Stanley K. Sheinbaum

Money and Politics

VTR Date: June 14, 1987

Guest: Sheinbaum, Stanley K.

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THE OPEN MIND
Host: Richard D. Heffner
Guest: Stanley K. Sheinbaum
Title: “Money and Politics”
VTR: 6/14/87

I’m Richard Heffner, your host on THE OPEN MIND. Not many months ago – and I’m sure it could happen again today, and probably will again in the months ahead – The New York Times wrote that “In politics, money buys access”. And this particular story went on to note that Stanley K. Sheinbaum, a leading California Democratic party contributor and fund raiser, had grown so frustrated by the demands of money-hungry politicians from all over the country that…he did not even want such access…telling one distant United States Senator who sought an appointment with him in Los Angeles, that he would see the Senator only, quote “Privately on the proviso that money not be discussed”, end quote. One hears that the Senator and the contributor/fund raiser had a fine old time. Money was never mentioned.

Now, this is all because Mr. Sheinbaum, my guest today on THE OPEN MIND, an economist, the publisher of New Perspectives Quarterly, a member of the University of California’s Governing Board of Regents, and a leading giver and raiser of dollars for Democratic politicos everywhere, is so convinced that our present campaign financing arrangement has become an obssessional drain on our elected leaders’ time and energies…and, too often, perhaps even a drain on their honor and honesty. A thumbnail description of our present campaign financing arrangement is simple; namely, scrambling for every buck available, for dollars from all kinds and shapes and forms of sources from sunrise to sunset…constantly, every day of the year, and not just before elections, but before, during, after and always between elections…a never-ending process almost diabolically designed to demean American political life, devalue our leaders, and cheat the public.

Well, twenty years ago, I directed for M. J. Rossant a Twentieth Century Fund study of money, television and politics. And if the facts of the matter were dreadful then, today – particularly given the incredibly high cost of political broadcasting – they’re so much worse, so that I’ve asked Stanly Sheinbaum here to talk about what to do, though first I want to ask our guest: if in politics money talks, what generally does it say? And In our national life, does who pays the piper generally call the tune?

Sheinbaum: Well inevitably it does. The people in office will deny it, but they cannot say that those who give the money do not have better access than those who do not. The question of access is the critical one. When somebody can get in there they can talk about the bill they want or particular Legislator or the tax break that they want. There’s no doubt about it. The real problem is a little more subtle than that. The need for money victimizes those people who are the office holders. You said they might be dishonest. I don’t think they’re dishonest, I think what happens very subtly and they never make a conscious decision to cave in, they are obsessed week after week, month after month with the need to go out and find money. And they will go to the big money centers, New York, Chicago, Atlanta, Dallas, Boston, New York, New York. (Laughter) And they will not spend time going to those parts of the country where the problems are, the rural areas, the ghettos, the barrios. So they never brush elbows with the people who have the problems. They’re always brushing elbows with the people who need the breaks of one sort or another, usually tax breaks.

Heffner: When you say, “Need the breaks”, you mean…

Sheinbaum: Want the breaks.

Heffner: Want and, basically, will pay for those breaks.

Sheinbaum: That’s right. That’s right.

Heffner: Where does that leave us then, as a nation?

Sheinbaum: Well, it’s a very sad situation because one of the things that has happened…and I want to repeat that I see the office holders victimized, I don’t see them corrupted, I see them victimized. They’re our representatives. Because the needs for funds have gone so high, they…to repeat, they have to go out on the road. Let me give you an example. In the Senate races in 1972 thirty-one million dollars was spent. In 1986 one hundred and eighty-four million dollars was spent. Now that requires a lot of effort. That requires going out weekend after weekend, not to their home districts, unless they happen to come from the money centers…one of the money centers, but to wherever they think they can get the money. One of the problems is, and it’s an interesting development that nobody talks about, is that they don’t do their regular work as much as they used to. And this has increased the influence in the Congress of the staffers. It’s the staffers who do the substantial work on legislation, etc. But the office-holder has to go out on the road, on the hustings constantly to find the money.

Heffner: So we…

Sheinbaum: I’d rather, excuse me, I’d rather see them spend the weekend playing golf or drinking with their friends, finding out what’s what. But when they only meet one class of people, that’s very unhealthy.

Heffner: With what result? Now you’ve been theoretical, ou’ve said they have dealt with, associate with essentially, those who have and want more.

Sheinbaum: Well, as you know, in this last year this country finally engaged in a tax reform. The reason we had to engage in that tax reform was that over the years, because of campaign financing, the corporate sector, the wealthy kept getting tax break after tax break after tax break.

Heffner: Now wait a minute…can I interrupt this?

Sheinbaum: Yes. Can you relate the campaign financing to the tax breaks?

Heffner: Yes. Specifically.

Sheinbaum: Oh, yes you can. Yes, you can. Take General Electric, just take General Electric. Between the years 1982 and ’84, three years, ’82, 3 and 4, General Electric netted more than six billion dollars in profits. They not only did not pay a cent in taxes, they got rebates of several hundreds of millions of dollars. A lot of that was in response to campaign financing that was used to persuade the Congress, various members of the Congress to provide certain tax breaks for them.

Heffner: Yes, but that’s the connection, Mr. Sheinbaum that I really ask you to develop. It’s easy to see, it’s easy given the information you have, to see the fact that there was such a refunding of taxes, there was such a diminution of tax liabilities, and there was such a contribution made by this corporation or the other to campaign funds. But what evidence do you have of the connection, the real connection between those two. After all these have been the Reagan years.

Sheinbaum: We are not a court of law here.

Heffner: I understand.

Sheinbaum: And I can’t bring in the people who could testify to that, right here.

Heffner: But you’re convinced.

Sheinbaum: Well, there are patterns that develop. There are patterns of most of the major people in the corporate sector who have obtained tax breaks of one sort or another. There’s one…another theoretical point I would like to make. A tax break is a tax reduction. Usually the argument is that the tax reduction will encourage that particular industry ore corporation to invest more in new products and equipment. The effect of that tax reduction is just the same as if the government was spending an extra dollar or whatever the amount was. It increases the deficit. In 1984, Jim Wright the current Speaker of the House said that one hundred and thirty-give billion dollars of that year’s deficit, the total being two hundred, approximately, one hundred and thirty-five billion was the result of tax generated cuts. Linking it explicitly to the contributions that had been made over time, gaining the access, the ear of the legislators and getting the legislators to pass the necessary tax breaks.

Heffner: It’s so interesting to me that a moment ago you put your emphasis, or indicated, that because the Congressman and Senators are, themselves, going around the country to the centers…

Sheinbaum: Right.

Heffner: …of giving, of contributions, they’re not paying as much attention to their legislative work as they once did and that younger staffers, the professionals are doing it for them. What about the influence, therefore, of the PACs of the…and the pressure groups, the lobbyists, the organized ones who much have a considerable amount of connection with the staffer?

Sheinbaum: Well, Senator Proxmire made the point and I found it a very interesting point. The use of the campaign monies to candidates, to office holders does not always result in a specific piece of legislation. It often results in the hiring of a particular staffer who would be sympathetic to that point of view, or the firing of a particular staffer who would not by sympathetic to that point of view.

Heffner: This is not paranoia?

Sheinbaum: Well…

Heffner: Seriously.

Sheinbaum: Well, Proxmire strikes me as a very intelligent man. And a sane one. And I don’t think he goes off…he’s noted for not going off the handle like that.

Heffner: So the feeling then is that dollars do talk, money does talk and sometimes it talks to the detriment of a staffer who has perhaps taken a stand that a particular economic interest is opposed to.

Sheinbaum: That’s right, that’s right. I’m surprised that you’re trying to get me to prove that there’s a link between the money and the kinds of results I’m talking about. We live in a society where money generally talks a lot, it is almost an assumption.

Heffner: But, Mr. Sheinbaum, the question is then who listens? I know that money talks, but the question has to be, who listens and what do they do once they listen? The whole business of conflict of interest, it seems to me, if I may be so bold, has been pushed, perhaps, beyond its legitimate boundaries. And that because there is money here and it talks that there is an elected official over here and he listens, politely, does he do something in return?

Sheinbaum: You’re missing a step.

Heffner: What’s that?

Sheinbaum: You’re missing a step. And you already described that step in your own opening of the show, which by the way was a very excellent capsule of the problem. And that is because of the sky-rocketing needs for campaign funds, I use the word obsessed. That these candidates are obsessed in their need for campaign funds. It’s not that they’re obsessed for…or greedy for need somehow to get monies to put into their own pockets. That’s not what’s going on. They believe in what they’re doing. Most of them are good, responsible public officials, who need the money with which to run and to get re-elected. So when they go out after the money, or the PACs come in offering the money, they’re going to listen. And more often than not, I would say there is not a conscious decision to tilt, but I know with that intense obsession for the money they will give in a little bit here and there. You can call that paranoia on my part and Senator Proxmire’s part, and I’m delighted to be in his company, but I think it’s very real.

Heffner: Well, of course, I’m baiting you a bit.

Sheinbaum: I understand that.

Heffner: But only partially because…look, you are very reluctant to use the word dishonest. You’re very reluctant to say that these people are playing shady games and somehow or other make it a…almost a subjective necessity or an objective necessity.

Sheinbaum: If they were pocketing the money themselves, I would say dishonest.

Heffner: That isn’t what I mean. Pocketing money is the equivalent of being re-elected. I mean the real currency is the ego currency, isn’t it? Being re-elected, having that power. And what we’re talking about is raising money so that they can be re-elected.

Sheinbaum: I’m willing to give them the benefit of the doubt. They’re in public office. They’re usually ideological. They feel it important they get re-elected. And there is a certain amount of commitment and I give them that. Their ego is involved, so is yours, so is mine. There’s no doubt. And they want to be re-elected. But they’re getting re-elected for salaries that are not at all respectable, given the burden and responsibility that’s put on them.

Heffner: Which may be some indication of the allure of the power that they have. Look, I’m not trying to down-play the problem as you see it. I’m fascinated, though, by your point on the one hand that these people are tremendously affected by the need to raise money and by the gifts of money. And the other hand, your unwillingness to say that there’s anything dishonest going on. That by and large they’re honest. I don’t see that.

Sheinbaum: I almost plead with you, let’s not waste time on whether the word honest or dishonest pertains here. The more important problem is what all this is doing to the society. Look at the participation rates in the elections since the early ‘60s. It has gone down from about seventy percent to fifty percent. We have a Presidential election now, only fifty percent vote. Only twenty-six percent voted in Ronald Reagan. There’s a reason why people are falling out…there are a lot of reasons why people are falling outside the system. I will tell you that they smell that money talks in the political process. Look at what’s happened…one statistic here: Those people giving one hundred dollars or less has been cut in half in the last ten years. One hundred dollars or less. The noises for political processes are now mounting all the time. When you think of those people who no longer give their hundred, when you think of all those people who are dropping out of voting at all, we are less and less describable as a democratic system. We’re in trouble. You want to look at it differently. Look at the impact on the distribution of income. You know the homeless problem. And I can go to the tax structure, a lot of which was eliminated a year ago, thank goodness, but a lot of which was created by all these campaign financing funds. Breaks were given that resulted in the building of houses and homes, such that there was not enough for those people who could no longer afford. There are increasing numbers of people who could no longer afford because the one hundred and thirty-give billion dollar part of the deficit that Jim Wright talked about has been going toward shifting the distribution of income upward. We didn’t have thirty-five million people in poverty ten, fifteen years ago. A lot of that is happening because of the way the political process is structured. And there’s nobody, this is an important point about the financing problem. Labor unions are represented the corporate sector is represented, specific corporations, trade associations. Nobody is there gaining access to speak for those people who are down at the bottom rung. And the legislation that goes on very subtly, very slowly moves the distribution of income upward.

Heffner: Now I think you’re points are extraordinarily well made, terribly important, but they lead me to the question…what to do?

Sheinbaum: Well, there is in front of the Senate right now, S-2. It is a bill called the Boren-Byrd Bill, Senator Boren and Senator Byrd. There’s a general recognition in the Congress, Barry Goldwater said, conservative man, that the extrapolation of financing needs upward is going to destroy liberty in this country. This is not a crazy, soft-hearted liberal saying this. John Stennis, who objected to the campaign financing reform in 1974-75 is now solidly behind S-2. I think about sixty Senators have now signed on to S-2. What will S-2 do? S-2 will provide as we have already provided for our Presidential campaigns, Federal funding. It’s one of the things it will do. It will limit expenditures, so you don’t get these crazy expenditures on television, your business. These thirty second spots that don’t say anything and cause you to rely on either an advertising genius or the personality of the candidate, without ever finding out what the candidate’s all about. But let me get to the Federal funding. That’s the key. It has been very successful, in the Presidential campaigns. In 1972 Nixon spent about sixty-two million dollars. Had we not gone to Federal financing, it is guessed that in 1984 a Presidential candidacy would have cost about one hundred and sixty million. Ronald Reagan got by on a neat sixty-eight million. Fine. We kept the expenditures low. He is indebted to nobody. And neither was Walter Mondale. Now the first thing you hear, to answer your next question, “Well, wouldn’t it be too expensive to finance the Senatorial races and the House races?” I used the example before of GE netting six billion in three years earlier in this decade, paying no taxes. Had GE paid the average tax for an average corporation during that three year period it would have covered all Federal financing costs until the year 2015. It is not expensive to do this. And it gives those candidates, were they to get Federal grants, the ability to go out to the public and talk about the issues and not go into just the Regency Club or Chasens in Los Angeles or the high powered…I don’t know what clubs they go into in New York, where they meet only the wealthy who can afford the thousand dollars…and they can talk to people in Harlem, they can talk to the people in the barrios in the South, the Puerto Ricans, wherever. And talk about the farmers…they can talk about the needs of this country.

Heffner: You know the Murray Rossant’s Twentieth Century Fund study that I referred to…

Sheinbaum: I read it.

Heffner: …in my initial remarks, 1968-69, clearly the vision then of what was going to happen came to pass. Nothing that strange, nothing that different has happened since that time. What makes you think it will happen now?

Sheinbaum: there’s a revulsion. There’s a revulsion.

Heffner: Wasn’t there then?

Sheinbaum: Not the way it is now. I described to you…

Heffner: Okay.

Sheinbaum: …between ’72 and ’86, the expenditures for the Senate went from thirty-one to one hundred and eighty million dollars.

Heffner: Are you going to take bets now as to whether the Bill will pass?

Sheinbaum: Yeah. Are we allowed to bet on public television?

Heffner: Why not?

Sheinbaum: (Laughter)

Heffner: Do you think it will?

Sheinbaum: I think it will. I think it will.

Heffner: Where will…

Sheinbaum: Just go back a few months to November ’86 when people were fed up with the dirty television campaigning, the thirty second slots that said nothing. Senator Cranston and his opponent, spending twenty-two million dollars when there are homeless.

Heffner: Now wait a minute.

Sheinbaum: Come on, there are moral questions.

Heffner: Now wait a minute. Wait a minute. Now you’re talking about the content of these television spots and the television medium.

Sheinbaum: Well there’s a lot to talk about.

Heffner: So what you really want to do is set up some agency in…

Sheinbaum: No.

Heffner: …Washington…

Sheinbaum: No.

Heffner: …that will decide…

Sheinbaum: No.

Heffner: …out-out damned spot.

Sheinbaum: No.

Heffner: No?

Sheinbaum: No.

Heffner: But then why talk about the quality?

Sheinbaum: No. There is always a lot of noise on the part of legislators and candidates who really don’t want to do anything serious about campaign financing. Who will tell you we have to do something about having clean campaigns. You know and I know that there will never be an agency of any sort that will be able to assure that the opponent won’t be slandered or whatever. We will never get to that. But when the money is so plentiful, they have to concoct things to do with it. You want to hear another phenomenon that’s involved here?

Heffner: Go ahead.

Sheinbaum: That’s causing the escalation in the costs?

Heffner: I’m all ears.

Sheinbaum: There’s a new industry. It’s called the campaign manager. And people are in business. It used to be…I ran for Congress in 1966 and in 1968. It used to be in those days of purity that a guy who liked me and what I stood for, or liked Gene McCarthy or what he stood for, or liked Richard Nixon, would work for, maybe for a little salary, not for much. Now there’s an industry of campaign managers who tell their candidate, “Look, you’re opponent’s going to spend x millions of dollars on TV. You better do it, too” and the candidate gets worried, so he goes out into the field and starts raising money. The campaign manager doesn’t have to raise the money. Besides which, the campaign manager when he buys the time gets a fifteen percent rebate. So we’re buying more and more on the television time that he sells. You seem doubtful about that.

Heffner: No. I’m wondering whether this still won’t happen. Only the tax payer will be paying for it.

Sheinbaum: One, there will be limits. There will be expenditure limits. There’s a complicated formula as to the limits. The tax payer will be paying for fifty million dollars a year, one-third of what the defense budget pays for military bands.

Heffner: You have these figures…

Sheinbaum: You’re damned right I have these figures. This country has been capable of demonstrating some very unwise judgments in these last years.

Heffner: Alright. Let me ask you a question then. And I know that you’re honest enough to give it fully…give the answer fully. What’s the downside?

Sheinbaum: I don’t see a downside.

Heffner: None whatsoever?

Sheinbaum: I don’t see a downside. Some people feel the downside is that it’s too expensive for the taxpayer.

Heffner: Okay, you’ve said “no”.

Sheinbaum: Alright, I’ve said, “no”. Some people feel it would be bad for minor party candidacies. I don’t want to go into the details of that. That is built into the Bill. There are ways of making sure the minor party candidacies are attended to. And if they can establish a certain level of local support, monetarily, then they can get certain levels of grants. As their money support goes up, the grants go up. But they have to prove that they are not fly-by-nights, who just get up and say, “I want to run”.

Heffner: Do you subscribe at all to the critics who say, to a certain extent at any rate, “This approach will freeze into place you Democrats and those Republicans”?

Sheinbaum: Well, nothing is frozen into place. I assume you’re talking about the incumbents.

Heffner: Yes. Well, no, I’m not just talking about the incumbents. I’m talking about the two established parties.

Sheinbaum: No, as I said, there is a way of allowing for parties that are showing the capacity to get off the ground to be financed so they can do more if they can hack it.

Heffner: No. No. I understand that. I’m asking you, in practical terms, do you think the result of campaign financing, on a national…

Sheinbaum: Well, I’m going to turn it around on you. Because one of the things that PAC financing has done, the current financing arrangements, has to greatly weaken the party structures. A lot of things serve to weaken the party structures, including the advent of television. Again I keep getting back to your favorite medium.

Heffner: I know.

Sheinbaum: But, no. I think what has happened is that the parties used to go out and raise the money for candidates. Not all the money, but a lot of the money. So the parties had some organizational purpose. It’s almost now as if the parties don’t have any organizational purpose, because the PACs have raised so much of the monies and have, in a sense, replaced that function of the party.

Heffner: So one could almost say that the bills that have been offered…

Sheinbaum: Would be healthy.

Heffner: Are party bills.

Sheinbaum: They will be healthy for the party structure and there are a lot of very serious people, including myself, who are very anxious to see parties back to what they meant in American politics.

Heffner: I wish we had more time…

Sheinbaum: So do I.

Heffner: …’cause that’s the point at which to begin. But we must end. Stanley Sheinbaum, thank you so much for joining me today on THE OPEN MIND. And by the way, my favorite medium is not that eye, but print. Anyway, we’ll see you back here again.

Sheinbaum: Thank you, Richard.

Heffner: And thanks, too, to you in the audience. I hope you’ll join us again next time. And if you care to share your thoughts about today’s program, please write to THE OPEN MIND, P.O. Box 7977, FDR Station, New York, NY 10150. For transcripts send $2.00 in check or money order. Meanwhile, as an old friend used to say, “Good night and good luck”.

Continuing production of this series has generously been made possible by grants from: The Rosalind P. Walter Foundation; The M. Weiner Foundation of New Jersey; The Mediators and Richard and Gloria Manney; The Richard Lounsbery Foundation; Mr. Lawrence A. Wien; and The New York Times Company Foundation.