Political donations and democratic values, N America way

This is election season in North America. General elections to Canada’s Parliament are scheduled next month and the US is getting ready for the presidential elections due in November 2016. Aspiring candidates in the US are working hard to gain nomination from the major political parties – namely, Democrats and Republicans.

In this age of mass-media and 24/7 television, the cost of running election campaigns is, predictably, huge. President Obama’s re-election campaign a few years ago cost over US$1 billion, as reported to the Federal Election Commission. Obama’s rival, Mitt Romney, spent a similar amount. Here lies the story of money in elections.

To be clear, the use of money in American elections is somewhat different from India. The campaigns are conducted with a regular cadre of employees, expensive gatherings, and paid media campaigns, all done professionally. The reporting rules promote a degree of transparency in the use of funds as well.

In general, there are no reports of practices such as candidates distributing cash or other goodies (alcohol, clothes etc),to influence voters. These were not uncommon in India before T N Seshan, as chief election commissioner, effectively wielded the broom in the early 1990s and ushered in cleaner elections.

The difference being stated that money can have a pernicious influence on elections is undeniable, regardless of the manner in which it is spent. Money power in elections has been the subject of regulation in the US since the Tilman Act, enacted in 1907. A series of federal legislations since then have attempted to curb wealthy corporations and individuals from overly influencing the political process through money power.

A recent effort in this direction is the Campaign Reform Act of 2002, also known as the McCain-Feingold Act. Limits are imposed on individual contributions to election campaigns, with the current limit for individual contributions pegged at $2,600. The Campaign Reform Act prohibited corporate political donations.

However, the success of such efforts had to be necessarily limited in a commercialistic setting that believes in the power of money and tends to interpret most things in financial terms. Other than this cultural aspect, curbs on election financing and campaign expenses are also understood to limit freedom of expression.

This is among the fundamental rights of citizens, protected by the First Amendment to the US Constitution. Restricting the flow of money to the political process, the argument goes, undermines the right of individuals to express their opinions, which is essential to democracy.

The combination of factors, outlined above, effectively diluted the attempts to curb money in elections. To balance the curbs on campaign funding with the freedom-of-expression concerns, the device of “Political Action Committees” have been developed. These committees can raise money outside the stream of campaign funds raised by candidates, and spend the money for selected candidates.

Thus, in effect, there are two streams of finance for election campaigns. One is directly collected by the candidates and is subject to limits, and the other collected by Political Action Committees (PAC). The PACs can collect and spend money without limits.

In 2010 in the Citizens United v Federal Election Commission, the US Supreme Court further loosened election finance permitting corporations to make political donations. This was based on the reasoning that corporations represented “associations of citizens,” and they were equally entitled to free expression.

The consequence of the developments is the astronomical amounts of money raised and spent on elections, including by personalities like President Barack Obama who is hardly identified with business or moneyed interests and is seen as left-leaning, or “aam aadmi” in Indian terminology.

Campaign fundraising is treated as a regular job for American politicians and in recent times, Political Action Committees wield staggering financial power. According to a recent report in The New York Times, Jeb Bush had raised $120 million until now and of this $108 million came through PACs.

Takeaway for India
In Canada, the rules are not very different. But they are followed better – at least until now. Corporations and other organisations are prohibited from making political donations and individual political contributions are capped at $1,500.

Inevitably, the American practice of Political Action Committees as parallel streams of election finance/spending seem to be entering Canada. Recently, it has been reported that a PAC supporting Prime Minister Stephen Harper has been setup to support his campaign for re-election – for an unprecedented fourth term.

Is there a takeaway for India from the experience in the US or Canada? This question is relevant for India, which is a much younger democracy still developing its own traditions. In India, the trends have been more mixed. On the one hand, the integrity of elections has greatly improved since the 1990s largely due to the efforts of Seshan.

In this effort, Seshan mainly relied on the “free and fair elections” clause in the Representation of the People Act, 1951. He showed remarkable grit in cleaning up the system. During the same period that elections became better, a more commercialistic culture strengthened in the country with the emphasis on business and economic growth. The Companies Act, 2013 authorises private sector companies to make political donations of up to 7.5 per cent of average profits.

In any case, the reform efforts in America for over a hundred years ago stressed the incompatibility between democratic values and money power. The concern has continuing validity. A link is apparent between the progressive loosening of election finance rules, decline in the quality of the political class, and increasing public disillusionment with the political process.

They underscore the importance of promoting the integrity of public institutions. A mere right to elect candidates to public offices, by itself, is not adequate to foster democratic values unless election process is also reasonably clean.

(The writer is Associate Professor, Faculty of Law, University of Ottawa, Canada)