Responding to Arguments Against Significant Restrictions on Pay-to-Play

Anonymous

Wed, 01/19/2011 - 06:28

City Related

<a href="http://www.paytoplaylawblog.com/2011/01/articles/lay-of-the-land-2011/#…; target="”_blank”">This
week, the Pay to Play Law Blog</a> took a snapshot of the status of
pay-to-play laws across the country, breaking them down into four
categories: jurisdictions that impose significant restrictions,
including debarment; jurisdictions that require disclosure;
jurisdictions with limited requirements; and jurisdictions that are
considering pay-to-play laws. 
 
I don't intend to summarize these categories; the post is short and
clear. What I would like to do is look at arguments made on both sides
for the two principal categories, significant restrictions and
disclosure only.

A discussion of these two alternatives occurred <a href="http://www.paytoplaylawblog.com/2009/11/articles/common-cause-georgia/c…; target="”_blank”">on
the Pay to Play Law Blog in November 2009</a>, with respect to a Common
Cause Georgia proposal for Atlanta pay-to-play legislation. Here's how
Common Cause Georgia described its proposal:<ul>

People can either contribute freely to the campaigns of candidates, or
they can qualify to receive contract work with the City of Atlanta.
They cannot do both. All companies submitting bids and continuing
contracting arrangements with the City would be asked to certify that
they had not contributed more than a minimal amount to candidates for
Mayor or City Council in the previous 12 months. Enforcement would rest
with the contracting office. Companies or individuals violating the
statute would be disqualified from further business with the City.</ul>

The Importance of City Employee Birthday Gifts 
The Pay to Play Law Blog, which is written by lawyers for a firm that
represents officials and companies in government ethics matters,
criticized the proposal's requirement that everyone from executives to
employees not be able to make contributions or gifts to Atlanta
officials or employees aggregating more than $250:<ul>

Imagine being the compliance office who has to tell your
boss
the CEO that her company’s life-blood contract with the City of Atlanta
has been terminated for cause, and the company is liable to the City of
Atlanta for all damages resulting from the termination, because the
aggregate of all the contributions to a City of Atlanta politician by
all of the company’s officers, directors, partners and salaried
employees of the company exceeded $250, or because a competitor alleged
that the company made a single “indirect” gift “for the benefit” of an
employee of the City of Atlanta. One can envision that birthday parties
for City of Atlanta employees would be lonely places indeed.</ul>

The first thing that struck me about this argument was the fact that
the public's trust in government was being balanced against the need to
give birthday gifts to city employees, and even against the odd idea
that contractors (and others) who don't give presents wouldn't even go
to city employees' birthday parties. This picture provides a very sad
view of what is important in city government, and what is important
about birthday parties. It was clearly intended to be humorous, but it seemed pretty inappropriate to me (see <a href="http://www.cityethics.org/content/having-concessionaires-and-contractor…; target="”_blank”">a blog post</a> on a recent Atlanta retirement party scandal). 
 
Disclosure 
The Pay to Play Law Blog supports disclosure instead. But many jurisdictions require
contributors to disclose what they do, and yet contractors keep giving
large contributions anyway. And those they give them to keep getting
elected. Disclosure is not an effective solution. 
 
And wouldn't full disclosure mean that there wouldn't be any surprise
contributions or gifts that might unfairly terminate a "life-blood
contract"? There is no doubt that such pay-to-play legislation would be
impossible for companies to follow if there were not a strong
disclosure program, internally or government-required. And there is no
doubt that this would be more difficult for larger companies. But they
already have excellent compliance programs to deal with these matters.
Smaller companies would, in this sense, be at a disadvantage but,
luckily, they have many fewer individuals to keep track of. 
 
Essentially, the difference between disclosure and enforcement is that
disclosure alone requires enforcement by the public, which would
somehow, almost miraculously, be able to translate numerous
contributions and gifts by companies into votes for or against
government officials. Enforcement places the burden on a city's
contracting office (in the Common Cause proposal), an ethics
commission, inspector general, or other office. 
 
Compliance Costs vs. Pay-to-Play Costs 
What confuses me the most about the Pay to Play Blog's arguments is
that I thought pay-to-play was bad for companies, that it was the way
some politicians coerce those who want to do business with their cities
into giving them large contributions and any sort of gifts they can get
away with. I can see that there is a cost to complying with pay-to-play
laws, but is that cost more than complying with greedy politicians,
including the cost of losing contracts to more dishonest, desperate,
and better-connected companies? 
 
The Goals of Pay-to-Play Laws 
Certainly, there should be protection from loss of a contract or
debarment for minor violations. No penalty should be completely
automatic. The principal goal of enforcement in a pay-to-play
context should not be Gotcha! It should be to make it clear to
politicians that pay-to-play won't work because no one will be in a
position to play along. It just won't be in their interest anymore. The
goal should be to ensure that each contractor and subcontractor's
interest is to make the government ethics program work. The goal
should be to make the contracting process work fairly and in the public
interest, and to look fair and in the public interest. 
 
Disclosure alone does not accomplish these goals. As Georgia Common
Cause points out in its comment to the blog post, there is lots of Atlanta campaign finance
information on the Money Watch and Common Cause websites, and still the
problems exist. 
 
The Realities of Our Political System 
A central problem in this debate is the reality of the situation. As
Georgia Common Cause says in its comment to the blog post, "Very few
corporations or other for-profit business enterprises make
significant expenditures to candidates in the City of Atlanta for
altruistic reasons or out of civic pride or a general interest in good
government." This counters the argument against restricting
contributions by contractors, because their contributions are free
speech. That simply isn't reflective of reality. It's usually a
business decision. 
 
More important, the reality is that most local incumbents and party
committees get most of their money from those doing business with the
local government and those who work for the local government. As the
Pay to Play Law Blog says in <a href="http://www.paytoplaylawblog.com/2009/09/articles/common-cause-georgia/p…; target="”_blank”">another
blog post</a>, with respect to the proposed rule to not allow those who
make campaign contributions to bid on a contract for the following
year, "Restricting contribution amounts in this manner would
undoubtedly chill
the making of political contributions for City of Atlanta elections
altogether." 
 
The Alternative of Public Financing of Elections 
The Blog also says that "the specter of campaign contributions to
procurement officials from
those seeking city contracts can be unseemly; but so can the prospect
of a system in which only individuals wealthy enough to self-fund their
campaigns have the means to seek elected office." 
 
Are these really the only alternatives? If they are, we are really in
trouble. It means that our political system is based on the need for
those doing business with a local government to fund political races.
And since they usually support incumbents or insider replacements, it
means that our political system not only favors incumbents, but does so
in a way that seems and is corrupt. 
 
Fortunately, there is at least one other alternative. If what the Pay
to Play Law Blog says is true, and a law such as Atlanta's will mean that
only rich candidates can successfully run for office, this would mean
that everyone else would strongly support the public financing of
elections. 
 
But the reality is uglier. They do not support public financing either.
The same people who oppose restrictions on contractors making campaign
contributions also oppose giving money to publicly financed candidates
running against wealthy candidates. Or, as in the case of the Pay to
Play Law Blog, they simply ignore the alternative. In short, they don't
want a solution to a central problem in our political system. They want
things to remain as they are. 
 
Those Who Influence and Those Who Pay-to-Play 
People who really hate pay-to-play are those who are forced to pay to
get contracts or permits, or to keep their job in local government.
They would love to be prevented from making campaign contributions. It
would save them money. If they merely have to disclose their
contributions, they would still have to pay up. Those who feel coerced
should be the first to support public financing. 
 
But those who are seeking to influence would be the first to oppose it.
Herein lies a very important distinction in government ethics, a
distinction that is central to who supports which remedies to which
problems. You can't go by the language, of influence or pay-to-play.
You have to look at what they support and what they oppose. 
 
A Lack of Resources and a False Sense of Security 
A more interesting argument is that of Rick Thompson in a comment to
the blog post. Thompson had just come over from the Georgia Ethics
Commission to the law firm that does the Pay to Play Blog.<ul>

Pay-to-play legislation can give a false sense of security to the
public that the prohibited practice of pay-to-play is not happening.
Sometimes members of the public blindly place faith with a regulatory
agency to ensure any activity strictly prohibited by law is not
occurring. However, the reality is most agencies do not have the
resources to monitor an over encompassing prohibition on a large scale,
such as pay-to-play. Many agencies are forced to utilize their
resources in manners to be reactive and do not have the ability to be
proactive. In order for pay-to-play laws to be effective it would
require the agency to be proactive and unless substantial resources are
allocated specifically to the endeavor then the prohibition would be
extremely difficult to enforce.</ul>

This is another sad reality, the lack of resources in government ethics
oversight. But Georgia did not have a very effective government ethics
programs. Cities such as Los Angeles and New York have much more
resources, and there is no reason that Atlanta's oversight agency could
not have sufficient resources. The reality Thompson points out is one
that can be changed. It can be changed not only by spending more money,
but also by requiring prospective contractors to take an online
training course, including all rules in bid documents, providing
advice, and being easier on contractors during the first couple of
years so that a cooperative rather than antagonistic relationship
develops. An annual fee could also be charged to those who win
contracts. Lack of resources is not an argument for disclosure alone. 
 
As Thompson says, a false sense of security can be a serious problem,
but that problem is most serious when there is an ethics commission,
but it does very little. Often ethics commissions don't even meet, with
or without resources. Few people actually know much about the specific
laws. An ethics commission without good laws does create a false sense
of security. Good laws that are not fully enforced are also a problem,
but at least they can be the basis of an argument for obtaining more
resources. Who needs more resources if there is nothing to do with them? 
 
Robert Wechsler 
Director of Research-Retired, City Ethics 
 
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