[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



                        CAMPAIGN FINANCE REFORM

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

                                HEARING

                               before the

                   COMMITTEE ON HOUSE ADMINISTRATION
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

              HEARING HELD IN WASHINGTON, DC, MAY 1, 2002

                               __________

      Printed for the use of the Committee on House Administration




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                            WASHINGTON : 2003
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                   COMMITTEE ON HOUSE ADMINISTRATION

                           BOB NEY, Chairman
VERNON J. EHLERS, Michigan           STENY H. HOYER, Maryland,
JOHN L. MICA, Florida                  Ranking Minority Member
JOHN LINDER, Georgia                 CHAKA FATTAH, Pennsylvania
JOHN T. DOOLITTLE, California        JIM DAVIS, Florida
THOMAS M. REYNOLDS, New York

                           Professional Staff

                     Paul Vinovich, Staff Director
                  Bill Cable, Minority Staff Director

 
                        CAMPAIGN FINANCE REFORM

                              ----------                              


                          TUESDAY, MAY 1, 2002

                          House of Representatives,
                         Committee on House Administration,
                                                    Washington, DC.
    The committee met, pursuant to call, at 3:00 p.m., in Room 
1310, Longworth House Office Building, Hon. Robert W. Ney 
(chairman of the committee) presiding.
    Present: Representatives Ney, Ehlers, Linder, Hoyer, 
Fattah, and Davis.
    Staff present: Roman Buhler, Counsel; Paul Vinovich, 
Counsel; Jeff Janas, Professional Staff; Luke Nichter, Staff 
Assistant; Sara Salupo, Staff Assistant; Bob Bean, Minority 
Staff Director, Keith Abouchar, Minority Professional Staff; 
Matt Pinkus, Minority Professional Staff; and Cynthia Patton, 
Minority Professional Staff.
    The Chairman. The House Administration Committee will come 
to order. And I just wanted to note before we start with the 
agenda, to note that today's hearing is being broadcast on the 
Internet and Intranet. The internal and external address can be 
found at www.house.gov/cha.webcast.html. We welcome you to 
visit the site during the proceedings.
    Also, an overflow room is available next door in the 
committee conference room, Room 1309. The audio Webcast of 
today's proceedings can be heard there. I would also, please 
note, put your cell phones and pagers on silent so we won't 
have interruptions with the committee panels. I just have a 
brief opening statement because I don't want to take much time.
    The House Administration Committee is meeting today for the 
second in a series of hearings on the issue of campaign finance 
reform. I want to welcome our distinguished guests here today: 
Majority Whip Tom DeLay, Minority Leader Richard Gephardt. 
Minority Leader Gephardt has been seated, and due to the tight 
scheduling restraints of all of our witnesses today, we want to 
allow him to testify as soon as possible. However, I will make 
a brief opening statement.
    Campaign finance reform is an issue of great importance to 
Congress and the American people. We all know that. And I look 
forward to the following discussion. Regulation of political 
speech in America is not a subject to be taken lightly. This is 
no longer a merely intellectual exercise; as some have phrased 
it, quote, we are now shooting with real bullets. With the 
Senate having passed a bill, the likelihood of our passing 
something into law has greatly increased. Therefore, we need to 
be thorough in our process but also expeditious.
    This committee and the House--and I have said this many 
times--do not serve as a mere rubber stamp for Senate action. 
We have an important role to play in the process and I intend 
to make sure we fulfill that role completely. The reason I say 
that is I anticipate this committee will be able to, sometime 
in the latter part of June, produce a product. But we do have 
42 Members of the House on both sides of the aisle who have 
introduced bills, and we do need, I think, to give them some 
type of say in this system for their ideas.
    The history of our Nation is the history of people's 
struggle for freedom and the right to be heard. Patrick Henry's 
famous speech, ``Give me liberty or give me death.'' expressed 
the spirit of our forefathers who literally risked their lives 
for the freedom to criticize the government. American veterans 
who fought and often died to preserve liberty sacrificed so we 
might enjoy the freedoms we enjoy today. The freedom Americans 
have enjoyed to speak out against taxation without 
representation, against slavery, against economic injustice, 
racial discrimination and government corruption is part of what 
makes our Nation an inspiration to the rest of the world. It is 
one reason we so proudly call ourselves Americans.
    For a Democratic society such as ours to survive and 
prosper, citizens must be politically informed, engaged and 
active. By joining together, individuals can raise their 
collective voice and influence. Without the freedom to gather 
and speak out in such groups, there will be little chance for 
an average citizen to be heard in our country. Unions, 
businesses, political parties and other groups help to make the 
voices of our average citizens heard. When we pass laws 
regulating what citizens can do or say as members of political 
parties, either side of the aisle, labor unions, business 
enterprises or any group, we are not just regulating them we 
are regulating ourselves and we need to be aware of that.
    The Chairman. With that I turn to Mr. Hoyer.
    Mr. Hoyer. Thank you very much, Mr. Chairman. I want to 
welcome our distinguished witnesses and we look forward to 
hearing them.
    Mr. Chairman, I want to applaud you for having this 
hearing. While it could have been held sooner, obviously we 
were waiting on the Senate to see what they were going to do, 
and I applaud you for having this hearing as well as the last 
hearings on election reform, both critical issues confronting 
this committee.
    I will keep my opening remarks brief because I want to hear 
from our witnesses, obviously, and I believe the House of 
Representatives must stop talking about campaign reform and 
take up Meehan-Shays or the very similar McCain-Feingold by 
Memorial Day. To that end, I urge you, Mr. Chairman, to make it 
the committee's goal to report our legislation embodied in the 
principles of Shays-Meehan and McCain-Feingold in time for a 
final vote by Memorial Day.
    Let's be clear. The longer the House takes to pass the kind 
of reform for which Representatives Meehan and Shays and 
Senators Feingold and McCain have tirelessly fought, the less 
time Congress will have to deliver to President Bush's desk the 
kind of reform that I think Americans want.
    Opponents will insist that Congress should not act on 
reform of any kind until it has carefully studied all the 
issues and the opinions. Very frankly, Mr. Chairman, we passed 
a $1.6 trillion package of tax cuts in the first instance, an 
almost trillion dollar income tax cut without a hearing--not a 
one--and we have had numerous hearings on this bill and we 
ought to know where we are on this bill.
    On September 14, 1999, the House adopted Shays-Meehan by a 
resounding 252 to 164. Only a year before, August 6, 1998, 
Shays-Meehan passed the House by an identical 252 to 179, so 
actually our percentage got better as the year passed. Of 
course, only last month the United States Senate passed the 
McCain-Feingold 59 to 41.
    The substance of Shays-Meehan has not changed in that time, 
and the differences between the two measures are not so vast 
that they cannot be closed in the time between Memorial Day and 
the August recess.
    The problems that Shays-Meehan and McCain-Feingold have 
addressed have changed, however, and they have changed for the 
worse. Last November's election revealed a sharp and disturbing 
rise in the unregulated issue adds by third-party groups, which 
most of us would agree are essentially campaign adds; a 
doubling of soft money contributions to political parties 
compared to the 1996 elections; and one of the lowest voter 
turnouts in a Presidential election in more than 50 years, due 
in large part perhaps to the public's growing cynicism about 
the influence of money in our political system.
    Speaker Hastert has indicated he might allow a vote this 
summer, after hearings and committee action. But since the 
House has already acted on reform in the past, it seems to me 
there is little reason to wait that long. A bill should be 
brought up to the floor during this month so the final passage 
does not get caught up in the budget battles that could consume 
Congress in the fall.
    Mr. Chairman, I would hope that we could pass Shays-Meehan 
or McCain-Feingold before the Memorial Day recess and report it 
to the House, with or without recommendations, by that time. 
And again I thank you for having this early hearing. I think 
that will facilitate that objective. Thank you, Mr. Chairman.
    The Chairman. We will start with our first panel, and we 
have the Honorable Richard Gephardt, House Minority Leader.
    Welcome.

  STATEMENT OF THE HON. RICHARD GEPHARDT, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MISSOURI

    Mr. Gephardt. Thank you, Mr. Chairman, members of 
committee. I am pleased to have this opportunity to be here and 
I commend you for having these hearings.
    Mr. Chairman and Ranking Member Hoyer, members of the 
committee, when I learned of the committee's plans to hold this 
hearing, it gave me a lot of hope that we were finally moving 
toward a conclusion in the long, hard effort to get campaign 
finance reform. I am heartened, Mr. Chairman, that you have 
begun action on two important issues that many of us in the 
Congress feel deeply about and that we believe should have 
swift legislative action: election reform, which you held 
hearings on last week, and I know and hope you will have 
further hearings on campaign reform which we are discussing 
here today.
    This is the first effort by the House to address campaign 
finance reform since the Senate passed the modified McCain-
Feingold bill. I am encouraged that we now have within our 
grasp an opportunity to enact meaningful reform of our system 
of political fund-raising, a system that has become so dominant 
that it has placed the integrity of our elected government 
under an ethical cloud.
    This is a bipartisan effort. Briefly, I have had the 
privilege to testify before this committee with the hope that 
we can enact meaningful comprehensive campaign reform for the 
first time in a long time. In a prior era of bipartisanship, 
President Clinton shook hands with then-Speaker Gingrich as 
part of a promise to act on this issue, and we are still 
waiting for that promise to be fulfilled, and now we have an 
excellent opportunity.
    The House has passed comprehensive campaign reform four 
times over the past 9 years: in 1992, 1994, 1998, and 1999, but 
the reform effort died with every successive adjournment. And 
what followed was progressively more costly elections that 
shattered all previous fund-raising record.
    With the Senate's passage of McCain-Feingold, we are closer 
to a bipartisan campaign reform bill than we have been for over 
a decade. It now falls to the House to do what it has done 
before on a bipartisan basis: put public interest ahead of 
special interest and reduce the influence of money on politics.
    I have cosponsored and voted for the Shays-Meehan bill in 
the last two Congresses and this House passed this both times 
by overwhelming bipartisan majorities. Since its introduction 
in this Congress, it has already had more than 160 Republican 
and Democratic consponsors. So we are off to a good start and 
now is the time for action.
    Along with my colleague Marty Meehan, a leader of this 
effort and a co-sponsor of the Shays-Meehan bill, I have asked 
Speaker Hastert to schedule consideration of the campaign 
reform prior to the Memorial Day district work period. I it my 
hope that we can agree to put before this House legislation 
that truly bans soft money contributions and reins in campaign 
issue ads designed solely to help elections. I hope we can do 
it by May 25.
    From this day forward, we should declare an end to the 
endless money chase. Let us decide today that this next 
election will be conducted differently than in the past; that 
the focus will be on debating the issues rather than on fund-
raising schedules; that emphasis will be on communicating with 
America's families and addressing their concerns rather than 
the 30-second media spots that bombard the electorate and which 
are designed to convey a negative message that deepens public 
discontent with our process.
    President Bush, in the wake of the McCain-Feingold debate, 
has laid down principles which outline his views on reform. It 
is my hope that we can begin a dialogue with him now on the key 
areas of bipartisan reform that will result in a bill he would 
sign this summer.
    It has been estimated that more than $3 billion was spent 
on federal elections in the year 2000. I would like to note 
that if you look at the soft money spent in the 1992 cycle 
compared with the 2000 cycle, it is a marked increase. In 1992, 
there was approximately $86 million in soft money raised in all 
the committees. By the year 2000, it went to $487 million, an 
increase of $400 million in just 8 years.
    Campaigns are no longer instruments by which candidates 
present themselves and their ideas to the electorate. They are 
more like big business, advertising bought and sold. I have 
talked with colleagues on both sides of the aisle about this 
endless chase for more and more money. The creative energies of 
our best and brightest public servants in both parties are 
invariably being directed towards keeping up in order to be 
competitive and raise more and more money to get there. Our 
focus should be on addressing and solving the problems that 
confront the American people, not meeting quarterly fund-
raising goals.
    This is the politics of mutually assured destruction, 
utilizing campaign war chests as the instruments of our 
elections instead of actually engaging with our voters. Unless 
we do something about this trend, we will undermine our ability 
to communicate with anyone. Our platform for communicating our 
positions and ideas will shift ever more towards the negative 
attacks instead of the give-and-take of meaningful debate.
    It doesn't have to be this way. It was never meant to be 
this way. Our Founding Fathers never conceived of such a 
system. We have inherited a wonderful legacy of democratic 
government which began as a bold and risky experiment. Despite 
more than 200 years of history, it continues to be an 
experiment and we cannot allow it to fail. The American people 
sometimes understand this better than we politicians.
    I would like to quote in closing one of the original 
political thinkers of our day, Doris Haddock, or, as the 
American people have come to know her, Granny D, and I quote. 
She said, ``The idea that the American government is my 
government is an idea that is a joy to my heart. Though it does 
not always feel like my government, when it is it is a part of 
me, I am a part of it. I help direct its actions according to 
my civic values through the work of my Representatives in its 
powerful councils. In this way, through them, I can better 
fulfill my responsibility to do good for my countrymen and for 
others around the world. If I cannot fulfill these 
responsibilities, a sour sickness comes over me and over the 
land itself.''
    She said, ``There is a high price paid in America and 
around the world when Americans whose values are profoundly 
fair and generous are not in control of their own government 
and when they do not believe they are indeed a self-governing 
people.''
    Those words were stated by Granny D on March 19, 2001. I 
believe she said it the best. Let us now let her down. Let us 
not let down the other Americans who feel the way she does 
about their government and about the reform that is needed. Let 
us do the right thing. Let us let a bipartisan majority in this 
House express its will. Let us address meaningful campaign 
finance reform to ban soft money, address issue advocacy and 
put the government of the people back on track.
    We must strengthen our civic life and prevent people from 
becoming disillusioned, cynical, and losing faith in the 
greatest democracy in the history of the world and, I would 
say, the greatest hope of the world.
    I thank you for letting me be here today and I would be 
happy to respond to any questions, or however you would like to 
proceed. And I thank you for holding this hearing.
    The Chairman. Thank you, Mr. Leader. I have a question. The 
Senate has a provision in the Senate that is called Senate 
millionaire candidates. Would you support a provision where if 
we placed it in the bill it would apply to the House also?
    Mr. Gephardt. Well, Mr. Chairman, I am engaged now in a 
dialogue with members in my caucus who have supported McCain-
Feingold/Shays-Meehan. We are trying to understand the changes 
that the Senate made, and I haven't reached a conclusion about 
any of the changes that they have made, and I surely don't know 
how my members and other Republic members who have supported 
these proposals feel about it. I think we have got to look at 
all of it, and I appreciate your committee doing that, and 
determine where the majority wants to go with this effort.
    Again the one thing we know is that we had a large 
majority, a bipartisan majority in this House, twice in the 
last 3 years, vote for the original Shays-Meehan/McCain-
Feingold bill. I don't think we know today whether that 
majority exists for the Senate measure but I will try to 
determine those facts and both reach a conclusion myself and 
see where others are on proposals like that one.
    The Chairman. Thank you. Mr. Hoyer.
    Mr. Hoyer. I have no questions but I thank the leader for 
joining us and giving us his testimony and for his leadership 
on this issue. Clearly the sooner we act on this, the better 
opportunity we will have for it becoming law for the next 
cycle.
    The Chairman. Thank you. Any further questions? I want to--
Mr. Davis? I want to thank the leader for his testimony today.
    Mr. Gephardt. I thank the committee for letting me be here.
    The Chairman. Thank you very much.
    For Panel 2, we have our whip, Mr. DeLay. It is a pleasure 
to have you here today.


 STATEMENT OF THE HON. TOM DeLAY, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF TEXAS

    Mr. DeLay. Thank you, Mr. Chairman. I too appreciate you 
holding this hearing and I appreciate that there are Members 
that want to move swiftly on this issue. But as the minority 
leader has stated, even the minority leader doesn't know where 
his own caucus is on what was done in the Senate. So having 
these hearings allows all of us the opportunity to look at what 
is going on, what the Senate did, its unintended consequences, 
and what the House means to do about it.
    So I appreciate not only this committee holding hearings, 
but I think other committees wish to hold hearings, too, on the 
Senate bill.
    Mr. Chairman, I just have to say if Americans can't fully 
participate during elections, democracy is meaningless. It is 
average Americans working together to elect people that share 
their views and beliefs that make our democracy special.
    Because the Senate bill threatens to make it harder for 
people to do this, it is clearly a step in the wrong direction. 
As the truth about this bill actually becomes known, I think 
people are going to start walking away from it. Supporters tell 
us that McCain-Feingold will clean up politics, but the 
reality, in my opinion, would be much different. If this so-
called reform passes, it will be harder, not easier, for people 
to stop their government from doing things they disagree with. 
That is because McCain-Feingold is designed to stop people and 
groups from criticizing their elected Representatives. The 
Senate bill has serious flaws that will protect politicians in 
office from the people who are trying to hold them accountable. 
For that reasons I think McCain-Feingold will make it easier 
for politicians to stay in office. That is why I call it a full 
incumbent employment bill. That is why so many officeholders 
support this bill, despite knowing that the bill violates the 
Constitution of the United States.
    How exactly will this bill freeze average Americans out of 
the political process and cement politicians into office? 
First, McCain-Feingold lets politicians buy TV advertisements 
at lower rates while voters have to pay the full price. That 
places groups of citizens at an unfair disadvantage. 
Politicians already have an advantage because the media covers 
their States and they have a tax subsidized $1 million annual 
budget to communicate with voters. A new system that mandates 
discount advertising to politicians while forcing average 
people and groups to pay top dollar only swings the pendulum 
further towards the incumbents.
    Second, the so-called millionaire amendment that the 
Chairman referred to is a complicated mathematical formula that 
bends the contribution limits for Senators running against 
millionaires but keeps a different standard for everyone else. 
The bill does nothing for challengers to those Senators who are 
sitting on--to those Senators that are sitting on multimillion 
dollar war chests. That reasoning doesn't make sense to me. If 
some candidates can accept larger contributions without being 
corrupted, why shouldn't we raise the contribution limits for 
all candidates? The answer is we should. Contributions should 
be, at a minimum, indexed to the rate of inflation and the 
limits--because the limits haven't been raised since 1974 when 
a Mustang cost only a couple of thousand dollars.
    Third, McCain-Feingold buries citizen groups under a sea of 
Washington red tape. It restricts participation by grassroots 
groups and individual voters with more than 300 new regulations 
and prohibitions. In practical terms, that means that if 10 
college students each threw in $25 to print a flyer opposing a 
Senator, they would have to register with the Federal Election 
Commission. That is a hassle, and fewer people will exercise 
their constitutional and civic rights.
    Finally, the Senate bill muzzles people who want to 
criticize politicians in office. Besides politicians and 
political parties, the only other group that can run ads 60 
days before an election are political action committees. Unless 
you have registered as a PAC with the FEC, you cannot run 
television or radio advertisement. The current advertisements 
being run by the Democratic National Committee and some 
environmental groups criticizing the President would be illegal 
if they ran those same advertisements within 60 days of the 
election. Is that constructive reform? Why do we cut off voices 
60 days before an election? Well, that is when people are 
beginning to pay close attention. That is the most important 
time for citizens to be heard, and McCain-Feingold silences 
these critics during the vital period before an election.
    There are real problems with this bill. But so-called 
reformers denounce anyone who will not fall into line behind 
their self-interest plan. Sadly, they have labeled the 
opponents of their restricted scheme as corrupt. But I believe 
it is corrupt for politicians to pay lower advertising rates 
than average citizens. I believe it is corrupt to require 10 
college kids to register with the FEC in order to be heard. I 
believe it is corrupt to silence critics within 60 days of an 
election. That is corruption, not reform.
    Legitimate reform should make it easier for people to enter 
into politics. It does not throttle political freedom under 
hundreds of new regulations. We should only support reform if 
it expands opportunities for average Americans to join the 
political process. And we have a plan to do that, a bill 
introduced by me and Congressman Doolittle. They call it the 
Doolittle-DeLay bill. You are supposed to laugh at that, Mr. 
Hoyer.
    Simply put, our bill raises contribution limits and we 
require instant disclosure. Candidates should instantly 
disclose contributions by posting them on the Internet as soon 
as the checks have been cashed. There is no doubt about the 
unconstitutionality of McCain-Feingold. Your previous witness, 
the minority leader, Dick Gephardt, even admitted the problem 
when he said earlier, a year or so ago, when he said, what we 
have are two important values in conflict: freedom of speech 
and our desire for healthy campaigns and a healthy democracy. 
You can't have both.
    Well, the first amendment is crystal clear, gentlemen, and 
I will read it to you: Congress shall make no law respecting an 
establishment of religion or prohibiting the free exercise 
thereof or abridging the freedom of speech or of the press or 
of the people peacefully to assemble and to petition the 
government for redress of grievances.
    Members of Congress take an oath to support and defend that 
Constitution. There is no way that they can both honor their 
oath and vote for a bill that takes dead aim at the most 
important protection in the Constitution. Let us have a real 
constitutional reform that encourages people to take part in 
the preliminary process without restricting their ability to 
hold politicians accountable. And I thank you, Mr. Chairman, 
for having me.
    The Chairman. I want to thank the whip for testifying 
today.
    Questions? You obviously provided great testimony; you 
don't even get a question.
    Mr. Davis. Mr. Chairman.
    The Chairman. I am sorry, I spoke too quickly.
    Mr. Davis. I do not want Representative DeLay to feel 
neglected here. Congressman, I think you have raised some valid 
questions about the Senate edition of the bill and I am glad we 
are having the hearings to look into that. Congressman 
Doolittle's bill you mentioned does not just change limits, it 
eliminates any limits on the amount of money that can be given 
to campaigns, does it not?
    Mr. DeLay. Yes, it does, Mr. Davis, and I am glad you asked 
the question. We are operating under regulated campaign finance 
rules--campaign finance regulations that were imposed after the 
1974 elections, regulating speech and regulating participation 
and our right to assemble. I would have voted against it back 
then when they first did it. Now there are Members that want to 
further regulate. I think if you want to bring more people into 
the process, you ought to defer to freedom, not to more 
regulations. And the Doolittle bill opens up the process so 
that my opponent can look at how I raise money and how I spend 
money and make that issue with my constituents, and my 
constituents can decide what is the proper course to take.
    Mr. Davis. Isn't it fair to assume if the Doolittle bill 
which you support became law, we would have far more money 
entering the political campaign system, and do you think that 
would make the system better than it is now?
    Mr. DeLay. I am going to shock you, Mr. Davis. I don't 
think there is enough money in the campaign system in America 
today. We today--if you add up all the money that was spent in 
the last election, it is almost half of the amount of money 
Americans spend on advertising cosmetics. It is about the same 
amount of money we spend on Easter candy. It is less than the 
amount of money we spend on potato chips.
    The point I am trying to make is I think if more money was 
in the process and more people were participating, because more 
people would be participating if they are giving their dollars 
to the process, then we would have the opportunity to tell our 
stories and get more people involved in the process. And 
frankly, I think if it was wide open, you would have fewer 
speeches about the corruption of a system that is not corrupt, 
about an ethical clout, as the minority leader said, that is 
not here. I don't know of one Democrat or one Republican that 
is corrupt. And when you ask people to point out those that are 
corrupt they fail to, because they know they can't. They 
cannot.
    And I would challenge this committee, anytime somebody 
comes before you in this panel and says that the system is 
corrupt, I challenge you to ask them to show where it is 
corrupt and who is corrupting it, because I think what they are 
doing is, they are doing nothing more than political posturing 
for a demagogic process out there. As long as this system is 
open and honest and instantaneous, so people can see what is 
happening in the system, it won't be corrupted.
    Mr. Davis. I appreciate the initial emphasis in your 
testimony on the average American because those of us who were 
elected here today have to represent those people who can't 
afford to come traveling to Washington and have all these 
lobbyists, necessarily. Many of us feel strongly we should ban 
the soft money because these people who write these hundreds of 
thousands of dollars of checks to both the Republican Party and 
the Democratic Party are not doing so for good government and 
it is disadvantaging the average American. What is your view on 
that?
    Mr. DeLay. My view on that is soft money has gotten a bad 
name by this whole process. Soft money is moneys given to the 
parties for party building. It is not moneys given to the 
individuals. There is this perception out there that these 
hundreds of thousands of dollars are going to individuals. It 
is not; it is going to parties. And the McCain-Feingold bill, 
if it became law, would do more to destroy our two-party system 
than anything else I know of, because it would completely 
remove the ability of parties to do their job. And I think that 
is a disservice, that people are equating soft money to 
individual elected officials, and they are not connected. And 
so I think that is really unfortunate in this debate and that 
is why I think we need more hearings like this so the real 
story will get out.
    Mr. Davis. Congressman DeLay, do you think these 
individuals and businesses that are writing these hundreds of 
thousands of dollars of checks are doing so for good 
government?
    Mr. DeLay. Yes, sir, I do.
    Mr. Davis. In the Buckley v. Vallejo decision, the Court 
said, I believe, that it was constitutional and appropriate to 
regulate contributions in the interest of avoiding corruption 
or the appearance of corruption. Do you accept that rationale?
    Mr. DeLay. I think it is an ill-founded rationale and 
follows the perception that has been created by those that are 
out there, frankly, twisting what is reality here in the 
political arena. I think if you have open--the Doolittle bill 
that is open and immediately accessible by everyone who is 
interested, that would do more to alleviate the perception of 
corruption than anything else.
    Mr. Davis. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Mr. Linder.
    Mr. Linder. Mr. DeLay, first of all, I would like to point 
out that you stated my favorite five words in the entire 
Constitution, which are the first five in the first amendment, 
``Congress shall make no law.'' I think it applies to more than 
just campaign finance. There is a gentleman named Dr. Troy at 
Rutgers University who for 25 years has been studying campaign 
contributions, and he points out that in the last three or four 
cycles, labor unions combined spent in each cycle anywhere from 
6- to $700 million of soft money doing things like party 
building and communicating with their members. Do any of the 
bills that you have seen do anything about labor union soft 
money?
    Mr. DeLay. None whatsoever. In fact, they are very careful 
to avoid touching unions because they know the minute they try 
to regulate union participation in campaigns as they regulate 
other groups in the bills, that they would lose their support 
in a nanosecond and none of the bills would pass.
    Mr. Linder. Can you think of any other areas in campaign 
contributions where individuals or corporations or anyone who 
can give money for political purposes that is tax deductible?
    Mr. DeLay. If I----
    Mr. Linder. Labor union dues are tax deductible.
    Mr. DeLay. Labor union dues are the only thing I know of.
    Mr. Linder. So they are using tax deductible money to 
finance the campaign.
    Mr. DeLay. That is correct.
    Mr. Linder. Have there been any efforts to stop the use of 
tax-deductible money for campaigns, since it comes out of the 
Treasury?
    Mr. DeLay. Not that I know of, not in McCain-Feingold or in 
Shays-Meehan.
    The Chairman. Mr. Hoyer.
    Mr. Hoyer. Mr. Whip, let me try to understand your 
statement as to the average citizen. I don't know many average 
citizens that can buy television time, do you?
    Mr. DeLay. Not individually; but collectively they 
certainly can, and they do.
    Mr. Hoyer. If they are participating in preliminary debate, 
which you want to further always, I understand, and which I 
understand all of us say we want to further, does not it 
therefore make sense to have them have the lowest available 
price for them on the airways which, after all, we all conclude 
are public airways which we license to broadcasters?
    Mr. DeLay. I think if I understand your question, Mr. 
Hoyer, yes, if you are going to lower, have discount rates for 
politicians, then you ought to at level the playing field and 
have those same discount rates for individuals or groups of 
individuals that want to run political advertising. Right now 
in McCain-Feingold, the incumbents benefit but the average 
citizen does not.
    Mr. Hoyer. Let me ask you, are you telling me that under 
McCain-Feingold it is your perception that challengers would 
not be entitled to the lowest rate?
    Mr. DeLay. Sure, challengers would also be eligible for 
those rates, but the American people would not.
    Mr. Hoyer. Are the challengers not the American people who 
choose to run for office?
    Mr. DeLay. Of course they are, but they have their own 
interest and the incumbent has his own interest, and the people 
ought to be able, according to the Constitution, to have their 
own interest, their right to assemble and their right to 
petition about their grievances.
    Mr. Hoyer. Let me ask you something further. Do you believe 
that many, if not most, of the issue adds that we see during 
election times are essentially designed to promote or defeat 
one of the candidates in a particular race?
    Mr. DeLay. I do, and I have no problem with that process. I 
do think that both sides have been very irresponsible in the 
kind of ads that they have run, and frankly I think that the 
media has been irresponsible in holding their feet to the fire 
to at least have the ads be true. But I think in the political 
process, the Constitution guarantees that everyone, no matter 
who they are, in America can come together and participate or 
singly participate in the process. What McCain-Feingold/Shays-
Meehan does is count in that process in the most important 
part, and that is 60 days before the election. And the only 
reason that it is in both bills is that incumbent politicians 
hate those ads being run in front of them. They hate being 
criticized by their own constituency.
    Mr. Hoyer. Let me ask you another question in terms of 
issue ads. Do you believe that the folks who pay for those ads, 
who communicate with the American public, ought to be known to 
the American public?
    Mr. DeLay. No, I do not, because we already have seen in 
the recent bill that was passed last year that opened up 
disclosure, where the politicans have come and harassed those 
people that give to those organizations. The reason they are 
not disclosed in those organizations is so that politicans 
cannot oppress them or harass them for their participation in 
the process.
    Mr. Hoyer. I am not going to ask any further questions. I 
appreciate Mr. Delay's position. I disagree with it but I 
understand where he is coming from.
    The Chairman. Any further questions?
    Mr. Ehlers.
    Mr. Ehlers. Thank you. I just wanted to comment, Mr. Whip. 
A few years ago I had a constituent talk to me. He said, Vern, 
I don't understand why you are wasting this time on campaign 
finance reform. He said, you need only two rules: no cash--in 
other words, everything by check--and full disclosure, and let 
the voters decide. It sounds to me that is describing your 
position fairly accurately; is that correct?
    Mr. DeLay. That is the Doolittle-DeLay bill. And I might 
just add, because you are giving me the opportunity, people 
talk about all these special interests. Everybody has a special 
interest. And frankly, the reason that we have the system that 
we have now with people coming together and joining together in 
order to get their views heard, is that the Federal Government 
has become so large, and frankly some of us believe so large 
outside the Constitution of the United States, that in order to 
defend yourself as a citizen of the United States, you have to 
also become large. You have to participate, you have to join 
together, you have to organize in order to have your voices 
heard. And I think it is really unfortunate, particularly in 
McCain-Feingold, that they would want to shut those people out 
with even more onerous regulations 60 days before the 
elections.
    Mr. Ehlers. Let me just pick up on one other comment you 
made, and it is a concern I have had for a long time. Over the 
years--and I have a few more years than you do--but over the 
years I have noticed the power loss of the political parties. A 
major impact, of course, was the introduction of electronic 
media which made the candidates by and large independent of the 
parties. The second aspect was the introduction of primary 
elections which took the power to choose candidates away from 
the parties.
    Your comment about the fact that McCain-Feingold would take 
away much of the funding of the parties I think is very much 
accurate and would very likely lead to the demise of the 
parties, or the parties as organizations, or make them very 
ineffective. And I just wanted to pick up on that because I 
think that is an important point. If the Congress in its wisdom 
should decide to ban soft money, I think it extremely important 
that we provide some alternative means for the parties to have 
the money to maintain themselves, to be viable organizations. 
Otherwise, I am afraid you are going to see the disintegration 
of the parties and, frankly, a much more chaotic situation 
politically. It might begin to resemble some countries that 
have 20 or 30 parties operating, because it would certainly 
lend itself to that. I just wanted to make that observation.
    Mr. DeLay. I cannot say it better than you did, Mr. Ehlers.
    The Chairman. I thank the whip for being here. We 
appreciate your testimony.
    The next is Panel 3, Senator Mitch McConnell, Senator Chuck 
Hagel and Senator Russ Feingold. We will begin with Senator 
Mitch McConnell. Welcome to the committee.

STATEMENT OF THE HON. MITCH McCONNELL, A UNITED STATES SENATOR 
                   FROM THE STATE OF KENTUCKY

    Senator McConnell. Thank you very much, Chairman Ney. I 
described this bill in the Senate as stunningly stupid, and I 
certainly hope the House will have the wisdom not to pass 
anything remotely similar to what we have visited on you and I 
apologize for sending it over to you. What we should have done 
was to pass a bill that was fair and balanced and 
constitutional, and McCain-Feingold is none of those things.
    Let me talk about the winners and the losers. First, the 
losers. As Tom DeLay described, I think almost totally 
accurately, the biggest losers of course are the political 
parties. This bill that passed the Senate doesn't take money 
out of politics. It just takes the parties out of politics by 
eliminating all the nonFederal money. I will get to that chart 
in a minute. By federalizing the parties which currently are 
able to engage in issue advocacy like any other citizen group--
which, by the way, party issue advocacy is disclosed, fully 
disclosed. And 65 percent of the money that goes to finance 
party issue advocacy is hard money, which we have all decided 
is the good money around here.
    So let us take a look at what the world would be like if 
the national party committees were operating in 100 percent 
hard dollars. So what I did is--can you bring the chart over 
here and let me hold it, because I think it works better for me 
that way. What I did here was take the last cycle, the last 
cycle, the 2000 cycle, and point out how much net, net hard 
dollars the two big committees had under the current system. 
The RNC had $75 million net hard under the current system in 
the last cycle. The DNC had 48 million net hard under the 
current system. Now apply McCain-Feingold retroactively to the 
last cycle, the NRC would have gone from 75 million net hard 
dollars to 37 million net hard dollars; the Democratic National 
Committee from 48 million net hard dollars down to 20 million 
net hard dollars.
    Over on the Senate side, Republican, excuse me--the 
Republican Senatorial Committee under the current system had 14 
million net hard dollars, they would have gone down to one 
million net hard dollars, less than the coordinated in New 
York. The Democratic Senatorial Committee which had 6 million 
net hard under the current, would have gone down to $800,000.
    Over on your side, you will love this, the Republican 
Congressional Committee had 22 million net hard under the 
current system. They would have had $13 million hard money debt 
under McCain-Feingold. The Democratic Congressional Committee 
under the current system had a $7 million debt under the 
current system. Under McCain-Feingold it had a $20 million hard 
money debt.
    Make no mistake about it, gentlemen, what this bill does is 
not take money out of politics, it takes the parties out of 
politics.
    Now, all restrictions, to which my friend Tom DeLay 
referred, on outside groups will be struck down. There have 
been 22 cases since Buckley of various efforts by States, and 
in some cases localities, to require as a condition for 
criticizing candidates in proximity to an election that they 
register in some way. It has been tried. The Snowe-Jeffords 
language which is in the bill that we regretfully sent you, 
that specific language was struck down in the second circuit 
within the last year and a half. So make no mistake about it, 
the outside groups will not be impacted by this very long. 
Those provisions seeking to make it difficult for them to 
criticize individuals like us in proximity to an election will 
be DOA in any Federal district court in America.
    So who are the big winners? Again, Congressman DeLay 
touched on it. The biggest winners, of course, are us 
incumbents, unless of course you happen to be House incumbent. 
And I will come back to that in a minute. We benefit because we 
get dramatically reduced television time rates. We benefit, if 
they were upheld, because we don't get criticized very much 
except by newspapers in proximity to an election. By the way, 
the newspapers are the biggest winners under this. Nobody is 
seeking to restrict their ability to criticize us on the front 
page or the editorial page, not only 60 days before an election 
but a day before the election. So they are the biggest winners 
of all in this effort to micromanage who gets to speak and 
particularly who gets to criticize people like us in proximity 
to an election.
    But getting back to one of the best provisions to take care 
of incumbents, Senators are increasingly nervous about having 
to run against candidates with a lot of money, so we took care 
of ourselves by passing a millionaire amendment. We did not 
include the House in that. So the message will clearly be if a 
millionaire wants to buy an office, he should run for the 
House, not the Senate.
    In the Senate, let me give you an idea of how it will work. 
Let's say by the end of 2001 I raised $3 million dollars. In 
January of 2002, let's assume that a millionaire candidate 
enters the race against me and declares he is going to spend $5 
million. This has been done before in my State and probable in 
many of yours. It is not really a paltry amount compared to 
what some millionaires spent last year. So in my hypothetical, 
if a Kentucky millionaire candidate spends in excess of $2 
million, I can start raising $24,000 per couple. That is 12,000 
per couple for each election, the primary being one election, 
the general being another. There is more. If the millionaire 
candidates spend in excess of $2.5 million in my State, I can 
start raising 48,000 per couple, 24,000 for each election. But 
I am not finished. If the millionaire candidates spend over 4.2 
million in my State I can raise 48,000 per couple, and the 
limit on what the party can spend on my behalf in coordination 
with me comes off entirely what we typically refer to as the 
coordinated.
    So if you look at the Senate bill, we have taken pretty 
good care of us incumbents. We have given us reduced, 
dramatically reduced, broadcast rates. We have put in a 
provision to protect us against millionaires, and we have also 
structured the restrictions on House groups in such a way that 
there is no chance, none, that that will be upheld as 
constitutional.
    I certainly hope the House will not replicate the action of 
the Senate by passing this monstrosity and sending it to the 
President.
    I thank you very much, Mr. Chairman for the opportunity to 
be here.
    The Chairman. Thank you very much for your testimony. Any 
questions?
    Mr. Linder.
    Mr. Linder. Senator, you have watched these for some time, 
these efforts to curtail spending on campaigns and reform the 
laws. I want to ask you the same question I asked Tom DeLay. 
What would limit the ability--the party-building activity of 
the labor unions using soft money and money that indeed they 
were given that was tax deductible? You are going to eliminate 
parties from using soft money at the State and Federal level; 
what stops the unions from continuing and becoming the only 
party?
    Senator McConnell. Other than the restrictions on outside 
groups, which every serious scholar in this field knows will be 
struck down, the unions are not disadvantaged at all. In fact, 
we offered two or three different amendments during the course 
of our debate. One was the so-called paycheck protection 
provision that would give union members an opportunity to be 
informed before their dues were spent on causes that they might 
disagree with. Another amendment, to simply disclose to them 
some of their existing rights. In short, we did not get 
anywhere passing any amendments that would have any kind of 
adverse impact on unions at all. And as you correctly pointed 
out, in fact the unions get to operate on tax-deductible dues, 
which no other organization in America can operate on. So there 
is nothing in here that would seriously inconvenience organized 
labor other than these restrictions in the last 60 days which 
are going to be upheld anyway.
    Mr. Linder. They still would be allowed to use soft money 
for the three exceptions that have been provided in law; that 
is, to administer your PAC, communicate with your membership, 
or party building.
    Senator McConnell. Yes. And other than television, I think 
the restrictions in the last 60 days would be essentially 
nonexistent.
    Mr. Chairman. Thank you. I want to apologize to the other 
two Senators. We had a note indicating that Senator McConnell 
had to leave. That is why we went out of order to grant the 
request. Any other questions?
    Mr. Hoyer. Senator, I would observe that obviously neither 
the Senate nor the House is necessarily as constrained by not 
voting for unconstitutional bills, particularly bills that 
people know are clearly unconstitutional. I refer to the 
numerous pieces of legislation we deal with on a regular basis 
that are obviously contrary to Roe versus Wade. I don't know 
how you voted and I am not asking that and I don't care. I 
understand what you are saying, but until they are actually 
tested, you can opine that they are unconstitutional because 
they fall in a class very close to another case that is the 
precedent. I understand that.
    Let me ask you something. Mr. DeLay and I had a discussion. 
This theoretical person that has the opportunity to have 
access, if we do not have full disclosure on ads or limits on 
ads that clearly are relative to campaigns--I mean, I think all 
of us have a concern about this, that Citizens for a Better 
Environment run an ad, if the American public that own the 
airwaves that they are advertising on has given license to a 
broadcaster to transmit that ad, has no idea who Citizens for a 
Cleaner Environment are--I mean, all of us put in context what 
we hear in certain respects from who is telling us, who is 
relating the information to us. If Citizens for a Cleaner 
Environment are in fact oil-company-financed, my suggestion 
would be the citizen has perhaps a different perspective of the 
substance of the ad as opposed to whether or not the Sierra 
Club or the Nature Conservancy that is perceived to have a 
different interest in funding that ad. Would you think that is 
a fair statement?
    Senator McConnell. The problem is the Constitution. In the 
Buckley case, it was made clear that unless you expressly 
advocate the election or defeat of the candidate, you are free 
to criticize 
us any time you want to during the course of a year without 
having----
    Mr. Hoyer. I have no problem with that.
    Senator McConnell. Let me finish. Without having to 
disclose the donors to your organization. The landmark case was 
NAACP versus Alabama in 1958. Senator Hagel, who sits to my 
right and from whom you will hear momentarily, has crafted a 
measure that at least might pass constitutional muster, which 
is to allow the television stations to make available the books 
which say who paid for it. But there isn't anybody who believes 
you can compel a group as a condition for saying something 
critical, short of express advocacy, something critical of us 
in proximity of an election, is going to have to give the 
government the list of donors in a public fashion. This has 
already been litigated. Whether you or I might find it 
desirable or not--I frankly don't like it when people come in 
and criticize me. I don't like the billionaire who dropped half 
a million dollars against Senator Bunting in 1998 in my race. I 
don't like the fact he did it, but he had the right to do it. 
This is the same billionaire who is paying for a lot of reform 
lobbyists who were crawling on the outside of the Senate 
chamber a couple of weeks ago and will be over here on the 
House side shortly. But these people have a constitutional 
right to do that. Whether we like it or not is really kind of 
irrelevant. They have a constitutional right to do it.
    Mr. Hoyer. Senator, let me ask you the last question then. 
The whip talked about the DeLay-Doolittle bill which was 
characterized by Mr. Ehlers as essentially being no cash and 
full disclosure. Would that be the limit of your belief as to 
what we ought to do as it relates to campaign finance reform?
    Senator McConnell. That is the Virginia law. And the 
Virginia law under--in Virginia the law basically is both 
unions and corporations can contribute directly to candidates, 
which they haven't been able to do to Federal candidates in a 
long time, and you have full disclosure. And as a practical 
matter in Virginia, everybody is able to finance their 
campaigns; both the donor and the donee to consider whether or 
not a contribution is appropriate, if it is big, because they 
know it is going to be revealed immediately. It has been an 
essentially corruption-free system. I think that would be the 
ideal world.
    That is not the world we are operating in. What we ought to 
do is at least go back and index hard money. The reason we have 
a money chase is because we are operating in 1974 dollars. At a 
time when buying a Mustang cost $2,700, the Congress concluded 
that a thousand dollars in the primary and a thousand dollars 
in the general was an appropriate limit, and the Supreme Court 
did uphold--and Congressman Davis was referring to that--did 
uphold contribution limits; not spending limits, but 
contribution limits. We made a huge mistake in not indexing 
that for inflation.
    As a result of that, we are caught in a cycle of 
fundraisers because we are operating in 26-year-old dollars. At 
least we ought to index that. Most of the rest of this stuff 
has serious constitutional problems. And even if the Congress 
passes it and even if the President signs it, which I hope he 
will not do, but if he does, most of it will be struck down by 
the courts.
    Mr. Hoyer. Thank you, Senator. I don't know that this will 
surprise you, but essentially I agree with you on your 
proposition on indexing. I think it has put us in a position 
where we are using 1974 dollars to pay 2001 expenses, and that 
is a problem and I think we should address it.
    Senator McConnell. Can I make a quick observation on that? 
That amendment in the Senate--it did not fully index, but 
moving in the direction of indexation--had I think 80 or 84 
votes. So there was bipartisan concern about the money scramble 
created by the failure to index. I am sorry to interrupt, but 
it was bipartisan concern about that in the Senate as well.
    Mr. Hoyer. Yes, I knew that. Thank you, Senator.
    The Chairman. Thank you, Senator.
    Senator McConnell. Thank you, Mr. Chairman.
    Mr. Chairman. Senator Feingold.

 STATEMENT OF THE HON. RUSS FEINGOLD, A UNITED STATES SENATOR 
                  FROM THE STATE OF WISCONSIN

    Senator Feingold. Thank you very much, Mr. Chairman. I am 
the co-author of the bill which my friend and colleague 
referred to as stunningly stupid, and I am prepared to take a 
different view. On April 2, 2001, we completed an extraordinary 
2-week debate on campaign finance reform in the Senate and 
passed the McCain-Feingold bill by a bipartisan vote of 59 to 
41. You have heard the eloquence of Senator McConnell and you 
have heard him describe here today some of the powerful 
arguments that he has advanced. Well, those arguments were 
advanced, heard, considered, and overwhelmingly rejected by the 
United States Senate just a month ago. And I want to assure 
you, although you may think on occasions this is true, the 
Senate did not lose its mind. the Senate did the right thing. 
This is the first time that the Senate will be permitted to 
vote on final passage of campaign finance reform since 1993.
    Senator John McCain and I have said for years that if the 
Senate were actually permitted to work its will with a free and 
fair amendment process, it would pass a bill by a strong 
bipartisan majority and we were right. Immediately after we 
passed our bill, Representatives Shays and Meehan asked the 
leadership of this House to schedule campaign finance reform 
for floor action before the Memorial Day recess. I hope, with 
all respect, that you will act with expedition and make sure 
that your committee helps this process along rather than holds 
it up.
    The American people are not looking for us to pass a bill 
simply to start applying to the elections in 2004. If we act 
quickly we can put these rules in place for the 2002 elections. 
I know that Representatives Shays and Meehan are scheduled to 
testify next, and I will leave to them the job of outlining 
what the bill does and answer any extensive questions.
    But let me say a few things about the bill that the Senate 
did pass. First and foremost, the bill bans soft money to the 
political parties. This is the most important feature of the 
bill and the component which more than any other marks our bill 
as real reform. In contrast to other proposals, our bill does 
not just cap soft money, it doesn't simply prohibit soft money 
contributions to the national parties but not to the State 
parties, and it does not pretend to prohibit soft money while 
leaving gaping loopholes. Our bill, like the Shays-Meehan bill, 
does the job right. From what we have seen in recent election 
cycles, a soft money ban is critical to public support and 
acceptance of the bill as reform. And yes, the winner will be 
the American people, not incumbents. If anyone really believes 
that soft money is not a greater benefit to incumbents than 
challengers, I have a bridge I would like to sell them. And I 
am gratified that when Senator McConnell spoke about the bill, 
he devoted a great deal of his time to talking about a 
provision that was not even a core provision of our bill, the 
so-called millionaire amendment.
    The House should work its will on that issue. The core 
issue of our bill is the soft money ban, and that was the one 
that I think we have to literally decide where we are going to 
go as a country when it comes to campaign financing. Some have 
said and some of the Congressmen today have said that the soft 
money ban is going to cripple the parties, especially State 
parties. I strongly disagree that the parties have to have soft 
money to survive. Our great national parties have become little 
more than fundraising machines under this system. And how old 
is the system? This great Nation has had wonderful political 
parties for over 200 years before the soft money system arose.
    In 1992 when I came to this Congress, there was only about 
$827 million in soft money. Four years later it was something 
like $262 million. In the year 2000 the amount of soft money 
that was raised and spent was nearly half a billion dollars.
    Now, this notion that somehow the parties were bereft, 
destroyed, were unable to function in the last 200 years and 
have only functioned effectively during these last 5 or 6 
corrupt years is appalling to me. Obviously the system has 
worked very well and the parties have not been crippled.
    In a system that did not involve soft money, what would it 
be like? It would be like the system we had principally in the 
1970's and the 1980's. And I believe the parties were a lot 
better off then and I believe the average person who 
participated in the process was a lot better off then as well. 
The ban on soft money will let them get back to working with 
small donors, organizing volunteers and developing and training 
candidates, with a base of support from citizens, not just big 
donors. And that is what they did up until the 1980's when the 
soft money system was born.
    Parties have become primarily a system to transfer large 
checks. That is not what our political parties have been about. 
That is not what they have should be about. And unless we ban 
soft money, that is not what they should be.
    The issue ads provision to the Shays-Meehan bill have been 
a subject of great controversy and also a great exaggeration 
and misinformation. I want to say for the record as clearly as 
I can, no advertisement, indeed no speech of any king, is 
prohibited by the McCain-Feingold or Shays-Meehan issue ad 
provision. These provisions are about who can pay for these ads 
and what kind of information on them will be available to the 
voters.
    Right now under current law, unions and corporations are 
prohibited constitutionally from running ads that say vote 
against Representative Ney or vote for Representative Hoyer, 
but that speech isn't prohibited. Ads that say those so-called 
magic words can be run with money from a corporate or union 
PAC. All the McCain-Feingold bill does is make sure that ads 
run close to an election that mention a candidate have to 
comply with the same or similar requirements.
    And, of course, Senator McConnell is right; there will be 
legal challenges to these limited provisions. Even during the 
debate, he said he would soon change from a Senator to a 
plaintiff for purposes of this.
    But we propose these ideas for the Supreme Court to 
consider in good faith and there is solid legal argument to say 
they are constitutional. I want you to know the same statement 
that Senator McConnell made about his certainty with regard to 
a Supreme Court ruling is the same tone he used when he told us 
for sure that the Supreme Court would strike down the limits on 
contributions in the Missouri Shrink PAC case in the year 2000. 
I sat next to him at the oral argument. The Court ruled 6 to 3 
that they were right. There is a common basis for limiting 
contributions, and that 6 to 3 vote included a 4 to 3 margin by 
justices appointed by Republican Presidents.
    Prior to the Senate debate, we received a letter signed by 
over 70 legal scholars that describes the Snowe-Jeffords issue 
ad provision as, quote, a well-reasoned attempt to define 
electioneering in a more realistic manner while remaining 
faithful to the first amendment's vagueness and overbreadth 
concerns.
    Along the same lines is a statement from every living 
individual who has served as president, executive director, 
legal director, and legislative director of the American Civil 
Liberties Union outside of the current leadership of that 
organization. If I could, Mr. Chairman, I would like to submit 
the legal scholars' letter and the ACLU former leaders 
statement for the record.
    The Chairman. Without objection.
    Senator Feingold. Thank you.
    In light of these two documents, those who argue that the 
issue ad provisions in our bill are plainly or clearly or 
obviously unconstitutional are engaging in a bit of wishful 
thinking.
    Let us see what the Supreme Court decides. And those who 
portray these provisions as designed to clamp down on a 
political speech or to silence criticism of candidates are 
simply wrong and they do a disservice to this debate when they 
engage this that kind of rhetoric.
    Mr. Chairman, after many years of struggle, the House 
finally has a change to debate campaign finance reform with the 
knowledge that what you pass will have a good chance of being 
signed into law. I sincerely hope that your hearing today will 
be the first step towards prompt consideration of the Shays-
Meehan bill and therefore the elimination of a soft money 
system that has truly cast doubt over everything else that this 
Congress does. Thanks for your consideration.
    The Chairman. Thank you, Senator Feingold.
    Senator Hagel.

STATEMENT OF THE HON. CHUCK HAGEL, A UNITED STATES SENATOR FROM 
                     THE STATE OF NEBRASKA

    Senator Hagel. Mr. Chairman, thank you. And I am grateful 
to you and your committee for allowing us an opportunity to 
class up and come to your side of the Capitol where and 
abundance of common sense reigns.
    I developed a foundation of government and philosophy on 
this side of the Capitol back in the 1970s when I served as 
chief of staff to a Nebraska Congressman for 5 years. So I am 
and was early-on indoctrinated to the House side of doing 
business, so I appreciate an opportunity to say hello and share 
some thoughts on an important issue. And you all believe it is 
an important issue or you all wouldn't have a hearing.
    I would like to begin my comments by stressing that I 
believe and I think all Members of the United States Senate 
believe that we need to reform our campaign finance system. The 
lack of faith the American people have in our political process 
can be partly attributed to how our campaigns are financed and 
conducted. There are steps we can take to make the system 
better, like making it more transparent and more accountable.
    And I have acknowledged the leadership and efforts of my 
friends, Senators Feingold and McCain often, and again I would 
like to do it for the record. Again, it is because of those two 
Senators that we have been able to move campaign finance reform 
into the middle of the arena and engage in a very serious 
debate.
    In my opinion, the legislation recently passed by the 
Senate would not improve our campaign finance system. In fact, 
I believe it would make it worse. In fact, I believe much of it 
violates the first amendment to the Constitution. And my friend 
and colleague, Senator McConnell, has addressed that.
    There are things I do support in the bill, such as the 
increase in hard dollar donations. That was part of my bill. 
That increases the ability of candidates to finance and control 
their own campaigns with accountable, reportable dollars. I 
think this is a very key part of any campaign finance reform 
that you work through, the candidates keeping control of their 
own campaign, their own destinies, the conduct of those 
campaigns and the resources to be able to compete.
    The limits should be adjusted. The 1974 $1,000 contribution 
is worth $3,300 today, and again Senator McConnell I think 
developed that theme. And as Congressman Hoyer referenced in 
response to a question he asked Senator McConnell, there is 
little doubt in most of our minds that the chase and hunt and 
flow of soft money is a direct result of these ridiculous 
limits of 1974.
    And I am always a bit astounded when I hear the term 
``corruption'' thrown around, as it was often on the Senate 
floor during this debate, because how is the same dollar amount 
in today's dollars, the worth of that dollar today the same as 
if we move to $3,000 today, as the $1,000 that you had in 1974, 
how is that more corrosive and how is that more corrupt, that 
3,000 today, just to stay close to inflation, as was the $1,000 
in 1974?
    Senator Hagel. But in my opinion the most onerous aspect of 
the Senate bill that we passed is its impact on our political 
parties. Our parties play a vital role in our democracy. They 
recruit and support quality candidates for office. They are the 
only institutions in our political system that help challengers 
effectively compete against incumbents--both parties, both 
sides. They represent multiple interests in governance, not 
just single interests.
    Preliminary parties are not the problem, in my opinion, in 
today's politics, so why should which weaken them? The Senate 
legislation bans soft money contributions to the six national 
political parties, depriving them of approximately 40 percent 
of their revenue, even though much of what our national 
committees do is help candidates across the country running for 
State office in State elections. These are accountable, 
reportable dollars in the political system. These are all 
transparent dollars.
    The Senate bill regulation restricts State parties from 
spending State party funds on some of the most basic grassroots 
activity in a Federal election year, even if those activities 
never mention a Federal candidate. So what in essence we are 
doing is we are federalizing State law and State elections, 
even if they have no regard to a Federal candidate.
    Things like voter registration drives, get out the vote and 
activities that expand voter participation, I believe that is 
good. I believe that strengthens the system. I believe that is 
what we should encourage in our testimony.
    The national bill would federalize elections that occur in 
even-numbered years, elections ranging from governor, State 
legislator, mayor and even local school board members if those 
elections are held in even-numbered years. When they are, as we 
all know, you all know, there is always a Federal election in 
an even-numbered year.
    Under the Senate bill, any State political party wishing to 
engage in various grassroots activities in a Federal election 
year would be prohibited from using anything other than Federal 
money. Now we know what Federal money means. Under current law, 
that is hard dollars. It would ban States from legally using 
money allowed under their own State laws for these purposes. 
This would severely handicap the ability of State and county 
parties to increase voter participation.
    We must be very careful not to stamp out the grassroots 
political activities essential to our democratic system.
    However, the Senate bill does nothing to ban outside groups 
from raising unlimited amounts of soft money and spending it on 
radio and television ads.
    Now this is in response to may friend's, Senator 
Feingold's, comments about how well things were going until all 
of the soft money came on the scene. And he is correct. Many of 
you have been around for a while, and you know that so-called 
large amounts of soft money are a fairly new phenomenon in 
American politics.
    What my good friend Senator Feingold fails to mention is 
the counterbalancing weight of why that has happened in 
addition to limits on hard money. The advent and ascendance of 
third party organizations, left and right, Democrat, 
Republican, and wealthy individuals having no limitations, no 
accountability on how much they can put into a race--my race, 
your race, anybody's race, for me, against me. There is not 
even a disclosure requirement. But yet the Senate bill doesn't 
touch that except, as was commented on by Senator Feingold and 
Senator McConnell, the 60-day rule in general elections, the 
30-day rule in primaries.
    Now again we will let the courts decide whether that is 
constitutional or not. I am not a constitutional scholar. I am 
not even an attorney. But I find far more onerous than just the 
constitutional dynamic of that is that you all know, again, 
like I do, because we are practitioners of this business, we 
are not theorists of this business, that third party 
organizations, Sierra club on the left and NRA on the right and 
wealthy individuals that put millions of dollars into campaign 
ads, start beating your brains in or supporting you a year, 8 
months, 10 months, a year and a half out before an election.
    So, big deal, big deal that 60,000- or 30-day limitations 
all of a sudden are going to change that. It wouldn't change 
it. The only ones left out of the process are the political 
parties.
    As Morton Kondracke, editor of Roll Call said in a recent 
article, quote, if parties can't mount issue ads but 
corporations, unions and independent groups, wealthy 
individuals can, those special interests will have a greater 
influence on politics and on the officeholder they help elect, 
end of quote.
    Weakening our political parties will put outside groups on 
the extremes of our political spectrum in charge of campaigns. 
It will drive resources out of the accountable, reportable 
system into a new political world dominated by single-issue 
politics.
    As I said at the beginning of my testimony, we need to 
reform our system. The Senate has provided one alternative. I 
believe it is the wrong approach. The intentions were good, but 
the unintended consequences of our Senate bill will weaken our 
political system at the point where it should be the strongest. 
The Senate bill would not open the process to more people. It 
would put more power in the hands of those with the most 
resources, the single-issue wealthy individuals and 
organizations from both the political right and the political 
left.
    I hope the House will pass a campaign finance reform bill 
that genuinely improves the system, expands voter participation 
and is constitutional. I thank you very much.
    The Chairman. Thank you for your testimony, Senator.
    The McCain-Feingold bill bans soft money to State parties 
for Federal election activities, but your bill did not limit it 
to State on preliminary party level, correct? It just has the 
limit on the Fed?
    Senator Hagel. That is correct, Mr. Chairman. My bill set 
up a $60,000 annual limit across the board--unions, 
corporations, organizations, individuals who want to play in 
the soft money business. I did that because I thought that was 
a number--and I was not stuck on $60,000, but I thought it was 
a responsible number that would allow some monies to get into 
the parties for the kind of party-building voter turnout 
activities that I believe, as I said in my statement, is very, 
very important to this process.
    The Chairman. One of the problems I have had--and Senator 
Feingold obviously didn't have the time, due to some commitment 
for questions, but one of the problems I have had is that, in 
my opinion, McCain-Feingold federalizes State elections; and I 
don't think we should do that by imposing limits.
    In the voter registration area, in fact, if you have got a 
Member of Congress, as I understand it, running in the same 
years as, for example, our governor would be in Ohio, then the 
political parties would be under a certain limit because you 
have got a Federal candidate on the ballot at the same time as 
a State candidate. Therefore, we are telling them you are under 
a limit, whether it is a check from a person or a check from a 
company. I guess that is the part that puzzles me.
    I didn't pretend to follow the complete floor debate in the 
Senate. But we encourage people to vote, we encourage people to 
register to vote, we want young people to participate in the 
system, for our turnout to be greater. But then we turn to the 
two political parties in this and we say, well, you are going 
to be limited, though, because we do not like a particular type 
of money that went in. It was a union contribution or business 
contribution. I think we are doing the reverse. Was that at all 
debated?
    Senator Hagel. Mr. Chairman, I happen to agree with that 
point of view, and I have expressed it. I had an opportunity to 
express it. Unfortunately, I don't have enough of my colleagues 
who agreed with me on that point. But I think it is, as I 
referenced it in my testimony, an unintended consequence of 
this bill.
    I fear the consequences of that from many perspectives; and 
the many dynamics that will flow from that I do believe will, 
in fact, restrict the system. I don't know how it could be 
otherwise.
    To take your question further, and I alluded to this in my 
testimony, that I don't think any of us want a preliminary 
process that is so dominated by outside single-issue groups, 
both left and right. It does not make any difference that in 
fact both sides, both parties will be beholden to them, much 
more the reason that those groups and individuals will be the 
ones with the resources. Their single-issue agendas will drive 
not only elections, but, as you all know, elections have 
consequences. Elections are about governing, elections are 
about issues and policy, and that then will, of course, carry 
over into the governance of our country.
    The Chairman. Thank you.
    Mr. Hoyer.
    Mr. Hoyer. Senator, thank you very much for being here, and 
I thank you for your thoughtful testimony. I want to pursue 
your bill for a second.
    Your bill, as you have indicated, limits soft money to 
parties at $60,000. Now, I want to explore that a little bit. 
Because the premise of a limitation on expenditure is that too 
much of that will skew the playing field, as you point out, in 
terms of giving too much influence. You indicated you weren't 
wedded to $60,000, but, as Mr. Ney has pointed out, there would 
be no limitation to soft money going to State parties, am I 
correct, under your legislation?
    Senator Hagel. That's right.
    Mr. Hoyer. Now, if that is the case, wouldn't under your 
bill we simply shift soft money to essentially State parties 
and, therefore, in fact, if you think that a limitation is a 
good one, it is a limitation in form but not in substance? That 
is to say that money, if you are going to give $100,000 to the 
RNC or the DNC, you would give them 60,000 and then you would 
give 40 to the party of their designation at some State 
contest--New York, Nebraska, Maryland.
    Senator Hagel. Yes. Well, my answer to that, Congressman, 
is this: I don't believe we will ever be able to screw the 
system down so tightly--or I hope we never will--where there is 
no daylight left at all, if that is the intention of somebody 
to try to get around a rule for whatever reason.
    But, more fundamental than that, I don't think it is right 
for the long arm of the Federal Government to essentially 
federalize State election laws and dictate to States where they 
can force State elections and organizational efforts on behalf 
of parties to participate. I think it is blatantly 
unconstitutional, but I will leave that for the smart people 
and the people across the street.
    So, philosophically, I have a difference of opinion with 
some of my colleagues on that. I don't see why that is bad.
    Third point I would make, if in fact we all believe what we 
say up here, that we want to expand the voter turnout and the 
base and the population and let everybody participate, then in 
fact what soft money does as it works its way through State 
parties and State efforts is exactly that. We have very 
stringent disclosure requirements, and the media in my State of 
Nebraska--I suspect it is the same in Maryland--pays attention 
to that, and both parties--each party pays attention to what 
the other one is getting and where it is coming from. So I 
think a lot of that skullduggery and deviousness in this 
business is well addressed in the process that we have. But I 
think to go beyond the Federal campaign organizations to put 
limits is not philosophically what I think is the right think 
to do.
    I would just add one other thing. There was an interesting 
piece done in the Wall Street Journal during this debate we had 
in the Senate. The Wall Street Journal went back and charted 
the 2000 election cycle on soft moneygiving through the Federal 
parties. What it found is, if you limit it, if during the 2000 
election cycle there has been a $60,000 limit to Federal 
parties and their committees, you had--you would have 
eliminated about two-thirds of the soft money that went into 
the Federal parties and their committees.
    Now to your point, well certainly, that won't have stopped 
these people just going to Nebraska or Maryland and giving to 
the Maryland Democratic party or the Nebraska Republican party. 
No, that is true. But there is considerable evidence that this 
process does not work quite this way.
    I am sorry to spend so much time on it, but your question 
is a good question and a legitimate question. I can't give you 
a better answer than that because I think to go much below it, 
as I have already said, probably is--in my opinion isn't good 
for the system.
    Mr. Hoyer. I understand your point.
    Let me ask a second and last question, if I might.
    You heard the question I asked Senator McConnell. I am very 
concerned about the proliferation, as you say, of single-issue 
groups or multi-issue groups that communicate to the American 
public on a anew that sounds good. As I have pointed out, my 
example of citizens for the environment that are funded by the 
oil companies. Very frankly, sometimes I agree with oil 
companies, sometimes I don't. So I don't want to pick on them.
    But my point being that I think all of us listen to what is 
being said to us with an eye towards who is saying it and what 
bias they may have and with where they are coming from. I think 
that is normal human behavior.
    Your Senate colleagues, some have more credibility with you 
than others and you take what they say with more credibility. 
What is your thought with reference to this problem that the 
American voter has that he or she turns on the television gets 
this ad saying something and it is for Citizens for Better 
Government, which could be anybody in the world, from right to 
left or whatever. Do you think that is a problem, A; and, B, if 
it is a problem, have you thought about how we might solve it?
    Senator Hagel. Well, Congressman, I think it is a big 
problem; and I don't know one of our colleagues in either 
Chamber who does not understand it is a problem. And, yes, I 
have addressed it in my bill. I will give you a very real-life 
example of this and then tell you what I have done in my bill 
to address it.
    Many of you have followed the McCain-Bush primary with some 
interest last year. I was one of John McCain's presidential co-
chairmen. So John McCain and I are very close friends. There is 
not an individual that I respect more. On this issue we 
disagree, but that is the way it is.
    So I was very active in McCain's presidential campaign last 
year; and some of you might recall that there were a couple of 
brothers out of Texas who invented this very pro-American, pro-
environment, pro-everything good in life committee and had a 
wonderful name and then put in a couple of million dollars in 
TV ads in New York and just gutted John McCain, distorted his 
record, misrepresented what he had said, what he had done and 
how he had voted.
    What is interesting about that when you start to isolate 
what happened there--but, again, the first amendment comes into 
play there. Do they have a right to do that? There is no 
disclosure requirement on the books for the media or anyone to 
know who those players were. Eventually, they sometimes get 
found out. There is sometimes some accidental transparency or 
the media gets it.
    But one of the things I did in my bill--in fact, 
Congressman, one of the three main parts of my bill--in fact, 
this was in the Senate bill; this was passed as a stand-alone 
part of the McCain-Feingold bill--is a disclosure requirement. 
What it does, it takes the disclosure element of all ads, 
regardless of who pays for them, out of the purview of the 
Federal Election Commission to some extent but most importantly 
shifts it to a requirement under the FCC.
    So your FCC requirements now that you all are aware of, of 
the open files of all media purchased when you walk into a TV 
or radio station and say I would like to find out who bought 
such and such, how much money and all the rest, these 
preliminary ads that are being run now with no disclosure 
requirements would come under that disclosure law. So you would 
get the following:
    First of all, who paid for those ads. Now we are very 
protective and careful about how far you go down because I 
think there are constitutional dynamics here that the courts 
have ruled on. But who paid for the ads, how much money they 
had spent, how much money they have bought in ads yet to be 
played, an address, phone numbers, and if it is a phoney, dummy 
front group that you are talking about or any group, good 
group, bad group, their officers and addresses. So at least we 
have that element of disclosure.
    Now to go beyond that and further than that I think would 
constitutionally be a problem but I do address it that way.
    Mr. Hoyer. Thank you, Mr. Chairman.
    The Chairman. Mr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman; and thank you, Senator 
Hagel. I very much appreciate your testimony, and I believe you 
have a good, common-sense approach. I was impressed with your 
proposal when I read about the subject sometime ago and also 
your proposals as you offered them on the floor of the Senate.
    Senator Hagel. Thank you. I could have used your vote in 
the Senate.
    Mr. Ehlers. I would have loved to have been there to give 
you my vote in several ways.
    But I think the point is that you are altogether too 
sensible about this issue. I think the train has left the 
station. I find it very disconcerting in the House a few years 
ago a lot of Members voted to pass the Shays-Meehan bill--and I 
am not saying it is a terrible bill, but I think it could have 
used a little improvement. But it was just rushed through. 
Everyone was tired of it. Let's get rid of it. Let's send it 
over to the Senate and see what they do.
    I suspect that there may have been some of that feeling in 
the Senate this time. This has been around for a few years. 
This has been around for a few years. It is time to deal with 
it. Let's just pass it and be done with it. Let's not fiddle 
around with Hagel improvements and other things and the hope 
that the House will clean it up. Is that at all a fair 
representation of process?
    Senator Hagel. Well, like you, I would never dare impugn 
the motives of my colleagues or question their attitudes or 
beliefs.
    Mr. Ehlers. Well, let's make it hypothetical.
    Senator Hagel. That is the way we always do it, as you 
know, around here. But I would go back to my opening statement 
about the common sense and practicality at that point resides 
in this body, which always is not the case where I find my home 
these days.
    But I think there was a certain dynamic that was in play, 
to your point that this was an issue that of course politically 
over the last few years in the Senate had been kind of like 
your Great-Aunt Millie, she died, and we don't know what to do 
with her. Should we have a party or what should we do or act 
like she did not die and she is still alive? So we wanted to 
kind of move it off to the side.
    There were some other dynamics, but once we realized that 
it was a reality as to it was in fact going to be dealt with, I 
think most of the Members of the Senate just wanted it over. 
And I have some evidence of that.
    I asked members of the media once, and I don't believe I 
have ever gotten an answer, and I don't believe my staff has 
ever recorded this, but if you go back and look at the record 
of that 2-week debate in the Senate and chart back through 
those 10 days of debate--actually they were 9, of debate--and 
total the number of Senators who participated, you will find it 
striking as to how many didn't even come on the floor of the 
Senate and did not want to be seen dealing with this until they 
had to deal with various amendments on various bills. That 
tells me something, and it may answer part of your question.
    Mr. Ehlers. Thank you.
    Mr. Chairman, on that point I have been very impressed with 
the proposals put forward by Senator Hagel; and as we go down 
this path I can--we have to seriously take a look at those. 
They deserve serious discussion and debate and not the short 
shrift that they have received in the Senate.
    Let me say also, comment, I am disappointed that Senator 
Feingold couldn't stay. He gave a very persuasive argument for 
their bill, but he seemed adamant about the fact that all the 
proposals in it were constitutional. And I simply want to 
observe that, if indeed that were true, why did he and his co-
sponsor argue so vehemently that they had to maintain the 
severability clause in that document? I really suspect that 
substantial parts of it are unconstitutional, and that is why 
they fought that hard. That is something that concerns me, too; 
and I hope we can also clear that up as we discuss this issue.
    Senator Hagel. Congressman, may I interrupt for a moment on 
that point? Congressman Hoyer's senior Senator, Senator 
Sarbanes, noted one night on the floor of the Senate during the 
early stages of this debate that he was a member of this body 
and had an active hand in writing the bill that was passed in 
1974; and it was very instructive as to what Senator Sarbanes 
had to say about this, because he argued strongly for the 
nonseverability clause.
    Now in the end people voted differently, but his point was 
this: When the Supreme Court threw out much of what the 
Congress passed and the President signed in 1974--2 years 
later, the Supreme Court threw much of it out--Senator Sarbanes 
said this, that that changed the entire dynamic and flow of 
campaign finance law. Why? Because of the reality of the 
Supreme Court taking major pieces of that law and finding it 
unconstitutional and what was left you had to maneuver around 
and in fact, as Senator Sarbanes said, was not exactly or even 
close to the intent of what they had written in '74.
    So that is the danger again in a bill like this. We added I 
think 21 amendments to McCain-Feingold as it went down the 
track. Some of them are just blatant, no matter who has looked 
at them, on the constitutionality on that. Now you all have a 
chance to clean that up, obviously, over here; and I would hope 
that you would be able to work your way through all of that and 
do some of those things that need to be done. But if Senator 
Feingold was here, I would engage him as he and I have--John 
McCain have had conversations about some of those features that 
got tagged on the bill.
    Mr. Ehlers. Again, I thank you for your wisdom and 
testimony.
    Senator Hagel. Thank you.
    The Chairman. Mr. Davis.
    Mr. Davis. Senator Hagel, I want to commend you for your 
constructive role that you are playing in this debate.
    I want to go back to the disclosure issue you were 
discussing with Congressman Hoyer. In 1997, I worked closely 
with the freshman bill, Tom Allen and Asa Hutchinson. When we 
could not get the Democratic or Republican leadership to 
support us even having hearings on this issue, we had our own 
hearings. On the disclosure issue, we had groups come in on 
both the left and the right; and we asked them the question, 
why shouldn't they disclose the donors to their ads and why 
shouldn't they put their names on their ads?
    Their response was, if you force us to put our names on 
some of these ads, we won't run them anymore.
    Our response to that was, what is the problem? Because that 
is the accountability that you were referring to. Although Mr. 
Bob argued to his last breath that this is the anonymous 
political advertising enshrined in the NAACP decision.
    My question to you is, as I read your amendment, in the 
Senate you have tried to dig as deep as you could on the 
disclosure for identification of the purchaser of the ad and 
the officers, and my concern is that that may not go far 
enough. So this is really a question to you in terms of how you 
resolve this, if we accept Mr. Hoyer's premise that the 
constitutionality here is at least debatable in terms of 
disclosure.
    Because if you listen carefully to what Senator McConnell 
said, he said short of expressed advocacy there are 
constitutional issues, and the question here really before the 
court is really what is expressed advocacy. Can it be implicit 
or does it have to explicit? Shouldn't we be requiring a list 
of donors? Otherwise, a lot of these Washington law firms are 
going to be busy setting up corporations listing themselves as 
the officer, and we will never pierce the veil to find out who 
ran the ad and create the kind of accountability you want and 
avoid people running the kind of ads they don't want to put 
their names on.
    Senator Hagel. Well, that is the question.
    I would offer two thoughts. One is, again, the 
constitutionality of the issue, how far down the courts will 
allow you to go to protect the confidentiality and the privacy 
that is guaranteed under the first amendment. The courts have 
spoken on this over the years in certain cases. Now, it has 
never been exactly present as it might be or certainly will be 
if this bill is passed and the President signs it into law. So 
you have try to minimize, like we all do, being responsible 
legislators, that eventuality of having the courts throw it 
out.
    Second, you are exactly right, does that go far enough in 
really getting to the heart of disclosure?
    But there is another part of this. That is the practical 
part. We have found this out as we worked for over a year--my 
staff put in hundreds of hours on this--listening to the left 
and the right, all across the board. Common Cause was in, 
Sierra Club, NRA, abortion rights, pro-choice, and so on. And 
the practical reality is the political reality of the pressure 
that you get--that any of us get from those strong groups from 
the left and right who support Democrats and support 
Republicans. And if you start going too far and digging too far 
down, you might already be aware of this, you will find all 
kinds of political fallout. Now does that mean we should be 
inhibited from passing good legislation? No, but we also 
recognize the reality of how far we can go up here with some of 
this, and therein lies the real issue here as much as anything 
that we found on both sides of the issues.
    Mr. Davis. Thank you very much, Senator.
    Thank you, Mr. Chairman.
    The Chairman. We appreciate your testimony, Senator.
    Senator Hagel. Mr. Chairman, thank you and the committee 
for allowing me some time. Thank you.
    The Chairman. Before we go to the last panel, which is 
Congressman Shays and Congressman Meehan, I would like to add 
that we have a note from Senator McCain thanking House 
Administration for inviting him to be here today. He regrets he 
will be unable to participate in today's hearing.
    With that, we have Congressman Shays and Congressman 
Meehan.
    Congressman Shays, would you like to yield to your 
colleague, Congressman Meehan, to start?
    Mr. Hoyer. Of course, I have referred to this as the 
Meehan-Shays bill before you got here.
    Mr. Ehlers. That is not the first time you have been wrong, 
of course.
    The Chairman. Or the last.
    Mr. Shays. I guess that is better than McCain-Feingold, 
though, isn't it?

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

    Mr. Meehan. Thank you, Mr. Chairman, for inviting us to 
testify before the committee today. I want to congratulate you 
on your interest in campaign finance reform and look forward to 
what I hope will be a cordial and productive working 
relationship on this issue.
    I also want to thank the Ranking Member, Mr. Steny Hoyer. 
Mr. Hoyer has been a strong and steadfast leader in this effort 
to clean up our campaign finance system. We have benefitted 
from his guidance, his knowledge and his courtesy over these 
past few years; and we are very grateful.
    Mr. Chairman, Mr. Ranking Member, when I think about the 
evolution of our campaign finance system I think about the life 
and times of many a knit blanket. A curious child finds a loose 
thread and tugs it. A little bit of blanket dissolves. More 
tugs, and the blanket gets smaller. Eventually, what is left is 
yards of loose threads and not a shred of a blanket.
    If you haven't guessed it, our campaign finance laws are 
the blanket. And indeed they help shield our democracy against 
corruption and the appearance of corruption, but there isn't 
much of a shield left these days because of one loose thread 
repeatedly tugged at, soft money.
    I have gnashed my teeth before this committee in years past 
about six-figure checks being cut to the political parties from 
corporations, labor unions, and wealthy individuals, even 
though the law plainly bans corporate and labor contributions 
and caps individual contributions to parties. We worry about 
seeing more and more of these campaign ads masquerading as 
issue discussions paid for through prohibited corporate and 
labor treasury money, sometimes without a dime being disclosed.
    I look back at my testimony before this committee of years 
past, and I think I basically had it right, except I couldn't 
imagine then that our campaign finance laws could be unraveled 
much further. On that, I was wrong. In the past 2 years we have 
seen the rise of 527 PAC, an individual organization exempt 
from Federal taxes because it purports it is electioneering and 
yet at the same time considered exempt from Federal election 
law because it supposedly does not engage in electioneering. We 
have seen the rise of so-called joint fund-raising committees.
    You thought that soft fund money was just a party 
phenomenon. Think again. Now we have candidates for office 
themselves raising six-figure checks from prohibited sources, 
channeling it to their favorite State party and having it fund 
advertisements promoting themselves or attacking their 
opponents.
    The American people may not know the 2000 election cycle 
soft money totals $463 million raised by the national parties, 
$100 million spent by nonparty groups on broadcast sham issue 
advocacy, but they are not blind. They see parties and 
officeholders taking in six-figure checks, soft money galas 
attended by powerful interests with big wallets and a stake in 
legislation. And yet still no Patients' Bill of Rights, still 
no prescription drug coverage for seniors. They are connecting 
the dots in ways that none of us should take lightly.
    So I am here today in urgency because this soft money 
system is breeding a nasty strain of cynicism among the 
American people and because we have learned the hard way that 
when it comes to soft money the worst is always yet to come.
    But I am also here with great hope. This House has cast 
courageous and principled votes to end this corrupting soft 
money system twice. We overcame steep obstacles to restore the 
meaning of the laws long on the books, only to run into a then 
insurmountable Senate filibuster. That obstacle is now scaled. 
In early April of this year, the Senate followed the trail 
blazed by this House. It passed a bill to truly ban soft money 
contributions and reins in campaign ads that masquerade as 
issue discussion.
    Both Houses have spoken. Neither sees a future for soft 
money. We have spoken with one voice on the most fundamental of 
issues. We agree on much, so now we stand within arms' length 
of sending real campaign finance reform to the President's 
desk. I don't suggest that bridging that short length will be a 
pegboard, but I am confident that those who have cast their 
votes for real reform, 252 House Members, 59 Senators, will not 
let this unprecedented opportunity slip away.
    With the same courage and commitment that has now produced 
three separate votes by the full House and Senate for companion 
bills banning soft money and reining in sham issue advocacy, we 
can for the first time finish the job for the American people. 
So Memorial Day should not pass this year without the House 
being able to work its will on this issue. The American people 
will not understand delay. They are wondering what is taking so 
long. This month, not 2 months from now, not next election 
cycle, but this month.
    Mr. Chairman, Ranking Member Hoyer, I appreciate your 
inviting me to testify today; and I will be happy to answer any 
questions.
    The Chairman. Thank you.
    Mr. Shays.

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

    Mr. Shays. Thank you, Mr. Chairman.
    Mr. Chairman, I am here to talk about the Meehan-Shays 
legislation and also McCain-Feingold and to say, first, thank 
you, Mr. Ney, thank you, Mr. Hoyer, thank you, Mr. Ehlers, 
thank you, Mr. Davis, for caring about this issue. We may agree 
on a number of parts of it and may disagree on some others. 
Thank you for caring, and thank you for giving us the 
opportunity to even have a bill. There was a time when a whole 
large number of Members, a majority of Members, wanted a 
dialogue on campaign finance reform; and we weren't even given 
that opportunity. So, for me, this is very special.
    I have heard this legislation characterized in a whole host 
of different ways. For me, I will tell you how I characterize 
it. This is not an issue of freedom of speech being denied. 
This is about corruption of politics. This is about corruption 
in politics that is getting worse rather than better. It is 
about the shakedown by legislators in a temperate way but still 
a shakedown of the corporate executive and union leaders. 
Sometimes the reverse, of corporate executives and union 
leaders enticing members to do things against their better 
judgment. Not necessarily on how to vote on legislation but 
whether bills are even heard or not heard.
    I would love some day to have a debate with Mitch McConnell 
on TV. Every time I have had that opportunity I have found that 
he doesn't want to show up.
    But this is a debate about corruption in politics. That is 
what it is about. It is a debate about corporate treasury and 
union dues money drowning out the voice of individual 
Americans. That is what it is about.
    It is about the individual American who is being shut out. 
It is about the political parties that do not even turn to the 
individual Americans to seek financial help because it ain't 
worth it when you can raise $100,000, $200,000, a half a 
million dollars, a million dollars.
    And someone said, if this legislation passes, how different 
will it be when it passes from what we have today? That isn't 
the question you should ask. How bad is it going to get if we 
don't change it?
    I will predict to you, with no reluctance at all, because a 
few years ago we never thought people would have the chutzpah 
to ask a corporation for a million dollars or two or three, but 
leaders do. I predict to you they will ask for 10 million, and 
they will contribute 10 million because the other side is. We 
are in an arms race that is called the money race. It is for 
real. It is not an imaginary thing. It is not getting better. 
It is getting worse.
    We have a system that is corrupting our democratic 
institutions, and no one is being denied their voice. No one. 
We just want to enforce the 1907 law, the Tilman Act, that bans 
corporate treasury money in campaigns.
    We didn't make up that law. Mitch McConnell says there are 
things that are not constitutional. That law is 
unconstitutional. No corporate money. None in campaigns. That 
is the law. We did not make up the law in the Taft-Hartly Act 
that says no union dues money in campaigns, and we didn't 
invent the 1974 law that happened before our time that said no 
foreign nationals in campaigns. All three of those are the law.
    But there are two loopholes. The loophole is a created act 
in 1978 that started to devise this so-called soft money which 
is educational money. It wasn't campaign money. It was 
educational money. And in the beginning the parties used it as 
educational money. They got out the vote. They informed people. 
Win the election. They wouldn't have thought to use it to 
endorse a particular candidate or oppose a particular 
candidate.
    The second loophole is what we call sham issue ads. They 
are not sham campaign ads. They were very real campaign ads. So 
we were not passing judgment on whether they were sham ads. 
They are sham issue ads.
    What is the significance of issue ads? If it is an issue 
ad, it is not a campaign ad. If it is not a campaign ad, in 
comes the corporate money, in comes the union dues and the 
foreign nation money, all three of which are illegal.
    I want to say it one more time, because it is just so 
important to realize. We didn't invent the 1907 law banning 
corporate treasury money, but your committee needs to enforce 
that law. You have a moral obligation to enforce that law I 
think.
    We didn't invent the Taft-Hartly Act. During the war, they 
determined that it was wrong for union dues money to be in 
campaigns. We didn't invent it. They just codified it in the 
Taft-Hartly Act.
    You know, when we worked on this bill originally we did not 
even know that, because we see the corporate money, the union 
dues money and the foreign nation money--and I was not here, 
none of you were here in '74--with banning foreign nationals 
from contributing to campaigns.
    They come in through two loopholes, soft money sham issue 
ads. Please break these loopholes. Please enforce the 1907 law, 
the 1974 law and make the system work again. It worked in 1974. 
It worked in 1980. It slowly began to be eroded through these 
loopholes.
    I would just conclude by saying to you that you need to 
report out a bill soon. It is one thing to say, well, we need a 
campaign Election Day reform. That can wait. We do not have 
Election Day until next year. Right now, people are raising 
soft money. They are getting prepared to have sham issue ads, 
to use the corporate money and union dues money.
    I encourage you to bring out this bill. We need to vote on 
this bill sooner rather than later, I would think before 
Memorial Day.
    And, Mr. Ehlers, I want to say I respect you so much, but 
for you to say we have rushed through this legislation defied 
logic. We rushed it through? We had 200 amendments to the bill. 
We debated it for 3 weeks in 1998. We had over a week's debate 
in 1999. And we rushed it through? I don't think so. I think we 
have taken too damn long.
    The Chairman. Mr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman.
    I hope--I don't know if you were referring to my comments, 
Chris, or not, but I was not saying it was rushed through. I 
think people are simply tired of it and said let's vote for it 
and get rid of it.
    But what I really wanted to say--and I have to leave for 
another committee meeting. I just wanted to make a few 
comments.
    Chris, you are one of the most ethical if not the most 
ethical person I know in this body; and I deeply respect your 
feelings, your insight and particularly your intensity on this 
issue. I think that is very important, and I really respect you 
for that.
    I was also pleased by your opening comments, because we 
have a chairman that I believe is intent on producing a 
campaign finance bill. It may or may not be the one you like, I 
don't know that, but--and I heartily agree with his objective. 
I think it is time to resolve this issue.
    Mr. Shays. I would like the record to note I agree with 
you. I am nodding my head, but I would love the transcript to 
say I agree with your comments about the chairman and what this 
committees is going to do.
    Mr. Ehlers. Thank you. I appreciate that, and I have hope 
we can progress.
    The thing that concerns me, or one idea, item that concerns 
me, you made the comment and earlier Senator Feingold made the 
comment very strongly that soft money is corrupting our 
democratic process. I hear that a lot from Common Cause, too. I 
am a charter member of Common Cause. I have been with them all 
the time, and I am still a member, but I get dismayed by the 
continual comment about the corruption in the Congress. I just 
do not see it.
    Now, I am not a fan of soft money and I am not defending 
soft money, but I just don't see the corruption. I think we 
have a group of very fine individuals here and I--the only--and 
I have some major donors. Never has any of my major donors 
asked me to vote a particular way.
    Mr. Shays. Could I ask you a question? With you, haven't 
those only been a thousand dollar contribution or less?
    Mr. Ehlers. Yes.
    Mr. Shays. What happens if that donor is giving you a 
million dollars?
    Mr. Ehlers. I suspect--well, in fact, some of my 
constituents could write me a check for million dollars and not 
notice it.
    Mr. Shays. They haven't. but they give it in soft money to 
the parties, and the parties schedule votes and--some of which 
never see the light of day--and I believe with all my heart and 
soul it is the influence of these gigantic sums.
    Mr. Ehlers. That is where we disagree, because I don't 
think it has that influential part. What I found out is that 
the few individuals who have somehow thought that their 
contributions to me would influence my votes were very small 
contributors. I have gotten several angry letters from some of 
those who have contributed $50 and said, I gave you $50, and 
now you voted against this issue.
    Mr. Shays. That is what we want to do. We want to restore 
this individual kind of voter that can give you up to a 
thousand dollars or maybe up to 2,000 under the Senate bill. I 
don't think that corrupts. I think a million dollars corrupts.
    Mr. Ehlers. As I have always told my constituents when they 
talk about this, the most important thing in campaign finance 
reform is vote for their individuals on the basis of their 
integrity. If you elect candidates with integrity, you don't 
have problems with corruption, no matter the money.
    I agree with you. There are many things we can do to 
improve the testimony, and I will be happy to do that, but I 
just want to register some concern about this and painting this 
that we have a very corrupt system. I really don't see the 
corruption, and I don't want the American people to think that 
this is basically, intrinsically a corrupt institution, so I 
just want to get that clarification out there.
    I am sorry, I have to leave for another committee hearing.
    Mr. Shays. Thank you for hearing our testimony.
    The Chairman. Mr. Hoyer.
    Mr. Hoyer. Thank you very much, Mr. Chairman.
    I agree with Mr. Ehlers that this is not a corrupt system. 
Nor do I believe we have corrupt Members. But anybody who has 
been involved in this business for very long knows there is a 
nexus between large dollars and the apparent influence if not 
the influence on the legislative process. I just think that 
is----
    Mr. Ehlers. Will the gentleman yield?
    Mr. Hoyer. I certainly would.
    Mr. Ehlers. If you want to talk about money or corruption 
affecting politics, it is not on the direction of contributor 
towards candidate. It is a second order effect--to use a 
physicist term--it affects who gets elected. Those candidates 
who attract the most contributions are more likely to get 
elected. There are--a company or organization or whatever it 
may be that gives all of its money to a certain individual it 
favors is more likely to influence the institution by having 
that member elected.
    But it is not that Members are voting a certain way because 
contributions have been given to them or even that parties 
operate in a specific way because of contributions. That is my 
point simply. I am not saying that money doesn't influence 
politics, but it influences it in the selection of the 
candidates or the election of the candidates, rather than on 
the behavior of the elected officials.
    Mr. Hoyer. I appreciate the gentleman's comment and think 
there is a lot of merit in it.
    Mr. Ehlers. I thought it was true.
    Mr. Hoyer. I think there is a lot of merit, and it is true 
as well.
    Without getting into the debate here as to the chicken and 
the egg, which is what you are talking about, I agree with your 
basic premise that individuals, small donors and large donors 
tend to support those candidates who support those policies 
that they believe are good for them. I agree with that premise.
    But there is always a judgment to be made during the 
process, and I think that--so you have both the influence at 
the front end--but I think Mr. Shays is correct. There is 
influence at the end as well. In any event, I appreciate the 
gentleman and his comment.
    I would like to ask Mr. Meehan or Mr. Shays, Mr. 
McConnell's premise is that, as it relates to McCain-Feingold, 
that it is an incumbent's bill. I would like you to comment on 
that.
    Mr. Meehan. Well, first of all, I think that argument is 
really opinion, but I don't think the facts back it up. 
According to Charlie Cook, the number of competitive House 
races has actually declined since 1996 when we saw this 
explosion of soft money, from 120 competitive races in 1996 to 
barely 40 in the 2000 election cycle.
    I think what is more telling also is the incumbent 
reelection rates with the soft money system. You know, when the 
soft money system firms started to take hold we saw 94 percent 
of House incumbents that were reelected in 1996, 97.8 percent 
in 1998, and 98 percent in 2000. So I just don't think the 
facts bear this out.
    I notice there was a recent Roll Call article, April 5 of 
this year, entitled NRSC Seeks to Deter Challenger. How are 
they seeking to deter challengers? By transferring soft money 
to parties in Oregon and New Hampshire for broadcast ads.
    So it strikes me that soft money has been used to buck up 
incumbents who are in office, and I just don't buy this notice 
that somehow it is to the benefit of challengers, because the 
fact don't pay that out at all.
    Mr. Shays. The best example of that is our bill is not law 
right now, correct? How many incumbents lost this election? How 
many in the House? How many incumbents lost? out of 435 
Members, how many incumbents lost? I think of one Democrat, Mr. 
Gejdenson. We lost four Republicans. But less than 10? So we 
are talking about the present system somehow not favoring 
incumbents. I mean, that is a joke.
    And he did not say anything to support it. He just makes 
the comment. Well, no disrespect to the gentleman, he just 
throws it out there.
    I will tell you what it is. What the present system does is 
it gives someone like Mitch McConnell, who is head of the 
Republican Senatorial Campaign Committee, the opportunity to 
reward his friends who think like him and not contribute to a 
Bob Franks, who is for reform; or not to encourage Mr. Castle 
to run in Delaware and encourage an incumbent to stay in 
office, even though he would lose; to not help a Ms. Smith out 
in Washington because she wasn't of his persuasion in terms of 
for reform and against it. It enables the leadership to shape a 
party in their view.
    That is what it is going to do. It is going to restore some 
power to the individual candidate again; and the leadership, 
with no disrespect to either side of the aisle, it will take 
away some of their ability to reward and to give money to 
certain people.
    Mr. Hoyer. Well, you understand the leadership on my side 
of the aisle is for Shays-Meehan.
    Mr. Shays. I know that. And let me say this. I need to say 
this: The Democratic leadership has played straight with us 
from day one. In 1998 and in 1999, they could have played 
games, and they are playing straight with it now. We wouldn't 
not have gotten to first base if they had played games, and 
they could have allowed this to die and then blame us.
    Mr. Hoyer. Last question I will ask, because I know the 
hour is getting late and Mr. Davis, who really is our expert on 
this side on campaign finance reform, intimately involved as a 
freshman and has worked every year since then on campaign 
finance reform, I want to leave time for him. But the 
constitutional issues, the issue of severability issues, 
clearly there are nonpoliticians who have concerns about the 
issue of limitation of funds. Would you speak to that?
    Mr. Meehan. The Supreme Court has ruled as early as last 
year in Shrink v. Nixon that contribution limits are in fact 
constitutional if they are contributions for political 
advertisements. They have upheld disclosure requirements for 
money that is used in politics.
    There is nothing in this bill that seeks to regulate 
discussion of issues. Issue ads are legal and will be legal 
once this bill becomes law. Nothing in it at all. All we say is 
that, when you run campaign ads, then the public has a right to 
know where the money comes from, and the public has a right to 
expect that there would be limits that would be in effect. That 
is basically what we seek to do.
    The other thing people say is, how will you be able to 
determine what is a political ad and what isn't? The Brennan 
institute did a study using the test that we used in our bill, 
and they found that in the last election cycle 99.5 percent of 
the ads were campaign ads--were meant to be campaign ads. 
People could run issue ads all the time and use whatever money 
they wanted to.
    Mr. Shays. I would like to answer it this way: Issue ads 
are legal, and you can have corporate money and union dues 
money. When they become a campaign ad, then they are also 
legal. But what isn't legal is the corporate money and the 
union dues money and the unlimited money in a coordinated way.
    Any individual--and it is based on the law. We do not 
change the ruling in 1974. Any individual can spend whatever 
they want for or against a candidate or for themselves. They 
can still do that. So we do not change what an individual can 
do.
    When they coordinate, if it is a campaign ad, then they 
come under the campaign law. They can still run the ad.
    I think of Right to Life. All of their grassroots 
supporters, NRA, they can run million dollar ads, but they 
cannot use corporate treasury money and union dues money and 
unlimited money from an individual. That is all.
    Mr. Hoyer. Thank you. Thank you, Mr. Chairman.
    The Chairman. I just have a couple of brief comments, and 
then I want to get to Mr. Davis.
    But some of the things--and you weren't here today, but 
some of the things that have been said today--I think I should 
probably go back in my Appalachian district that I represent. 
Some of the stuff has run deeper than the biggest--biggest, 
deep mines we have got around the building here. So I should 
get my boots to run through it. To make blanket statements of 
corruption which has been made I think is just wrong. There are 
a lot of clean people in politics and there are some that are 
not clean, whether it is at local level or out here in the 
Congress. I think we do have to be careful with the emotion of 
the moment and the emotion of the issue.
    The other thing I wanted to just make I guess crystal 
clear, I think our leaders have played straight on this. I know 
the Speaker of the House has with me. Mr. DeLay sure has. He 
does not like the bill. He makes no secret of that in the 
newspapers or here when he testified. But the Speaker of the 
House has a time frame, as he mentioned, for this bill; and so 
do I.
    I would like to note, because Senator McCain wanted it 
passed in 2 weeks and we have had this bill before, but we have 
had routine bills that passed one Chamber and never get passed 
again. This is a different time and a different flavor. We do 
not have some Members--some lost their election, but some new 
Members, because of open seats, and 42 Members have introduced 
bills in this committee that I think have a right. We are not a 
rubber stamp for the United States Senate--shouldn't be. We 
shouldn't be a rubber stamp for the U.S. Senate. If I was in 
the United States Senate, I would probably say we should be. 
But we should not be a rubber stamp for the U.S. Senate.
    This bill had a debate January, February, March in the U.S. 
Senate, came over to us April 2, I believe. We went in recess 
April 5,. We couldn't have drug people back to this building if 
we had to. Now we are back, and within 1 week we have got a 
hearing.
    I also want to, I think, express my opinion that this is an 
important issue. I believe both of you have acted in good 
faith. I have debated Mr. Meehan on television. I think we had 
a great debate. He looked younger than I did on TV, but still a 
good debate.
    But I do believe that both of you act in good faith, and 
you are deeply interested in the issue. But I think the 
American people care that their gasoline went up. I think they 
are on the edge of their seats on that. I think they are on the 
edge of their seats that this winter they can barely pay their 
bills after having 300 or 400 dollars in their checking account 
and their home heating doubled. They get up in the morning and 
take their children to school, whether it is single moms or 
dads or grandparents, whoever is raising the children. They 
struggle all day long, and they wonder what has happened to 
their paycheck. Where has it eroded to for whatever reason? I 
think that is what the American people are on the edge of their 
seats for. I don't believe the American people are on the edge 
of their seats for this particular bill.
    But, still, having said that, it is still an important 
subject and an important measure. I just want to make it clear 
I am not the undertaker for this piece of legislation. I fully 
expect by the end of June, this committee--probably 30-some 
days later than both of you would like it, but by the end of 
June this committee somewhere around that time should produce a 
product. What it will look like I don't know. But it is a free 
flow of amendments in the process here.
    Two points I guess I would like to ask about is the 
provisions of McCain-Feingold, in my opinion, nationalize, 
federalize voter registration, because it comes into a State 
and says, because I am on the ballot with our governor in the 
State of Ohio that year, there is going to be certain limits on 
how political parties can use their money for voter 
registration.
    I know we all agree we want to turn out voters, we want 
young people and people of all ages to vote. Do you think there 
is any--what is your opinion on that nationalization or 
federalization of----
    Mr. Shays. Could I just respond to the timetable issue? I 
did rightfully point out the good faith that I have seen in the 
Democratic leadership. I would like to, as well, have the same 
courtesy to say that Denny Hastert, the Speaker, has been an 
extraordinarily straight shooter on this. He has had 
disagreements within his own leadership, and he has steered his 
own course.
    Last Congress, we took it up in the first year. He said he 
would like to take it up this summer. I would hope, if you 
cannot do it--vote on the bill--and, Mr. Chairman, let me say 
that we have had conversations, and I have total faith in your 
fairness and also David Dreier on the rule. So you do not have 
any question mark in any of our supporters that I know that are 
going to question your good faith here. I certainly, if I hear 
of it, I will step in and give them a different view.
    In terms of your question, if you can find a way to make 
sure that voter registration does not become the loophole to 
bring in corporate money and union dues money into individual 
races, then let's see how you do it. But, right now--that was 
the intent years ago, and it has become a gigantic loophole. In 
came the corporate money, the union dues money, the foreign 
national money without limits; And that is, I think, wrong, 
Contrary to the law.
    Mr. Meehan. In addition to that, Mr. Chairman, there is 
nothing wrong with State parties using hard money for this 
effort. That way it is disclosable. People know where it comes 
from.
    But there also was an amendment passed in the Senate bill 
by Senate Levin that would allow some flexibilities for State 
parties to raise some limited soft money with a limit of 
$10,000 to get real, genuine get-out-the vote or generic 
Republican or Democratic advertisement. That was a get-out-the-
vote for the ticket. That was a compromise that was agreed to 
to try to deal with this issue.
    But, look, there is nothing wrong with using some good old-
fashioned hard-dollar low contributions to get people 
registered to vote and get them out to vote; and if there has 
to be some level of soft money used, the amendment offered by 
Senator Levin provides that opportunity to State parties.
    The Chairman. I think it ought to be disclosed if you have 
soft money. It ought to be fully disclosed.
    Mr. Shays. I would like to say I think it should be 
disclosed. One of the challenges, though--and give me the 
opportunity to say I have no problem with Tom DeLay on this 
issue. And I have people who ask me about it because he is 
going to try to kill it. He does not like the bill, and he is 
up front. I would rather deal with a person who is up front. I 
know where he is coming from. We just disagree. He could be 
right, and I could be wrong. He could be.
    But disclosure is what they asked for, and when they had--
they, the opponents of this bill--when they had the 527, they 
did not want disclosure. They did not want it, because some of 
the issue groups did not want disclosure.
    I think all of that should be disclosed. If you can--what 
are the challenges that we have now on our side here trying to 
marshal the bill though is some good amendments kill our 
coalition, and some bad amendments gut the bill. It does us no 
good to have people offer a good amendment and not be there to 
help pass it at end. All they have done is loaded the bill 
down.
    I would love to just mention quickly about severability. We 
are dealing with 21 amendments that passed the Senate. They 
were not all eagerly accepted by the reformers who were moving 
forward McCain-Feingold. There are one or two of those 
amendments that I think could be unconstitutional. That was the 
whole point. We are dealing directly with each other. They 
wanted to load the bill down with one or two things that might 
be questionable constitutionally. That is one reason why this 
bill needs to be changed ever so slightly I think, but maybe 
have to be changed.
    The Chairman. Do you support paycheck protection and also 
corporate protection?
    Mr. Shays. I support something better. Enforce the dang law 
of 1947. Paycheck protection means that, if a union member 
wants to, they can have their uniform dues go to campaigns. I 
think the Taft-Hartley Act, which makes it illegal, is the way 
to go. The paycheck protection ignores the corporate issue. You 
invest money in stock, you work for a corporation, you do not 
get a say in the money they give. So it is really one-sided. If 
you are going to deal with paycheck protection by unions, you 
have to find a way to deal with the other side.
    I will make this point. Sorry to be redundant. It is 
against the law for unions to contribute to campaigns. It is a 
stronger provision than what some advocates who want to go 
after unions are advocating. Enforce the 1947 law. Do not let 
it even be contributed. Have them do it through political 
action committees voluntarily.
    The Chairman. Do you have the same opinion, Mr. Meehan?
    Mr. Meehan. I do, and also enforcement of the United States 
Supreme Court decision in Beck as well.
    The Chairman. One final--and if you could make the answer 
short. I want to get to Mr. Davis, and I apologize to him.
    One final point that bothers me a lot in the bill, the 
scenario that I have got that bothers me, I guess, is that if 
you have, let's say, the National Rifle Association or Gun 
Control Incorporated, and they have 100,000 members each, and 
they can take in--or under the bill they cannot take in the 
soft money contributions from companies or unions and use it 
within 60 days for radio or television. Okay?
    Now, if you limit them--and let's say we do limit them, Gun 
Control Incorporated and the NRA. What about the wealthy 
individual, the multimillionaire who decides to form his or her 
own PAC and go on TV and say things about both of you or me and 
Mr. Hoyer and Mr. Davis on this issue, whether it is for gun 
control or against gun control? That is--we have limited 
hundreds of thousands of people who contributed--because some 
corporate or union money comes into those two groups we have 
limited them, but again here is the multimillionaire, who can 
form their own PAC and do what they want.
    Mr. Shays. What you have limited is enforcing the 1907 law 
and the 1947 law that says it is illegal. What you have limited 
is unlimited sums, but you haven't limited the rank and file 
people of those organizations to contribute.
    The Chairman. But the multimillionaire can use a million 
dollars to have issue advocacy the day before the election on 
radio or television, though.
    Mr. Shays. As long as they do not coordinate it. That is 
the law. That is the Constitution of the United States. We do 
not prevent that.
    The Chairman. Okay. Well, we do prevent it if you took the 
wrong type of money if you are gun control or NRA.
    Mr. Shays. I don't understand. We go along with the Supreme 
Court rules that says an individual can spend whatever money 
they want. We do not do that. And Mitch McConnell has tried to 
give the impression that somehow we are interfering with the 
ruling in Vallejo. We are not. We are staying very sincere to 
that ruling.
    The Chairman. My problem is that the millionaire who let's 
say is for gun control can spend all that they want the day 
before the election on radio and TV, but yet this group----
    Mr. Shays. And the millionaire who is against it can do the 
same thing.
    The Chairman. Right. But the hundreds of thousands of 
people, because there would be some union or corporate money in 
there, the quote, soft money, couldn't do that issue advocacy 
60 days before on the same radio and television. Influence is 
influence is influence; and this is by two individuals spending 
a million each versus 100,000 on this side and 100,000 on this 
side, because they have union or corporate money in there and 
cannot then use that money.
    Mr. Meehan. Sure they can. If those individuals were to 
send money to organizations, hard monies, and there were 
thousands of individuals, they put it into a hard money 
account, and they could use that money for politics. They could 
influence an election with that money if they wanted to do it. 
They would simply put it into a hard money account.
    Mr. Shays. There is no limit on what they can spend.
    Mr. Meehan. No limit at all.
    Now, if it were corporate money or soft money, they would 
use that--the NRA would use it to convince people to drop their 
position on guns, which is what issue advocacy is really all 
about; and there is no prohibition at all when it comes to 
that. In fact, a group with thousands of people, in some cases 
millions of people across America who pay dues into it, they 
would be able to set up a system whereby, if it is hard money, 
they would be able to use that money. But the American people 
would have the right to know where it came from. It would be 
disclosed. Just as if you had a wealthy individual who made a 
contribution, that would be disclosed as well.
    The Chairman. You don't have to answer, but then, 
obviously, you could use the soft money if you fully disclosed 
it. You allow soft money to be disclosed. Because if you used 
hard money and it is disclosed, it would be okay to use soft 
money if it was disclosed?
    Mr. Meehan. No, the soft money couldn't be used for 
electioneering. The soft money could be used for issue 
advocacy. In other words, if the NRA wanted to influence 
Americans on their positions relative to gun control, they 
would have that flexibility, the same flexibility they have 
today.
    The Chairman. I am sorry, Mr. Davis. Go ahead.
    Mr. Davis. Thank you, Mr. Chairman. I am glad to hear you 
get specific. It helps us understand the rhythm of the 
committee here. You have got a lot of votes.
    I want to commend you all on getting as far as you have. 
But you know what happens when you get closer to the goal line, 
and I think your efforts together with Senators McCain and 
Feingold has dispelled the myth that the public doesn't care. 
You knew they care. They just thought we were a hopeless lot, 
and it is not a hopeless lot.
    I want to ask about the two major issues that Senator 
McConnell harbored upon as to what he considered to be the 
deficiencies in the bill, both of which he voted for in the 
Senate, interestingly enough, the millionaire amendment and the 
broadcast amendment.
    Mr. Shays. He voted for both of those?
    Mr. Davis. He did.
    Mr. Shays. And he thought they were stupid amendments?
    Mr. Davis. I think the word he used was ``stunningly 
stupid''--as well as the whole bill.
    I guess my question to you is what--I am, of course, a 
cosponsor of the bill, but we need to look at those amendments 
carefully. What advice do you have for us as we begin to 
venture into those amendments? And does the broadcasting 
amendment clearly implicate the Commerce Committee in your 
judgment?
    Mr. Meehan. First of all, I think, as a matter of public 
policy, the intent of that amendment would be to sell political 
advertisement at the lowest possible per unit rate and not have 
broadcasters preempt time. In other words, it is one thing to 
have the law that you can buy political advertisements, require 
that at the lowest possible rate but then say we can get more 
money in prime time, therefore, you can't buy political 
advertisement.
    My reading of the amendment is that it is a good amendment 
from a public policy perspective. The fact of the matter is, 
the reason why the cost of running in elections is so high is 
because of television time. I think, on the whole, this is a 
very good amendment. I don't think it necessarily means that we 
have to bog the entire bill up in committee. We can get this 
bill to the floor and have a vote up and down. My initial 
reading of it is that it is a good amendment. But I think the 
Members have to look at that. I think once the Members hear 
about the amendment, read the amendment, they will believe it 
is a good amendment.
    Now the other provision relative to the millionaire 
provision, it is something that the Senate specifically left 
out provisions vis-a-vis the House. We need to have a 
discussion among the 250 or so supporters of campaign finance 
reform in the House to determine what course of action should 
be taken. We are having meetings. We want to talk to Members 
and get input.
    Now, initially, the language in the Senate needed some 
adjustments. Because in the provisions initially, if somebody 
had $5 million in an account and had an opponent that spent a 
million of his or her own money, then the spending limits would 
triple automatically for the incumbent who already had $5 
million in the bank. We need to look at these provisions and 
have a discussion in the House about them and determine what 
the will of the House is.
    Mr. Shays. Mr. Davis, the one thing our bill does not do, 
and I think Mr. Ney was drawing some focus on that, is that we 
do not have as good a solution on what happens when you run 
against a wealthy opponent who can spend unlimited amounts. The 
best that we have was done by the Senate, not the House, and 
that was to increase the overall limit that somebody could 
contribute from $25,000 to $37,500 and to go what they could do 
as a party from $25,000 to $30,000.
    Ultimately, the parties, in my judgment, are the ones that 
are basically going to be able to contribute to the candidate 
who needs the help, because we have seen the Senate lift that 
amount. And Mr. Meehan is right. Ultimately, we have 252 
Members who supported this bill last time. They are going to be 
weighing in on whether the individual limits should go up. But 
I would make an argument and I would certainly recommend to 
them that we need to do that to deal with this issue.
    But the big flaw with the millionaire's amendment is, just 
to be real precise, if a Senate Member has money already in the 
account of a million or two, the person running against them 
does not get to raise three times as much, and that would be 
wrong. So we have to deal with that. Your committee has to deal 
with that.
    Mr. Davis. My last question has to do with the indexing, 
and you started to allude to it, that the Senate has inserted 
in their bill and you all's initial reaction to that.
    Mr. Meehan. I would prefer it not to have the indexing. I 
would prefer that we not necessarily double the hard money 
numbers. But the fact is, under the present system, we do not 
have any limits. There are unlimited contributions in soft 
money. I think that that is one of the issues.
    We need to talk to the Members of the House who have 
supported campaign finance reform and determine whether or not, 
through negotiation with Members of the Senate, we could reach 
a compromise. We need to have a continuing dialogue, and I am 
interested in what other House Members believe that we should 
offer on that. But I do think it is important to get this bill 
to the President's desk as soon as we can, and that may 
necessitate some compromise in order to get this bill to become 
law.
    The one other point that I would make relative to this bill 
being a priority, look, people all across America want a 
Patients' Bill of Rights. We have bipartisan support for a 
Patients' Bill of Rights. But they see the HMOs have 
contributed millions of dollars on one side of the issue to the 
political parties, the trial lawyers have contributed millions 
of dollars on the other side of the issue, and we see gridlock.
    They want a prescription drug benefit that is part of the 
Medicare program, and they cannot understand why we can't get a 
prescription drug benefit for seniors across this country. Then 
they pick up the newspaper and read that the pharmaceuticals 
contributed $15.7 million in soft money. That is when they say, 
why can't you clean this system up to get policy and health 
care that makes sense for average Americans? That is why I 
think it is so important.
    Mr. Shays. When we voted out the bill in the House in 1998 
and 1999, there was the recognition that ultimately we would 
have to deal with the hard money issue, because you would be 
basically forcing the political parties to go through 
incredible withdrawal. So I compliment the Senate in trying to 
deal with this issue.
    You could make an argument that, based on the 1974 law, 
which I thought worked well, the individual contribution would 
be $3,750 and PACs would be over $18,000, versus $5,000. So you 
could make that argument if you wanted to be consistent with 
the 1974 law. So what the Senate did was go up from $1,000 to 
$2,000.
    And I just want to reinforce what Marty has said. We have 
lost some reformers on this issue now. And I look at limits. It 
is not that we went from a thousand to 2,000. It is that we 
went from a million dollars down to 2,000. That is the way I 
see it. I mean, it seems so obvious to me. Maybe I am getting 
too arrogant about this, but seems like it is so obvious.
    And the indexing, I think, is essential. The indexing is 
essential if you are going to do it, if you want to avoid 
constantly having to deal with this issue every 10 years when 
it gets out of whack and people start to find ways to get 
around the system.
    Mr. Davis. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Davis. I want to thank both of 
you for your time today and patience.
    Mr. Hoyer.
    Mr. Hoyer. Before our colleagues leave, first of all, I 
thought your testimony was excellent. It is obvious to all of 
us that you have been enmeshed in this issue for I guess a long 
time--I don't know the number of years, but a number of years--
and clearly are experts in the House on these issues; and I 
commend you for your passionate advocacy of trying to reduce 
what I think most Americans think--and I heard Tom DeLay, and I 
understand his argument about buying cosmetics and this, that, 
and the other, but I believe Americans believe that politics is 
too much about money and not about them. And I think that is 
what this bill is about.
    But let me say something to both of you. I understand your 
desire--and before both of you got here I asked that we try to 
report out a bill by Memorial Day. I don't know whether we can 
reach that or not. But let me urge you as well to keep in mind 
that if we have a campaign finance system that is honest and 
above-board and limited and disclosed to the public and they 
make decisions based upon that disclosure and are based upon 
their confidence in us and they go to the polls and cast their 
vote and that vote is not counted, we have a problem.
    So while I understand when you say that election reform is 
not going to happen until November of 2002, let me urge you to 
consider the fact that if we do not act by September, States 
will not be able--and we are going to hopefully give some 
assistance to States--States won't be able to implement reforms 
to ensure that every vote is counted, that citizens have full 
access and education and that our election officials are well 
educated.
    So I think both of these are critically important issues if 
we are going to increase the citizens' confidence in their 
democracy. So I think it is not one or the other, it is both 
that need to move forward as quickly as we can move them 
forward.
    Mr. Shays. But as separate items.
    Mr. Hoyer. Yes, absolutely.
    Mr. Meehan. But I agree, Mr. Hoyer, as well that both of 
them need to move forward and would point out, because I have 
heard some people say maybe we should DeLay campaign finance 
reform for this. The same people who, in many instances, are 
opposed to campaign finance reform are also opposed to moving 
quickly on election reform. So I think we need to do them both 
but have them be separate issues.
    The Chairman. I assure you they are going to be separate. 
The next time we see punch cards, we want to see them in the 
Smithsonian.
    I ask unanimous consent that witness be allowed to submit 
their statements for the record, and that those statements be 
entered in the appropriate place in the record.
    Without objection, the material will be so entered.
    I also ask unanimous consent that the staff be authorized 
to make technical and conforming changes in all matters 
considered at today's hearing.
    Without objection, so ordered.
    Having completed our business, we are now adjourned. Thank 
you.
    [Whereupon, at 5:37 p.m., the committee was adjourned.]

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