 
President of Government Affairs for the National Association of 
Realtors. I am here on behalf of the 750,000 Realtors 
nationwide who reside in literally every State, every 
congressional district, every town, village and hamlet of this 
great country.
    As part of my duties, I help administer the Realtors 
Political Action Committee, which is one of the largest and 
most successful political action Committees in the country.
    And I am here today to talk about citizenship and what PACs 
do, and what our PAC in particular does to enhance and expand 
citizens and citizenship and opportunity to participate in this 
great political system of ours.
    I have heard the testimony today and you hear political 
pundits and observers decry the lack of citizen involvement, 
the lack of political participation. I think all of us were 
taught from our very earliest days in Civics 101 that political 
activity, political involvement is a highest responsibility of 
a citizen and yet by almost any measure the level of political 
involvement in this country is at historical all-time lows.
    Compared to most other industrial nations in the world, we 
rank low in all indices, such as voting participation, simply 
going to the polls on election day to help determine who is 
going to lead us at a local, State or national level. We have a 
citizenship that is woefully inadequately informed about their 
public officials and about the great issues of the day.
    Fewer than a third of most citizens can name their Members 
of Congress, much less tell you how they vote on key issues 
that affect them, their business, their personal lives. We 
decry the lack of involvement of volunteers that come to work 
in political campaigns. We talk about that campaigns have 
become too much focused on personalities and not enough focused 
on discussion of issues.
    We have heard even here today people talking about the 
perception of undue influence that large contributors have in 
the political system of the so-called ``fat cats'' who can give 
of their own wealth either to finance their own campaigns or to 
support other candidates.
    Let me tell you how the Realtors Political Action Committee 
helps address and eliminate many of these problems that are 
affecting us today. Let's talk about citizen involvement.
    Every year, our PAC involves over 140,000 Realtors 
nationwide in getting them to write a check; a small check. Our 
average contribution during the last election cycle was $26.76 
cents, less than $28 per member--not fat cats, not big 
contributors--less than $28 per member.
    We have a special program called ``Opportunity Race 
Programs'' designed to get our members actively involved in 
candidates on behalf of candidates of their choice. We do this 
by informing them how these candidates stand on the key issues 
of the day of importance to realtors and homeowners and private 
property rights.

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    In the last election cycle in 1994, these opportunity races 
involved over 22 percent of our membership, approximately 
150,000 members in 66 congressional districts, got these people 
involved in political campaigns that they would not have 
otherwise, in most instances, been involved in had it not been 
for our PAC involvement.
    Recently, our PAC has shifted substantial amounts of its 
resources to what we call Issues Advocacy Campaigns and away 
from direct contributions. What is an issue advocacy campaign?
    When we have an issue that is of concern to our members, be 
it at State, local or Federal level, we spend those dollars 
raised through the RPAC fund-raising mechanism to educate not 
only our members but to educate the general public, to educate 
policymakers, on our views.
    For example, an issue that is now being hotly debated on 
the campaign trails and that is the overhaul of the Nation's 
Tax Code and what that might mean in terms of elimination of 
mortgage interest deduction, State and local property tax 
deduction, what that can mean to homeowners, the value of their 
house, the affordability of housing, the housing opportunities 
in America.
    The national RPAC trustees have spent over $350,000 this 
year on that issue alone. They just recently, last week, at 
their national trustees' meeting voted to spend another 
$300,000 to carry this campaign forward through the 1996 
congressional and presidential campaigns.
    All of this goes to raise voter awareness of key issues, it 
goes to involve our members politically in campaigns. We have a 
campaign to get out there to help encourage our members to run 
for Congress, to run for State legislature, to run for school 
board and to get other Realtors involved in helping these 
people. All this helps increase citizenship, political 
involvement in this country.
    I want to conclude by responding to one question you asked 
the earlier panel, Mr. Chairman. If PACs were to go away 
tomorrow, would we still see that level of involvement? Would 
we still see that $3.15 million that RPAC raises and 
collectively spends in an election cycle?
    Would we still see that in the system? No.
    We have tried getting our members involved in direct giving 
and we have not been able to get the level of success that we 
have been able to do to get them to write the $25, $26 check to 
their PAC.
    So by restricting PACs, you are going to restrict citizen 
involvement in this country, and I don't think that is a good 
thing for the American political system.
    The Chairman. Thank you.
    [The statement of Mr. Driesler follows:]

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[[Page 272]]

    The Chairman. Mr. Parmelee.




                   STATEMENT OF KEN PARMELEE

    Mr. Parmelee. Chairman Thomas, Congressman Fazio, good 
afternoon. My name is Ken Parmelee, I am the Vice President of 
the National Rural Letter Carriers' Association, an 87,000 
member postal union that has maintained a political action 
Committee for a number of years.
    Unfortunately, today the news media and the public, 
including our membership, is very critical of PACs because it 
is perceived that we represent special interests. There is a 
perception that large individual contributors are cleaner or 
better than PAC contributions.
    This I believe is a false premise. Individual large 
contributors have special interests, too. I believe it was the 
cartoon strip POGO which said: We have found the enemy and he 
is us.
    In fact, virtually every American has some kind of a 
special interest, and if you take large contributors, they may 
not be as readily identifiable as money coming from a political 
action Committee, and that is because PACs have a principal 
entity which registers with the Clerk of the House and spells 
out what our legislative interests are.
    But we at the Rural Letter Carriers believe that our 
contributors become stakeholders in the election process. In 
the case of Rural Letter Carriers, the average rural letter 
carrier earns approximately $36,000 a year and we live 
geographically all across the United States, except in the 
major cities.
    Approximately, 12,000 of our members give an average of 
$23.00 a year to their PAC. Last year, about $1,000 of them 
gave as much as $100 and only 12 of them gave over $200. Our 
PAC is truly a pool of small donations from our members.
    Rural letter carriers live in about 23,000 zip codes across 
the United States. That is just about half the zip codes in the 
country; 8,000 zip codes are represented by contributions to 
our political action Committee. On the other hand, if we take--
and I don't have current election figures, but I have them from 
1990--the top 10 zip codes in the United States gave 5 percent 
of all the individual contributions to Members of Congress and 
the top 100 zip codes gave 21 percent of all the contributions, 
and one Manhattan zip code gave more individual contributions 
to campaigns than from each of 24 States.
    So it is our belief that if you want to involve citizens in 
this process and keep them involved in the process, you will 
not ban PACs but keep us around, because as the other witnesses 
have said, we get our members to participate in the process and 
our members live everywhere and they vote for you all and they 
get involved in your campaigns, and that is exactly what we 
want them to do.
    We don't think PACs are a problem. The perception of money 
is a problem; we all recognize that. That was the heart of the 
1974 reforms; the perception of money. But then I suspect the 
perception of money has been a problem since the beginning of 
the republic.
    We at the Rural Letter Carriers like the Speaker's 
proposal. I have not had a chance to study it in detail, but we 
think the appointment of a commission of wise men and women to 
study the 

[[Page 273]]
problem with a closure that Congress could vote up or down on is a very 
constructive idea.
    That concludes my testimony. And I would be glad to answer 
any questions that you have.
    Thank you for holding these hearings, Mr. Chairman. We 
appreciate them very much.
    The Chairman. Thank you.
    [The statement of Mr. Parmelee follows:]

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[[Page 277]]

    The Chairman. The gentleman from California.
    Mr. Fazio. Thank you, Mr. Chairman.
    Since this is a panel of PAC partisans, let me see if I can 
ask you to look at some of the issues that might amount to PAC 
reform within the community of PACs. I apologize I didn't hear 
all of the panels make all of their remarks.
    We have in particularly the two groups represented to the 
left of the audience very broad based organizations. We know, 
however, there are PACs that don't have mass membership 
organizations behind them or many contributors. Is there a way 
that we could win the structure of reform of PACs, engender 
more participation, more democracy with a small ``d,'' if that 
is a question about how contributions are made?
    Are there ways we could take some of the rough edges off 
the PAC attack by showing more clearly that these are 
organizations that represent thousands of people and not a 
handful of people who have found another way to amplify what is 
probably already for them a loud voice in the political process 
by making personal contributions as well?
    I would be interested in your thoughts as it relates to the 
original purpose of PACs as it was created in the image of the 
Clark McGregors of the world, who were looking to come up with 
an alternative to mass membership labor PACs, bringing white 
collar workers or corporate middle management and senior 
management people together in a political process, much like 
these two organizations certainly have perpetuated.
    Mr. Stockmeyer. The law as it stands today, in order to 
become a multi-candidate Committee, you have to have 50 people 
contributing to your organization. So you start with that base. 
Some expansion on that, PAC probably it is not a bad idea to 
look at. I think it is, however, a myth that there are a lot of 
PACs out there that only have a small number of people in them 
that give major amounts of money to the PAC and then in turn to 
candidates. I don't know any of those.
    Our surveys of the corporate community shows that there are 
800 people on average per corporate PAC and their average 
contributions are slightly less than $200 a year to the PAC. 
There may be a handful of those, but I don't think it is a 
particular problem.
    But the idea that you should perhaps reward those that are 
better at stimulating people and getting them involved in 
campaigns is not a bad concept. I am not sure how you might 
implement that. I think it would have to be broad gradation.
    Some of the proposals in early Congresses talked about fat 
cat PACs, which I don't think there are many of, and skinny cat 
PACs, that just weren't not based on evidence, but they 
protected certain groups and penalized others. If you get down 
that road, I think it is a slippery slope.
    Mr. Fazio. If others want to comment on ways of emphasizing 
more participation by structuring the rules a little 
differently, I would be glad to hear it.
    Mr. Gora. I think partly the problem is one of political 
education. I think if enough people saw the tape of these 
hearings they might realize that PACs do represent a broad 
spectrum of American political life, that they are an important 
vehicle for participa

[[Page 278]]
tion by the average person and the more than average person. That is 
their genius. I think the major problem, assuming that the 
structure of the law were to remain essentially unchanged, is a 
matter of political education.
    Mr. Driesler. The one comment that I would have is that 
while almost I think any standard of a skinny PAC or broad 
levels of participation or low average dollar contribution, a 
Realtor PAC would fall into that framework, so I could sit 
there and be very self-righteous and say, yes, yes, limit those 
PACs and we can go ahead and do our business the way we are 
doing it now.
    But prior to going with the National Association of 
Realtors, I was with another real estate trade association here 
in town. I also oversaw their PAC. They did not by the nature 
of the membership have as broad a base. They tended to 
represent companies as opposed to individuals and we had a much 
higher dollar contribution. We had a much smaller number of 
people contributing. We also had a much smaller overall total 
dollar amount in which to give.
    I think it would be unfair to say that that PAC is somehow 
or other tainted or not viable, because I tend to agree with 
the statement that participation, the problem of participation 
is solved by getting more people involved and that includes 
people who are able to write $1,000, or even sometimes 
multithousand-dollar checks to a PAC, as long as there is full 
disclosure, which we would, as to where those contributions are 
coming to and who those contributions are going to, I think 
that is the real problem that needs to be addressed and solved 
by disclosure, which is exactly what the PAC reform of 1974 
did.
    Mr. Fazio. Thank you.
    The Chairman. I think I will use Mr. Crane as a foil since 
he is not here.
    In part of his testimony he indicated what contempt the 
legislators earlier must have had for the process by virtue of 
the structure that they created. I was going to engage him in 
discussing the fact that everybody who has been elected has 
come through the process doesn't necessarily make them 
contemptuous. They may be ignorant or naive about the 
consequences of the decisions they made.
    What we tried to remind people in the first hearing was 
that we had a spurt of laws basically in the early 1970s, one 
court case, and then a series of decisions from a commission 
that was created out of those laws, with virtually no changes 
since then; a lot of stops and starts and attempts, but no 
fundamental reexamination.
    What we are trying to do at this time, notwithstanding the 
pressure to move product, which many of us believe to be 
imperfect in a number of ways, is to carry out a more 
fundamental examination of what went on in the 1970s, so that 
we don't create those, as Mr. Stockmeyer said, unintended 
consequences.
    When you began looking at the way in which individual 
contributions relate to individuals who are part of 
partnerships which get counted if they contribute to the 
partnership, back toward the individual contribution, but that 
if they had made it through a PAC, it doesn't count toward the 
individual contribution, it creates a rather mine field of when 
and how and through which structure 

[[Page 279]]
you contribute. I don't think it was through contempt. I just don't 
think folks understood what they were doing.
    Mr. Driesler, you outlined the activity of the Realtors 
PAC, and I said earlier that I thought political parties were 
relatively unique institutions in that they carried on a series 
of activities that no other institution carried on, and I 
talked about recruiting candidates for office and making sure 
those candidates get elected and to program public policy.
    In your outline of your PAC, talking about your issues 
thrust and recruiting candidates and helping to finance them 
sounds a lot like a political party. I was sitting here trying 
to go over my definition, and I said, wait a minute; there are 
several Members of Congress who were in fact realtors when they 
ran for office, and several of them have indicated to me, 
notwithstanding the fact that they were realtors, the realtors 
did not contribute to their election, but to their opponents, 
who happened to be incumbents.
    I just use that for this segue. I still believe my 
definition is valid because I haven't seen too many situations 
where the Democrats help a Republican get elected or a 
Republican helps a Democrat, or any other party structure.
    Mr. Fazio. Only indirectly.
    The Chairman. That goes back not to contempt, but ignorance 
and naivete. I have a real concern about the belief that many 
people think political parties are super-PACs or PACs are mini-
parties. I believe that neither is either.
    Mr. Stockmeyer, when you went through your analysis of what 
would happen in the system if we followed the wishes of some of 
our colleagues and did away with PACs, and you indicated there 
would be fewer dollars, there would be more time spent trying 
to raise dollars, more reliance on the wealthy, less 
accountable in terms of the structure, education would suffer 
structure, and my desire to respond to you at that time was 
only if you keep the current structure, because what you have 
done is shut down political parties which used to perform all 
of those functions. If you released political parties, it 
wouldn't necessarily produce the result that you have.
    I guess what it does is caution us that if we are going to 
make a change in one area, we had better understand it is going 
to have an influence in another.
    I will make one more statement.
    Mr. Gora, the appeal is always fundamentally exciting when 
someone tells me the First Amendment says, ``Congress shall 
make no law.'' Yes, but Justice Holmes said you can't shout 
fire in a crowded theater if there is no fire. So from that 
absolute position of the First Amendment, which is sometimes 
difficult to defend, I don't know that I absolutely support 
somebody's ability, not necessarily based upon any achievement 
that occurred in their lifetime other than an accident of 
birth, to be able to go into the political arena and blow out 
anybody else's ability to participate. There I am wrestling 
with the question of yes, but, yes but, as we move through it.
    Now, your point in Buckley, I think is more reinforced 
today about disclosure being the fundamental sunshine in the 
system, because technology allows us to make disclosure a real-
time part of 

[[Page 280]]
the campaigns more today than ever before. We just passed a bipartisan, 
with no objection, reform in the statutes to allow the FEC to 
begin electronic filing, and I think in a short time we will 
have a real time campaign participation on the question of 
disclosure.
    But notwithstanding that, I still bump up against Justice 
Holmes' argument of not being able to shout fire in a crowded 
theater when there is no fire.
    Mr. Gora. You are correct; the First Amendment has not been 
interpreted as absolutely protecting all utterances, written or 
spoken. On the other hand, where political speech is concerned, 
the Court has given the First Amendment its most stringent 
application. And so the words of the First Amendment are a 
special caution that of the various kinds of laws that threaten 
the First Amendment right of expression, of communication, the 
ones that we are to be most concerned with are those that 
emanate from Congress, and particularly those that form the 
rules of the political road.
    Mr. Stockmeyer. Mr. Thomas, if I could comment on your 
question of what happened in the 1970s and about political 
parties.
    I was around when the 1974 Act was passed, and shortly 
after it took effect found myself trying to manage the National 
Republican Congressional Committee, the campaign arm of House 
Republicans under the new law. I found at that time most 
everybody, least of all incumbents, had no idea of what was in 
that 1974 Act and were astounded when they came to us in the 
1976 election and said where is my big amount of money that I 
used to get from my campaign Committee. I am sorry; we can't 
give it to you because the law treats us as no more than a 
super-PAC. That is unacceptable I think to the two-party system 
in this country or any number of party system, for that matter.
    The party Committees are not special interests. The party 
Committees are there for a broad range of purposes. Obviously, 
I am biased on this point, but I think the whole system would 
be better off if the parties were stronger, were able to do 
more.
    I would take all their limits off, subject them to full 
disclosure, and I think the system would be a lot better off if 
we did that. I don't think that would stop PACs from trying to 
do what they can do in their little narrow corners of the world 
or broad corners, but they should be encouraged as well.
    But in many ways the parties have supplanted the law, the 
presidential campaigns are not as vigorous as they should be. 
The 1974 Act is a failure and we really ought to examine it and 
consider taking some of it off, not putting more of it on.
    Why would we take a failed law and do more of it? It is 
beyond me that we should move in the same direction that the 
1974 Act did.
    The Chairman. Would I be pushing it if I referred to an 
article in the Wall Street Journal today entitled ``The Man Who 
Ruined Politics,'' which is an article about Fred Wertheimer 
and Common Cause and their view of a destroy-the-field-to-save-
it-approach to campaign financing.
    Does anyone want to respond to that general question; 
because otherwise I would go to the PACs and say this. 
Notwithstanding the statements that you have made, one of the 
criticisms which I 

[[Page 281]]
think has a degree of concern, if it is valid, is the broader argument 
of what we have here, our diverse educational and informational 
structures that allow us to bring more people into politics and 
allow for participation in politics through pooled dollars has 
largely not been achieved. Rather, basically what we have in 
most PACs are centralized check collecting agencies that are 
primarily interested in influencing the system vis-a-vis 
assisting incumbents to remain in office.
    I put this fairly harshly, and I guess the way I would ask 
each of you to respond is by asking have you found that your 
attempts to educate and inform folk satisfied you in terms of 
fulfilling the goals that you had about getting them involved 
in the system, or has it been as frustrating as to most other 
folk trying to get your average person involved? Does the hook 
of participation either in the professional letter carriers or 
realtors and the tie to the PAC which is part of their at least 
work-a-day world--has that been a lever that you have found you 
could use to get people more interested in the system?
    Mr. Driesler. The answer is absolutely yes. Let me give you 
examples of the two gentlemen who are sitting here today.
    In your district, Mr. Thomas, we have 1,581 Realtors. We 
get 500 plus of those who donate to the PAC every year, a 31 
percent participation rate. In Mr. Fazio's district, he has 
over 5,500 Realtors in his district; 2,300 plus donate to the 
PAC, over a 43 percent participation.
    Mr. Fazio. I just came out for in-district fund-raising.
    Mr. Driesler. One of the things that we are most proud of 
is that our decision making is from the ground up. And you 
gentlemen both know because you have gone through the process, 
the national PAC trustees don't ever originate a request. They 
respond to, approve, deny, amend a request that originates in 
your home congressional districts in your home State.
    You have gone to those candidate interviews. They look at 
your voting record and they choose to support you because you 
have been right on issues that are important to those realtors 
back in those home congressional districts and home States. 
They may choose, and in many instances have chosen, that even 
if a realtor runs that they not support them, not just because 
they are a realtor, but because more fundamentally we believe 
that it is important to get realtors involved, but we think it 
is important to support those people who believe in private 
property rights, who believe in homeownership opportunities, 
who believe in the type of issues that you gentlemen espouse, 
and to make sure that people like you remain in Congress if you 
are there, and if you are not in Congress, to do everything we 
can to get you there.
    Our PAC was the fifth largest donor to challengers in open 
seats during this last election cycle. We habitually run about 
that level. We put a lot of our resources into open seats and 
into challenger seats. But yes, we do give a lot to incumbents, 
but individuals give proportionately the same amount to 
incumbents as PACs do, because you are dealing with a known 
quantity, and as one person alluded to in the earlier panel, 
you are dealing with an odds that heretofore have said 98 
percent of you get reelected. Those odds have come down 
slightly in the last two election cycles, but it is 

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still 90-plus percent, which is a pretty good bet in any horse race. 
But still, fundamentally, notwithstanding that, we look 
primarily at issues, at voting records and what the realtors 
back home tell us who they want us to support and that makes 
the determination.
    The Chairman. The point I tried to make about comparing the 
realtors to political parties was to point out that even if you 
emulate most of what a political party does, you can't do it 
because PACs are not mutually exclusive operations like 
political parties. Political parties are in fact unique 
institutions, and my definition survived even your expanded 
role for PACs.
    Mr. Driesler. And we would support expanded roles for 
political parties. We have been major donors to political 
parties in the belief that it is important to have a viable 
two-party system.
    Mr. Parmelee. Mr. Chairman, in part, the reason that PACs, 
as individual as you so well pointed out before, end up 
supporting so many incumbents is you develop a voting record. 
You develop a history with the organization of how you deal 
with that organization, and therefore the organizations tend to 
go more towards incumbents.
    But in open seats, we encourage our State leadership to 
interview the candidates and to actually get involved, give 
them a questionnaire and see where they stand on issues that 
are vital to us. And we also feel that those people who do give 
money to PACs really become stakeholders and really do care 
about voting, frankly, more than our other members do.
    Mr. Driesler. Let me add, we have over 200,000 of our 
members who have at some time given to the PAC. When we have an 
issue before Congress, we will typically send out a call to 
action. No doubt you have been recipients of some of those 
calls and letters.
    We have tracked the amount, the percentage response from 
those who have given to the PAC versus those who have not, and 
it is like three and four times the level of people who are 
willing to pick up the phone or get out their pen and pencil 
and write a Member of Congress or call them or send them a 
telegram from people who have that stake hold because they have 
given to the PAC. We think that is an important correlation.
    Now, it is what comes first; the chicken or the egg, and 
that is hard to answer, but there is a clear correlation with 
their willingness to participate in other levels, including 
voting, including working in the opportunity races, 
volunteering their time, to the fact that they have given a 
dollar or $2.00 or $5.00 or whatever to the PAC versus that 
person who has not given a nickel.
    Mr. Stockmeyer. Mr. Chairman, let me add on this incumbency 
point, the seeming bias of PACs toward incumbents, I think it 
is sort of a bum rap because almost every form of political 
giving tends to favor incumbents. But one chart you might 
consider having for another hearing is to measure the years 
where there is political volatility and opportunity and you 
will find then the PAC percentages that go to nonincumbents 
increases.
    PACs are very heavily involved where there are marginal 
races. Some PACs are on one side and some are on the other. But 
they are in there. But that shouldn't--it is difficult for us 
to accept the idea that people would challenge our right to 
come together, but it is even more abhorrent I think 
constitutionally that anyone would 

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question how these people decided to express themselves politically 
through their fund-raising. I think that that is a fundamental 
point that we forget. If a PAC organizes and decides to give 
all its money to incumbents, so what? That is their right.
    The Chairman. Mr. Fazio.
    Mr. Fazio. I just wanted to comment, I am aware that the 
two PACs at the table do give to parties. Many don't and I 
think that is up to each individual PAC to determine. But in 
the last Congress one of the issues that slowed down the 
ultimate resolution of the conference on campaign finance 
reform was with the elimination of soft money for the two 
parties, certainly the national Committees and the House 
Committees.
    It was the suggestion of some, including this Member, that 
we be able to take more money from PACs to make up for--only a 
small amount, I am sure, of the shortfall that would have 
occurred with those party Committees. Even though we had only 
suggested a modest increase in what PACs could give, and even 
though those PACs would have been vastly reduced in their 
ability to give to Members given the other aspects of the bill 
that reduced the total amount of PACs that Members could take 
dollars from, we were unable to get support from any of the 
outside support groups for campaign finance reform for the 
concept of giving more money to the parties. So they have not 
only a concern about PACs generically, they have a concern 
about giving more money from PACs to the parties, which is I 
think one of the reasons why every time we attempt to legislate 
in this area we end up weakening the parties even more. I would 
have hoped for more flexibility, but it didn't exist in the 
last cycle.
    Mr. Gora. If I might amplify on that point, one of the 
points we have always tried to make as both a political science 
and a constitutional law point was that if you restrict 
people's ability to use their resources to communicate their 
message in one way, they will try to do it in another way, and 
that is perfectly understandable. But then you will have as 
skewed and imbalanced a system as you thought you were trying 
to create. That is the law of unintended consequences that we 
are talking about. That is why good political science and good 
constitutional law come together in a way that says the right 
of candidates and PACs and issue groups and lobby groups and 
media groups are all the same right under the first amendment, 
to speak, to communicate, to use their resources essentially 
without limitation.
    The Chairman. One comment on that, and I would like you to 
react to it. It is in part taking off from what Mr. Fazio has 
said. I think there is some concern, and I would like some 
constitutional reaction or rational political reaction to the 
argument about the movement of money in politics horizontally 
or vertically. One way money moves is vertically, the idea that 
if an individual contributes to a PAC, then the PAC is supposed 
to contribute to a candidate running for office. Also, if an 
individual contributes to a party, then the party can 
contribute to the candidates of that party, this is vertical 
movement of money.
    There is a concern about horizontal movement of money from 
individuals to PACs and from PACs to parties, and then from 
parties to candidates, or from individuals or PACs to other 
candidates who 

[[Page 284]]
are usually incumbents who then have leadership PACs of their own which 
then contribute to other candidates running for office. There 
is some concern that the horizontal movement of money within 
the system short circuits both individuals, PACs and political 
parties in the system.
    Any reaction to that? Some people watching on television 
might want to know what in the world is he talking about? I 
think you folks do, and as we talk about it more, then people 
might understand.
    Mr. Driesler. The National Association of Realtors a number 
of years ago--we have been around this racetrack, too, on 
campaign finance reform--are on record as having favored and 
called for the abolition of leadership PACs. Our national PAC 
trustees a couple of years ago said, let's put our money where 
our mouth is, and we have voluntarily suspended giving money to 
leadership PACs for the very reasons you just so well 
articulated.
    The political party issue has been a little bit difficult 
for us; I will be honest with you. There are many within our 
association who feel that if we give to a party they may in 
fact give then to candidates that our Realtors wouldn't 
support, in fact may be opposing, and that that is somehow a 
not wise use of the money. On the other hand, there are those 
who feel that parties are important, that they serve a vital 
interest of recruiting candidates, of helping get the message 
out, getting people involved, so we have been somewhat mixed.
    We have reduced our level of party giving but we have not 
eliminated it completely I guess in an effort to try to strike 
a balance between those who feel we should be giving all our 
money either to candidates or to issues or to direct 
involvement as opposed to the horizontal transfer versus fill 
some legitimate and valid need to support the major political 
parties.
    The Chairman. Let me say that if you were looking at it in 
the negative, the argument would be that people wouldn't want 
to move money horizontally because they would lose the 
influence, and the whole purpose of giving money is to 
influence, and why would you give money to somebody else to let 
them influence when it is your money.
    I think the positive and legitimate way is accountability, 
the concern about being able to disclose and have disclosure 
means something in terms of where the money originated and 
where it went. I do believe and I do agree with the gentleman 
from California that when individuals or PACs contribute to 
political parties there is a way to structure for 
accountability and for disclosure that would be different from 
the horizontal movement of money in the leadership PACs or 
other noninstitutional structured giving.
    Thank you very much for your participation. We may be back 
to you; obviously we will for ideas, and this may lead to 
additional hearings and we very much appreciate your input.
    We have just heard from representatives of PACs and I 
thought it appropriate that in a discussion about PACs that 
although it is always valuable to hear from people who 
represent PACs, that we might ought to also have a panel of 
people who are members of PACs and who are themselves 
participants in PACs. So the third panel will consist of Kevin 
Kincaid, who is a fire fighter from Fair

[[Page 285]]
fax County, Virginia, and by virtue of his occupation and his choice, a 
member of the International Association of Fire Fighters, and I 
assume their PAC.
    Adrienne Baylin is an employee of Baltimore Gas & Electric 
Co. John Kavanaugh is a member of the National Restaurant 
Association; and Nancy Dietz is a teacher with the Frederic 
County School System and a member of the National Educational 
Association PAC.
    Let's begin with Adrienne Baylin. I will tell all of you, 
if you have written testimony, it will be made a part of the 
record. You have five minutes to inform the Committee in any 
way you see fit about political action Committees, your role 
and participation in them.




   STATEMENTS OF ADRIENNE BAYLIN, EMPLOYEE, BALTIMORE GAS & 
ELECTRIC CO.; JOHN KAVANAUGH, KAVANAUGH'S ESQUIRE CLUB, MEMBER, 
    NATIONAL RESTAURANT ASSOCIATION; NANCY DIETZ, TEACHER, 
     FREDERICK COUNTY SCHOOL SYSTEM, NATIONAL EDUCATIONAL 
                        ASSOCIATION PAC




                  STATEMENT OF ADRIENNE BAYLIN

    Ms. Baylin. Chairman Thomas, Ranking Member Fazio, 
respected Committee members, I am Adrienne Baylin. I am an 
employee of Baltimore Gas & Electric Company. I come before you 
today as a supporter of political action Committees.
    PACs are important to me as an individual. Our PAC has 
enabled me to make my contributions count. By recognizing 
common goals and interests, BGE employees and retirees have 
banded together to voice our views to legislators, both to our 
Maryland delegation and on a national scale.
    As an individual, I would not have supported candidates 
throughout the United States. Small political contributions by 
an individual seem insignificant compared to the cost of a 
political campaign. By pooling resources, BGE PAC gives me a 
voice while supporting the political process.
    Contributing to a PAC is a very personal issue. The welfare 
of business itself is important to me. A less than favorable 
business climate jeopardizes my livelihood. In the current 
economic climate of cost cutting and downsizing, more and more 
businesses disappear. I want our PAC to support business 
interests to broaden Maryland's economic base.
    I have come to look forward to BGE PAC newsletters. Through 
publications and discussions, PACs have a definite impact on 
neutralizing voter apathy and informing each member. PAC 
members tend to get involved. This results in better 
government.
    Not all PAC issues conform to party values. My ideals tend 
to cross party lines. PACs are nonpartisan entities. They 
allocate funds based on voting record and an individual's view 
of issues. I feel this gives me the ability to support the best 
choice for political office. As a PAC, we have argued support 
for a candidate that expressed our collective viewpoint. PACs 
support the common goals, setting aside the interests of the 
individuals for the benefit of the many, and that benefits all.

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    Nothing in this world is perfect, but by keeping PACs 
viable in a small way we try to achieve perfection. I implore 
you to leave me my voice.
    Thank you.
    The Chairman. Thank you very much.
    [The statement of Ms. Baylin follows:]

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    The Chairman. Mr. Kavanaugh, I neglected to State that the 
reason you are a member of the association is, I presume, 
because you own Kavanaugh's Esquire Club, which is located 
where?
    Mr. Kavanaugh. In Madison, Wisconsin.
    The Chairman. If you are going to come here, you might as 
well get a plug out of it. You just got the cheapest national 
advertising rate in the Nation.
    Mr. Kavanaugh. I appreciate it.




                  STATEMENT OF JOHN KAVANAUGH

    Mr. Kavanaugh. Thank you, Chairman and members of the 
Committee. Thank you for inviting me here today.
    I am John Kavanaugh and I am testifying on behalf of the 
National Restaurant Association, the leading organization for 
the U.S. food service industry. Our industry is made up of 
nearly 740,000 food service units throughout the United States.
    I own Kavanaugh's Esquire Club in Madison, Wisconsin. We 
have been in business for nearly 50 years. I grew up working in 
the restaurant for my father. That started in 1947 and I bought 
the restaurant from him in 1981. My son, now 23, is now working 
for me, and I hope some day that he will own the restaurant, 
too.
    Kavanaugh's Esquire Club sometimes is asked questions, what 
kind of business we are, because some people think that we are 
maybe a private club. The Kavanaugh Esquire is a steak and 
seafood restaurant that serves lunch and dinner, seven days a 
week. Our customers tend to be regulars, everyone from local 
residents to a local Oscar Mayer meat packing plant, as well as 
many politicians, State and local, that come to the restaurant 
to meet and eat.
    When the phrase ``campaign finance'' hits the headlines, 
people think that political corruption, high-stake campaign 
contributions, and big ticket fund-raisers are appropriate. 
They don't think of people like me. I am here today because I 
would like to put another face on it, one that I think is truer 
to life even if it is not good for the headlines.
    I am a regular contributor to the National Restaurant 
Association Political Action Committee and for the past two 
years I have served as a PAC trustee, which means I have gotten 
more involved in both fund-raising and deciding where to spend 
our money. It has given me a real feel for the way a good PAC 
does business and I am proud that we do it that way.
    Our PAC is a significant PAC. Last election cycle, 
restaurant owners contributed over $700,000 to the 
association's PAC. Nearly 60 percent of them contributed less 
than a hundred dollars. These are not shadowy figures with deep 
pockets, but they are people like me who have literally 
invested their lives work in their restaurant and who want to 
come together as an industry to impact on national politics.
    We can be as different from each other as the Esquire Club 
is from McDonalds, but we share a lot of same concerns. We 
believe in a strong free enterprise system and getting rid of 
regulations that don't make sense, and keeping our taxes low so 
that our capital can go back into our businesses. That is why 
this PAC spends its money extremely diligently. Put simply, we 
support our supporters and we oppose those who oppose us.

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    Based on recommendations from local restaurateurs, we scour 
the country early and often for promising challengers, both 
incumbents and nonincumbents. Last year, 45 percent of our 
contributions went to challengers and not incumbents. That is a 
higher proportion than the average PAC. In fact, it is a higher 
proportion than the general public contracts to nonincumbents. 
We did that because we were dead serious about standing up for 
an industry that accounts for 9 million jobs and $290 billion 
in annual sales.
    I tell you all this because we have nothing to hide at our 
PAC. It is a clean way of doing business, and like I said, I am 
proud of it. I don't kid myself that a donation to my PAC is 
not going to make or break an election. It makes me part of the 
democratic process, so it is the easiest way for me to 
participate in the process on behalf of my industry that is my 
livelihood.
    I am at my restaurant six and a half days a week, usually 
working 12-hour days. My main goal is keeping my customers 
happy and keeping them coming back to see me. But because I 
know Congress' decisions in Washington affect the way I operate 
my restaurant in Madison, Wisconsin, I want to be involved at 
the national level, too, and the PAC gives me a way to do this.
    People say that PACs cut the average citizen out of the 
electoral process. I am here to say the exact opposite. 
Literally thousands of restaurant operators have been brought 
into the electoral process by the National Restaurant 
Association Political Action Committee. As you know, the names 
of anyone contributing over $200 are available as a matter of 
public record. We are happy to provide the names of all others, 
too. I can hardly think of a more open and responsible way to 
encourage participation in the democratic process.
    The Chairman. Thank you.
    [The statement of Mr. Kavanaugh follows:]

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    The Chairman. Ms. Dietz, representing the NEA. I assume you 
are a teacher?
    Ms. Dietz. Yes.
    The Chairman. What do you teach?
    Ms. Dietz. I teach math.
    The Chairman. What level?
    Ms. Dietz. Seventh grade. Will there be a quiz?
    The Chairman. It was less the subject and more the age 
level. The combination of the two must keep you busy. Thank 
you.




                    STATEMENT OF NANCY DIETZ

    Ms. Dietz. Good afternoon. I am Nancy Dietz, a seventh 
grade math teacher at West Frederick Middle School in 
Frederick, Maryland. I have come to speak to you today because 
I believe that you should maintain my right to participate in 
the political action Committee of the National Education 
Association.
    As a teacher, my influence is not great. I do not often get 
the opportunity to speak with Members of Congress. But it is 
important that you hear my message. That message is that you 
must see to it that every child in the United States has an 
opportunity to learn. That opportunity often depends on you. 
You make decisions that affect schools and teachers and 
children, and your decisions are a result of a political 
process that affects us all.
    How can I take part in that process? How can I join the 
debate? You do not often hear my voice, but you hear me because 
I can join with others like me to raise a collective voice in 
support of education. You hear the message of the NEA.
    In my community of Frederick, Maryland, during the last 
election over $40,000 was raised in six weeks in support of 
candidates sympathetic to the interests of builders and other 
local businesses. It took the teachers of Frederick four years 
to raise $7,000 to support education. The teachers had $7,000 
to carry the message of support for public education to the 
voters.
    Guess who won? At the national level, it is those big 
corporations with great big blue chip names who raise money to 
pay for advertisements and mailings. They have money, they have 
a voice, and they are heard. Teachers don't have that kind of 
money. Teachers don't have that kind of money, but isn't it 
important that we have a voice? Isn't it only fair that my 
interests be represented in the political process along with 
those of large corporations? Through my individual 
contributions to my local, State, and national PACs, I have 
influence. I am included. Please protect my right to be heard.
    Thank you very much for the opportunity to speak to you.
    [The statement of Ms. Dietz follows:]

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    The Chairman. Let me say briefly, I think it would be an 
amendment that you would accept to your testimony that every 
time you said ``corporation,'' you would say ``individuals in a 
corporation,'' since clearly it is illegal for corporations to 
participate in Federal elections. It was the individuals in the 
corporations.
    Ms. Dietz. That was my intent.
    The Chairman. Right.
    Mr. Kincaid, how long have you been a firefighter?
    Mr. Kincaid. Almost 17 years.
    The Chairman. Thank you. Please proceed.




                   STATEMENT OF KEVIN KINCAID

    Mr. Kincaid. Mr. Chairman, Congressman Fazio, my name is 
Kevin Kincaid, and I have been an active fire fighter/paramedic 
for almost 17 years. I am currently a captain with the Fairfax 
County Fire and Rescue Department. I appear before you today to 
explain why I participate in FIREPAC, the Fire Fighters' 
Political Action Committee, and to tell you why I believe that 
PACs are beneficial to the Nation's emergency response 
personnel.
    The decisions made by the United States Congress have an 
enormous impact on my life and the lives of all fire fighters. 
Whether the issue is assuring that the protective gear I wear 
into a fire meets basic safety requirements or assuring that my 
pension is secure, the votes cast by Members of Congress 
directly impact my ability to do my job and protect the public 
safety.
    I believe that I have a right to support candidates for 
office who support fire fighters. Contributing to the fire 
fighters PAC is a way that I do that. All money raised by our 
PAC comes from voluntary contributions made by the Nation's 
professional fire fighters. The typical donation is around $25. 
I view political action Committees as a way for the average 
American to participate in our Nation's political process. The 
unfortunate reality is that wealthy people always have and 
always will be able to influence elections with their money.
    PACs are the mechanism for fire fighters and other middle-
income Americans to attempt to level the playing field.
    Mr. Chairman, I don't know too many fire fighters who are 
in a position to sit down and write a check for $1,000. In 
fact, I don't know any fire fighters who can do that. But by 
pooling the small contributions of fire fighters across the 
country, the fire fighters' PAC is able to assist candidates 
who are willing to stand up for us and we were able to offset 
some of the financial advantages of candidates backed by those 
who oppose us.
    It is a simple question of fairness. Upper-income people 
can raise $5,000 for a candidate who represents their interests 
by asking five friends to donate $1,000 each, but to raise 
$5,000 for a candidate who represents our interests, we must 
ask at least 200 fire fighters to donate $25 each to our PAC.
    I firmly believe that banning PACs would unable the 
wealthiest Americans and large corporations to dominate the 
political process. Candidates who stand up for working 
Americans would simply not be able to compete. In short, PACs 
are the way that the voices of typical Americans get heard by 
our Nation's policymakers.

[[Page 301]]

    Large donations--whether from an individual or a PAC--come 
with an unstated message attached. When the fire fighters' PAC 
contributes to a candidate, it is understood that the support 
is being provided because the candidate supports fire fighter 
issues. I want my donations to carry a message and the fire 
fighters' PAC makes that possible.
    In recent years there has been a great deal of rhetoric 
about the detriments of PACs on our political system. I hear 
these comments on radio and read about them in newspaper 
columns, and I even hear them echoed around the fire stations. 
I would like to share my thoughts with you on why I find these 
arguments misguided.
    First, some people argue that PAC contributions are little 
more than bribes. Members of Congress, the argument goes, vote 
for legislation contrary to the public interest simply because 
their vote will be rewarded with a campaign contribution. Aside 
from being insulting to Members of Congress, this argument 
misunderstands the relationship between voting and PAC 
donations.
    Members of Congress do not support fire fighter issues 
because they receive support from the fire fighters PAC. 
Members of Congress receive support from us because they 
support fire fighter issues.
    It will come as no surprise to the members of this 
Committee that the fire fighters' PAC has been a strong 
supporter of Representative Curt Weldon, Mr. Fire Service in 
the United States Congress, but our support did not influence 
his views of fire fighters. Curt Weldon was the champion of 
fire fighters long before coming to Congress. The only thing 
that the fire fighters' PAC contributions did was help this 
champion of fire fighters win a seat in Congress.
    A second argument used against PACs is that they comprise 
some sort of secret cabal, a mysterious group of people behind 
closed doors to manipulate the political process for their own 
selfish needs.
    In reality, PACs are the most open and heavily regulated 
entities in existence. Every PAC donation expenditure is 
reported to the Federal Election Commission and available for 
public review, and the methods PACs use to raise money are 
restricted by Federal law and closely regulated.
    I find it significant that despite the negative perception 
of PACs, campaign finance scandals in recent years almost never 
involve PACs. The Keating Five controversy, for example, dealt 
with contributions from individuals. The truth is, PACs are the 
cleanest, most accountable, and most open aspects of campaign 
finance ever developed, and banning PACs would surely make 
campaign finance less ethical than it is today.
    Finally, the argument has been made that PACs are 
detrimental because they advance special interests. Mr. 
Chairman, allow me to tell you a few things about my job.
    Fire fighting is the Nation's most dangerous profession. 
Every day fire fighters put their lives on the line to protect 
the lives and property of our fellow Americans. We are a very 
special group of people, and we have legitimate legislative 
interests. If that makes me a special interest, so be it.

[[Page 302]]

    I am glad that there is a PAC out there that supports me 
and one that I can support with my voluntary contributions.
    I don't doubt that there are problems with the way that 
campaigns in this country are financed. It seems to me that too 
much money is spent campaigning, and there may be a way to 
reduce the overall influence of money on the political process. 
But whatever problems exist, PACs are not one of them.
    As this Committee considers this issue, I leave you with a 
plea on behalf of myself and my fellow firefighters. Please 
don't take away our ability to participate in the political 
process, and please don't destroy my political action 
Committee.
    Thank you.
    The Chairman. Thank you.
    [The statement of Mr. Kincaid follows:]

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    The Chairman. All of you expressed the desire and 
involvement in pooling your funds for some kind of a combined 
impact through your PAC. Can you give me instances, either 
because of your ability to contribute some time or your 
inclination to be involved in any kind of educational or 
informational activity surrounding your PAC, or have you only 
been able to limit your participation in terms of dollars and 
cents in the PAC?
    Ms. Dietz. Educating the public in terms of issues?
    The Chairman. If you have a PAC, and you are part of that 
PAC, your testimony primarily focused on the contributions that 
are important to you through that PAC.
    Have any of you been able to contribute time or been 
involved in any kind of educational or informational activity 
focused by your PAC or initiated by your PAC to assist in more 
than just putting dollars into the political system?
    Ms. Dietz. On a local level, during the last election, I 
organized the volunteers through my PAC to drop literature, to 
make phone calls. We developed a list of candidates to deliver 
at polls that supported educational issues. Is that what you 
mean?
    The Chairman. Did you get people involved that hadn't been 
involved in the political process before?
    Ms. Dietz. Yes. Teachers, you mean? Yes.
    The Chairman. Were they contributors to the PAC prior to 
being involved?
    Ms. Dietz. I can't answer that for sure. It is my sense 
that not all of them were because our contributions were lower 
the year before. We had a lot more participation--mostly 
because of the leadership, the people who were directing what 
was going on, and because we had the PAC drive. We also had a 
lot of other activities----
    The Chairman. So it is your impression after the 
participation that there is a higher participation in political 
giving through the PAC than before?
    Ms. Dietz. I guess the PAC drive is one way we go to our 
members and say, you can contribute this way. Some of them 
choose not to. Some contribute time as a result of that 
request. Some say, I would rather not give money, but I would 
make phone calls. So yes, it does stimulate that kind of 
activity, and that is what we look for.
    Mr. Kincaid. The fire fighters make a great deal of effort 
on a local and a national level to educate our members on 
political education. We hold legislative conferences in 
different arenas to bring new members in and educate them in 
the political process and the fire fighters' needs.
    Mr. Kavanaugh. In Wisconsin, I belong to the Wisconsin 
Restaurant Association, and in a lot of States, the National 
Restaurant Association is taking affiliations of the State 
associations to become one unit. Wisconsin is one of the last 
States to join as a member of both automatically. But in 
Wisconsin at all our monthly meetings, and we have 17 chapters 
around the State, we have political forums and we bring in 
candidates, whether national or local candidates, to bring up 
issues and we do mailings out of political questions that bring 
all the members, which in Wisconsin is 6,000 members to the 
State association, so that they are aware of all the political 
things that are happening. So they are becoming more politi

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cally active and that is what you want. You don't want just their 
money. You want their vote and their support.
    Ms. Baylin. I think any political action Committee that 
puts out any literature automatically starts discussions 
amongst coworkers, friends, family, because there are issues 
that come out, interesting articles that come up, things that 
warrant discussion, and I think this tends to get people more 
involved and starts to spread involvement at a grass-roots 
level.
    The Chairman. Mr. Fazio.
    Mr. Fazio. Mr. Chairman, if you would permit me, given the 
fact that we have a vote on, I have three questions. I will 
read them slowly. I would be interested in your responding to 
any of them that move you.
    First of all, how do you feel about the process of 
selecting the candidates you contribute to? Do you feel you are 
involved? Do you feel you have input? What do you do to solicit 
the grass-roots of your PAC, in other words, to be involved in 
the process of actually deciding who you are going to support? 
How do you sell your, and let's stipulate to this, increasingly 
cynical colleagues about the value of participating when in 
fact with corporate downsizing and everything else that is 
happening in society, teachers being laid off, firemen being 
laid off, restaurants going belly up, people are increasingly 
reluctant to give, given the impression that they have little 
hope that it will mean anything?
    And lastly, how do you feel about a law that would limit 
your giving simply to your Congressman, one Congressman, not 
your State delegation, not anyone beyond the boundaries of your 
State? How do you feel personally, given your current political 
participation, about a law that would restrict your reach to 
your own district or your State in terms of your political 
participation?
    I would be happy to hear from any of you on one or more 
subjects.
    Ms. Baylin. I am very concerned about the last question, 
restricting your contribution to an individual that was within 
your district or State. It is just the fact that we are so 
diverse as a country. Things that happen in California affect 
Maryland. Things that happen in the north of the country affect 
the south of the country. I don't think we can limit ourselves 
any longer to that narrow field. I think we have to realize 
that what happens in Congress, what happens in the United 
States affects all of us. I think we have to be national in 
scope.
    Mr. Fazio. Anyone else?
    Mr. Kavanaugh. One of the things, the process where we look 
at candidates, the candidates are interviewed by the PAC and we 
keep a real detailed voting record on how they vote on our 
issues, and at the PAC trustee Committee meetings each 
candidate is discussed on his voting record, and the candidates 
are, if there is a political contribution that is considered 
for them, people in their district certainly have the major 
input on whether they are going to receive funding or not. It 
is not just at a national level. The level of the local person 
is really important on whether they should be considered for 
funding. So I think that is important.
    Ms. Dietz. And on the issue of the process, in my county 
the political action interview team interviews all the 
candidates and then 

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makes a recommendation, and the positions of each of the candidates are 
printed and disseminated throughout the membership, and then 
there is an every member vote. It is a little different 
depending on which level of race it concerns. But every member 
is given the information on all the candidates, and often that 
is the only time that they get information on all the 
candidates in one publication.
    Mr. Fazio. You know your local candidates better, perhaps, 
but do you feel you have had some say in the selection of State 
and Federal candidates through people who represent you?
    Ms. Dietz. Well, I think it is natural for you to be more 
informed the closer it is to home, and I feel that that is 
true, but I have also been able to enter into the debate on 
State candidates, and we send a representative to the Committee 
that endorses or makes a recommendation on the congressional 
race as well. Then that comes back to the county for 
endorsement or not. So that it is in the districts across 
different counties.
    Mr. Fazio. So it is a shared responsibility?
    Ms. Dietz. Yes. On the issue of how do you get people to 
buy into that process, ask them. I find a lot of hope out 
there. I don't think that people are hopeless and depressed 
about the system. I ask them, would you like to donate to the 
PAC, and most say yes. Depending on how much homework we have 
done and gotten a lot of information out on how the political 
process is affecting them, they are willing to donate. It is 
not difficult to get people to buy in. You just have to tell 
them how and ask them.
    Mr. Kincaid. I think the fire fighters, we have seen over 
time that collectively we are much stronger and our voice is 
much louder and we can get our issues heard. Our members see 
that very clearly now.
    We have a process also where we screen all our candidates 
locally on the different levels, and everybody has an 
opportunity to participate in that, everybody that would like 
to. They are all screened on fire fighter issues. We steer 
clear of issues that are not fire fighter issues. It is kept to 
be a very open process for us.
    As far as supporting candidates outside of our own 
district, fire fighter issues are nationwide, and our issues, 
as long as our issues are nationwide and as long as our issues 
affect fire fighters all over, we would always want the 
opportunity to assist anywhere where we can have somebody 
assist fire fighter issues.
    Mr. Fazio. Thank you, Mr. Chairman.
    The Chairman. A follow-on, have you ever been involved in 
an attempt to determine which candidate should receive a 
contribution from your political action Committee? Have you 
ever been involved in the process and the candidate that you 
wanted to receive the money didn't? What was your reaction to 
that?
    Ms. Dietz. I was disappointed. But it happens. People are 
elected that I don't choose. I lose elections. I don't always 
get my way, but I feel if I have been able to come to the table 
and say my piece and had an opportunity to be included in the 
process, I am comfortable with that decision if I feel that it 
is broad based and based on the wishes of the association.
    The Chairman. So you are comfortable if the decision is 
from the grass-roots up in a kind of triangular structure.

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    What would your reaction be if you thought it was a 
decision from the top notwithstanding the structure of the PAC; 
that is, if a lot of people wanted them but the leadership 
didn't, and it was always a decision of people at the top? 
Would you tend to participate in that kind of a structure? In 
other words, we want your money but not your opinion.
    Ms. Dietz. That is not my experience. I probably wouldn't 
participate in that, but that is not my experience.
    The Chairman. My assumption then is, that since you are all 
involved in participating, giving money and your time, that you 
believe that what you are involved in is a useful process.
    Ms. Dietz. Definitely.
    The Chairman. I want to thank you on behalf of the 
Committee for giving up time out of your busy days to help us 
trying to shape perhaps new rules and regulations for 
candidates running for office. Thank you very much. The 
Committee stands adjourned.

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