So it is agreed that the Internet has changed fundraising in American politics; its potency has been proven, and there is no known limit to future innovation in integrating small donor fundraising with other forms of voter mobilization and volunteer recruitment.  This is a success story:  and in this country, it means that alarms have been sounded.  Success begets the regulatory question:  what should be done about it?

     One possible answer—reasonable, once one thinks about it—is "nothing."  This was discussed at a panel sponsored by COGEL on Monday at a conference in Chicago.  The discussion opened with a proposal by Rick Hasen who will not take "nothing" for an answer and who suggests there is a middle path between inaction and overreaction. 

     To answer questions about the flood of small donations, not subject to reporting at $200 or less, Rick would have the campaigns report these donations only to the FEC, as part of a mandatory audit.  The regulatory authorities could satisfy themselves that the contributions were lawful, received from the reported sources, but the small donor would remain otherwise anonymous to the public at large. 

     It was once said of the hyperactive Senator Hubert Humphrey that he had more solutions than there were problems.  Hasen, as I said in remarks following his, is being perfectly sensible, if a sensible proposal is needed.  First, however, the problem he was solving was begging for definition.  Yes, campaigns might be raising larger small donor contributions via the Internet than ever before.  This was a fact, and quite remarkable; but that it was a notable fact did make it a troubling fact.

    In the last Presidential campaign, there was grumbling that campaigns were taking in fraudulent contributions, such as funds donated by contributors going by the name of Mickey Mouse and God.  Campaigns eventually spot this trickery and can disgorge the money.  How do we know that the problem was not worse than this, that Internet giving has not encouraged technologically perfected means of fraud?  During the COGEL discussion, it was remarked that there is no evidence that "fraud" in this sector of political giving is higher than in others.  In fact, there is scant evidence that there is major problem—a regulatory problem—with this type of fraud. 

     And it is not on its face obvious why small donor cheating would surpass in incidence or seriousness the large donor variety.  Those donors looking to cheat on the contribution limits would go about their business inefficiently with small money, and at a high risk of detection:  the crime of "conduit" contributions (one person’s money spread among an array of straw donors) is conducted, as the years have shown, with large sums.  To corrupt the candidate by giving well in excess of the limit, the perpetrator starts at the high end, with $2300 contributions, and not with installments at the $10, $25, or $100 level.

     What is the fear, then, that without a fresh dose of regulation, we will have a burgeoning scandal on our hands?  It is not a rational fear, but we have seen this reaction before, whenever a major technology change sweeps through the business of politics.  Television inspired its share of dread:  in the l950s, it was first welcomed as an educational tool invaluable to the voters, but then, as its use spread and its power was demonstrated, it came to be viewed suspiciously.  By l971, the Congress had decided that limits on media were required to tame the beast (and keep at bay the next generation of Nixons skilled at paid media manipulation).  Now we have the Internet and, not too long after the FEC worked through a contentious rulemaking proceeding, we are back at it again.

     Feeding into the anxiety is the unprecedented sums that have been raised.  Advocates of regulation say the total amount of money in politics is not what moves them.  And yet there is a pattern here, a very visible relationship between the volume of dollars and the volume of regulatory proposals.

     If one is looking for a proposal, Hasen’s has the feel of a compromise but not an especially workable one.  It is highly unlikely that disclosure provided only to regulators will win over critics.  They will expect the public to be let in on the data:  they will not put their trust in the regulators, or in a plan for regulators and the regulated to share the information on an exclusive basis.  Sooner or later, the disclosure, if there is such disclosure, will be public, and the $10 contributor, named and with address also supplied, will be revealed to all.  Hasen told the panel that he hoped to preserve privacy for the small donor and, by this standard, his proposal sets a course that, inevitably, leads away from that goal.  And it leads, just as inevitably, toward more regulation, since each phase, experience shows, sets the stage for the next.  Robert F. Bauer, "Not Just a Private Matter:  The Purposes of Disclosure in an Expanded Regulatory System," 6 Election Law Journal 38 (2007). 

     Internet fundraising should not become an object of regulatory fascination simply because it has outperformed all expectations.  For the moment, its virtues can be simply appreciated and its possibilities explored. 

Bob Bauer