CAMPAIGN SPENDING.

Business cries uncle

No one is more fiercely consistent in opposing reform of our broken campaign money system than Senator Mitch McConnell, a Kentucky Republican (and chair of the national Republican committee that raises funds for senatorial candidates). So when the senator attacked a group of business leaders who say the money chase verges on what one of them calls "a shakedown," it was not his intention to give the reform movement a boost.

That's what he's done with his assault on the Committee for Economic Development (CED). The venerable business organization's sin was issuing a report endorsing campaign-finance reform. Its argument, not heard widely enough, is that many business leaders are as tired of being pressured to cough up political money as politicians are at having to raise it.

"In many, many cases it's a shakedown, and they have no choice but to give," Edward Kangus, chairman of Deloitte Touche Tohmatsu, said of his fellow executives in an interview. "It's presented to them as, 'This is what you have to do,' with whatever veiled message that sends. Especially if they're a regulated industry, they have no choice but to play the game." Kangus, who co-chairs the committee on campaign finance reform at CED, also worries about business complicity with a bad system. "Our customers believe that we are co-conspirators in this system and that we are as corrupt as the politicians who are pushing this on us. And that's not good for business."

Charles Kolb, president of the CED and a Republican who served in the Bush administration, summarized his group's thoroughly free-market view this way: "Our business trustees would rather compete in the marketplace than in the political arena."

In its report, the Washington-based CED endorses banning the flow of unregulated "soft money" to campaigns, an issue that will sharply divide Congress in the coming weeks. This group's most innovative suggestion is to use public money to provide a two-for-one match of all small contributions-those of $200 or less.

That means, if you gave $200, the fund would kick in $400 more. But the two-for-one match only covers the first $200 contributed. That would mean that a $1,000 contributor would get the same $400 match as the $200 giver. Matching only small contributions, the report says, would provide candidates "with a strong financial incentive to seek out small contributions from a large number of donors."

Ah, but isn't this "taxpayer financing" of politics? Refreshingly, the CED doesn't flinch. "We make no apology for proposing direct public financing of this program," its report declares. "The improvement of our campaign finance system is a public benefit, and it should therefore be publicly funded. It is an investment in the people's business."

The CED also proposes lifting the current $1,000 ceiling on individual contributions to $3,000. By itself, this change would only increase money's influence on politics. But as a new way of winning votes for a broad package of serious reforms, it might be a useful concession to politicians tired of wasting time raising money in $1,000 chunks.

Faced with opponents hard to stereotype as wide-eyed radicals, McConnell tried to do so anyway. In a letter to business executives associated with the group, he charged the CED with an "all-out campaign to eviscerate private-sector participation in politics." My, my. He said CED supported a "radical campaign finance agenda" and "antibusiness speech controls." Ominously, he suggested to his correspondents that "public withdrawal from this organization would be a reasonable response." Since his letter was first made public by the New York Times, McConnell has stayed on the attack. His office released an op-ed piece he's circulating to Kentucky newspapers charging the CED with "unethical conduct."

The CED, for its part, has noted the irony that McConnell's publicly expressed solicitude for First Amendment rights did not stop him from seeking "to stifle" theirs. "This letter has kind of exposed the way the system works in a fashion that I don't think is terribly flattering," Kolb says, referring to McConnell's efforts to push businesses to sever ties with the CED. "The subtext is very clear: Keep playing with those guys, and I won't play with you."

The message of this episode is simple: Many business people believe the system holds them for political ransom. It distorts the market by producing rules and tax laws that favor one competitor over another not on the basis of market prowess, but as a product of who contributes to whom and who works the system best. The committed capitalists at the CED understand that. And now, thanks to Senator McConnell, they'll be heard.

(c) 1999, Washington Post Writers Group