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					                                       Timeline

               Interest Groups and Campaign Finance
Basic/Meta Information

 ID#                                                 TL010
 Date of Re-Write                                    August 2006
 General Topic/Chapter                               Campaigns and Elections
 Author                                              Bryan Reece

Overview
What do Enron and Arthur Andersen have in common?

    a. They allegedly colluded to create false corporate accounting statements, resulting in
       Enron's bankruptcy and the loss of thousands of jobs and billions of dollars.
    b. They donated a combined total of more than $11 million to federal candidates and
       political parties during the 1990s, mainly to Republicans but also to key Democrats.
    c. Both firms benefited considerably from the passage of legislation affecting the energy
       and accounting industries during the 1990s.
    d. All of the above

Enter the Timeline to find out!

The answer is "All of the above." The corporate scandals involving Enron and other huge
companies have, among other things, revealed the extent to which well-aimed campaign
contributions can have a far-reaching effect upon the passage or defeat of proposed
regulatory legislation in Congress. For many Americans, the fraudulent accounting practices
of Enron and other corporate giants came as a shock, eroding their trust in Wall Street and
sending the stock market into a dive.

For those who have
been complaining
for years about the
corrosive influence
of money on the
American political
system, however,
the fraud committed
by Enron and Arthur
Andersen hardly
came as a surprise.
Nor did the fact that
these companies
were able to get
away with their
financial chicanery for so long, given the loose regulatory climate on Capitol Hill throughout
the 1990s. If there is a positive benefit to these scandals, critics contend, it is the momentum
that they have produced for serious campaign-finance reform.

The Enron/Andersen debacle provides a useful starting point for an examination of the role of
interest groups in American politics. In a system that divides power among national, state,


                                                                                               1
 and local governments, and then further divides it among legislative, executive, and judicial
 branches of government, individuals and corporations have plenty of opportunities to voice
 their demands to government officials. However, because of the multitude of channels
 available to those who wish to influence government policy, it makes sense for those who
 share similar interests to form groups, as a way of attracting the attention of policymakers. As
 the old adage goes, there is strength in numbers. The First Amendment to the Constitution
 guarantees both freedom of speech and freedom of association. Accordingly, some political
 scientists have argued that all organized groups have both the means and opportunity to
 participate in the political process on a relatively equal basis. Therefore, policy outcomes
 should reflect the efforts of those groups who represent the most popular positions, or those
 who are the most determined to have their voices heard. Furthermore, because of the
 diversity of interests across American society, no single group should be able to wield an
 inordinate amount of power across a range of policy issues, and policy decisions are most
 likely going to be the result of a process of bargaining and negotiation.

 Two of the basic assumptions underlying this theory, known as pluralism, are that interest
 groups are relatively easy to form and that groups representing popular ideas will have
 sufficient resources to influence the policy-making process. However, other political scientists
 question these assumptions, contending instead that wealthier individuals and corporations
 will have an easier time forming interest groups and will be able to use their material
 resources in ways that consistently work to their advantage in the political process. Although
 there may be strength in numbers, they argue, the numbers that matter most are the ones
 that come after dollar signs.

 This Timeline will explore the role of interest groups in the political process, with particular
 attention paid to the role of interest groups in financing election campaigns, in the hope of
 influencing the policy-making process. As you proceed, consider the impact of money on the
 electoral process:

    Do those candidates with larger campaign budgets have an advantage?
    If so, do these candidates, once elected, make policy decisions with an eye toward
     protecting the interests of those who contributed to their campaigns?
    If this is indeed the case, should we reform the way in which campaigns are financed?
    Finally, what does the evidence that is presented here suggest about the merits of the
     pluralists' position?

Timeline
People
Conclusion
Suggested Videos
Test Yourself




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Timeline

1787: Federalist Paper #10—The Mischiefs of Faction
In 1787 a series of essays advocating ratification of the recently drafted U.S. Constitution was
published in the New York Independent Journal. The principal author of these essays, now
collectively known as the Federalist Papers, was James Madison, the primary architect of the
Constitution. As a member of the educated, land-owning elite, Madison was concerned that
"the people" were prone to acting in selfish ways that threatened property rights and
undermined what he regarded to be the best interests of society. At the same time, as
someone who firmly believed in the need for government to be based upon the "consent of
the governed," Madison favored a political system that allowed the people to have a voice in
the selection of their leaders and the formulation of government policy.

In Federalist Paper #10, considered by many to be one of the greatest American
contributions to political theory, Madison revealed his concerns about the way in which
organized interests could undermine the stability of the political system. He termed this
problem "the mischiefs of faction." In Madison's view, "the most common and durable source
of faction has been the various and unequal distribution of property." Because Madison
considered "an equal division of property" to be "wicked and improper," he had to find a way
to prevent majority factions (that is, those with less property) from using their numerical
advantage to threaten the rights and liberties of those who enjoyed greater wealth, all the
while "preserving the spirit and form of popular government."

You can access Federalist Paper #10 at http://memory.loc.gov/const/fed/fed_10.html. Read
this important essay. What does Madison propose as a method of curing the "mischiefs of
faction?" What are his attitudes toward "democracy?" Do you think his concerns are still
relevant today? If we consider contemporary interest groups to be the modern equivalent of
factions, do they cause the same types of mischief today that so concerned Madison more
than two centuries ago?

Did You Know?

The New York Independent Journal began publication in 1783. It became New York Daily
Gazette in 1788.

The Federalist Papers consist of 85 articles. The authors were James Madison, John Jay,
and Alexander Hamilton. They used the pseudonym “Publius”, the name of a Roman consul,
Publius Valerius Publicola. His last name means “friend of the people.”


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                                                                                5
1835: de Tocqueville's Democracy in America—A Nation of Joiners
In 1831, a French aristocrat named Alexis de Tocqueville came to the United States,
ostensibly on a mission to study the American penal system. With a close friend, Tocqueville
spent nine months visiting 17 states. After his return to France, in 1835 he published
Democracy in America, a collection of insightful observations of 19th-century America that
continue today to be regarded as an astute characterization of the unique qualities of
American politics and culture.

In Chapter 4 of Democracy in America, Tocqueville comments on the propensity of
Americans to form interest groups: "In no other country in the world has the principle of
association been more successfully used or applied toward a greater multitude of objects
than in America." Ironically, he attributes this phenomenon to the individualistic nature of
American society. We are taught to be self-sufficient, argues Tocqueville, and not to depend
on government to solve our problems. However, when we realize that we cannot solve many
problems on our own, we join together with others to achieve solutions.

Tocqueville distinguished among three degrees of political association: the first involves
simply holding the same beliefs as others; the second involves meeting together to exchange
opinions with other like-minded individuals; and the third involves engaging in formal activities
designed to promote these shared beliefs amongst the greater society.

According to Tocqueville, the principal value of this tendency to form associations was that it
strengthened democracy by educating citizens in the value of deliberation and participation.
At the same time, Tocqueville expressed concern that democracy could lead to a "tyranny of
the majority," somewhat echoing Madison's argument in Federalist Paper #10. For
Tocqueville, this tyranny resulted from an excessive deference to public opinion and a
pressure toward conformity, produced by the relative equality of social and economic
conditions in the United States as compared to his native Europe.

Did You Know?

Democracy in America was originally published in French, with the title De la démocratie en
Amérique. The book is popular both in the United States and Europe.

One of Tocqueville’s quotations: “...experience suggests that the most dangerous moment for
an evil government is usually when it begins to reform itself. Only great ingenuity can save a
prince who undertakes to give relief to his subjects after long oppression. The sufferings that
are endured patiently, as being inevitable, become intolerable the moment it appears that
there might be an escape. Reform then only serves to reveal more clearly what still remains
oppressive and now all the more unbearable.”

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                                                                               7
1896: Big Money and Presidential Politics—Marketing Political Medicine
Acting in accordance with the principle of association noted by Alexis de Tocqueville,
Americans formed a wide variety of interest groups in the decades after his tour of the United
States. Charitable organizations, anti-slavery societies, and religious associations were some
of the most common groups active between 1830 and 1870. The rise of industrialism in the
last third of the 19th century witnessed the formation of groups serving the interests of
railroads, banks, and other large corporations, as well as farmer organizations and labor
unions. Some groups still active today were founded during this time, including the National
Rifle Association (1871), the American Federation of Labor (1886), the Sierra Club (1892),
and the National Association of Manufacturers (1895).

The presidential election of 1896 is discussed briefly in the timelines in the chapters on
parties and elections. In many ways, this election was the first modern race for the White
House, in terms of the role played by well-funded interest groups and the use of signs,
posters, buttons, and other forms of political advertising.

Responding to the appeal of Mark Hanna, a wealthy industrialist who served as William
McKinley's primary campaign strategist, business owners and corporations filled Republican
campaign chests with at least $4 million in contributions, allowing for a massive advertising
buy in newspapers throughout the nation.

McKinley's Democratic and Progressive opponents charged that business interests were
buying the election for the Republican Party. (Theodore Roosevelt, who later served as
McKinley's vice president, purportedly declared that "Hanna marketed McKinley like a patent
medicine.") The businesses weren't as organized as present-day interest groups are – they
didn't have to be because any business could contribute unlimited campaign funds.
Collectively, they protected the interests of the business community at a time when farmers
and organized labor were advocating "free silver" and workers' rights.

In 1901, Theodore Roosevelt became president after William McKinley's assassination. After
being reelected in 1904 with the same business money that put his predecessor in office,
Roosevelt became an advocate for reform. With Roosevelt's urging, Congress passed the
Tillman Act of 1907. This legislation attempted to limit interest group power by making it
illegal for corporations to make direct contributions to political campaigns. However, because
business owners and executives could still make individual contributions, the effectiveness of
the legislation was limited. Furthermore, business associations – interest groups, in other
words -- could still contribute unlimited amounts.

Did You Know?

The National Association of Manufacturers (NAM), headquartered in Washington, D.C., is the
largest industrial trade association in the U.S.

The National Rifle Association (NRA) is regarded as one of the most powerful U.S. nonprofit
organizations. To make the use of firearms safer, NRA sponsors educational safety
programs.

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1925: The Federal Corrupt Practices Act—More Loophole Than Law
In 1922, the administration of Warren Harding was rocked by the Teapot Dome scandal,
which involved the leasing of oil reserves located on federal land in Wyoming to Sinclair Oil,
on extremely favorable terms. The oil company had been a major contributor to the
Republican National Committee in 1920, helping Harding to get elected. Public anger over
the scandal led to demands for campaign finance reform.

The Federal Corrupt Practices Act of 1925 was an attempt to respond to the public outrage
and to codify federal campaign law. Limits were placed on contributions from business
interest groups, but the legislation was essentially toothless. Limits did not apply to state
races, primary campaigns, or races for the presidency, and candidates for office could have
multiple campaign committees, effectively allowing interest groups to donate to a candidate
more than once. Further adding to the weakness was a provision that gave Congress the
power to enforce the act, a step that it was unwilling to take. The 1925 act would remain in
effect until 1971, with a provision prohibiting direct contributions from labor unions added in
1943. During its existence, no one was prosecuted under it, leading President Lyndon
Johnson to call it "more loophole than law."

Did You Know?
                                    th
Warren Harding was elected the 29 U.S. president on November 2, 1921, which happened
            th
to be his 55 birthday.

The Federal Corrupt Practices Act of 1925 was a revision of the Act of 1910. The 1925 Act
was replaced in 1971.


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                                                                                                              10
1944: The First PAC—Flexing Labor's Muscle
Starting in 1936, labor unions began to use union dues to support federal candidates
sympathetic to the demands of workers. This practice was prohibited by the Smith-Connally
Act of 1943, and labor unions joined corporations and interstate banks as entities barred from
contributing directly to candidates for federal office. The next year, the Congress of Industrial
Organizations (CIO), one of the largest labor interest groups in the nation, found a way to
circumvent the Smith-Connally Act by forming the first Political Action Committee, or PAC.

The CIO PAC relied on voluntary contributions from union members, not mandatory dues,
and it was therefore not prohibited by law. In the 1944 presidential election, the CIO PAC
donated heavily to the reelection campaign of President Franklin Roosevelt. Although
opponents tried to discredit the PAC as communist influenced, it continued to fund pro-labor
candidates until 1955, when it merged with the American Federation of Labor's League for
Political Education. PACs would subsequently be restricted by additional legislation until their
resurgence in 1974, discussed below.

Did You Know?

The Congress of Industrial Organizations (CIO) was founded in 1935 by John L. Lewis as a
result of the division with the American Federation of Labor (AFL). CIO and AFL merged in
1955.

The Smith-Connally Act of 1943 also known as the War Labor Disputes Act, passed during
the presidency of Franklin D. Roosevelt.


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1971: The Federal Election Campaign Act (FECA)—Better Government
      Through Better Disclosure
In the 1960s, large numbers of Americans began to push for a broad government reform
agenda, spurred on by concern over civil rights and opposition to the Vietnam War. Part of
this agenda included a demand for campaign finance reform. The 1971 Act provided for full
disclosure of all contributions received by a candidate totaling more than $100, limits on the
amount of family money that a candidate could spend, and limits on the amount of money
that a campaign could use on advertising.

The disclosure provision was born of a belief that better government would be obtained by
knowing who was financing a candidate. The limit on personal spending was aimed at
reducing the advantage of a wealthy candidate. The cap on media spending was intended to
reduce the power of television commercials and the so-called "packaging" of political
campaigns. The media limitation would quickly be declared unconstitutional and tossed out
by the courts on First Amendment grounds. This was "phase one" of the modern era of
campaign finance reform.

Another provision of FECA created the voluntary $1 check-off box on federal income tax
returns. By checking the box, taxpayers could direct $1 of their taxes to a pool of matching
funds distributed to presidential candidates who raised equal funds from private contributors.
Today, the amount on
the check-off box is
$3, but many people
don't check it because
they mistakenly
believe it will raise
their tax bill by $3.




Did You Know?

The Federal Election Campaign Act (FECA) made it mandatory for candidates to disclose
campaign spending and sources of campaign financing. The act passed in 1971 and was
amended in 1974.

Other names have been used in describing the Vietnam War—the Second Indochina War,
Vietnam Conflict, and in Vietnamese, Kháng chiến chống Mỹ, meaning “Resistance War
Against America.”


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1974: The FECA Amendments—The Watergate Reforms
The Watergate scandal that shook the Nixon White House in the aftermath of the 1972
presidential election led to an extensive congressional investigation of various illegal activities
undertaken by White House officials. During the investigation, it was learned that the
Committee to Re-elect the President (or CREEP, as it was known) had received significant
amounts of illegal campaign contributions from wealthy supporters of Nixon. This revelation
led Congress to enact a number of revisions to the earlier FECA legislation.

The 1974 reform act had four main components:

   Campaign contributions were limited. An individual could give only $1,000 per candidate
    per election cycle, and no individual could donate more than a total of $25,000 to political
    candidates in any given year. A PAC could donate only $5,000 per candidate per cycle.
    Corporations, unions, and special interest groups were allowed to establish PACs, which
    were required to raise money from a minimum of 50 donors and distribute it to a minimum
    of five federal candidates.
   Limits were placed on how much a candidate could spend in a campaign. Under the
    guise of reform, these spending limits favored current members of Congress because
    incumbents almost always have more name recognition than do their opponents.
    Challengers usually have to spend more money to garner public recognition.
   The system of public financing of presidential campaigns was extended. In the primaries,
    it was delivered in the form of matching funds. In the general election, it was dispersed
    from the tax-form pool. Presidential candidates accepting public funds had to agree to
    observe campaign spending limits. Public funds were also appropriated for the two major
    party nominating conventions.
   The 1974 legislation established the Federal Election Commission (FEC). Its mandate
    was to enforce the FECA acts, and it was intended to be staffed by six nonpartisan
    administrators. In practice, the commission membership has always consisted of three
    Republicans and three Democrats. Candidates were required to disclose lists of their
    contributors to the FEC.

One of the greatest impacts of this law was a surge in the number of PACs. Corporate PACs
alone grew from 89 in 1974 to 1,200 in 1980. One way for corporations and labor unions to
get around campaign contribution limits was to form multiple PACs and have each make
contributions.

Did You Know?

Members of the Committee to Re-elect the President (CREEP) that were indicted and
convicted in the Watergate Scandal, along with the burglars, were Howard Hunt, Gordon
Liddy, and John N. Mitchell.

Following the Watergate scandal and the resignation of Richard Nixon, Gerald Ford took over
as the U.S. president. Gerald Ford pardoned Richard Nixon of all wrong doing while he was
president; therefore, no criminal charges were filed against him.


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                                                                           14
1976: Buckley v. Valeo—Money Talks
Opponents of campaign finance reform legislation waged a battle in court, alleging that their
First Amendment rights were violated by FECA and its amendments. In the 1976 case of
Buckley v. Valeo, the U.S. Supreme Court considered the constitutionality of campaign
contribution and spending limits.

Addressing the issue of campaign contribution limits, the Court upheld the $1,000 cap on
individual contributions and the $5,000 cap on PAC donations. The potential for bribery or
corruption, or even the public perception that legislators might perform favors for those who
furnish them with large sums of money, was sufficient to warrant these contribution limits. In
the words of the Court, "the integrity of our system of representative democracy" outweighed
the imposition on individual rights presented by the FECA reforms.

However, the Court took a different approach to the issue of campaign spending limits,
arguing that they posed an insufficient potential for corruption to justify the restrictions passed
by Congress:

        The Court struck down spending limits in races for the U.S. House and Senate.
         Presidential contest limits were sustained because these voluntary limits are a condition
         of public campaign funding. Presidential candidates who forgo public funds are not
         limited as to their spending.
        The limit on the use of personal funds by candidates was overturned. Individuals can
         spend as much of their own money as they wish.
        PACs were liberated from independent expenditure limitations -- that is, PACs could run
         their own commercials and campaigns for candidates without fear of encountering
         spending limits, so long as these independent expenditures were not coordinated with the
         candidate's campaign.

In each of these instances, the Court found that the ability to spend money to run campaigns
for public office was protected under the First Amendment, in effect declaring that money was
a form of speech. Upholding freedom of speech was considered more important than any
potential damage caused by excessive campaign expenditures.

Did You Know?

A lawsuit was filed against Francis Valeo, the then Secretary of the Senate, by New York
Senator, James L. Buckley. The case became known as the Buckley v. Valeo case.

In the 1976 Buckley v. Valeo case, the Supreme Court maintained federal restrictions on
campaign contributions.


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                                                                                                                 15
1976-1996: The PAC Explosion—An Era of Scandals and Influence
The most dramatic consequence of the Supreme Court's decision in Buckley v. Valeo was to
further strengthen the role of PACs in the electoral process. By 1992, the number of PACs
was eight times greater than it was in 1974. Not surprisingly, the average expenditure per
candidate has risen dramatically since the reform efforts of the 1970s, with much of the
money going toward television commercials. After the 1974 FECA amendments, money
became the lifeblood of elections, thus enhancing the power of those interest groups that
furnished the money to candidates. (Soft money contributions to the two major parties grew
from $86 million in 1992 to $487.5 million in 2000. Ads paid for with soft money were
sometimes indistinguishable from those funded through hard money.)

In the mid-1980s, a huge scandal emerged in the savings and loan industry. The
congressional banking committees, whose members received significant PAC contributions
from the savings and loan industry, had deregulated lending practices, leading to corruption,
fraud, and excessive speculation in real estate and other ventures. The subsequent collapse
of dozens of savings and loans, whose deposits were guaranteed by the federal government,
resulted in hundreds of billions of dollars in taxpayer bailouts. When it was revealed that
Charles Keating, an Arizona savings and loan executive, had made substantial contributions
to five senators (the "Keating Five"), including John McCain, who sat on the banking
committee and who attempted to interfere with an investigation of Keating, public cries for
campaign finance reform increased.

Members of Congress found themselves in a difficult position. Although most legislators
disliked having to devote a considerable portion of their time to raising money, they were
reluctant to change a system that was responsible for putting them – and more importantly,
keeping them – in office. Several congressional efforts at campaign finance reform in the
early 1990s stalled in Congress, victims of filibusters and presidential vetoes.

Campaign finance abuses in the 1996 presidential election generated new momentum for
campaign finance reform. News reports revealed that President Clinton had invited several
wealthy campaign donors to spend the night in the Lincoln Bedroom at the White House. In
addition, the Clinton reelection campaign had organized a number of fund-raising "coffees" at
the White House, to which the price of admission was a mere $50,000 donation to the
Democratic Party. Moreover, several party officials were indicted for soliciting contributions
from foreign donors, an act barred under federal law. These donations, known as "soft
money," were legal under a 1979 amendment to FECA, which allowed unlimited contributions
to political parties for "party-building activities," such as voter registration drives.

Exploiting the soft money loophole, both the Democratic and Republican parties raised
millions of dollars to finance "issue ads." These television commercials promoted the political
party's agenda without explicitly telling viewers to vote for a specific candidate and were thus
not subject to FECA's "hard money" contribution limits.

Did You Know?

The “Keating Five” were five senators involved in the 1980s Congressional scandal. They
were Alan Cranston, Dennis DeConcini, John Glenn, John McCain, and Donald Riegle.

“Soft money” is a form of campaign money. Unlike “hard money,” it is a contribution made
toward the building of Party activities rather than directly to the candidate.

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                                                                           17
2002: The Bipartisan Campaign Reform Act—Reform At Last?
In the wake of the 1996 fundraising scandals, additional campaign finance reform bills were
introduced in Congress to curb the ability of well-financed interest groups and wealthy
individuals to influence elections and legislative decision making. The most prominent of
these was a Senate bill sponsored by Arizona Republican John McCain, a former member of
the "Keating Five," and Wisconsin Democrat Russ Feingold. The McCain-Feingold bill's
central provisions were a ban on soft money and significant restrictions on "issue ads."
Comparable legislation was introduced in the House.

Despite public support for campaign finance reform, these measures failed to overcome
determined opposition by Republican leaders in Congress. John McCain made campaign
finance reform the centerpiece of his bid for the Republican presidential nomination in the
2000 election, and vowed to keep pressing the issue after he was defeated by George W.
Bush. Finally, the Enron scandal, discussed at the beginning of this Timeline, generated
sufficient public outrage to force passage of a campaign finance bill in early 2002. President
Bush, who had opposed the measure, reluctantly signed it, accurately gauging that a veto
would likely be overridden in Congress.

The Bipartisan Campaign Reform Act (BCRA), or McCain-Feingold, as it is known informally,
closed the federal soft money loophole and banned issue ads from the airwaves within 60
days of an election. However, as has happened after previous reforms, efforts by individuals
and groups to influence elections have simply led to new ways around limits. Already by May
2004, the 2003-2004 election cycle saw over $160 million in spending by so-called "section
527" groups, while federal party organizations directed many of their soft money contributors
to donate to state organizations, whose spending was not limited under BRCA.

Did You Know?

One of the major provisions of Bipartisan Campaign Reform Act (BCRA) of 2002 is that
federal candidates are not allowed to receive or spend soft money.

Russell Dana Feingold, the co-sponsor of the McCain-Feingold Act, graduated from the same
law class at Harvard as did Chief Justice John Roberts.


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People

Alexis de Tocqueville (1805-1859)
Alexis de Tocqueville was a French aristocrat and historian. He presumably came to the
United States in 1831 to study the American penal system. After his return to France from
traveling to 17 states in the United States, he published Democracy in America, based on the
                                   th
knowledge he acquired about 19 century American politics and culture. Today, Democracy
                                            th
in America is often used in the study of 19 century U.S. history. Other works by de
Tocqueville include The U.S. Penitentiary System and its Application in France with Gustave
de Beaumont (1833), The Old Regime and the Revolution (1856), and Recollections (1893,
published posthumously).

Quick Facts

         Born in Verneuil-sur-Seine (Île-de-France)
         Democracy in America appeared in two volumes (1835 and 1840)
         Married Mary Motley in 1835
         Supported colonialism
         A commercial research institute in Washington, D.C., is named after him—The Alexis
          de Tocqueville Institution
         Died in Cannes, Southern France


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                                                              s.jpg
                                               Date Copied:   9/11/06
                                               Copyright:     Pulled from Mackinac Center
                                                              for Public Policy site (.org)




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Richard Nixon (1913-1994)
                             th
Richard Nixon was the 36 vice president during the Dwight D. Eisenhower administration. In
response to accusations of misappropriation of funds for personal use as a U.S. senator from
California in 1952, he appeared on television to defend his character. Although he was seen
as lacking qualities suitable for television, he succeeded in redeeming his character and
political life. On camera, Nixon made a full account of his financial status available to the
audience. In the end, he was portrayed as a warm and honest family man—a perfect match
as vice president under Dwight D. Eisenhower, who was then running for the U.S. president.
                        th
Nixon served as the 37 U.S. president from 1969 to 1974. One of his most successful and
significant foreign policy contributions from the Nixon administration is the major role they
played in bringing an end to the American-Vietnam war dilemma. Nixon resigned from office
in 1974 as a result of the Watergate scandal, making him the first U.S. president to resign
from office. White House officials led a massive congressional investigation of several illegal
activities leading to the Watergate scandal. It was discovered that the Committee to Re-elect
the President (CREEP) had accepted considerable illegal campaign contributions from
President Nixon’s wealthy supporters. Consequently, Congress enacted several revisions to
FECA legislation.

Quick Facts

         Born to Francis A. Nixon and Hannah Milhous Nixon in California
         Married Pat Ryan in 1940
         Had two daughters
         Served in the U.S. Navy during World War 11
         Ran for president as a Republican
         Created the Environmental Protection Agency (EPA) in 1970
         Wrote several books including memoirs after he left office
         Died as a result of a major stroke


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                                                Copyright:     Public Domain




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4.3 Charles Keating (1923- )
Charles Keating, a lawyer and a banker, was at the middle of the Keating Five Scandal (the
Savings and Loan scandal) in the 1980s. The deregulation of lending practices by the
congressional banking committees led to corruption and fraud in real estate. Subsequently,
thousands of savings and loan institutions failed in the 1980s. Keating was the chairman of
one of these institutions—the Lincoln Savings and Loan Association, California. Following an
investigation, it was revealed that Keating had given five senators (Alan Cranston, Dennis
DeConcini, John Glenn, Jr., John S. McCain III, and Donald Riegle Jr.) a huge amount of
money in campaign contributions. The senators became known as the “Keating Five.” In
1993, Charles Keating was convicted of fraud, racketeering, and conspiracy. His convictions
were overturned after he spent four-and-a-half years in prison.

Quick Facts

         Born in Cincinnati, Ohio
         Won the 1946 NCAA 200 yard butterfly competition
         Earned a law degree from the University of Cincinnati
         Was involved in anti-pornography campaign
         Was a swimming champion in the 1940s
         A Roman Catholic
         Donated about $1,250,000 to Mother Teresa



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                                                               ntalismus/fund0556.gif        Mother Teresa
                                                Date Copied:   9/22/06
                                                Copyright:     Pulled from a German
                                                               website.




                                                                                                          21
John McCain (1936- )

John McCain was a Republican presidential candidate in the 2000 election but was defeated
by President George W. Bush in the Republican primaries. He was elected U.S. senator from
Arizona in 1987 and has won re-election in 1992, 1998, and 2004. Following the Keating Five
scandal, one of McCain’s political interests was campaign finance reform. Several legislative
proposals were introduced in Congress to regulate campaign financing; a major success
came in 2002 when Congress passed the Bipartisan Campaign Reform Act of 2002, also
known as the McCain-Feingold bill. The bill was sponsored by Arizona Republican John
McCain and Wisconsin Democrat Russ Feingold.


Quick Facts

         A Vietnam war veteran
         Graduated from the United States Naval Academy in 1958
         Was a prisoner of War during the Vietnam war for five-and-a-half years
         His father and grandfather were well-known U.S. Navy admirals
         Married Cindy Hensley McCain in 1980
         Named one of the 25 most influential people in America by Time Magazine in 1997
         Suffers from recurring skin cancer
         Actively promotes the awareness of skin cancer



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                                               Copyright:     Public Domain




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Conclusion
When Charles Keating, the savings and loan executive who contributed over a million dollars
to key senators in the hope of forestalling a criminal investigation, was asked whether his
contributions made any difference, he replied, "I sure hope so." As this Timeline has
illustrated, much of the agenda for campaign finance reform in the past century has been
driven by scandals and arguments that well-funded interest groups have exercised undue
influence on the legislative process. The "mischiefs of faction" that so concerned James
Madison in Federalist Paper #10 has not been cured, and legislators are still struggling to
control their effects, as the recent Bipartisan Campaign Reform Act demonstrates.

The issues discussed in this Timeline suggest that it is necessary to take a closer look at the
pluralist model discussed in the introduction. It doesn't appear that all interest groups operate
on a level playing field; those with greater financial resources have been able to use their
clout in the electoral process to secure advantages not available to those who can't afford to
make large campaign contributions. As long as political spending by corporations, unions,
and interest groups is protected under the First Amendment's guarantee of individual freedom
of speech, the situation is unlikely to change substantially. However, it is also apparent that
millions of ordinary Americans, acting in accordance with the principle of association
celebrated by Alexis de Tocqueville back in 1835, will continue trying to broaden access to
the democratic process.




                                                                                              23
Suggested Videos

Political Action Committees (PACs) (Debate)
American democracy allows for political participation on many different levels—voting,
volunteering, organizing, demonstrating, and much more. PACs are a recent phenomenon in
American politics that participate by primarily contributing money to political campaigns. This
debate explores the impact PACs are having on our political processes.

Public Campaign Financing (Debate)
The cost of campaigning at the federal level continues to climb, especially for candidates
challenging incumbents. Incumbents have a tremendous advantage in terms of funding
which makes competitive elections very rare. Some people believe that the solution is
limiting private financing and replacing it with public funding.

Interest Groups and Representation (Roundtable)
Americans have historically participated through groups. Some political scientists believe that
a relatively small number of powerful groups have too much power and that the collective or
public good suffers as a result. Others believe that American democracy is a model of group
diversity and activity.

Campaign Finance Reform (Roundtable)
Historically, elections have been public enterprises while campaigns have been private. The
government has played a regulatory role in monitoring campaigns and a more limited role in
financing federal elections through matching funds. As growing concern has emerged around
the idea that the current campaign finance system is in need of repair, however, a range of
solutions is taking shape. In this roundtable, campaign finance reform is discussed with the
understanding that the legitimacy of our public officials and institutions largely rests on the
integrity of our electoral system.

Successful Interest Groups (Roundtable)
The video looks at what makes interest groups successful. The three panelists discuss the
role of funding, organization, membership, and other factors that contribute to successful
lobbying and influence.




                                                                                             24
Test Yourself

[Existing MC Questions (Questions 1-10)]
1. Which group formed the first Political Action Committee (PAC)?

        The Congress of Industrial Organizations.
       The Sierra Club.
       The National Association of Manufacturers.
       The National Rifle Association.
       The American Federation of Labor.

2. Which of the following is an assumption underlying the pluralist model of interest group
   competition?

         All organized groups have the means and opportunity to participate in the political
        process on a relatively equal basis.
       The decentralized structure of the American political system limits opportunities for
        group action.
       Public officials will tend to favor wealthy interest groups more than any others.
       There are so many groups competing for power that nothing ever really gets
        accomplished.
       The groups whose interests are ultimately represented in the policymaking process
        accomplish their goals through underhanded techniques such as bribery and deceit.

3. Soft money is the term used for campaign contributions that:

         go to political parties, instead of individual candidates, and are designated for "party
        building" activities.
       were excepted from regulation under the most recent campaign finance legislation.
       are limited by law to no more than $1000 per individual, or $5000 per PAC.
       are designated only for television ads.
       are made in violation of federal campaign finance law.

4. All of the following scandals prompted cries for the passage of campaign finance reform
   legislation EXCEPT:

         the Iran-Contra scandal.
       the Watergate scandal.
       the savings and loan scandal.
       the Teapot Dome scandal.
       the Enron scandal.

5. Since the mid-1970s, candidates for which office have been eligible to receive public
   financing?

        President.
       U.S. senator.
       U.S. House member.
       Supreme Court Justice.
       U.S. secretary of state.

6. In Buckley v. Valeo, the Supreme Court ruled that:


                                                                                               25
              candidates for the U.S. Senate or House of Representatives could spend unlimited
               amounts of money in their efforts to win election.
              the structure of the Federal Election Commission was unconstitutional, and would
               need to be reformed.
              PACs representing corporations or labor unions were not bound by the $5000
               contribution limit set by FECA.
              the First Amendment protected an individual's right to contribute unlimited amounts of
               money to any candidate he or she supported.
              presidential candidates were not subject to voluntary spending limits even if they
               accepted taxpayer funds.

       7. All of the following were features of the 1896 presidential election EXCEPT:

                 it led to immediate passage of campaign finance reform legislation.
              it involved a debate over whether to coin silver in addition to gold.
              it involved a level of advertising never before seen in a presidential contest.
              it was won by William McKinley.
              business organizations and wealthy individuals contributed large sums of money to
               the Republican candidate.

       8. All of the following were provisions of the Federal Election Campaign Act of 1971
          EXCEPT:

                it created the Federal Election Commission.
              there were limits placed on the amount of personal or family money a candidate
               could spend.
              the source of all campaign contributions over $100 had to be publicly disclosed.
              a $1 check-off box was placed on tax forms to provide public funds for presidential
               candidates.
              there were limits placed on the amount of money candidates could spend on
               advertising.

       9. A tremendous growth in the number of PACs followed the passage of which piece of
          legislation?

               The FECA amendments of 1974.
              The Bipartisan Campaign Reform Act.
              The original FECA of 1971.
              The Federal Corrupt Practices Act.
              The Smith-Connally Act.

       10. The Bipartisan Campaign Reform Act of 2002 did which of the following?
               Banned all soft money contributions.
            Banned all issue ads.
            Placed limits on the number of PACs to which an individual could contribute.
            Limited an individual's annual contributions to all political candidates to $5000.
            Outlawed all PACs.

[8.0   New MC Questions for New Content (Questions 11-15)]

       11. Federalist Paper #10 was written by:




                                                                                                     26
        Madison.
       McCain.
       Feingold.
       Keating.
       Tocqueville.

12. Alexis de Tocqueville wrote a famous book titled:

        Democracy in America.
       Mein Kampf.
       The Communist Manifesto.
       The Federalist Papers.
       Civic Culture.

13. The scandal which became known as Watergate led to the resignation of:

        Nixon.
       Carter.
       Kennedy.
       Reagan.
       Clinton.

14. Charles Keating worked in the ________ industry.

         Savings and Loan
       Construction
       Real Estate
       Insurance
       Entertainment

15. John McCain is a U.S. senator from:

         Arizona.
       California.
       Texas.
       Florida.
       Massachusetts.




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