Correcting the record

As I'd feared yesterday, Lib bloggers are out in force in trying to attack the very idea of removing big-money supporter loans from politics. While I'd much rather see a cooperative effort to improve the bill going forward to make sure that the end result is as fair as possible, I'll take a few minutes to debunk a couple of the more glaring pieces of misinformation on the topic.

1. A restriction on loans makes big-money campaigns less important, not more important.

A number of the Lib commentaries have seized on a claim that the effect would be to somehow favour big-money, self-financed campaigns. Suffice it to say that that's a patently wrong interpretation of the ban on loans: indeed, the very nature of the move is to ensure that big-money donations - whether from oneself or from others - don't find their way into the political system as "loans" (with or without a "wink-wink" background).

But what about the question of banks being more willing to loan to a person with money? As it stands, another loophole which would be closed is one related to guaranteeing loans. From the Globe and Mail:

The legislation will allow only banks to lend to political candidates, and places stringent limits on providing guarantees or collateral for politicians.

I'm presuming that the rules would also applying to repaying loans after the fact (i.e. that this would be classified as a "donation"), such that individual wealth will be properly removed from the system. And if the Cons' legislation as phrased doesn't go so far as to cover repayment later such as to result in a benefit to wealthier candidates, the proper response would be to try to amend it to close that last loophole - rather than to demand that nothing be fixed.

2. A system based on commercial loans (if any) makes for a playing field that's more equal and fair, not less so.

Remember that in the Libs' leadership campaign, Carolyn Bennett managed to take out a CIBC loan for $35,000 based solely on their presumptive appraisal of the ability of a lower-tier candidate to make up that amount. It thus seems readily apparent that money is available from financial institutions.

So why did so many Libs choose to make use of private loans instead? Presumably, the main reason is because they were able to get a better interest rate or better repayment terms out of supporters (or themselves) than out of a bank. Or perhaps it's because unlike banks, private supporters were more than willing to see the money converted into a donation if repayment doesn't prove possible.

But that only hints at the fact that it's the current system which involves a need for big-money supporters to provide a candidate with a better financial footing that his or her competitors. In contrast, in a system based on regulated financial institutions, it's the candidate's ability to fund-raise and attract support - so as to offer confidence that the loan can in fact be repaid, rather than serving as a disguised donation - that will determine a candidate's available loan funding. In sum, the proposed change involves a move from a system based on self-funding and/or cronyism, to one where any available loans are based on merit.

Of course, it does bear mention that Bennett's loan was smaller than the ones her competitors received from their supporters. But that only hints at another potential benefit: a need for all loans to be justifiable on a commercial basis would likely limit the amount of money involved in a race, forcing candidates to persuade potential supporters through words and actions rather than dollars to a greater extent. Which only feeds into a shift away from reliance on big money, rather than the move toward it that Lib supporters seem to want to allege.

None of the above is to blame the Libs for operating within the system that existed at the time of their leadership race. But if the party seriously plans on trying to argue that an attempt to remove a loophole which allows for unlimited back-door funding constitutes an "attack (on) democracy", then it's going to be awfully tough to for anybody to believe that the Libs are any less beholden to big-money supporters than they've ever been. And I hope at least some Libs will come around to the merits of trying to improve the plan to close the campaign-loan loophole, rather than stubbornly assuming that any policy which calls into question anything the Libs have ever done must itself be indefensible.

Update: Full credit to Steve for one in separating politics from policy. (And if anything, he seems more supportive of some of the Cons' other plans than I'd be.)

Update II: Now that the original hysteria has died down, Jason (no, seriously) and Jeff have some constructive thoughts on how the Cons' proposal could be improved. In the case of Jason's ideas, I wonder only whether the dollar amounts will take care of themselves under a commercial-loan system (particularly to the extent that a party will itself decide its own nomination costs and procedures), but the possibility of including statutory spending caps is certainly worth discussing. And it's hard to quibble with Jeff's points about making a riding association liable for the acts of a candidate who may well have few long-term links to the riding and/or the party.