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JLPP 2021 Legislation Competition Winner

By: Aaditya Tolappa, Margaret Shields & Samantha Yi

March 10, 2021

This piece won first place in the Journal’s legislation competition accompanying its March 5 symposium titled “Politics, Power, and Women’s Leadership.” Contestants were asked to respond to Rep. Katie Porter’s “Help America Run Act.”

Introduction

The United States Congress should reflect the people it represents. Instead, over half of congressional representatives are millionaires,1See Karl Evers-Hillstrom, Majority of Lawmakers in 116th Congress Are Millionaires, OpenSecrets.org (Apr. 23, 2020), https://www.opensecrets.org/news/2020/04/majority-of-lawmakers-millionaires. seventy-seven percent are white,2See Katherine Schaeffer, Racial, Ethnic Diversity Increases Yet Again with the 117th Congress, Pew Rsch. Ctr. (Jan. 28, 2021), https://www.pewresearch.org/fact-tank/2021/01/28/racial-ethnic-diversity-increases-yet-again-with-the-117th-congress. and seventy-six percent are male.3Jennifer E. Manning, Cong. Rsch. Serv., Membership of the 116th Congress: A Profile (2020), https://fas.org/sgp/crs/misc/R45583.pdf. Working-class, minority, and female candidates face major challenges obtaining the financial stability necessary to run for federal office.4Press Release, Rep. Katie Porter Introduces Bill to Make It Easier for Working Parents to Run for Office (Mar. 8, 2019), https://porter.house.gov/news/documentsingle.aspx?DocumentID=33.

The average American household living above the federal poverty line spends 7 to 18 percent of its annual income on childcare.5Poor Families that Pay for Childcare Spend and Average of 30% of Their Income on It, Ctr. on Budget & Pol’y Priorities (2013), https://www.cbpp.org/poor-families-that-pay-for-child-care-spend-an-average-of-30-percent-of-their-income-on-it. Although healthcare costs vary based on household needs, working-class families spend a significantly larger percentage of their income on these expenditures than wealthy Americans do.[6]6Gary Clazon, Bradley Sawyer & Cynthia Cox, How Affordability of Health Care Varies by Income Among People With Employer Coverage, Health Sys. Tracker (Apr. 14, 2019), https://www.healthsystemtracker.org/brief/how-affordability-of-health-care-varies-by-income-among-people-with-employer-coverage/#item-start. Diversifying Congress will require guaranteed funding for candidates to cover essential needs while running to serve their country.

Federal Election Commission (FEC) regulations allow non-incumbent candidates to pay themselves a salary from campaign funds. In 2018, the FEC issued an advisory opinion to candidate Liuba Gretchen Shirley informing her that her campaign funds could cover childcare expenses incurred as a “direct result” of campaign activity.7Use of Campaign Funds for Childcare Expenses, FEC Advisory Op. No 2018-06. However, FEC guidelines have left many questions unresolved. Since the advisory opinion did not carry force of law, prospective candidates may still feel compelled to request FEC advisory opinions before campaigning, incurring administrative costs and facing the risk that the FEC may later deem their childcare expenditures impermissible. Prospective candidates also lack clarity on whether campaign funds can reimburse other major costs they will incur by campaigning full-time, such as elder care and healthcare costs.

We must formalize and legitimize this process so that diverse candidates can run for office knowing that they will be able to provide for their families.

The Help America Run Act (“HARA”) aims to ensure that campaign funds may be used for the “personal” expenditures of childcare, healthcare, and elder care (collectively, “Care Expenditures”). In order for the bill to increase the number and diversity of people running for Congress, its funding provisions must be certain, clear, and administratively efficient.

Evaluation of HARA

The “Necessary” Standard Creates Uncertainty and Imposes Administrative Costs

In past election cycles, the FEC has imposed an “irrespective” test on the use of campaign funds for expenditures: candidates cannot use campaign funds for obligations incurred irrespective of the campaign. HARA replaces the FEC’s “irrespective” test811 C.F.R. § 113.1(g), 113.2(e) (2016) (prohibiting use of campaign funds for “personal use,” defined as “use of funds . . . to fulfill a commitment, obligation or expense . . . that would exist irrespective of the candidate’s campaign”). with a “necessary” test.9Help America Run Act, H.R. 1623, 116th Cong. § 2(a) (2019) (proposing that candidates may pay for Care Expenditures using campaign funds if they are “necessary to enable the participation of the candidate in campaign-connected activities”). This language does not provide clarity for candidates or ease of administration for the FEC. Under HARA, candidates still have to predict whether their expenditures meet the “necessary” test and must risk later enforcement by the FEC if the expenditures are found unnecessary ex post. Furthermore, FEC investigations into whether expenditures were necessary may be just as burdensome as the current process for issuing advisory opinions, except that instead of making ad hoc determinations as requested, the FEC may be obligated to investigate every candidate who spends on Care Expenditures. This uncertainty poses costs on the campaign that could outweigh any benefit from available funds. In order for HARA to achieve its goals, it must make accessing these funds clear and easy so that all candidates considering a run for office know with certainty whether and how they can use money on Care Expenditures.

Concerns with Appearance of Corruption

HARA’s current “necessary” language risks over- and under-inclusivity in addressing the problem it seeks to solve, potentially barring funds from candidates who need them while providing funds to independently wealthy candidates. As discussed above, under HARA, prospective candidates may choose not to access campaign funds for Care Expenditures because they fear the FEC will not view these costs as “necessary,” or they may choose not to run because of that uncertainty. Additionally, as with any threshold administrative requirement, the HARA’s “necessary” standard may be more difficult to navigate for less sophisticated (or less privileged) prospective candidates, and easier to navigate for candidates who may not genuinely need the help HARA provides. As a result, at the margin, the “necessary” standard may benefit people more fortunate than those it seeks to help. At the very least, general uncertainty around the meaning of “necessary” within HARA may lead to the appearance of corruption and misuse.

However, neither the current regulatory framework nor that envisioned under HARA actually results in misuse of these funds. Candidates rarely take the personal salary due to fear of how it will look to donors and the public.

The Candidate Salary Stigma

HARA offers access to these additional funds out of a candidate salary.10Id. However, very few candidates currently take advantage of FEC provisions to pay themselves a salary out of their campaign funds.11See Robert Harding, Dana Balter, Paying Candidates and How One Rule Could Help Working Americans Run for Congress, Citizen (Aug. 8, 2020) https://auburnpub.com/news/local/govt-and-politics/dana-balter-paying-candidates-and-how-one-rule-could-help-working-americans-run-for-congress/article_4b3011b3-bae3-5bb7-98da-c01f24c17704.html. Using campaign funds to pay a candidate’s salary creates backlash and stigma against working-class candidates.12See Robert Hardin, Why Dana Balter Paying Herself a Salary Is an Issue, Citizen (Dec. 5, 2020), https://auburnpub.com/news/local/govt-and-politics/why-dana-balter-being-paid-by-her-campaign-is-an-issue-in-cny-race-for/article_5e8afb12-f7a6-5384-8de9-0a9315124329.html; Michelle Tsai, Take the Money and Run?, Slate (Dec. 20, 2007, 6:47 PM), https://slate.com/news-and-politics/2007/12/do-presidential-candidates-receive-a-salary.html. Candidates may worry that their opponent will criticize them or that the public will view them as unqualified.13Tsai, supra note 12. Recently, the FEC has initiated enforcement against candidates for paying themselves a salary too early or too late, further stigmatizing this provision that is supposed to champion working-class candidates.14See, e.g., Rachel M. Cohen, A Campaign Finance Rule Makes Life Much Harder for Working-Class Challengers, Intercept (Jan. 16, 2020, 2:19 PM), https://theintercept.com/2020/01/16/campaign-finance-law-wealthy-working-class-candidates/; Cristina Marcos, Ethics Committee Orders Tlaib to Refund Campaign $10,800 for Salary Payments, Hill (Aug. 7,2020, 12:16 PM), https://thehill.com/homenews/house/511044-ethics-committee-orders-tlaib-to-refund-campaign-10800-for-salary-payments. The media highlights these instances of abuse, deterring candidates from taking the salary.

For candidates who need funds to cover their Care Expenditures to feel empowered to use the salary, the Bill must address this problem by (1) normalizing taking these funds and (2) encouraging most candidates to do so. Thus, the Bill’s framing of this benefit will be especially important.

Proposal

We propose removing the “necessary” language from the Bill and instituting an income-based determination. Unlike the “necessary” standard, this can be easily self-policed by candidates simply using their tax returns and widely available data. We propose that any non-incumbent candidate except those in the top-taxed income bracket be eligible to use campaign funds for Care Expenditures up to the congressional salary, per FEC guidance.1511 C.F.R. § 113.1 (2016). The top-taxed income bracket currently covers individual single taxpayers with incomes above $523,600 and families with incomes above $628,300. We chose this threshold because it is easy for an average citizen to determine whether they fall below the threshold, and because it would exclude most of the top one percent of income earners from the funds. IRS Provides Tax Inflation Adjustments for Tax Year 2021, Internal Revenue Serv. (Oct. 26, 2020), https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2021. These funds should be capped at the minimum congressional salary for all candidates, regardless of prior income.

Utah and Minnesota have successfully passed legislation allocating funds for Care Expenditures with broad language and without constraints.16H.B. 129, 2019 Gen. Sess. (Utah 2019); Minn. Stat. §§ 10A.01, 211B.12. Specifically, neither state characterizes Care Expenditures as personal expenditures with regard to campaign funds. Viewing Care Expenditures as public goods rather than personal expenses also advances gender and socioeconomic progress in politics and in the workplace more generally.17See Governor J. Whitehurst, Why the Federal Government Should Subsidize Childcare and How to Pay for It, Brookings (Mar. 19, 2017), https://www.brookings.edu/research/why-the-federal-government-should-subsidize-childcare-and-how-to-pay-for-it (addressing the negative consequences of unaffordable childcare, including lost wages and productivity); Leila Schochet, The Child Care Crisis Is Keeping Women Out of the Workforce,Ctr. for Am. Progress (Mar. 28, 2019, 8:00 AM), https://www.americanprogress.org/issues/early-childhood/reports/2019/03/28/467488/child-care-crisis-keeping-women-workforce (“There is a growing awareness of the links among access to child care, parental employment, and overall economic growth.”).

Corruption

Removing the “necessary” standard may create corruption concerns. However, these expenditures will still be subject to the ordinary FEC disclosure process and the FEC would be empowered to initiate enforcement proceedings for misuse. Candidates will also continue to face scrutiny in the political process from their opponents, constituents, and the media. For example, critics concerned that candidates could use campaign funds to fly their children to Cancun under the guise of “childcare” must consider the cost of the likely political blowback from the electorate.18Shane Goldmacher & Nicholas Fandos, Ted Cruz’s Cancún Trip: Family Texts Detail His Political Blunder, N.Y. Times (Feb. 19, 2021), https://www.nytimes.com/2021/02/18/us/politics/ted-cruz-storm-cancun.html

Addressing the Stigma

Removing obstacles like the “necessary” determination to receipt of these funds will ensure candidates can take advantage of this provision with certainty. However, it does not address the stigma associated with taking a salary. Implementing a high income cutoff will destigmatize the campaign salary by implicitly endorsing its use by ninety-nine percent of Americans and removing a perception of corruption by barring its use by wealthy Americans.

If HARA allowed candidates to draw a flat rate of the minimum congressional salary instead of the current “lesser of” standard, then critics might allege that the bill incentivizes running for office just to draw a salary. To preempt this critique, it is critical to underscore that (1) the maximum a candidate could take out is the congressional salary of $174,000, which is the same amount an incumbent candidate could receive;(2) the personal salary is paid on a pro-rata basis, so insincere runs cannot lead to sustained personal gain; and (3) the personal salary is drawn from a candidate’s campaign funds so the typical diligence of a candidate’s donors should prevent this kind of misuse.19Ida A. Brudnick, Cong. Rsch. Serv., Congressional Salaries and Allowances: In Brief (2018), https://www.senate.gov/CRSpubs/9c14ec69-c4e4-4bd8-8953-f73daa1640e4.pdf. If the FEC “lesser of” language is left unchanged, candidates who were previously unemployed, such as stay-at-home mothers, could be effectively barred from using these funds.

Political Viability

HARA enjoyed bipartisan support when it was introduced in the House.20165 Cong. Rec. 8,576-8,579 (2019). It poses no additional tax burdens on Americans, simply regulating how candidates may use their existing campaign funds. Furthermore, by removing the “necessary” language, HARA will be easier to administer, which should elicit support from conservatives.

However, a means test could raise new problems for the bill. Means-testing usually wins support of conservatives, but they may worry this threshold is too high and that candidates who do not really need the funds to meet basic expenses will take advantage of donor money. Nevertheless, we argue that candidates, by necessity, will primarily use the funds for campaign-related expenses.

Progressives may abhor a means test, but our suggested framing should win them over. This is not a test to restrict funds to only the lowest-income Americans, but rather to ensure that millionaires are not taking this money to pay for their children’s nanny. It ensures that people from working-class backgrounds, minorities, and women are able to run and push the balance of Congress toward representing all American people, rather than the wealthy, white, male class that has controlled the country for the past two and a half centuries.