MS. DANIELLE BRIAN: I'm Danielle Brian. I'm the executive director of the Project on Government Oversight. Our mission is to investigate, expose and remedy abuses of power, mismanagement and subservience to powerful special interests by the federal government. And I really think that what we'll be talking about today highlights all three of those problems. This panel, "Preparing the FEC for Campaign Finance Reform: The Numbers Just Don't Add Up." It's being co-sponsored with Common Cause, as well as Representative Steven Horn, who actually held hearings on this issue in 1998 and has really been a long-time advocate for good government.

I would argue that this is probably the most distinguished panel one could have to talk about these issues. We have with us Kent Cooper, who is the vice president of TRKC, Inc., which is an Internet technology consulting group specializing in assisting media organizations, corporations, trade associations and non-profit groups with campaign finance and disclosure projects. And their work is well known through the website www.fecinfo.com. Previously, Mr. Cooper was executive director of the Center for Responsive Politics. And prior to that, was for 22 years the assistant staff director for disclosure at the United States Federal Election Commission.

As I looked through his bio, I realized he's essentially his entire professional life been working on campaign finance disclosure questions, all the way back to the FEC Act of 1971.

Our next panelist is Lawrence Noble, the executive director and general counsel of the Center for Responsive Politics, currently a non-partisan, non-profit research group based in Washington that tracks money in politics and its effect on elections and public policy. Prior to joining the Center, he served as the general counsel of the Federal Election Commission. And I must say that he was working there when we began working on this project several years ago and was really the only voice of reason at the FEC who was really listening and concerned about these problems. He was president of the Council on Governmental Ethics Laws from '97 to '98 and received the COGEL award for his outstanding contribution to the field of campaign finance and ethics, which I must mention Kent also has received.

He has served as an official observer and consultant with respect to elections held around the world.

Our third panelist is Donald J. Simon, general counsel of Common Cause, a citizen's lobbying organization with more than 200,000 members nationwide. Mr. Simon previously served as executive vice president of Common Cause and is currently a partner with the law firm Sonosky, Chambers, Sachse, Endreson & Perry?

MR. DONALD SIMON: Right.

MS. BRIAN: Thank you. And has been involved in litigation in federal courts on issues of campaign finance, government ethics, Freedom of Information and the Sunshine Acts.

And finally, our moderator for today is Mr. John Moyers, executive director of the non-profit Florence Fund and editor and publisher of TomPaine.com, the Internet journal of opinion best known for its weekly "op ads" on the op-ed page of The New York Times. Rolling Stone recently wrote that TomPaine.com is perhaps the media's most visible outlet for apple cart upsetting truths about glossed-over issues like environmentalism, Pentagon spending and campaign finance reform.

Prior to that, he served for six years as executive director of the Florence and John Schumann Foundation, which I'm proud to say has funded the Project on Government Oversight.

So I will step aside and let John take over.

MR. JOHN MOYERS: I thought we'd just start out by having Danielle recount something of POGO's recent study on the FEC just briefly as a background for the rest of the conversation.

MR. BRIAN: We learned in 1997 that the FEC, an agency that I'd had absolutely no experience in looking at at all did not take the information they received from PACs about the contributions they'd given to members of Congress or candidates with the information they received from the candidates about the contributions they'd received. And, in fact, when you compared those databases, it turned out nearly none of them matched.

At the time, in '98 when we issued our first report on the subject, there was about $1.45 million discrepancy that was unaccounted for. We've revisited that issue and found that now the discrepancy has grown to $12 million, and, in fact, only six incumbent candidates' numbers matched. And this is not just technical, without having its impact. Examples are for Congressman Horn, which is part of why I think he has a personal interest in this. He was accused by his opponent of lying when he said he had not taken PAC money, because the FEC database reflected that he had. And when I say "FEC database," that in itself is almost a misnomer, because there's essentially four groups of numbers to pick from. There's a candidate's report and information. There's the PAC's report and information. There's the public website, and then their database, which is updated, but the public website is not constantly updated. And so all of us in the public sector have to rely on these sort of constantly shifting numbers.

So I think sort of, in a nutshell, that's it, although one point that I think is important to make is that when we issued our first report, we had ten common sense reforms. Some of them, of course, have taken place. For example, the electronic filing that's begun in the House, although not in the Senate. But a number of them have not taken place yet. And we, you know, reviewing this information, issued a new report saying that some of these reforms continue to be necessary and some new ones that became apparent. And I must say it's been falling on deaf ears at the FEC.

MR. MOYERS: Well, welcome to everybody. Thanks for having me. I'm very pleased and honored to be with these three people today. Truly, Danielle was right. If your subject is the Federal Election Commission, you really couldn't have three better people to talk about that with their really breadth of experience on both inside and outside dealing with the FEC.

Don, I want to start with you. Danielle just briefly told us something of POGO's recent study and its findings. And I'm wondering if -- I know you've read the report. I wonder if there's anything in there that surprised you or, as a long-time advocate of campaign and election reforms, if this is sadly confirmation of the same old news.

MR. DONALD SIMON: Well, I was somewhat surprised by the report. To me disclosure is one of the things that the FEC has over time done rather well. And I think the FEC has generally been viewed as having a good disclosure -- a good administration of the federal disclosure laws and providing good information on campaign finance to the press and to the public. And in that context, I think what the report shows is disturbing, because I think there are some quite serious problems with even the disclosure program of the federal campaign finance laws.

In the broader sense, though, I think that there are quite serious problems with the Federal Election Commission. The Commission is generally viewed as a very weak and ineffective administrative agency. Somebody once said that actually the Commission is one of the great success stories in Washington because it is the weak and ineffective agency that Congress intended it to be. And I think there's some truth to that. I think the agency was created by Congress to be weak because Congress knew that a significant role of the agency would play is in regulating members of Congress and their campaigns. But I think, you know, we're at a situation today where the campaign finance laws are in a state of almost total dysfunctionality. There's been an almost a complete collapse of those laws in terms of regulating the kind of money that goes into a federal campaign. And in terms of serving the goals of the laws on the books to deter corruption and the appearance of corruption, there are a lot of reasons for that dysfunctionality. Certainly a key reason is the fact that Congress hasn't addressed the problems and amended the laws, even over 25 years. There're problems with the way the courts have construed the laws. But a big part of the problem is the way the Federal Election Commission has administered and enforced those laws. And in that broader context, I think it's important to focus on the problems with the agency and also to focus on what needs to be done at the agency. And hopefully in the next few weeks, the House will complete the job of doing at least the first round of campaign finance reform in passing the Shays-Meehan Bill. And I think the very next item on the reform agenda should be taking a very close look at the FEC and doing a really thorough reform of the administrative agencies.

MR. MOYERS: Larry, you most recently have been a member of the staff of the FEC, and, of course, Kent, you as well, though it's been a couple of years since you were there. Let me ask you both, Larry, you first. Let me put you on the spot a little bit and say, with all due respect to the volume of information and the variety and the inconsistency of the material that's coming into the FEC, what's the problem there? What can you tell us about the difficulty of its mission, of achieving the task in a way that effectively gives the public what we require, which is a clear understanding of where money comes from and where it's going?

MR. LARRY NOBLE: I think basically there're two problems. One is a problem of resources. I mean the agency has already had its problems with resources. As Don said, it's not the favorite agency of Congress. So I think Congress is in a position where it can say it has an agency, but by limiting how much money the agency has, limiting the resources of the agency to make sure it's not effective.

The second problem, I think, is the priority problem. I think it's a question of where you put your priorities. I believe that the sad part of this and the sad part of the study is that the FEC has always been as a disclosure agency. When I was there, with all the problems that we had in enforcement, the joke used to be, well, we'll always have disclosure. Well, I think the question now is how effective all that disclosure is. And I think a lot of it just has to be put on the disclosure side of it, not necessarily to the detriment side of it. But I also think that's part of the problem.

I would say that there's ultimately a priority issue, that what the FEC wants to do at the higher levels -- and I'm not talking about the staff level, because I think the staff level people are very concerned about these issues. What it wants to do is to make sure it meets the minimum that Congress wants. I think that they're also very aware, the commissioners are very aware that while Congress is lip-serving to disclosure, a lot of them don't necessarily really want disclosure, or effective disclosure. And one of the places you see that most blatantly is with the Senate, where you have the situation where you have electronic filing now with the House. And the Senate, which just passed McCain-Feingold, and in McCain-Feingold there are some reporting provisions which, if you look at McCain-Feingold carefully, what it says in it is that the reporting provisions apply for committees that file with the FEC.

Well, the trick there is that the senators might file with the FEC. So the Senate has been opposed to electronic filing. There is no electronic filing in the Senate because they will not make their reports to the FEC. I think that not only in terms of practical problems with disclosure. I think it presents problems in terms of the message that is sent, that if, in fact, Congress thinks that disclosure is one of the most important factors, I think then the Senate should be electronically filed, which would do away with all of the excuses they have to not electronically file.

So this, I think, is a resource problem. I think the agency has problems in terms of maybe their people aren't doing the type of work that the public says they should be doing. And also I think from the top, there's a prioritization problem.

MR. MOYERS: Ken, we turn the same question to you. When you were at the FCC, you were sort of the czar of the databases. And that's a lot of information. You were up to your ears or over your ears, maybe, in incoming data.

Help us understand what it is that goes on there that makes that process so difficult here in the age of digital information and massive data processing.

MR. KENT COOPER: Well, the commission was disclosing some information before. The potential in the next 60 days is phenomenal. You're talking about a gigantic flood about to be put into a wall, and the potential of electronic filing suddenly for electronically making vast quantities, much more than anybody's ever seen before, potentially available to everyone in this room, whether it's by your computer in an office, or at home, whether you're in a campaign in the far West, whether you're an academic in the Northeast, the South. The potential is going to be staggering if the Commission decides it wants to do it. And I don't think they've made that decision yet. I think they're very comfortable. They basically like to focus on neat things like advisory opinions where they're using their intellect to make great decisions from on high.

The mechanics of disclosure are interesting to you, right? It may be what each of you might want. But the Commission's not interested in it. And if people don't speak up and ask why don't we have this information, then the potential of that gigantic flood is going to be missed.

If you look at soft money as an example during the last few years, the Commission puts out one figure. The figure is how much money was being put into the soft money arena. Did you ever see a ranking from the FEC of who the largest soft money donors were? No. How many go over 60,000, over 100,000? They don't provide that information. The three groups up here do it because the FEC doesn't.

So if you look at an area where Congress is looking for information, facts or figures in order to legislate, the FEC didn't come through with that information. The same applies to electronic filing. If you are a filer with less than $50,000 on the House side, there's really not much for you. You're not required to file electronically. But there's no helping hand. There's no type of easy filer form for the small candidate. They've been left out of the picture.

And even two years after Congressman Horn's hearings where basically he'd apply some management tools to the Commission and say "Tell us what your goals are, but also what your priorities are, and let's monitor and measure that over time." And we have a situation where the voters two years pointed out a problem, and we still haven't seen anything done.

So we're talking about measuring the action of a federal agency. I think Congressman Horn's office should be increased, and Congress, in general, should increase its oversight function. Electronic filing itself is something that may not go as smoothly as we want. With focusing on the July reports, are you going to have an overload? Are you going to see sparks flying all over the place? The Commission is going to receive this kind of volume of financial information all at once. And you're talking about intentionally instantaneous availability of information -- Tony Rayburn's in the back; he was our key computer person -- basically grabs electronic filing now for the Commission in some cases before it makes it to the public records office. You can grab that on the Internet, clean it up a bit and turn it around and make it available.

The potential is there. Whether we can handle the volume is still unknown. We have a situation where one of the vendors who provides the electronic filing software had some problems with their software. As a result, the data that was coming in from some of our largest PACs, your big eight accounting firms that have PACs, their filings made it through the door into the FEC, just met certain minimum structural standards. But the data itself was such that all of a person's name was jammed into the last name field. So you couldn't do any searches on a person's name, a potential nominee for an administration position, ambassadorship, whatever. You couldn't do anything and feel comfortable that you got all the searches. They made some corrections. Now they're back on track.

But you've got potential situations where the standards that the FEC set are not required standards. You don't have to do any of these things. If you put it in a certain structure and it gets through the doorway, it will reside on the FEC database, but may not make any sense. If you don't want to fill in dates, both of those dates are not required fields.

We were looking yesterday for another example, the American Bus Association. They did a filing on Friday. There was no name. Well, yes, technically. Curious people can go in and find the ID number and figure it out. But when you're doing that on a massive scale, the average user is not going to be able to figure out that name.

These are kinds of examples of bottlenecks that you're going to see. Even in terms of the new version of their filing software, version 3.0, is available. It corrects a lot of problems, but you don't have to use it until after this next filing. So your July filing, you can use the old software with all its problems. While they didn't mandate that you've got to use the current, most recent version, I don't know. Maybe we have to go to a web page filing system so the changes and corrections can be made instantaneous and be available to everyone.

But I think what you're seeing here is an agency that has not really grasped the information age. They're dealing in a paper paradigm. You're dealing with a mix of paper and some electronic data. And the whole notion that you can take this electronic data and use it to match up donations from PACs that candidates receive hasn't entered their mind, even after the example from '95 and '96. This was The Washington Post back in August of '94. "Donations to Mr. Reynolds omitted from FEC list. Reynolds did not report PAC funds." Congressman Reynolds had a number of other problems for which he was sent to jail. But even then, Congress -- he was indicted on 16 counts of personal and campaign finance fraud because he basically took PAC money and put it somewhere else. And that's the issue that was sort of simmering below the surface in a lot of joint fundraisers. You have personal PACs, a lot of personal PACs with soft money arms. This is the kind of accounting that is now moving more quickly electronically. You're basically now -- the national party committees, the state committees, the county committees. With McCain-Feingold, you'll have the same situation. The electronic transfer of money around the country in and out of various accounts is going to be something the FEC will not be able to keep up with unless they get in there quickly.

MR. MOYERS: I should put a plug in here for both FECInfo and the Center for Responsive Politics. In my mind, we're doing what the FEC ought to be doing, which is making this current volume of information user-friendly and readily accessible to people like me who don't really know one end of a database from another, but need the information, want the information and would like to have a sense of what's there and what it adds up. There's a tremendous value added to that information by both institutions and by Common Cause as well, which has long done really benchmark research into where money comes from and where it goes in politics. So for anybody looking for a model of what the FEC might be, I urge you to check the websites of those three organizations.

Larry, when you were the FEC general counsel, you authored a report, or opinion, perhaps, that said, in essence, that the FEC could simply re-regulate soft money just as easily as it deregulated it some years ago without any congressional action whatsoever, that the FEC could exercise its power. It would be within, in your opinion as the FEC's counsel, within its rights and powers to do so. You recommended, in fact, that the Commission act in that way.

Would you help us understand what happened to that. How was that opinion dealt with? And what was the ultimate result?

MR. NOBLE: Well, the ultimate results we still don't know, and I could guess what's going to happen. It's still actually pending before the Commission. I sent it up there, I believe it was in the fall, and the Commission did not want to do it before the election because they thought it would upset everybody before the election, even though the actual proposal said it would not go into effect until after the election, because you can't write a couple of regulations that would change the rules. And as best I know, they are still considering it.

But you know, to be serious about it, they're just not going to do it. The proposal is really based on an analysis of how we came into the soft money problem and what was the authority of the SEC to change the problem. And let me just give you a very brief summary. What our analysis was -- and I should say, by the way, I signed it; the staff authored it. So you always have to credit the staff work because I think they did a fantastic job on this report. What we said here basically was that the FEC created in large part the soft money problem in the late '70s when what the FEC said was that national party committees could use both hard and soft money for certain types of activity. First, administrative expenses, get out the vote drives, what is now commonly called mixed activity.

I don't think the FEC did it, that most of the commissioners foresaw the problem that was going to come up, although I say "most," because, in fact, one commissioner did. One commissioner said at the time -- he said that this is going to cause major problems. I think what immediately happened was that the party committees, as they are prone to do, saw a loophole and tried to exploit the loophole. And even tough in the first ten years or so after the loophole was created, it was not really exploited to its fullest, at least by today's standards. Then you had is that the parties really took a run at it and basically, as opposed to looking at the national party as being involved as a major part in national elections, as a minor part in other activity, the national party committees began to view themselves as being only involved in national, federal activity, and really everything they did was really at the state and local level, which is nonsense.

And I think so what we looked at was the authority of the agency, and we basically went over the statues. The statue says that anything that's done for the purpose of influencing a federal election should be paid for with the money under the limitations and prohibitions of the Federal Election Campaign Act. And we get an analysis. We said that as a practical matter, virtually everything the national party committees do for influencing federal elections. Yes, they may be some influence on state and local elections. But as long as it's influencing federal elections, at least in part, then it has to pay for that out of hard money.

The Commission accepted the document, discussed it a little bit, as I said, and has not done anything with it at this point. And I don't suspect they will do anything with it. But I think it's very important that everyone should realize that, at least to a large part, the FEC created the soft money problem, maybe not knowingly for everybody, but it created a problem. And having created a problem, if there was a political will, I think they could uncreate the problem. I think they could remedy the problem in large part. But again, you have a problem of political will at the agency. You have also the problem that in recent years commissioners have been appointed to the agency who feel not that the agency isn't regulating enough, but, in fact, the agency is over-regulating, that you have a commissioner -- you have one commissioner, in particular, who's written a book that basically talks about how he feels the Federal Election Campaign Act is unconstitutional and it's bad policy and he's opposed to it. Interestingly enough, he's also called into question disclosure and whether actually disclosure serves a viable purpose.

So given that we're faced with three or four commissioners who fundamentally don't think the national party committees should be regulated the way they're regulated now, the chance of getting any type of soft money ban from the Commission seems very, very remote.

MR. MOYERS: And I just note as context that much of the headlines that we've heard in the last year or so, especially more recently over the debate in the Senate and now the not-yet debate in the House on Shays-Meehan and McCain-Feingold, it's all about soft money. There's a lot of political capital being put out there to rein in this abuse of soft money. And yet the solution is really in front of our nose, if that's what I'm hearing you say, Larry.

MR. NOBLE: Yeah. I think there was a practical matter. Now, you have to recognize the agency is not going to do it, that if it's going to be done, it's going to take an act of Congress. At least with the present commissioners, there is just no inclination. There's not a majority of commissioners. In fact, there may very well be a majority of commissioners who don't feel it can be regulated. But there is not a majority of commissioners who believe, as far as I know, that the FEC should or can regulate soft money. And the "should" is the important part. You're not dealing with a situation where they're saying, well, gee, we'd love to do this; we think soft money is a problem, but we just don't think we have the authority. What you're dealing with is a situation with several commissioners who say we think it would be bad policy to regulate soft money.

MR. MOYERS: Could we just take a moment to talk about the Commission as a current batch of commissioners. And I'm just curious. What is it that qualifies somebody for membership on the FEC, to be a commissioner? You know, how is it they operate? Just give us the quick -- well, first of all, the sort of quick and dirty. How do they operate? When do they meet, and that sort of thing? Is that part of the problem? But also, then speak to the current batch of commissioners. How do people come to be there in the first place?

MR. SIMON: Well, first, for those of you who don't know what a commissioner does, the Commission is composed of six commissioners, no more than three from any one political party. As a practical matter, that means three Republicans and three Democrats. We've never had an independent, communist, socialist or Reform Party member on the Commission.

How are they picked? Let me go back to a little bit of history. Prior to Buckley v. Valeo, two were appointed by the House, two were appointed by the Senate, and two were appointed by the President. And that right there gives you an idea of what they thought about the commissioners. The commissioners should be answerable to Congress and to the Executive Branch in a way that you don't see in other agencies. And the reason for that is that Congress wanted to create an agency that would look like them. You know, if I created the IRS, I might create them in my image, but that's not going to happen.

The Supreme Court held that unconstitutional as a violation of separation of powers. So what you have is they amended the law and they said that the President shall nominate and the Senate shall confirm, which is the way it's normally done. But as a matter of practice, they kept up the practice that the House -- there are two seats, a Republican and a Democratic seat that are seen to belong to the House. There are two seats that seem to belong to the Senate. And there're two seats that are seen belonging to the White House as an informal matter.

Now, that tells you again what the philosophy is behind the Commission is that they own these commissioners.

How do you appoint a commissioner? The statute talks about people of high standards, high ethical standards, knowledge. And the commissioners are, for the most part, very knowledgeable and, for the most part, very ethical people. But I think the problem is that the commissioners know that they answer to Congress.

Now, you can say, look, it's an agency created by Congress. Shouldn't all agencies be answerable to the collective officials? And the answer, the simple answer is, of course -- the proper answer is, no, they should be answerable to the American public. And, in reality, they were put there to regulate Congress, not to do what Congress wanted. And you're always going to have this inherent conflict in terms of the agency being created by the people it's regulating. But I think in one sense you have a worse situation in that not only are they regulating people who control the budget. But the point, though, is it's part of the institution. It's seen as that is the way it is; that's the way it's supposed to be.

And how are they appointed? They're appointed, you know, for a lot of reasons. But I thought the most interesting appointment was last time. It's was, frankly, Commissioner Brad Smith. And he was the one I referred to earlier, as he wrote a book against the campaign finance laws. He was put up with a long record of having spoken out as a law professor. And I know Commissioner Smith, and I personally like Commissioner Smith. I think he's a very honorable person. He has made no bones about the fact that he disagrees with the law. He just does not think that the law should be written the way it is. Now he has said, as everybody in his position says when they're up for confirmation, of course he will enforce the law as written, even if he disagrees with it. But we all know as a practical matter that you're forced to make a lot of decisions about interpretation of the law. And the view you take coming in about how much you agree with the law will have a great impact on how you enforce the law and how your interpret the law.

Now , think about what was happening when Commissioner Smith was appointed. President Clinton had filed a petition with the Federal Election Commission asking the Commission to ban soft money. And when the first proposal went up from the Office of General Counsel, when their proposal went up proposing the ban on soft money, he even wrote a letter supporting the position. And then he went ahead and appointed Brad Smith, who made it very clear that he was not going to ban soft money.

Now what does that tell you? President Clinton's answer to that -- and there was a large debate about Commissioner Smith at the time. But the President's answer to that is he had no choice, that this is a Republican appointee, and therefore he had to do what the Republicans wanted. By the way, this reminds for those of you who watch the "West Wing." It was actually a "West Wing" arch, a three story arch about an appointment to the FEC Commission. And I think actually President Bartlett would have done differently than President Clinton. [Laughter.]

And so the President said that he had no choice because this was a Republican seat. Well, first of all, it, legally, was not the Republican seat. And legally, it was a seat to be nominated by the President.

Second of all, historically, that wasn't true, because, in fact, President Reagan refused to nominate, renominate Commissioner Tom Harris, who was on the Commission. He was a Democrat who had ties to labor. President Reagan refused to nominate him. He stood up and said I'm not renominating him; you have to put somebody else up. But consider the message that sent. President Clinton's telling the public I want to ban the soft money, and he's appointing to the Commission somebody who says I'm not going to ban soft money. So as I said at one point with the letter that President Clinton sent about how he supports the proposal is, yes, I'm shocked, shocked to see soft money fundraising going on here. You know, at one point, you know, he spoke a good game about it, but made sure either intentionally for political reasons -- and the reasons given, by the way, at that time is he wanted a bunch of judges. And he got a number of judges through, okay. And that's the political calculation.

MR. MOYERS: Thanks.

Let me move this along a little bit and ask you to tell us -- this was mentioned earlier, but tell us briefly what, if anything, the new reforms in Congress, should they be signed by the President, would do regarding the FEC. Or regarding disclosure, and that may have something to do with the FEC.

MR. SIMON: Yeah. The McCain-Feingold and the house analog of it do not directly deal with the problem of the FEC, the kinds of problems we've talking about today in terms of, you know, how the agency should be restructured and how you can get a more effective and more vigorous enforcement mechanism in place. The heart of the bill really is the soft money system that Larry was talking about. And in light of the fact that the Commission, although it has the power, is not going to ban soft money, what the McCain-Feingold Bill does at its core is impose that kind of ban on soft money and prohibits the national parties from raising or spending any money that doesn't comply with federal law, prohibits the state parties from spending non-federal money on activities which affect federal elections and prohibits federal officeholders from soliciting money that doesn't comply with federal law. That's really the heart of the bill.

Now, there are some additional disclosure provisions in the bill, the most significant one of which is disclosure provisions for what we call issue ads, which are really campaign ads that sort of masquerade as issue discussions because they don't use magic words like "Vote for…." or "Vote against…." Those ads, those kinds of ads now are pretty much entirely outside of federal regulation. And what the McCain-Feingold Bill does is bring those ads within the scope of regulation and impose some reporting requirements on groups that run those ads.

In terms of the way the legislation impacts the agency, I mean the agency is going to have to interpret, administer and enforce the new law. You know, my concern is that they will do as ineffective a job of that as they've done with the existing law. So as I said before, I think it's very important that after the McCain-Feingold Bill is enacted, that the attention of reformers, the intention of Congress turn to the problem of how do we get a better enforcement system in place to administer the campaign finance laws.

MR. MOYERS: Well, that's a good introduction for where I want to take this in the next few minutes. I remember in New York City a number of years ago, not too long ago, four or five years ago, they put in a new system of reporting which is pretty interesting. It's electronically based. A candidate may submit their reports, and they have frequent reporting periods, and it's been refined since I last checked into it. But basically, you can submit them on disk, or you can now submit them over the Internet. The computer then goes through them, and any anomaly, any field that's missing, any information that seems garbled, or if the, say, limit is "x" and the contribution that's in that field is more than "x," the computer will kick out any of those anomalies so that a human being can check them out and see what's going on. According to Nicole Borden, who is Commissioner up there, was at the time, I think still is, the system works pretty well. And I'm wondering. That made me think. I was thinking about this last night, and it made me think we have three excellent people here who are in a good position to engage in a little bit of "What if?"

So I thought I'd go down the line and ask you all, starting with Kent, if you could imagine that you three were empowered here and now, today, to design the Federal Election Commission as you would have it so that it did serve the public interest, I'm wondering what kinds of -- you know, how you could construct that. And if you could each, say, focus on one particular proposal, and then we'll just come down the line, and maybe that'll open up a little bit more thinking, and we'll go back, if you have another thought.

But Kent, maybe you would want to start. What would be the first thing you could do if you could wave your wand and create an FEC, or begin to create an FEC that was truly doing what we hope it will do?

MR. COOPER: Well, that could be a long list.

MR. MOYERS: Yes, it would. I urge you to --

MR. COOPER: I think with a different mindset of the commissioners, the current commissioners, you could do a lot even with the current law.

MR. MOYERS: Should we have national election commissioners?

MR. COOPER: It's interesting. If you compare the FEC with what happened in the 50 states, for some reason the states were able to, in most cases, select people who were past their ladder-climbing career days. They were people who had achieved stature in their state, whether they be judges, newspaper editors, civic leaders, church leaders, what have you. They were people who weren't looking for their next job. They were people who were respected in their fields and had already learned that you've got to tell your own party people "You screwed up. You know, you do something like that, it's so egregious, we're going to have to slap you with a fine." If they can't say that, then they aren't their own person. And I think many of the states were able to select those people.

I think on the disclosure side, in general, the requirements are there. The potential for electronic filing is great. We shouldn't have a system like we do now where most news groups don't have the capability or the desire to try and handle the data and rework the data and flip it around. They've given up. They tried it five or six years ago. The structure of the data, the hard things of gathering the data, cleaning it up, they just threw their hands up and said we don't want to do it. So they come to three different groups for this data. And that shouldn't be.

The potential for being able to look at expenditures now is going to become available. All your expenditure data, it's going to come electronically. Well, why can't we have ranking of the vendors. Why can't we search for staff names, types of classifications, how much money was spent on mail, how much was spent on radio and TV. There are a lot of figures like that the Congress could use in watching trades and analyzing whether we need new laws or not.

So there's a wealth of data that is possible if you have the desire to do it. So I think you're talking about changing the mindset of the Commission, at least to meet the minimum standards of doing something with the required disclosure that's on the books right now. And the same would apply to McCain-Feingold or whatever bill might come through this year. You're talking about issue ad disclosure, which might be web-based. You're talking about the possible movement of money that was previously going into soft money. You know, are we to assume that it's going to go away? Where is it going to go? Into some other avenue. And are we thinking that through in terms of, all right, do we set something in place that says, all right, if we're seeing it going into another arena, we've got to rethink certain things. Is it going into the 527 area? Is it going into lobbying? Is it going into C4 or C3 activity? All these things are potential. And as you pass any piece of legislation, you've got to look at what are the consequences. What's intended? And what might possibly happen? Are we going to watch for it?

So I think that money might not necessarily totally go away. It might pop up in another area, but we've got to watch for it, because no organization now is doing anything for the 527 data. We do a database of the federal ones that appear to be operating at the national level. No other group is doing any work for the 527.

So there're a lot of activities, C3s, C4s. People are starting to look at that, and Ways and Means might look at it even more carefully at some areas. But the potential of money moving somewhere else is very high. You've got to have a mindset that says we've got to set up a system to watch for it, to raise the warning bell, just as POGO does with their reports. If the system's not working, if something's out of whack, we've got to take a look at it.

MR. MOYERS: Larry, how about you? What would you suggest as a starting point for creating an FEC that's truly responsive to the people's needs?

MR. NOBLE: I think you've got to change the culture, and the culture that's imposed by Congress. And I think you begin by changing how you appoint commissioners, what you look for in commissioners. You have to make it clear that commissioners will be appointed, and, if you have a reappointment process, reappoint them if they enforce the laws there in an effective matter, not if they just defend their parties and are seen as just spokespeople for the parties.

So I think you really have to begin there. And I think all reform comes top down. And the top to me is the President and Congress. I think the message that Congress and the President send is that we want full enforcement.

It all goes back to resources. I think the agency has to begin with sufficient resources. Kent and I have had a kind of model dispute about where the resources should be put. We disagree about where the resources should be put. Kent is talking on the disclosure side, which I understand. I've tended to focus in the past on the enforcement side. And I think that right there shows you a problem. There should not be a fight on where you're putting the resources, disclosure or enforcement. In fact, Congress should ensure the agency has enough money to do both effectively, because, frankly, disclosure helps enforcement; enforcement helps disclosure. Without one you really cannot have the other.

But, again, I say that we have to look at how they appoint the commissioners and at the message they send to the commissioners. When a commissioner takes what is absolutely courageous vote, which actually should not be seen as a sort of a courageous vote. It should be seen as a vote doing their job. And when they're punished by being told they will not be reappointed, I think you're sending a very wrong message to the agency, and that has to be changed.

MR. MOYERS: Don, how do you wield your wand?

MR. SIMON: Well, what I would do is start all over. I really don't think this is a matter of fixing this agency or tinkering with this agency. I think this agency just simply doesn't work. And we just have to start all over and reconceptualize what kind of system we want to have for the administration of campaign finance laws. There's actually a project led by another group called Democracy 21, which has set for itself the task of, from first principles, designing a new enforcement agency for campaign finance laws. That work is underway. And I would expect a report to be issued by that task force this fall.

I think in looking at the problems, I second much of what Kent and Larry said. I think there are three principal areas. Well, the first is the structure of the agency. I mean, you know, as I said before, Congress designed this agency to be ineffective. It set up a three-three partisan split. The agency has a very weak chair, so it lacks leadership. There are extraordinarily cumbersome enforcement procedures that typically take years for an enforcement matter to work its way through. And at the end of the day, you really can't do anything. Unlike most other administrative agencies, the FEC can't actually find that somebody violated the law and can't actually impose sanctions. At the end of the very long and very cumbersome enforcement process, all the agency can ultimately do is go to court and try to have the court impose sanctions on the violator. So there's a lot of room for improvement of how the agency is structured.

Secondly, as Larry said, appointments are actually critical. You know, as long as you have sitting on this agency people who don't believe in the law that they are charged with administering or people who view their loyalty as running to the congressional leadership of the political parties which appointed them, you're simply not going to have effective enforcement of the law. So there needs to be an ability to have people appointed to the agency, appointed to enforce the laws, who actually believe in the law and believe in the public purpose behind the laws.

And finally, as Larry said, it's important not only to insure that the agency has adequate resources, but to try to foster and protect the independence of the agency from what has been in the past very blatant examples of congressional harassment and sort of retaliation against the agency on those occasions when it has tried to take an effective course of action.

So, you know, this is a tough, tough problem because you have in this area an almost unique kind of conflict of interest of Congress --

[TAPE CHANGE.]

MR. SIMON: You know, it would almost be like having the broadcasters appoint the members of the FCC and set the budget for the FCC. I mean there just is this kind of inherent conflict of interest. And because of that and because of the unique sort of position that this agency occupies, I think we really do need to kind of rethink a structure for the agency that, to the degree possible, insures a kind of independence for the agency and a kind of public voice for the agency to insure better enforcement of these laws.

MR. MOYERS: Could we -- I've thought of an idea that I've called no info/no cash, which is, you know, all this money comes in in checks. And the first thing any campaign does when they get a check, a campaign or any political entity, a PAC, or what have you, is they put it in their own database so they can send a thank you note, so they can hit those people up again down the road. They keep track of them, know who they are. So that data input's already happening, and it's happening overnight, of course, very soon. Couldn't we design a system where we said, well, until that information on a particular check is reported to the standard that the law sets that that check couldn't be cashed, give them five business days or something like that, and if the electronic system didn’t notify you that some information was missing or somehow anomalous that you could go ahead and cash the check, pending, you know, any sort of a notification? Is there any barrier to that? And doesn't that properly put the onus on where it belongs, which is on the people who are benefiting from the contributions?

MR. COOPER: I think you've got a system like that now. You go into a store; you buy something with a credit card. They're running it through their machine. We're double-checking the information. The web-based electronic filing system is there. You could utilize that.

You talk about using a standard address, which is the billing address on the credit card. You talk about quick verification. I mean if you've ever bought anything on the web, you know, if you try to buy without filling in a block, you don't get it. So you've got to make sure all the data is there. If it's all there in the right form and basically disclosed to Visa, American Express, or whatever, nothing happens. So you've got a system which can handle it. And it's the change between instantaneous reporting, electronic transfers of information and paper. And the Commission has stuck to that paper. They want to see this because they want to be able to check it over, spend a few months, they'll send you out a couple of letters. The lawyers come in. They want to see paper. And that forces you into filing deadlines every, you know, several months or every six months. That becomes a real problem when you have large expenditures and movements of money. Why do you have to wait until July for activities that happened in January of this year? All right. As you go into next year, you've got quarterly filing. Well, between January and March 31st, you can do a lot of activity in a congressional election year. The same with the presidential candidates. When they start three years out, you're basically in an off-year. Six months goes by before you see the next report. And yet you basically could be dealing with immediate, electronic disclosure where it's filed with the committee itself, and then with a federal agency, or whatever, put on the web immediately. That system, you know, is there now. It could be there now.

MR. MOYERS: I was just going to say just make your comments very brief. We're going to have a couple of quick questions, and then we'll have to stop.

MR. COOPER: -- to basically say you can't cash a check until you have all the required identification information about the contributor. For a credit check over a certain amount, you need the name, address and occupation of the contributor. What happens now is campaigns get checks, they cash them, sometimes they get the information; sometimes they don't have the information. The law now requires them to, you know, make their best efforts, quote, unquote, to try to get that contributor ID.

But as you're suggesting, you could have a system where unless and until the campaign has that identification, they can't spend the money; they just have to hold it in escrow. So I think you could --

MR. MOYERS: It would be a good incentive, wouldn't it?

MR. COOPER: It would be a great incentive.

MR. NOBLE: Let me just say. The FEC actually looked at that one one time. What Don was talking about was called the best efforts rules. The campaigns had to go out and try to get the principal place of business and occupation. And what you see is some committees have a 30% rate of putting that in; other committees have virtually a 100% rate of putting that in. And the FEC has to look at how to increase that.

And it was interesting. The FEC used to have what were called ex officio members. They were held unconstitutional. But these were non-voting members representing the House and the Senate. And the representative from the Senate one time said -- the Commission was discussing best efforts and how do you get this information. He said there's a very easy way to get it. Say that they can't use the money unless they get the information. And that was pretty much met with dead silence. And there was a party person saying that this can be done, and I think every member will tell you the same thing. If they want to do it, they can do it. If they say to their contributor "I can't accept that check without the information," they'll get the information.

MR. MOYERS: Thank you. Quickly.

MR. COOPER: A good example, Mr. Clinton. One thing that he did that was good, when he set up his legal defense fund, he basically told a group of trustees "Do it right, do it honestly and fairly, open and above board. And the legal defense trust is actually one of the best examples of disclosure out there in terms of receiving money. Basically, if they don't have that information, it doesn't go into the account. It's locked off until they get the information.

But it takes the will of a candidate or a party basically to say "We want your help. You know, we want your support and money. But we have to have this information. Please provide it." And then if they don't, they have to give the money back. It actually relieves a lot of many problems. It could be a great saving grace for some candidates and parties who later wind up with massive problems and staff time spent on collecting the information because of a subpoena or an investigation.

MR. MOYERS: We're going to run just a couple of minutes over so that we can take a couple of questions. So if anybody has a question, would you please stand up, tell us your name. This is being transcribed. So we'd like your name and your affiliation, if any. Please speak clearly. And make your questions brief, please.

Q: Karen Roth….

You were talking about the need for more resources…. How much resources is the FEC going to need to, like, require that…..?

MR. NOBLE: Some of these don't require a lot more resources. Some of them just require a change in priorities. I don't think that one will require more resources. That just requires the will to say that they have to do it a certain way. Even if the software that's provided, or a web-based software system, you could basically put all the names, all the PACs and all the numbers right into the computer or the software, have it updated or downloaded regularly from the web so that a candidate or campaign has a full list every day of the potential. And you don't have to have people sitting there keying or coding reports and saying, gee, AFSCME, or something like that, they gave $5,000. What is the AFSCME and looking it up in a little dictionary and then writing in the number. All that can be done electronically. It's a time-saver for the candidate, for the treasurer, as well as the FEC.

Q: Why hasn't that been done?

MR. COOPER: Well, I think that's one thing you ask the Commission to do. I mean they're not a user-friendly agency. They'd like to be, I'm sure. But they certainly aren't trying that hard. I think the new version, the 3.0, might have [inaudible]. But this is understanding the problems of candidates and treasurers. Most of these candidates and treasurers will do whatever you tell them, if you can give them the tools and the parameters with which to do it. So I think part of it is they don't understand the burdens that candidates face pre-election. And give them a system that works efficiently at that critical time. The last month before an election, and their treasurer's going crazy; they're bringing in money; they're spending it real fast. You've got to give them a system that meets their needs and the needs of disclosure.

Q: You know the name of the vendor….?

MR. COOPER: Well, the Commission puts out a disk which they provide the candidates. This is sort of a minimal electronic….

Q: Do you know the name of the vendor?

MR. COOPER: Well, the vendor is the Commission.

MR. MOYERS: Don, is there anything you'd like to add?

MR. SIMON: Yeah. And there are other vendors who have done the same type of structuring of data. But the key -- and I'd caution the press and the candidates generally with the July reports. Just because you could technically file electronically with the Commission doesn't mean it's complete. It doesn't mean it's right. It doesn't mean it's accurate, or it isn't.

And so if --

MR. MOYERS: And, in fact, the experience of the watchdog organizations in the non-profit sector shows there's tremendous variation, tremendous missing information. And as Danielle's report shows, it can be highly erroneous.

MR. NOBLE: We have a tremendous problem going over the FEC database, everything from duplicates to just wrong information, information that's not corrected. And we have to spend -- the same thing -- a tremendous amount of time trying to clean up the database. And it would really be much more efficient for everybody if it was cleaned up at the source.

MR. MOYERS: So another question? Sir? Please identify yourself.

Q: Ken Doyle with BNA.

Is there anything POGO or anybody else is aware of to indicate that there's widespread instances of people intentionally not reporting? Are you talking about -- are these problems that are basically technical, cleaning up the database, or is there a lot of activity which is trying to hide the sources of money, trying to intentionally misreport some of these finances?

MR. NOBLE: I think there are cases where somebody's trying to intentionally misreport or trying to hide. And I think you'll have that no matter what system you put into effect. And that's for the enforcement side to make sure that they have somebody checking that, because, frankly, if you're going in and saying I'm willing to do something illegal and dishonest, there're ways to get around virtually any system. You've got to have stops in place to try to catch that. I think more of a problem is sloppiness and where campaigns want to put their resources.

Now having said that, I do know anecdotally of cases where people have -- committees have software that obviously can put the names alphabetically, put the names in any form they want, where, in fact, what they did when they filed with the FEC was scramble the names to make it very hard for anybody who needs to look up somebody. So there is some of that, a lot of that game-playing that goes on. But in terms of the willful misreporting, the fraudulent misreporting, I think it is not obviously the majority of cases. It goes on. It's not the major problem in the sense of what we're talking about. We're talking about the thing, the problem, people who, if given -- told they have to comply, told they have to provide the information, and if given a means of doing it, will do it. That's what we're talking about here. The other ones, that ones that are going to try to lie and steal and cheat, a lot of them are going to do that any way.

MR. MOYERS: There was a question in the back, I think. Yes, sir.

Q: [Inaudible.]

MR. NOBLE: There're several things you can do. One, within the parameters of the law -- by the way, the FEC has nothing to do with 527 disclosure. And for all the criticism of the FEC, the story I've heard about why it was not given to the FEC was that the FEC actually does disclosure pretty well. You see the same thing with lobbying reports, is that for all the criticism that we have here, they figure they don't want to give it to the FEC because the FEC actually does get the situation out in the public record. But there really are a couple of things you can do.

One, within the parameters of the law, you can have rules and regulations that are very strict in terms of what is required. And obviously you can't go beyond the law, and Congress would have to make certain changes in this.

The second thing that you can do, and the FEC does this, is you can review the reports. The FEC has a reports' analysis commission. It does go over the reports, and it looks for discrepancies. And they have computer checks on certain things. The question is at what level do they do that? And what are they looking for? And how much are they going to let go? What are their thresholds? The FEC has thresholds for things which I'm not at liberty to disclose. Unfortunately, I don't remember them any way. But as with all enforcement agencies, it has thresholds. The question is where do you set the thresholds. The thresholds keep creeping up and up and up, so they're allowing more and more to go. So I think if the FEC made more of an effort to send back the campaigns' reports and say these are not compliant, I think we'd see some more compliance.

MR. SIMON: Let me just add to that.

MR. MOYERS: Yes.

MR. SIMON: Any system of rules is going to require credible enforcement so that when people violate the law or play games with the law, there's a sanction that comes. And I think one of the generic problems we've had with campaign finance laws -- disclosure actually is only a piece of it -- is that people feel they can violate the campaign finance laws with relative impunity, that if they do violate the law, nothing will happen. And if something happens, it won't happen for a long time, and whatever happens at the end of that long time won't be very serious and will sort of just amount to a kind of cost of doing business.

So, you know, in my mind from the discussions I've had on the 527 disclosure law, part of the reason that I think the disclosure was housed at IRS instead of the FEC was a sense that the IRS has a reputation of being tougher on enforcement and that it would be a more credible enforcement mechanism for this disclosure than the FEC has been.

MR. MOYERS: Kent?

MR. COOPER: Well, if that were the premise, people are sadly disappointed. You're not going to find a listing of the 527s. You're not going to find very much up on their site at all. A tremendous disappointment. I think that was a failure. I think that people who supported that piece of legislation, as they look back it, will probably realize that they've got to do some technical amendments to that very quickly. There's no desire for disclosure at the IRS. They will do the minimum if they have to. They are not used to making things public instantly. They're not used to making things public at all. So I think that one has to be looked at again.

One thing that would be, you know, very easy to do right now, when you do electronic filing at the Commission, one of the things that the system does is kick back a little list of the problems with your filing right as you're doing it. You know, these are the following problems that we see. Why not put that in the public record. I like the capability where opponents, the people in the political marketplace and the political arena, can watch each other and in some way use some self-enforcement. If I saw my opponent filing a report and knew that at the time of filing they had a list of 37 violations or incomplete or inaccurate data, data that didn't fit the system, I'd certainly use that in a debate and say, you know, you were told your report was incomplete, and you still haven't filed an amended report or even filed the report correctly. And that's something that's up there. And I'm all for the Commission saying we won't accept the report. We told you. We warned you ahead of time. These things, you know, are incomplete. We won't accept the report. I'm all for that.

But even if they won't go to that, then I'd say take that first notice and make it what we used to call [inaudible] information. Put it on the public record, and make that your first instance where the FEC said two seconds after you filed it, we're putting on the public record all the problems with your filing. If you do that a couple of times, maybe you'd get some enforcement.

MR. MOYERS: Yes, sir.

Q: My name is Bill Dupre…..

[Inaudible.]

MR. MOYERS: So should we have sympathy for the politicians?

MR. NOBLE: No. I think you raise a very good point. I think there's culpability on both sides, though. I think that in the instance you're talking about, the contributor obviously has done something wrong and there's recourse against the contributor. Though I think in many of the cases, the contributor will do it any way they're told to do it. They don't particularly care. When I was at the FEC, all the contributors would answer "I just did it the way they told me. I don't care where they put the money. I didn't care how they did it. I was just giving them $100,000."

But I disagree with the implication that the politician, the candidate is put in a difficult spot there. What is he supposed to do? He's supposed to follow the law, that what he's supposed to do is do what is right and say to the person, "I understand this makes it easier for you to do it this way. It's illegal. And therefore I can't accept it."

MR. MOYERS: We've run over time. So we're going to have to it there. I'd simply say -- I'd simply end by noting that the question of adequate and timely and meaningful disclosure is at the very heart of our election system, which is itself at the very heart of self-governance and the ability of people to know who is in control, how power's influenced and exercised. And if we don't find a way to get a handle on disclosure and on the larger question of campaign financing, I think we're in serious trouble.

So I would thank POGO very much for hosting this event. Thank you. And thank the panelists.

[APPLAUSE AND END OF EVENT.]

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