Money mad

Jacob Sullum
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Posted: Mar 11, 2005 12:00 AM

In 1991, Sen. John McCain, R-Ariz., was reprimanded by the Senate Ethics Committee for his "poor judgment" in meeting with federal bank regulators who were investigating Arizona businessman Charles Keating, one of his campaign contributors. Ever since then, McCain has been trying to show he is not a hack politician kowtowing to special interests but a man of integrity and principle.

 Yet the main principle served by McCain's crusade for campaign finance "reform" has been the principle of incumbent protection, the same goal that motivates hack politicians who kowtow to special interests. In the end, it's hard to see how McCain's crusade to remove the corrupting influence of money from politics is any more admirable than the corruption of which he was suspected in the Keating scandal.

 McCain was one of five senators who met with regulators in 1987 and encouraged them to ease up on Keating's Lincoln Savings and Loan Association, which was under scrutiny for risky investment practices. The government ended up bailing out the S&L's federally insured depositors two years later at a cost to taxpayers of $3.4 billion, and Keating served several years in prison for fraud, although his conviction was later reversed because of juror misconduct.

 Between 1982 and 1987, Keating had steered $1.4 million in campaign contributions and gifts to the five senators. McCain had received $112,000 of that, along with nine trips on Keating's jets to the Bahamas and elsewhere.

 Although the bank regulators later said they felt pressured by the Keating Five's intervention, the senators insisted they were not trying to exert inappropriate influence. McCain even said as much during one of the two meetings. "I would not want any special favors for them," he said, according to notes taken by one regulator. "I do not want any part of our conversation to be improper."

 But when the meetings were publicly exposed, leading to 23 days of congressional hearings, McCain had an epiphany. "The thing I learned was that it's not only impropriety that counts," he said during his 2000 presidential campaign. "It's the appearance that's just as important."

 Whether McCain really learned that lesson is debatable. As chairman of the Senate Commerce Committee, he received hundreds of thousands of dollars from companies affected by the committee's work, and he has repeatedly been criticized for intervening with regulators on behalf of businesses whose employees gave him money, including Paxson Communications and AT&T.

 Nor was McCain paying close attention to appearances when he set up the Reform Institute, which is dedicated to curbing the influence of special interest money yet depends on special interest money to fund its operations. According to The New York Times, McCain "defended the large donations as a necessary part of advocacy work, and drew a distinction between the progressive agenda of the Reform Institute and political efforts to which campaign finance laws apply." Unlike them, he said, the institute is "nonpartisan and issue-oriented."
 
I'm not sure I understand this distinction. Don't some politicians have "a progressive agenda"? Aren't efforts to change government policy "political" by definition?

 In any case, the Reform Institute helps keep McCain in the public eye and burnishes his image as a reformer, thereby enhancing his presidential prospects. The senator seems to be taking advantage of one of those terrible "loopholes" in campaign finance law that allows people to engage in unfettered political speech.

 Meanwhile, he is determined to close other people's loopholes. His odious Bipartisan Campaign Reform Act of 2002 already prohibits "nonpartisan and issue-oriented groups" from criticizing politicians close to an election, and it may lead to regulation of bloggers and online journalists. Unsatisfied by this impressive assault on the First Amendment, McCain wants to ban the so-called 527 groups that raised such a ruckus in the last presidential campaign.

 McCain describes the danger they pose this way: "Some billionaire decides he or she doesn't like you in office, and they decide to form a 527 and contribute $10 million or $20 million and dive-bomb into your state or district. That should alarm every federally elected member of Congress."

 Maybe so, but why should it alarm anyone else?

 During the Keating Five scandal, McCain was suspected of trying to keep himself in office by doing a favor for a campaign donor. Chastened by this experience, he is now trying to keep himself and his colleagues in office by silencing potential critics. In Washington this is considered progress.