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As we all know, we are supposed to report all of our income to the IRS and woe betide us if we do not. There are steep fines for under-reporting.
But, suppose the fines and fees were capped at $1,000. And, suppose instead of targeting people in certain professions prone to under-reporting, the IRS only did random audits of a small number of returns.
As you can imagine, the temptation to under-report would be great.
A red light (don’t under-report) would become a green light (feel free to under-report.)
That analogy is not my own. It was used by the late Carol Campbell years ago when asked to explain her failure to report the money raised and spent by one of her political action committees.
Even though her PAC would take in $50,000 to $80,000 a year, Campbell never filed reports with the state, which disclosed who gave her money and how it was spent. Not a single piece of paper.
When I called her and asked about it, she replied, a bit cryptically: “You know, sometimes a red light is really a green light.”
I figured out what she meant.
Though there was a law requiring regular disclosure, enforcement was lax, fines for failing to report were capped and the state did only random audits of three percent of all the campaign reports filed.
To put it another way, the odds of her getting caught were small and, even if she did get caught, the cost was minimal.
I thought of Campbell’s quote recently when reading about the cases involving State Sen. Leanna Washington and four Philadelphia legislators said to have taken cash ‘gifts’ from a lobbyist who was actually an undercover agent for the state Attorney General.
In Washington’s case, she is accused of using legislative employees to plan and run her annual fundraising birthday gala. As an aside, the indictment mentions that she also failed to disclose on her campaign finance report thousands of dollars in ‘in-kind’ contributions she got from a Philadelphia lobbying firm that paid the caterer and Belmont Mansion, which offered use of the mansion for free for her annual gala.
In the case of the four legislators, one Democratic leader suggested that all the four were guilty of was a minor violation state ethics code, which requires public officials to disclose gifts of over $250. (In the case of these legislators, the payments ran into the thousands.)
As part of the publicity about the case, it came to light that under state law cash gifts are permissible, a bizarre exception to the general rule that it’s a good idea not to let politicians take cash.
Both our campaign finance law and our state ethics law date from 1978. For those of you who weren’t around then, Jimmy Carter was President, Laverne and Shirley was the top-rated TV show and the Chevy Impala was America’s No. 1 car.
America has changed a lot over the last 36 years, but these laws have not.
Apparently, the legislature—thinking the laws were acts of perfection—has never seen a need to change them, except for minor tinkering.
It may be time to take a second look.
For starters, maybe the legislature should make clear that a public official should not take cash—ever. And it might consider updating the financial ‘disclosure’ portion of the Ethics Law, which provides little relevant information about a public official’s finances. As I have written before, if you took that disclosure form to your local bank to get a loan, they would laugh you out of the building.
For another thing, the campaign finance law really does little to actually regulate campaign finance. There are no limits on how much can be contributed and few limits on how the money can be spent. It is mostly a disclosure law, requiring the filing of regular reports about money received and spent.
But, there is little enforcement. Fines are small. Random audits are done on only a relative handful of reports.
Laws without enforcement are like flashlights without batteries.
Usually, this is the part of the story where we talk about how things work in other states and how Pennsylvania is far behind these forward-looking jurisdictions in laws regulating campaign finance and ethics.
But, we don’t have to go so far afield.
Philadelphia can serve as an exemplar on both fronts. The city has a law that limits campaign giving and, in the city’s ethics commission it has a body that takes enforcement seriously. The staff is pro-active in searching for violations and isn’t afraid to pile on the fines.
If the state had similar laws, along with enforcement units within the Elections Bureau and the Ethics Commission, it would not stop officials from violating the laws, but it would increase the odds they would be caught.
As it now stands, with our existing laws on “gifts,” our lax rules on financial disclosure and with no limits on the size of campaign contributions, we have legalized influence peddling. There is no other way to put it.