RESOURCE MATERIAL SERIES No. 56

CAMPAIGN FINANCING AND CORRUPTION IN THE US
Anthony Didrick Castberg*
I. OFFICIAL CORRUPTION IN THE
UNITED STATES
Corruption was common in the US in the
19th century. Patronage was widespread,and although the spoils system was createdwith the intention of diversifying
bureaucrats, it became clear that
corruption continued to increase. Rapid
industrialization and westward expansion
not only expanded the role of government,
but also of corruption in government.
Although there was considerable
corruption at the national level andscandals affecting the presidency, such as
those involving the Grant administrationin the 1870’s, most of the corruption in the
US at the time was found at the local level.
Most famous, perhaps, was New York’s
Tammany Hall, which involved politicalparty leaders, politicians, and businessinterests in collusion to control lucrative
government contracts. This corrupt
activity centered on kickbacks, extortion,
election fraud, and bribery. But a growing
consensus among reformers and the
population as a whole saw this corruption
as ultimately detrimental to both politics
and the economy. This consensus led to
the Pendleton Act, which created the firstfederal civil service system in the US. As
a result of this movement, bribery andother forms of corruption decreased
substantially, although it was still to befound at the city, county and state levels,
often through political parties.
Nevertheless, the reform movement spreadto all political jurisdictions and, by theearly part of the 20th century, the moreblatant forms of corruption had been
* Professor of Political Science, University of Hawaii
at Hilo, United States of America.

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reduced significantly. The reformmovement was frequently aided byoutrageous scandals, such as the Teapot
D o m e s c a n d a l d u r i n g H a r d i n g ’s
administration, and by the press, which
often played a crusading role in bringing
scandals to public attention.
The nation suffered a setback during theprohibition era, 1919 - 1933. Prohibition
was the result of the 18th Amendment to
the US Constitution, which prohibited the
manufacture, import and sale ofintoxicating liquors. Although wellintentioned, the Amendment was illconceived, as it sought to make illegal whatmany, if not most, of the citizens not only
enjoyed but felt was their right. Although
the Amendment tried to eliminate thesupply of alcohol, it clearly did not
eliminate the demand for alcohol. As aresult, a thriving underground enterprise
sprung up virtually overnight to supply thedemand. This enterprise established the
Mafia as a major criminal force in the US,
and with it, widespread corruption of law
enforcement. Such corruption was not only
accepted by many citizens but encouraged,
as it made access to the forbidden
intoxicating liquors much easier. The endof prohibition in 1933 did not mean the endof organized crime nor the end of corruption
in law enforcement, as organized crime
merely shifted its activities and corruptive
influence to other forbidden but desiredcommodities and activities, such asgambling, loansharking, prostitution anddrugs. The US has never completely
shaken loose of the corruptive influencesof the era of prohibition. But politicalcorruption and scandals at the national
level, at least, decreased; there were no
major scandals during the Roosevelt,

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Kennedy or Johnson administrations.
The US has not, of course, eliminatedpolitical scandals. Perhaps the most
famous political scandal involving
corruption in high offices in recent history
was the so-called “Watergate” affair
involving President Richard Nixon. This
scandal started with what, at the time,
seemed to be a simple burglary of
Democratic Party headquarters in the
Watergate building in Washington, DC.
The burglars were caught in the act andan investigation soon connected them to
Nixon’s re-election campaign staff (theburglars had been trying to obtain
information on Democratic campaign
strategy). President Nixon ordered thatmoney be given to the burglars so that theywould not talk about his involvement in thecrime. There then followed one cover-up
after another. The President used theInternal Revenue Service, the FBI, andother federal agencies against those hethought were leading the efforts to involve
him in the conspiracy. He had a very long“enemies” list. Largely due to an
aggressive press, all of the details ofcorruption in the office of the President
were brought to public attention.
Congressional hearings not only brought
to light the many details of the burglary
and cover-up, but also of illegal campaign
contributions made to Nixon’s campaign
committee. This ultimately resulted in theHouse Judiciary Committee voting for
impeachment, and the President’s
resignation soon thereafter - the first timein US history that an American president
resigned from office.
As is often the case in major scandals,some good resulted in the form of tougherlaws and new protections. The Federal
Election Campaign Act of 1971 wasstrengthened after Watergate, and theFederal Elections Commission wasestablished. The Foreign Corrupt Practices

Act was passed in 1977, and the Ethics inGovernment Act in 1978. The movement
led to a significant increase in the numberof state and local officials charged underfederal law with corrupt practices, anumber that reached almost 500 in 1986.
Despite reform, corruption continued.
The “Abscam” scandal of 1978-80 involved
FBI agents posing as Arab sheiks whooffered various government officials,
including senators and representatives,money for help in obtaining favorable
immigration rulings. Most of this wasrecorded on videotape. Six representatives
and one senator were convicted of bribery.
And in 1986-89 two representatives andmany other officials were convicted ofracketeering, tax evasion, bribery, fraud,
grand larceny, and perjury for accepting
payoffs from military contractors in what
was called the “Wedtech” scandal. In 1987,
five Senators obstructed federal regulatorsin their investigation of a savings and loan
company that had been had been looted byits owner, Charles Keating, of $2 billion.
Those senators received a total of $1 million
in campaign donations from Keating. But
the senators, called the “Keating Five”,
were never charged with any crime or
ethical violation because, while they could
influence federal regulators, they had no
direct control over them. One of thosesenators, John McCain, is now a
Republican candidate for the presidency.
More recently, President Clinton was
accused of accepting large campaign
contributions from several Chinese
businessmen in return for favorable
treatment of China on a variety of matters,
including the sale of satellite technology.
US intelligence agencies allegedlyintercepted information in early 1995
indicating interest on the part of theChinese government in spending money tosupport certain candidates for office in the
coming election, an issue raised by

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RESOURCE MATERIAL SERIES No. 56
Republican legislators but not proven until
subsequent indictments and trials. The
money, however, seems to have bought little
other than access to the President.
Early this year, the New York Times
reported that China had stolen highlyclassified nuclear weapons informationf r o m t h e L o s A l a m o s l a b o r a t o r y,
information that allegedly allowed theChinese to make rapid advancement intheir nuclear weapons program. Although
the theft allegedly took place in the mid
1980’s, during the administration of Ronald
Reagan, it was charged that the theft had
not been detected until 1995, that the
President had not been informed until April
1996, and that nothing was done toinvestigate the alleged theft until 1997.
Congress was not informed until 1998.
Republicans charged that the failure of the
Clinton administration to follow up on thetheft and to promptly notify Congress wasdue to campaign contributions funnelled
through Chinese businessmen in the US
by the Chinese government. To date, noneof these allegations have been proven, andit would seem to be a highly partisan issue.
Earlier this month, it was revealed that
Secretary of Labor, Alexis Herman, wasunder investigation for influence peddlingand soliciting illegal campaign
contributions for the Democratic National
Committee when she was a White House
aide during Clinton’s first term. She wasappointed to her current post by Clinton
in May 1998. Although the investigationis still under way and she has not been
charged with any crime, this is an exampleof how working for a campaign can result
in appointment to a high post. If she didsolicit large campaign contributions, it may
well have been a factor in her being
appointed to her present position. It is wellknown, for example, that individuals whomake very large contributions to apresidential campaign may do so in return414

for being appointed an ambassador.
The examples cited above are, of course,high level corruption. Just how muchcorruption is there in the US at all levels?
We only have official figures on reported
corruption, so the amount of unreported
corruption remains unknown, but the data
we do have gives us some idea of how casesof corruption compare to other offences. It
is interesting to note that the mostwidespread crime reporting system in theUS, the FBI’s Uniform Crime Reports(UCR), does not even list corruption or evenbribery it either Part I offences, thosedeemed to be the most serious, or Part II
offences, those less serious. Nor does datafrom state courts list corruption or bribery
in its data. When we look at data collectedby the Department of Justice’s Bureau of
Justice Statistics, however, we do find casesof bribery and of other forms of corruption.
Under the general category of “other,” acategory that also includes racketeeringand extortion, we find that in fiscal year
1996 there were a total of 405 federal
bribery suspects, of whom only 168 wereprosecuted in US District Courts. Of theremainder, 212 were not prosecuted and 25
were dealt with by federal magistrates (theequivalent of a misdemeanor case). It isdifficult to determine the exact reasons that
212 suspects were not prosecuted. Usingslightly different data, for the 232
defendants whose bribery cases were
terminated in fiscal year 1996 we find that
90.1% of the defendants were convicted,
most of them by a jury, and 16 of the 23
who were not convicted had their cases
dismissed, with only 7 going to trial andbeing found not guilty.
Using data from fiscal year 1998, we findthat official corruption cases have beenbroken down into separate offences.
Corruption in federal law enforcement
resulted in 52 cases and 74 defendants, andof the 46 terminated during this period, 44

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were through a finding of guilty. One
should also note that there were significant
numbers of state and local corruption cases,
the vast majority of which ended in findingsof guilty. While these figures are alarming,
they must be viewed in perspective. A totalof 902 officials were convicted of offences
involving abuse of public office in 1996.
These figures should be compared to thetotal of over 53,000 defendants convicted
in federal courts alone in FY 1996.
Corruption in the US, then, is a problem,
but it is not as much of a problem as manyother crimes, and as a consequence, does
not alarm the public as much as othercrimes, especially crimes of violence.
II. ELECTIONS IN A DEMOCRACY
A fundamental tenet of a democraticsociety is free and open elections, with few
restrictions on access to political office.
Age, citizenship and residence are theprimary limitations on candidacy forpolitical office in a democracy. The UnitedStates is a democracy, and prides itself on
the diversity of its elected politicians,
diversity measured in terms of gender, age,
ethnicity, race, religion, and political
ideology. A democratic political system may
be multiparty, or it may consist of two
parties, which is the case of the US.
Although over the past two hundred years
third parties have elected their candidates
to local, state and national office, the US
is considered a two party system,
dominated by the Democrats and theRepublicans. Most agree that neither party
is ideological in nature, but it is also truethat the Democrats are more on the liberalside and the Republicans on theconservative side of most issues. The
Democrats, for example, support social
welfare programs and government
regulation of business, while theRepublicans tend to favor less government
and more free enterprise. Over the last 100
years, all presidents and the vast majorityof national legislators have belonged to one
or the other party. In both parties one canfind the wealthy as well as those frommodest backgrounds, but over the past 30
years some things have changed.
Running for political office, or for reelection thereto, in the US is now very
expensive. The average cost of a winning
campaign for the US Senate in 1996 was$4,692,100 and $673,739 for the House,
with the most expensive campaigns foreach house costing $14.5 million and $5.6
million respectively. The 1996 Clinton andDole presidential campaigns spent over$230 million, not including almost $70
million in ads paid for by the Democraticand Republican parties. All of thecampaigns nationwide in 1996 cost an
estimated $2.7 billion. A great deal of thismoney is spent on television
advertisements - the Democratic National
Committee alone spent about $44 million
on such ads (this does not include themoney spent by the Clinton campaign
itself). Television advertising can be very
expensive - up to $500,000 per minute.
Needless to say, only millionaires canfinance their own campaigns for national
office. This means that most aspirants foroffice and incumbents running for reelection must rely on contributors,
contributors who usually expect something
in return for their contributions. That“something” may be as simple as apolitician whose political views are
consistent with those of the contributor, it
may be access to the politician not enjoyedby lesser contributors, or it may be an
explicit quid pro quo - paying for favorable
consideration on an issue over which thepolitician has substantial control. In thelast century and early part of the 20 th
century, the practice of selling votes was
fairly common. Today it is practicallyunheard of, but many argue that campaign
contributions amount to the same thing.

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RESOURCE MATERIAL SERIES No. 56
III. SOURCES OF CAMPAIGN
FINANCING
While political opponents may try to
influence voters by alleging foreign
influence on domestic politics, in fact thevast majority of campaign funds come fromdomestic sources. The single largest
contributors are corporations and Political
Action Committees (PACs). In the 1996
campaign, for example, a tobacco company- Phillip Morris - contributed $4,208,505
million, 21% of which went to Democrats
and 79% of which went to Republicans. The
second largest amount - $4,017,553 million- came from the American Federation ofState, County and Municipal Employees,
99% of which went to the Republicans.
While large individual donors and PACs
accounted for almost 32% of allcontributions, 31% came from small
donations (under $200). Political parties
may legally solicit and receive an unlimited
amount of funds. These funds must, undera 1979 amendment to federal election laws,
be used to publicize the party or present
issues, and may not be used for the benefitof specific candidates. This law was upheldby a 1996 Supreme Court decision that said
that political parties could spend unlimited
amounts of funds on congressional races
as long as they act independently of thecandidates. This has resulted in party
advertisements that devote a great deal oftime to a candidate and only discuss“issues” in passing, a method of meetingthe letter but not the spirit of the law.
Because this money is supposedly used topromote issues, it need not be reported,unlike other contributions.
Money contributed to political parties
and not specified for a particular candidate
is called “soft money,” and there arevirtually no limitations on how much canbe given or how it is spent, as long as the
spending is on “issues,” voter education,
party building, etc. Soft money raised by
the two major parties more than tripledfrom 1992 to 1996, where it amounted toover $260 million. There are, nevertheless,restrictions on soft money contributions,and the Democratic National Committee
admitted that it accepted $2.8 million
illegally or under questionablecircumstances for the 1996 campaign; it
subsequently returned the money to its
donors.
IV. CAMPAIGN SPENDING LAWS
The Federal Election Campaign Act, as
amended in 1974, established strict
disclosure requirements, set limits for
donations, and provided for publicfinancing of presidential campaigns.
Campaigns must list all contributors whogive over $200 per year, and cash
contributions of over $100 were prohibited(as cash contributions are almost
impossible to trace). Limits for donations
were set as follows:

To a candidate or To a national
committee per
party per year
primary or
general election
Individuals
PACs

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$1,000$5,000$20,000$15,000

To any otherpolitical
committee per
year

Total
contribution
per calendar
year$5,000$5,000$25,000
No limit

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These limits also applied to candidates
themselves - they could not even spend
their own money in excess of the specified
limits. All of the reports by candidates are
public, and are available on the Federal
Elections Commission website, and at least
one candidate for the presidency, George
W. B u s h , h a s p r o v i d e d d e t a i l e dcontribution information on his own
website. Bush so far has raised over $50
million - the largest amount ever raised bya candidate in a primary election.
The public financing provision allowed
taxpayers to indicate on their federal tax
return whether they wanted $3 of themoney they owe the government to be putin the Presidential Election Campaign
Fund. The Fund would then match up to$250 of each contribution made to eligible
candidates in primary elections. In order
to benefit from this, the candidate had toagree to spend no more than $50,000 of
their own money. Public funds would not
be available to candidates who exceeded
the limit. Public funding is not available
to candidates for congress, although limits
were set for campaigns for those offices.
Provisions of the law limiting a candidate’s
own expenditures, as well as total
expenditures, were challenged in a suit
filed by a broad coalition of candidates andpolitical organizations in early 1975, anda year later the US Supreme Court handed
down its decision in the case of Buckley v.
Valeo. The Court found that both theoverall spending limits and the limits on ac a n d i d a t e ’s o w n s p e n d i n g w e r eunconstitutional as a violation of freespeech. The Court recognized that abalance had to be struck between freespeech and the prevention of corruption,and stated that contributions to a
campaign are less protected than
expenditures made independent of
campaigns. Therefore, contribution limits
were upheld while money given to politicalparties or PACs could not be restricted.

V. ISSUE-SPECIFICCONTRIBUTIONSContributions to politicians are notalways made specifically for campaigns but
frequently for favorable treatment on
issues of interest to the contributor. The
money contributed, however, must beplaced in the politician’s campaign fundand must be so used. The large amount ofmoney contributed by Phillip Morris noted
above, for example, was very likely
intended to influence votes on tobacco
issues, including an impending
government suit against tobacco companies
for misleading the public about the dangers
of smoking. Issue-specific money was also
contributed in great quantities over the
proposed Telecommunications Competition
and Deregulation Act of 1995. As the titleof the legislation implies, the act was
intended to deregulate thetelecommunications industry and thereby
increase competition, which would
presumably reduce costs and increase
options for the consumer. Although the Act
passed Congress and was signed by the
President, the intended benefits to
consumers have yet to appear. The
campaign funds of many legislators,
especially those on the House and Senate
Commerce Committees, benefited greatly,
however.
The benefit to legislators of controversial
issues that affect large industries should
seem obvious: such issues provoke
significant increases in campaign
contributions. It should be noted as wellthat most such money is not soft money but
rather money from PACs, and therefore
limited to a total of $10,000 per campaign($5,000 for the primary and $5,000 for thegeneral election) per person. Because hardmoney is accountable and limited, it ispreferred for specific issues. But one
wonders whether some issues are invented
as a means of creating controversy and

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RESOURCE MATERIAL SERIES No. 56
therefore increased campaign
contributions rather than for the public
good. Many of these issues are highly
complex and, while they have a significant
impact on the public as a whole, are often
buried beneath more sensational but
ultimately less important legislation. For
the most part, only large corporations,interest groups, and legislatures play thisgame - the “little guy” is left out.
VI. INDIRECT SPENDING:LOBBYING
There are methods by which legislators
can be influenced on particular issues in
addition to campaign contributions, themost important of which is lobbying.
Lobbying is an important but low visibility
process, and it can be highly lucrative forthe lobbyist himself or herself. There areat least 12,000 registered lobbyists, anumber of whom are former legislators or
political appointees. While there is nothingillegal or necessarily unethical withindividuals and organizations trying to
influence legislators, many feel it is wrong
for former legislators and staff members
to get rich as a result of their former status
and the access that it brings. The lobbyist
is supposed to provide information to thelegislator as well as argue for a particularcause, but the lobbyist can also help bolstera legislator’s campaign fund indirectly bybringing together those who wantsomething from Congress with those who
can provide it. Thus, the former legislator,
now a lobbyist, continues to practice thefine art of seeking campaign money as wellas influencing legislation, but now forsomebody else.
Federal law prohibits most federal
employees and elected officials from taking
positions in private industry that theymight have been in a position to benefit
from through their prior position until atleast two years after they have left office.

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The same law applies to lobbying, but toget a conviction under the law, 18 USC 207,
the government must prove, among otherthings, that it had a direct and substantial
interest in the matter and that the former
official had direct responsibility for theparticular matter within one year of theirretirement (except for executive branch
officials, where the time period is two years
if the matter was pending under that
person’s official responsibility). There aremany laws that govern the activities ofcurrent and former government officials.
Some of them are listed below:
5 USC 2302
5 USC 7353
18 USC 201
18 USC 203

18 USC 207

18 USC 208

18 USC 211

18 USC 666

18 USC 1510

Prohibited
personnel practices
Gifts to federal
employees
Bribery of public
officials and witnesses
Compensation tomembers of congress,
officers, and others inmatters affecting thegovernment
Restrictions on former
officers, employees, andelected officials of theexecutive andlegislative branches
Acts affecting apersonal/financial
interest
Acceptance orsolicitation to obtain
appointive political
officeTheft or bribery
concerning programs
receiving federal funds
Obstruction of criminal
investigations

These are only a few of the many federal
laws dealing with crimes of official
corruption. In addition to these criminal
laws, there are standards of ethical113TH INTERNATIONAL TRAINING COURSE
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conduct, such as 5CFR2635.
VII. WHY THE GREAT DESIRE TOGET ELECTED?
It is likely that many people run for officebecause they genuinely want to serve thepublic. They may feel that the many
problems of their constituency are notbeing adequately addressed, or they may
simply want to be in a position where they
have a greater impact on society than justvoting. There are those however who seek
office because of selfish motives. The latterare probably a minority, but social andpolitical commentators are saying that
there seems to be an increase in these typesof people running for office. Note the titlesof two recent books on the subject: The
Buying of the President, by Charles Lewis,
and The Corruption of American Politics,
by Elizabeth Drew. Some politicians are
deciding either not to run for re-election orfor higher office. Christine Todd Whitman,
governor of New Jersey, recently changed
her mind and decided not to run for the
US Senate seat being vacated by SenatorFrank R. Lautenberg. She said thedemands of fund raising would interferewith her duties as governor. It also seems
clear that she would have a very difficult
time raising enough money to match thefunds available to Democratic candidate
Jon Corzine, the former chairman ofGoldman Sachs & Company, who has apersonal fortune of about $300 million.
Corzine has already put $500,000 of that
fortune into his campaign spending fund,while Whitman had raised over $2 million.
Nevertheless, Corzine has said would
spend as much as necessary to becompetitive, and it was clear that Whitman
could not match her fund raising against
his fortune.
This also raises the interesting questionof why a person like Corzine would spend
so much to win an election. It is highly

unlikely that he would consider money
spent on a ‘campaign’ as an investment he could never recoup the money spent on
the campaign, legally or illegally. Why
would a person who has such a fortune
want more? What he wants, and whatmany people who run for office want, is notmoney but power. As chairman of Goldman
Sachs, Corzine made important decisions
and controlled billions of dollars, but he still
had to rely on his elected representatives
to make the decisions that affected theeconomic environment in which he worked.
It is often the same motivation that makes
attorneys in the US want to be judges - they
will very likely make less money as a judge,
but they will have far more power andinfluence.
If we accept, then, that many, if not most,candidates for office or for re-election are
motivated by power, not money, what thenof those who make large contributions tothese politicians? As suggested at the
beginning of this paper, it is safe to say thatmany of the contributions are made witheconomic motivation. Corporations, PACs
and individual contributors who spend
large sums of money on those running forpolitical office expect something in returnfor their investments, and this puts
pressure on the winning candidate toreciprocate. As long as that politician
wants to be re-elected, s/he must act in thebest interests of those contributors. As longas the politician and the contributors do
not violate any laws, there has been no
corruption as defined by law. But hasn’t
the political process been corrupted?
Haven’t the interests of the rich andpowerful been put above those of the poorand powerless, the very people who mostneed the assistance of government? The
answer, of course, is yes.
VIII. WHAT CAN BE DONE?
The answer to many of the problems

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RESOURCE MATERIAL SERIES No. 56
cited above is campaign finance reform.
There are already enough laws and ethicalstandards to take care of criminal andunethical behavior, but the fundamental
problem - the corrupting influence of moneyin election campaigns - needs additional
attention. There is no shortage of reform
proposals, but despite public
pronouncements by many political leaders,little progress has been made. Part of the
problem is partisanship. The Democrats
generally support limits on soft money,
while Republicans do not, unless there are
restrictions on spending by labor unions(which traditionally support Democrats).
Republicans argue for raising the limits on
individual contributions, in part because
large individual contributions are mostfrequently made to Republican candidates.
But the fact is that the status quo favors
those in office, those who are the only ones
in a position to bring about change. One
current bill, which is backed by Democrats
and some Republicans, would prohibit
political parties from raising or spending
soft money, and would make a clear
distinction between issue advocacy andadvocacy of a particular candidate. The
limits on hard money would also apply tosoft money, and there would be stricter
disclosure requirements and higher
penalties for violations. It is unlikely,
however, that this bill will pass before
Congress adjourns in October. It is, after
all, difficult for those who benefit fromexisting law to change them, even thougha majority of voters want such reform. In
the end, we come back to the people, thevoters. They elected the current politicians
who benefit from an essentially corrupt
system and only they can throw them outof office. But will they? Only time will tell.

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