The Capitol Connection Show 1315, 2013 April 12

Welcome to the Capital Connection, a weekly program questioning New York State leaders
on a variety of issues.
Your host is Dr. Alan Shartock, political scientist and professor emeritus at the University
at Albany.
Distributions for the Capital Connection is made possible with the help of New York
State United Teachers, representing professionals in education and healthcare, online at nysut.org.
It's the Capital Connection, I'm Alan Shartock.
A very special guest is joining us in studio today.
Jonathan Soros is chief executive officer of JS Capital Management LLC, a private investment
firm.
He's also a senior fellow at the Roseville Institute, a think tank based in New York City and co-founder
of Friends of Democracy, a Super PAC and advocacy organization dedicated to reducing the influence
of money in politics.
Mr. Soros is a member of the board of the New America Foundation, holds several board
positions affiliated with the Open Society Foundations.
He's also a member of the next generation, he's also a member of the next generation,
leadership board of the Indian School of Business.
Prior to founding JS Capital, Mr. Soros spent nine years with Soros Fund Management, serving
as its president and deputy chairman from 2005 to 2011.
Mr. Soros has clerked for Judge Stephen F. Williams of the United States Court of Appeals
for the DC Circuit, worked as an assistant director of the International Foundation for
Electrical Systems Mission to Moldova and co-founded the Fair Trial Initiative, a nonprofit
that seeks to improve the quality of defense available to defend and spacing the death penalty.
Mr. Soros is a graduate magna cum laude of Harvard Law School and the John F. Kennedy School
of Government.
He received his BA from Wesleyan University, welcome Jonathan Soros.
Thank you, it's a pleasure to be here.
How did you get interested in all this stuff?
The money in politics work?
Yeah.
Well, so you mentioned the time I spent in Moldova, I was there for about two months in 1993,
working with that foundation to cover their first ever parliamentary elections.
I got a real taste of the way that rules matter in democracy.
Then I continued that interest at the Harvard Law School, I studied with Lonnie Gweneer,
a co-worker course on law and democracy, which is a real eye opener.
And of the issues that were covered in that course, and there were many, the money and
politics issue really stood out as one that was interfering with the flow of our democracy.
Well, somebody must be saying to Jonathan, if I may call you that, that you know, you've
got some money, obviously, and that you are successful and that money talks and all
of this walk, why shouldn't you be on that team as opposed to the other team?
I'm a very important question.
I mean, I have a deep and abiding faith in our democracy and in the importance that it
be a real democracy that is fundamentally accountable to all citizens.
I think to have a system in which a small group of people have an inordinate influence over
the process and the politics, it's just dangerous.
It's wrong and it's dangerous.
Right now, it's, I believe, 0.05% of Americans who give a reportable amount to electoral
campaigns.
When you looked at super PACs over the course of this last election at the federal level,
it was a small handful of people who gave the majority of money to super PACs.
That's just, that's a terrible way around the democracy.
So you decided to fight fire with fire and develop your own super PAC?
Yeah, so my view was, it was driven by several convictions.
The first is that there continues to be even after the Supreme Court's case in Citizens
United in 2013, that there is a suite of reforms that are practical and achievable and fully
consistent with the Supreme Court's jurisprudence that would fundamentally transform the way that
money flows in and around politics.
But the second premise was that none of those things get done until you can demonstrate
some real political will around the question.
Because you're dealing with the rules by which people get elected, they're not going to
change those rules unless they feel like voters care.
So in 2012, when you had the birth of the super PACs and the first people paying attention
to this issue at a level that they haven't since Watergate, it was a real opportunity to
prove that point and to break that conventional wisdom.
And in fact, a dangerously missed opportunity if we didn't engage.
But if what you had was, we ended up with a $7 billion federal election.
If you ended up with that, and there was no counter narrative, there was no other story,
then that becomes the new normal.
That becomes the, you know, this is just the way it is.
And I'm going to throw up my hands.
Why should I bother to be part of that?
So that's why we engage in this process.
Well, you're a brilliant young lawyer and certainly one in one makes two.
And you have to know that the Supreme Court of the United States has been where you
ain't.
How do you mean?
They've made it easy for the continuation of private money to flow into elections,
unmitigated.
Yeah, so it's never been my objective, my personal objective, to get money out of politics.
I don't think certainly this Supreme Court has made it impossible, at least under the current jurisprudence.
But even if it were, I don't believe you can do it as a practical matter.
So my objective personally has always centered around creating an alternative.
That's why the citizen-funded elections or public funding of elections is so
important to that suite of reforms that I mentioned.
You have to create an alternative so that candidates can run for office without dependence
on the large contributions and the large donors.
And that's how you reduce the influence of those donors rather than try to eliminate
them.
So is the Obama election in which a lot of people gave a little?
Is that the kind of thing you're talking about?
Partly.
But Obama also funded both elections with large contributions.
And if you look at, I can't remember what the number is.
I mean, some, I think a hundred or so fundraisers that he did during the course of the campaign,
those fundraisers were principally with folks like me who are writing, you know, checks
in the in excess of $10,000 to his campaign.
So and the same was true in 2008, right?
It was a great story.
And it's a wonderful example of what's possible when you can draw in small donors.
And he funded more of his campaign with small donors than anybody else.
But the other side was still true that where he was spending his time was with larger donors.
Your name is Soros.
Of course, I'm sure it occurs to everybody that you come up from a prominent family.
What has that meant to you?
What has that meant to me?
I mean, where did you get these values?
Here you are fighting the good fight.
You're on the right side as far as I'm concerned.
I agreed to do this interview because I like what you're doing.
But you know, it's untypical of your class, of your social and economic class.
Well, I think it's obviously, if you look at the work that my father has been engaged in for,
you know, just for the few who don't know, your father is.
My father is George Soros.
And really since the late 1970s, he has been engaged in a variety of activities across the globe
to promote democracy in open society.
He was intimately involved in the fall of communism in the late 1980s
and in promoting the nascent democracies of Eastern Europe and the former Soviet Union in the 1990s.
And so if you want to point to a place where my values come from in that regard,
that's the most likely place.
How did he do that with you?
I mean, how did he sit you down and say, now son,
or when you were a small kid, how did he inculcate those values with you?
You know, I've asked this question of myself because I've tried to identify where these
government, I don't have a great answer for you.
But I remember occasions in which, you know, we had Black South Africans
visiting and discussing the apartheid system in South Africa.
And in fact, before he was involved in Eastern Europe,
the first four A's of the foundation, the nascent open society institute,
were actually in South Africa promoting scholarships for Black South Africans
so that there was meant to be a new class of folks who could be the future leadership.
So I remember a few pieces like that, but really, you know, it really was by example.
And by seeing these things in the 1980s, which, you know, I was a teenager at the time,
did you go up New York?
I grew up in New York City, yeah.
When did you go to school?
I went to Trinity School in the Upper West Side.
I know very well.
I went to Joan of Arc, I went to school around the corner.
And I didn't like the Trinity kids.
I always thought that they were to stuck up in warblazers.
Was that a sort of reverse snobbery?
You know, perhaps we did wear blazers at least for a time until I started relaxing the dress code.
Yeah.
So I wanted to get back to the main event here.
And that is what's going on in New York.
We see a spade of corruption.
That corruption is clearly almost always traced back to the evil root of money.
We have a state legislature which has glomed on to as much power as it can get
and is not sharing that power.
We'll never have initiative and referendum in New York state, which would be great.
We'll never have the kinds of ethics laws that would make a lot of sense.
And you're coming in like Lackenvar from the West on a white horse and you want to make this change.
How realistic is it?
Well, for starters, one of the reasons it's realistic is because I'm not alone.
I'm actually coming, I've arrived at this party late.
There's been a terrific coalition of groups who I'm sure you know well, the citizen action
of New York, the working families party, common cause, the Brennan Center for Justice,
who have been working on this issue for a long time.
Well, basically broke.
Perhaps, but they have influence and they have.
Not enough influence.
They haven't gotten anything done.
Well, look, so this is a hard thing to do.
And one of the reasons that it's live now is that the governor has put it on the table.
He put it on the table starting a couple of years ago and in his state of the state address,
he did it again last year and this year.
He's taken that a step further and gave a great speech a couple of weeks ago to group of
business leaders in New York that I think laid out the case for reform incredibly well
and incredibly powerfully.
What is that case?
So there are several cases.
There's a case that's based on corruption and there's case that's based on trust.
And the governor in part was arguing the case of trust that the way that money flows
in and around politics distances the ordinary citizen from their politics and leads to a situation
where they don't believe that their elected officials are working for them.
That's true nationally.
We've seen it in polls and that's true here in New York state and money and the fact
that candidates are being financed by a small fraction of the electorate is at the root
of that.
So that's one of them.
And the other now coming to the fore with these arrests last week is corruption.
And to be clear, it's not that reforming money in politics would have stopped these particularly.
We know that because New York City has the very plan that you want to implement.
Stay wide.
Well, let's start with the fact that there is no law that stops corruption.
The fact that this was corruption was because it was against the law.
So Malcolm Smith, if he ends up being convicted of what he's accused of, faces up to 45 years
in prison.
So it's not that if you had made it a 50 year penalty, that would have stopped him from
doing it.
And the fact that he's been...
Well, we didn't have stopped him.
You think he's just arrogant anymore?
No, I'm just saying the difference between 45 and 50, like penalties...
No, no, no, I get it.
...severe enough.
No, I get it.
But I'm saying what makes these guys go wrong is the fact that they're arrogant.
And I think they can get away with it as opposed to thinking that, you know, 45 years
in prison might be a long time.
So in the wake of this scandal, I did a little research.
I started doing a little research about the NAP commission, which I just thought was,
you know, I found a couple of things that I thought were really interesting.
Are you old enough to remember the NAP commission?
I'm not.
I am.
And I worked in the New York City Police Department at that time.
It's very interesting.
And I watched a lot of law and order, and they always have a guy who's supposed to be
like Whitman NAP, and they don't make them enough to be a nice guy, but go ahead.
Well, so Frank Sarpico, when he testified in 1971, he said something along the lines
of 10% of cops are completely corrupt.
10% are honest, scrupulously honest.
And the other 80% they want to be honest, right?
And so the NAP commission takes that testimony, does its investigation, and comes up with
a series of systems reforms, because they recognize that you can't drum out corruption
one guy at a time.
There's a limit to what law enforcement can do when you're dealing with systemic corruption.
So it, again, you need systems change.
They didn't give up.
They said you need to change the entire structure.
So you look at last week, and you say, you know, the US attorney had a great line in
his press conference.
So that there's a show me the money culture in Albany.
And so that's what you need to under you need to change the way that the money flows so
that people have a different set of incentives.
But Jonathan increased competition, he increased transparency.
But Jonathan, plunkett of time, he told put it best when he said there's honest graph
to this honest graph.
And the reason that I think somebody like Malcolm Smith, if he did what he was supposed to
have, is accused of having done, was so stupid.
As he didn't follow the rules for the honest graph as opposed to the dishonest graph,
that's why, you know, I think this culture of corruption thing, which is very interesting
to me because I think it's there.
But there's a culture of honest corruption.
And I think that's what you're talking about because people give the money to the campaigns.
Yeah, that's exactly right.
Right?
That the entire structure of the place is transactional.
Maybe through the very first day that you run for office.
Ever very first day.
Maybe there's one thing that comes before it.
But pretty soon, what you're focused on is finding the biggest donor to write you the
biggest check for your campaign.
Right.
And you never have to speak into a microphone and say, if you pass this bill, I will give
you this money.
That's not the way it's done here.
Is it?
Yeah.
You're the guy of the $50,000.
And then he's yours.
Later on, when you need something, he'll give you what you want.
Right.
And so what you need to do is to change the entire system by which people get funded for
their campaigns.
So here's two jokes.
Right.
Guy walks into a bar and comes across his representative and says, I'll give you $50,000
if you vote for this.
Right.
Second joke.
Guy walks into the bar and says, Hey, you know what I'm thinking about spending $50,000
on political campaigns.
I'm really interested in knowing what your position is on X, Y and Z.
So here's what's here's what's different about those.
One of them is illegal.
The other one is legal.
Here's what's the same.
Neither one of them is funny.
They're bad jokes because it's both of them are a corruption of the democratic process.
So if a candidate can run for office where that $50,000 doesn't really matter and they're
actually funding their campaigns with small contributions from ordinary citizens, it completely
transforms the way that works.
We're talking to Jonathan Soros and like other guests who I've had on this program.
He actually stops every once in a while and makes you ask another question.
Jonathan, you need to fill in for us the blanks.
First of all, there are a lot of people out there who do not want public money to be used
for elections.
They don't want it.
They say these crooks, and I've heard it a thousand times and I think it's over generalized,
but these crooks are going to not only steal from us and they will always steal from us,
but now they'll use our money to get elected.
How do you answer that one?
Well, I think there are a couple answers to that.
The first is, you know, that's part of the conventional wisdom.
That's the tried and true argument that people have been laying out for a long period
of time.
This raised this New York State Senate race with George Amador and Cecilia Ketchik last.
Yeah, I want to hear about that.
Yeah.
So I think that disproves the point about as well as you can.
So here you have a campaign where Cecilia Ketchik, the Democratic candidate, is vociferously
for public financing of campaigns in particular in this small dollar matching version.
For opponent George Amador, a sitting assemblyman who may say the district was designed for.
It was.
There's no choice but is against it.
Right.
So three weeks out before the election, she's in most polling down by north of 10 points.
In our polling, it was 13 or 14 points.
We got involved in that race with the super PAC that you mentioned.
You were super PAC, yes.
Yeah.
New York friends of democracy did some TV advertising to lift up her name recognition
and introduce this issue of money and politics more clearly into the into the frame.
And she sat in that chair.
You're sitting in right now twice to talk to us about her election.
And did she?
Well, the first time I thought I turned around to the producer and said, not off, not
a prayer.
The second time I said she could win this and it's so convincing.
And of course, nobody could pronounce her name.
So that makes it even worse.
It was that made it worse.
Just go by Cecilia.
It's okay.
Yeah.
One was that that George Amidr turned around and attacked her for her support of a citizen
funded elections.
Rand ads did mailers called it a CC tax said it was going to cost, you know, X dollars
for the for the politician, put out his own half-hearted reform proposal that was centered
around transparency only.
And that became for those three weeks the primary issue that was litigated over that period.
She comes back and wins by 18 votes, right?
Now it was only 18 votes, but in a district that was designed for the other guy and she
was down by 13 points, she closes that gap on this issue.
And she only wins.
They tried to steal it from her.
There's no two ways about it.
They went.
They found themselves a Republican judge.
The Republican judge figured out how some of the votes that she had been denied by the
Republicans, but in the end, she got the votes because the next thing happened.
They appealed to Democratic court.
And she wins.
I love her, by the way.
And I think that one of the things that's so extraordinary about you're helping get
her elected is that she didn't forget after she got to the Senate who she was.
A lot of these guys, they get elected and they get on the money train right away.
But she gets here and she does some of the most amazing work I've seen in the state
Senate insisting on the right kinds of things for children and schools and health.
And that makes her a real heroine as far as I'm concerned because she didn't forget
what did it.
A lot of these guys, they get here and they turn around and they start to act like idiots.
They start to act like whatever you say, Mr. Speaker, whatever you say, Senate President,
I'll do.
She's an amazing woman.
And that goes to your point, I suspect.
Well, I mean, gotten her elected.
Well, I mean, that's terrific to hear.
And she's a real person from her district.
And I think she's going to represent it well.
But the point about her race going back to the question that you asked was, okay, people
say we don't want to use public money because it's, you know, it's politicians and we don't
want to support that.
I think that her election goes a long way to disprove that argument that voters will,
when presented as plainly as they possibly can be with she wants to use your tax dollars
to pay for elections.
And I don't.
Right.
Because I come from behind victory and wins by even a small margin, wins by, wins by
18 votes.
So I think what you're seeing is a breakdown in that conventional wisdom that actually voters
are willing to pay for, for, for better elections to be more represented in the process.
The polling certainly shows that.
So now what we've done is we've helped to convert that polling into an actual election result.
And we're talking about, we're talking about a fraction of 1% of the New York State
budget is what it would cost to pay for this.
And the question is, what do you get for that fraction?
I think it's 0.1% of the state budget, right?
So for that, then you get credibility and a degree of confidence and honesty in the other
99.9%.
And that's worth paying for.
Well, first of all, I certainly agree with you, but just for the sake of argument, just
for the sake of argument, she won all right, but she won in an Obama year in New York City.
A lot of them.
Yeah.
You want a Democrat who turned out to vote for Obama, who would have stayed home otherwise.
And once they were there, they voted for other Democrats, don't you think?
So it's New York State where the presidential election is not as much in play, but either
way, getting folks to vote down the ticket all the way down to the state Senate race,
she won on the merits of her campaign.
Okay.
But the second thing I think has a little hope for here is that you say that it's a great
victory for having campaign, fair campaign finance.
Whereas I would say to you, Jonathan Soros, what about the, all that money you gave her?
That maybe this proves the argument.
No, I disagree.
Because for two reasons, first of all, she was still outspent, right?
When you add up the money that the society, Patrick and her allies spend, including us,
and you add up the money that George Amador and his allies spent, she was still outspent.
So what does actually proves is that what you need to run for election is enough money
to have a credible campaign and be heard.
And she probably hadn't, wouldn't wasn't able to do that.
We helped to increase her name recognition and to create a platform that she could then
run off of.
But people misunderstand, in the electoral context, people misunderstand, I think, the role
that money plays.
The battlefield of campaigns is littered with people who have vastly outspent their opponents
and still lost, right?
Leg Whitman is not the governor of California because she spent over $100 million on her
campaign because she's not the governor of California.
The real lesson is that people who don't have enough money to really run a credible campaign,
they almost invariably lose.
Now the question I have for you is this, how do you hold individual legislators?
We both agree.
We may not think that this is the best way to preserve their power.
How do you get them to do what they may consider to be against their own self-interest?
Well, so the assembly we know has done this for years and years, they've been passing a
one house bill for a long time.
One house they'd let the Republicans do the dirty work and kill it, but what happens
when it really becomes a chance of passing?
Well, you do what we're doing, right?
You create a campaign.
We had an electoral piece of it in November where I think we collectively, a group of folks
and a great candidate collectively demonstrated that this issue has forced at the ballot box
that you can genuinely lose your election if you're on the wrong side of it.
I think that's a message you mentioned it earlier, right?
Everybody in Albany seems to think that that was part of what happened there.
That's pretty important.
You build public pressure.
Have you talked with the leaders?
Have you talked to Dean Skellos?
Have you talked to Jeff Klein?
Have you talked to Shelley Silver about this?
I've had conversations with some of them as have other members of the coalition and other
folks who've been advocating for this for a long time.
I think in the next several weeks, you're going to see some very positive movement in
the legislature on this issue.
What makes you think so?
Indications are that this is going to move forward.
I mean, it's the last week in New York at a rally that both Shelley Silver and Andrea
Stewart-Cousins attended.
She's ahead of the regular Democrats in the state Senate.
Both of them spoke quite plainly about the need to get this reform done.
As I said, I mean, leader Silver has been leading these bills.
Passing these bills, he's been carrying this bill, I think, for over 20 years.
I think, over time, first of all, I think political competition is at the core of this.
Political competition is good for all of us.
We agree on that.
We're at a time, I guess, that's been Jonathan Soros' chief executive officer of Capital
Management LLC, a private investment firm, a senior fellow at the Roseville Institute,
and much, much more.
Jonathan, again, thanks so much for being with us.
I'm Alan Chalkton.
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