Master Plan 6: McCain, Money, and Reform Drive

Overview

This episode examines how Supreme Court campaign finance rulings in the 1970s led to widespread corruption in 1980s politics, culminating in Senator John McCain's decade-long fight for reform through the McCain-Feingold bill.

The Keating Five Scandal (1987–1989)

• April 2, 1987: Ed Gray (Federal Home Loan Bank Board chairman) summoned to surprise meeting with four senators
• Senators Dennis DeConcini, John Glenn, Alan Cranston, and John McCain pressured Gray to ease regulations on Lincoln Savings & Loan
• Charles Keating Jr., Lincoln S&L owner, had donated $1.3 million total to these five senators
• Senators later met San Francisco regulators, advocating for Keating despite concerns about bank's risky investments
• Lincoln S&L collapsed in 1989; taxpayers paid $3.5 billion to cover losses
• Senate Ethics Committee investigated; McCain cleared of criminal charges but cited for "poor judgment"
• Scandal damaged McCain's reputation despite being cleared; he felt intense public pressure and embarrassment

McCain's Political Background

• Shot down over North Vietnam in 1967; spent 5+ years as POW in Hanoi Hilton
• Released 1973; served as Navy liaison to U.S. Senate, gaining political experience
• 1982: Ran for Arizona's first congressional district; had three advantages: wife's family wealth, friendship with Arizona Republic publisher, Charles Keating's backing
• Keating gave McCain campaigns ~$112,000 ($320,000 today) across three elections (1982, 1984, 1986)
• Keating also hosted McCain family at Bahamas home on private planes
• 1986: McCain elected to Senate, replacing Barry Goldwater; campaign cost $2.6 million (5× opponent's spending)

Campaign Finance Problems (1970s–1990s)

• Buckley v. Valeo (1976): Ruled money equals constitutionally protected speech; limited FECA's effectiveness
• 1979 FECA amendments: Reduced disclosure requirements; allowed unlimited "soft money" for party-building activities
• National parties could raise unlimited corporate cash for get-out-the-vote and "party building"
• Issue advocacy loophole: Ads avoiding "magic words" (vote for, elect, defeat) could use unlimited corporate money
• Willie Horton ad (1988) exemplified independent expenditure loophole's power to influence elections
• Companies bought access through soft money donations; leadership meetings priced at specific dollar amounts ($10,000–$110,000)
• 1996 presidential election saw $260+ million soft money influx; Lincoln bedroom rented to Democratic donors

McCain's Reform Efforts (1995–2000)

• September 1995: McCain and Senator Russ Feingold introduced Senate Campaign Finance Reform Act
• Bill called for soft money limits, PAC elimination, strengthened spending limits; died in Senate 1996
• January 1997: Reintroduced after 1996 election scandals revealed pay-to-play culture
• Senator Mitch McConnell led opposition, calling reforms unconstitutional speech restrictions
• 1998: Bill failed again after McConnell filibuster (couldn't reach 60 votes)
• 1999: McCain ran for Republican presidential nomination with campaign finance reform as centerpiece platform
• George W. Bush outraised McCain massively using "Bush Pioneers" (donors raising $100,000 each)
• Bush campaign spent ~$70 million winning nomination; McCain dropped out after Super Tuesday
• McCain's campaign resonated nationally; issue struck chord with voters across party lines

The Bipartisan Campaign Reform Act (2001–2002)

• January 22, 2001: McCain-Feingold reintroduced as Bipartisan Campaign Reform Act (BCRA/"Bikra")
• BCRA prohibited political parties from raising/spending non-federal-limit money (soft money ban)
• Required campaigns to disclose funding sources and expenditures; limited timing of issue ads
• Enron scandal (2002) boosted support; company had donated millions as Bush Pioneer, then collapsed
• February 2002 Gallup poll: 70%+ Americans supported campaign finance reform legislation
• March 20, 2002: BCRA passed Senate 60–40 despite McConnell's hour-long floor speech
• March 27, 2002: President Bush signed BCRA quietly at night, no ceremony, expressing constitutional concerns

Legal Challenge: McConnell v. FEC (2002–2003)

• Mitch McConnell immediately filed lawsuit challenging BCRA's constitutionality as lead plaintiff
• Coalition included NRA, U.S. Chamber of Commerce, California Democratic Party, ACLU (strange bedfellows)
• Roger Whitten and McCain team prepared legislative history, speeches, studies defending law
• McConnell's "Dream Team" lawyers: Floyd Abrams, James Bopp, Ken Starr (former Clinton investigator)
• McCain's team: Roger Whitten, Seth Waxman (former solicitor general with 34 prior Supreme Court cases)
• December 10, 2003: Supreme Court ruled 5–4 upholding BCRA's soft money ban and issue ad limits
• Court agreed money restrictions justified to prevent corruption and preserve election integrity
• Republican-dominated court delivered blow against "master plan" to legalize corruption

Campaign Finance Timeline

Key Terms & Definitions

• Soft money: Unlimited contributions to political parties for "party building," not directly supporting candidates
• Independent expenditures: Political spending supposedly not coordinated with specific candidates; constitutional under Buckley
• Issue advocacy/sham issue ads: Ads avoiding "magic words" (vote for, elect, defeat) to escape regulation
• Bush Pioneers: Donors who each raised $100,000+ by bundling 100+ maximum donations
• Magic words: Specific terms (vote for, elect, defeat, reject) triggering campaign finance regulation per Buckley footnote 52
• Iron triangle: McCain's term for special interests, campaign finance system, and lobbying interconnection

Action Items & Next Steps

• Roger Whitten predicted "the Empire would strike back" against campaign finance reform
• Episode ends with Chief Justice Roberts taking oath, hinting at future court composition changes
• Suggests upcoming challenges to BCRA and campaign finance restrictions in subsequent episodes