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The Small-Donor Uprising

By E. J. Dionne

With the Supreme Court slowly closing the door on traditional approaches to campaign finance reform, individual citizens will have to take the cause into their own hands.

The good news is that hundreds of thousands of Americans are doing exactly that. The small-donor uprising, which began in the 2004 campaign, could fundamentally alter the direction of American politics without any changes in the law. But if Congress took some modest steps, it could ensure this revolution's success, and do so in a way that even judicial conservatives could accept.

The court's recent 5-4 decision eviscerating Congress' efforts to regulate the flow of corporate and union cash into campaign activities will require reformers to think anew.

The recent fundraising reports from the presidential candidates should give them hope in this endeavor. An unprecedented number of small contributors are standing up to the big guys.

Barack Obama is the main beneficiary, but by democratizing fundraising -- the most elitist aspect of our politics -- small donors could bring a salutary dose of equality to the process.

Enemies of campaign finance reform regularly try to play down the role of money in influencing the deliberations of government. But journalists covering the development of major pieces of legislation routinely document the fact that money really does talk in the halls of Congress.

It ought to be a natural for Democrats to favor closing tax loopholes that benefit private equity and hedge fund managers. The hedge fund mandarins are among the wealthiest of the wealthy. They've also been very generous to the Democrats. As Stephen Labaton reported last weekend in The New York Times, "the issue has divided the Democratic Party's populists and pragmatists, particularly as the party has courted Wall Street for campaign contributions." This raises a moral issue for the party of the people. It's also evidence of how money can push the system in unnatural directions.

Money also helps explain why Congress has taken so long in getting around to fixing the student loan program by reining in benefits for private lenders. The House finally passed a reform bill last week, but The Washington Post's Jeffrey Birnbaum documented the difficulties of getting there.

Birnbaum noted last April that the private student loan industry "had showered mostly Republican lawmakers with campaign contributions." When Republicans had a majority in Congress, the industry won the day. (By the way, and to his credit, President Bush has broken with his party in advocating reform of the program.) Money shouted down reform for a long time.

That's why the Supreme Court should not have opened a huge loophole for corporations and unions to finance pre-election or pre-primary ads that, while theoretically about "issues," are disguised efforts to help one candidate or hurt another.

As Justice David Souter noted in his powerful dissent, there is good reason to worry about how the demands for money in politics "assign power to deep pockets" and can lead to the "pervasive distortion of electoral institutions by concentrated wealth" and to "special access and guaranteed favor that sap the representative integrity of American government."

But Souter's side was voted down, so now what? Small contributors may be coming to the rescue, and Congress should do everything possible to empower them. Consider that Obama has 258,000 donors. As Jose Antonio Vargas reported in Monday's Washington Post, among online donations to Obama, 90 percent were under $100, and half were $25 or less.

Congress already needs to update the public financing system for presidential campaigns. A big part of that fix should be to offer large matches of public funds -- perhaps $5 for every dollar raised privately -- but only for contributions of $100 or less. The aim should be to give candidates strong new incentives to raise small money rather than big money. Congress should give tax credits of up to $100 for political contributions and consider vouchers of, say, $25 that every registered voter could direct toward the campaign of his or her choice.

Reformers need to be creative on the supply side of political money.
There still are not enough small donors to counter the influence of the big ones. But that day could come -- and it should.

Offering candidates realistic options to support their campaigns with public funds -- Sen. Richard Durbin, D-Ill., introduced an important bill to this effect earlier this year -- combined with a strong stimulus for small giving could be the most effective way to confront what Souter called the "unprecedented enormity" of the "concentrations of money in politics."

(c) 2007, Washington Post Writers Group

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