Planet Money - Suitcases, secret lists, and Citizens United

Episode Date: July 1, 2022

On today's show: the Watergate scandal you haven't heard about – that led directly to Citizens United and multi-billion dollar elections. | Subscribe to our weekly newsletter here. Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Planet Money from NPR. It was April 1972. Sonny and Cher were on the radio. MASH was on TV. Richard Nixon was running for re-election. And all over America, corporate executives were heading to the airport. I could only assume wearing bell-bottoms, carrying those brown leather suitcases, the kinds without wheels. And as they made their way to the airport, maybe they turned on the radio. The 1971 Federal Election Campaign Act becomes law in a little over a week. At this point, the executives may have squirmed a little, coughed nervously. And when they got to the airport and the clerk asked,

would you like to check your bag? I imagine they said, no, no, no, no, I'll just carry this with me. It's a suitcase you'd want to keep in sight because it didn't just contain toiletries and a change of pants. This was not just business as usual. In the weekend before April 7th, corporate executives from all over America literally flew into Washington with suitcases filled with cash. Like literally. Literally flew in from all over the country with cash. This is Fred Wertheimer, a lawyer in D.C. Soon as they landed, the executive probably sped to 1701 Pennsylvania Avenue, just kitty corner from the White House, to the headquarters of the campaign to reelect the president known by the acronym CREEP.

The executives were racing a clock, a countdown to April 7th, when a new campaign finance law would go into effect that would require public disclosure of any donation above $100. And there was this weird, I don't know if it was a glitch or a feature of the law, but there was this several week gap between when the law was passed and when it kicked in on April 7th. There was this so-called Wild West period prior to that. There was this vacuum period. West period prior to that. There was this vacuum period. And President Nixon had told his supporters, if you can get me your money in that vacuum before April 7th, it'll be our little secret. I will not disclose it. People were giving unlimited, undisclosed money to campaigns. That is the most dangerous money in American politics because, well, they're not disclosed. The donor knows it. The recipient knows it. The only people that don't know it

are the American people. And there's no way to hold that accountable. In just the month before this law took effect, $11 million found their way into the bank account of Nixon's re-election campaign. That's nearly $77 million in today's dollars. Some of that undisclosed money went to pay for what came just a few months later. The Democratic National Committee is located in the Watergate office. Ended up in the account of one of the Watergate intruders. Watergate dominated the national news picture again today. It was the omnipresent Watergate.

And that's the part of the story most of us know, the burglary and political espionage and cover-up that took down a presidency 50 years ago. But there is a corner of the Watergate scandal that doesn't get nearly as much attention, and it has arguably impacted the country far more. Hello and welcome to Planet Money. I'm Karen Duffin. And I'm Amanda Aronchik. And it has arguably impacted the country far more. Hello and welcome to Planet Money. I'm Karen Duffin. And I'm Amanda Aronchik. Today on the show, wonky Watergate.

How the secrets in those suitcases outraged the country and led to some of the most significant reforms in how elections get paid for. Reforms with big and very unintended consequences. Because there is a direct line between those Watergate-era suitcases, Citizens United, that landmark Supreme Court case about campaign finance, and the rise of multi-billion dollar elections, like the one coming to a voting booth near you this fall. This is the story of how we got here, the moment the first domino fell. Not long before those corporate executives were racing to Washington,

Fred Wertheimer was interviewing for a new job. He was a young lawyer at the time. He'd worked on Capitol Hill and at the SEC. And in May 1971, he joined a new organization called Common Cause. It's an advocacy group working on a few issues, including the very exciting, very sexy world of campaign finance reform, trying to regulate election money. And actually, of all the issues this ambitious Harvard Law graduate could have worked on, campaign finance did feel like an extremely important one to him. So important that 50 years later, he's still working on it, still feels passionate about it. If money is buying influence and results over government

policies, then most Americans are shut out because the campaign finance system is dominated by the people who are putting up very large sums of money. Election money is sort of a tricky thing to legislate because elections are the heart of a democracy. So you want to do just enough to limit corruption, but not so much that you stifle the free range of discussion that keeps an election free. So to resolve that tug of war, for a long time campaign finance laws have oscillated between two potential solutions, regulation and disclosure. Either regulate political money, set limits and restrictions on it, or else require that political money be disclosed so voters understand who might be influencing politicians. And in 1972, pre-Watergate, President Nixon, of all people,

signed a law that, for the first time in American history, swung the pendulum toward disclosure and transparency in a real way that had just not been done before. Up until then, the disclosure laws that existed were completely loophole ridden and didn't work. It was this law that sparked the great suitcase scramble from earlier, the law that required campaigns to disclose any donation above $100. And history had shown that disclosure can be a game changer. The very first presidential donor list that went public was Teddy Roosevelt's. And that list outraged the public so much that it resulted in one of the first major campaign finance laws in 1907.

That law full out just banned corporate contributions. Still today, corporations cannot directly contribute to campaigns. Still today, corporations cannot directly contribute to campaigns. So, Nixon's new law requiring disclosure struck fear in the hearts of the people and corporations who'd grown accustomed to donating in the dark. And Fred and Common Cause were excited about this new law, but they were also realistic. Like, this new disclosure is great. Politicians finally forced to actually disclose their donors. But also, Fred knew that politicians would be filing thousands of papers at the General Accounting Office, the GAO. You know, that hotbed of media attention. We wanted to make the disclosure laws real. But if you weren't getting this information out to the media and the public,

then the disclosure law wasn't real. If a disclosure form is filed at the GAO's office and nobody reads it, was it ever really filed? So Fred and the folks at Common Cause took it on themselves to make sure all this new public disclosure actually made its way to the public. They told politicians, we have our eye on you. As people rolled out of bed on March 30th, 1972, just eight days before the new law went into effect, and turned on their radios. Common Cause announced today it will monitor financial contributions to campaigns in several key states. Common Cause recruited dozens of volunteers. Like, what do we want? Change. How will we get it? By copying thousands of pages of documents and compiling them into understandable press releases

we give to the media. Wertheimer said if candidates refuse to comply with the law, complaints will be filed with the Attorney general's office and that court suits eventually could be brought. Every campaign finance filing deadline, they would sick their volunteers on the piles of disclosure forms. The volunteers would pull the most important parts of the disclosures and use them to make a press release. But in the most tedious way possible. make a press release, but in the most tedious way possible. No computers. So this was just type it out manually on a typewriter, praying that you don't make any mistakes. We had to correct press releases by whiteout. For our younger listeners, can you tell them what whiteout is?

Well, whiteout... I've used it before. Whiteout is something that you use to cover a word and then type over it. Uh-huh. But you have to wait for it to dry. You have to wait for it to dry. Fred and his crew were doing this for all the usual activists working for a thriving democracy reasons in the spring of 1972. But as spring turned to summer in June of 1972, their work started to feel more urgent. Good evening. We have a mystery story out of Washington. Five people have been arrested and

charged with breaking into the headquarters of the Democratic National Committee in the middle of the night. The Watergate break-in. And maybe it coulda woulda ended at just a strange but fairly simple burglary. But, as we all know, investigators soon found clues that connected these burglars to the White House. Amongst other things, investigators traced money in one of the burglars' bank accounts to Nixon's re-election committee. Creep. The grand jury is interested in how $114,000 of contributions to the president's re-election campaign ended up in the account of one of the Watergate intruders. Nixon, surprise, surprise, was not in the mood to say exactly who had donated that money. He told everyone, look, those donations came in before the new disclosure law.

Remember the money in suitcases? So Nixon said, I'm not required to tell you who those donors are. His secretary kept that secret list of names locked in a desk in the White House. This situation, money donated in secret and used for political espionage, that felt to Fred like exhibit A for why we need transparency. So he and his volunteers next set out to try to force Nixon to disclose. A little public pressure. Here's the president of Fred's organization. Build our confidence, Mr. President. Tell us where the money came from. And a few court filings.

Attorneys for common cause filed their suit in U.S. District Court this morning, seeking to force disclosure by invoking a neglected law, which has been on the... Shortly after that lawsuit, by the way, the President's Campaign Committee wrote to the IRS challenging our tax status. Just coincidentally. Just coincidentally. Okay. As we all know, Nixon was famously not a vindictive person.

No, no. Nixon put the founder of Common Cause on his infamous enemies list. Nixon and his allies also took to calling them Common Crook. Common Cause, Common Crook, get it? Yeah. Nevertheless, Fred persisted. After a year of legal battles with Nixon, Fred and his volunteers won. A judge told the Nixon campaign, you have to turn over your full donor list, including everyone who donated in that pre-disclosure gap and may have helped fund the Watergate break-in. It was 1973 now, and the country had been glued to the Watergate hearings for months.

More than 85 percent of Americans watched at least part of them live. So, word that a secret list of donors kept locked in the White House, word that this list was coming out, this may have been the most hotly anticipated campaign finance disclosure of all time. Fred and his team wanted to make sure that it would count. We didn't just want to release names because that wouldn't tell anyone anything. Nixon had to disclose names of donors. But at the time, he didn't have to disclose things like where those donors worked.

And there was, of course, no Google back then. So this list of just first and last names on its own would mean nothing. So step one, he needed to turn the list of just names into a list that meant something. Like Bob Hope was on the list. He was a famous performer, so they knew who he was. But like, who are all the other guys on this list? Who's George Spader? Who's Robert Allen?

The team of volunteers meticulously traced those names to the corporations behind them. Step two, how to release the list the very same day it became public, just like logistically, clerically. They knew they'd be doing this cross-referencing in a total flurry and that mistakes could and almost definitely would be made. And they wouldn't have time for the usual wide out and retype everything. For Fred, this was the stuff of actual nightmares. And I literally woke up in the middle of the night and just sat up and said, labels, labels, three o'clock in the morning. Labels. Type each donor's information

on labels, and then all you have to do is just paste those on a page and copy that. This gave them speed that apparently amazed the world's media. And no one could figure out how we did it. The wheels of democracy turn on tedium. Finally, release day came. We had a press conference on the day we received the final information, we had almost the entire Washington press corps in our office while we were pasting all these labels onto a document. A list of one-secret Nixon campaign contributions was made public today. The issuance of the report is the result of a year of litigation by common cause. What started out as a burglary, as the investigations broadened, it became the biggest campaign finance scandal of the century.

The secret donor list, it was part of why Nixon was ultimately pressured to resign. But quite possibly the longer-term impact was the wonkier impact. This disclosure so outraged the country that it launched a whole new era of campaign finance reform, starting with prosecutions of people on that secret list. That document was used by the Watergate special prosecutor to identify and get criminal convictions of 20 corporations following the use of it. Remember, corporations have been banned from directly donating to a campaign since 1907. And part of what this list revealed was that corporations had been trying to sneak around that law. Like, take that unknown Robert Allen guy on the list.

He was actually the CEO of Gulf Oil. And his donation was technically a personal donation because he donated with a personal check. But then he essentially expensed it. Like, filed a Gulf Oil expense form with amount $100,000, purpose, political influence. The donor list also included executives from companies like 3M, Pennzoil, Goodyear, a large insurance company. That guy, George Spader, he was from American Airlines. And as those names came out, investigators drew lines between the donors and what looked like favors from Nixon, like he intervened in an antitrust case for one

donor and overruled his secretary of agriculture to get price supports for the dairy industry, who had coincidentally recently donated two million dollars. What happened next would start a chain reaction that ultimately led to the campaign finance laws we have today. And the first domino to fall was that secret donor list going public. The anger over that list led to the second domino, which was a huge update to the campaign finance law. It passed the same day Nixon resigned from office. The new law established the Federal Election Commission, the first time that there'd been a body dedicated to enforcing campaign finance laws.

It also set up public funding for elections. It banned cash contributions altogether, and it established limits on donations and on spending. Fred and his team were elated. This was by far the most limits and oversight ever put on campaign finance. So now it would be more than just him and his copy machine trying to keep politicians and their donors accountable. A future in which election money had actual oversight and transparency? That felt possible now.

But that revolutionary new law came with very unintended consequences. revolutionary new law came with very unintended consequences. A whole chain of falling dominoes that would ultimately lead to new laws and lawsuits and topple restriction after restriction on money in politics. That's after the break. Fred and his band of reformers helped launch campaign finance reforms stronger than the country had ever seen before. To Fred, it felt like this huge sigh of relief for democracy. Like, finally, we can get big money out of politics and keep democracy for we the people. But major reforms often spark major backlash. And just a few months after the new laws were passed, that is exactly what happened. This backlash would not only chip away at the new laws, it would lead directly to the Supreme Court case, Citizens

United, the case many Americans love to hate. According to a Center for Public Integrity survey, more than 70 percent of Americans want it overturned. Right after the updated campaign finance law was passed in 1974, a lawsuit was filed challenging that law. It was filed by a motley crew of libertarian-leaning politicians from both sides of the aisle who were afraid that limiting political money would limit the expression of political ideas and would make it harder for lesser known candidates in particular to get into politics because introducing new people or ideas just requires more money. Their lawsuit was called Buckley v. Vallejo. This case is

considered one of the most important of the century. It involves the whole way our political system will function in the future. It went to the justices on November 10, 1975. Common Cause got special permission to step in and defend the reforms that they'd helped pass. I remember walking into the Supreme Court on the day of oral argument, and then nine justices at the same time come out from behind these curtains. And I realized what absolute power they have. And I am helpless because it's simply up to them. There's nothing more you can do. That is awesome, awesome power. The awesome power of the Supreme Court is that it can deem an issue worthy of constitutional protection.

Sounds arcane, but it's actually kind of a magic wand. All right, everyone, lean in for a second. We are going to help you sound smart at your next cocktail party. If you are discussing campaign finance at your next party, I don't know, maybe you are. No one's ever going to come to my party again. All right. Extremely broadly speaking, the law in America separates our rights into two buckets, constitutionally protected rights and everything else. And constitutionally protected rights are things like speech, religion, freedom of the press. And those rights that are deemed worthy of constitutional protection are super sacred. Like picture them in a holy shrine surrounded

by, like, warrior guards. These rights are nearly untouchable. They can't be restricted unless you have a really, really good reason. And then there's the everything else bucket. Things like, say, parking. Your right to good parking is important, but it's not sacred. So the law lets people restrict parking quite a bit. The holy grail for lawyers is to convince the courts to see their pet issue as not one of these everything else parking-like issues, something that can be restricted, but that their issue is a constitutional right, like speech or religion, that cannot be easily restricted. constitutional right, like speech or religion, that cannot be easily restricted. And that's what the politicians who filed the Buckley case wanted, for campaign money to be put in that holy constitutional shrine so that that money would just keep flowing freely, unrestricted. Their argument went like this. The Buckley lawyers step up to the podium and say, if you really think about it, what does political money buy

in an election? Ads, door knocking, getting the word out, all of which is essentially speech. Ergo, in an election, spending money is speech. So if you restrict political spending, you are unconstitutionally restricting speech. The justices deliberated and issued their decision. They said, yes, we agree with Buckley. Political money is speech. So the only reason we'll let you restrict political money is if it corrupts the political process. And then they essentially split the baby.

They said money given directly to candidates can be restricted because that could corrupt the politician. ...to deal with the reality and appearance of improper influence stemming from the dependence of candidates on large campaign contributions. And improper influence or corruption, that is an adequate reason to restrict speech. But the court also said you cannot restrict money spent by independent organizations, something like a political action committee or a PAC, because that money is independent, so it can't corrupt the candidate. And money spent

independently is really just citizens spending on speech, spending to make their voice heard, which is their constitutional right. Therefore, restrictions on independent spending... So in summary, yes, you can limit direct contributions, but no, you cannot limit independent spending. Fred was livid. spends money to elect candidate X, I am going to know I made a major contribution to help candidate X, and so is candidate X. Fred also said, sure, it's a nice idea that political spending is just people speaking their minds. But the practical reality is that PACs are heavily funded by the rich and powerful. So in practice, average Joes with average money can only spend speak softly. The wealthy can spend speak very loudly.

So, Fred argued, Buckley made it not so much we the people as we the wealthy. After this decision in 1976, a whole parade of laws and cases followed, until eventually 2010 and Citizens United. The Citizens United oral arguments were peppered with dozens of mentions of Buckley. I do think Buckley. Buckley is the court in Buckley. And Buckley. And Buckley.

Was Buckley. Citizens United extended the Buckley idea that political spending is protected speech from just people to corporations. In essence, Citizens United said, what are corporations but a group of people? Am I right? So if, per Buckley, people's money can flow freely in elections, why not the people who make up a corporation? The Supreme Court agreed. The Supreme Court agreed. And with that, corporations and their billions of dollars, companies with profits the size of small countries, were also allowed to spend speak with few restrictions. Since Citizens United, it's also become significantly easier to donate without having to disclose it at all. estimation, we've made one step forward and two steps back since his hopeful Watergate-era reforms. We've wound up with more regulations and disclosure of direct contributions, but an almost total erosion of donation limits and disclosure requirements on independent spending groups

like PACs and non-profits. And with that, election spending has exploded, reaching nearly $15 billion in the 2020 election cycle and set to break new records in the midterms this fall. Do you have more questions about campaign finance? Tell us. We are on all the socials at Planet Money and our email is planetmoneyatnpr.org. Today's show was produced by James Sneed. It was engineered by Isaac Rodriguez and Gilly Moon and edited by Molly Messick. Planet Money's executive producer is Alex Goldmark. For full disclosure, Fred Wertheimer is married to Linda Wertheimer.

She's one of NPR's founding mothers, and she had no involvement in this episode. I'm Amanda Aronchik. And I'm Karen Duffin. This is NPR. Thanks for listening. And a special thanks to our funder, the Alfred P. Sloan Foundation,

for helping to support this podcast.