A Role for Parties

Daniel H. Lowenstein

A "collision between public and private interests" has produced "a system gone awry," according to David Donnelly, Janice Fine, and Ellen Miller.

Apparently, the authors are not fans of James Madison. In Federalist No. 10, Madison argued persuasively that the clash of public and private interests is inevitable in a republic. No measures short of the destruction of liberty could prevent the collision.

It is to be expected that private interests will deploy whatever resources are at hand to influence public policy. Of course, corporations, unions, and other interests will use campaign contributions--and other measures far more potent than campaign contributions-- to further their interests. And of course articulate individuals such as Donnelly, Fine, and Miller will resort to hyperbole when seeking support for their proposed policies.

Those who believe politics should resemble a learned debating society may look askance at such activities. Madisonians will recognize them as symptoms not of democratic failure but of democracy itself.

Despite its exaggerations and its shaky foundation, Donnelly, Fine, and Miller's essay contains much that is of value. Although the consequences for public policy are not nearly as great as they suggest, they correctly assert that the present system of campaign finance gives rise to widespread conflict of interest.1 Most importantly, they concisely demonstrate some of the major flaws in the proposed reforms that have dominated recent debates on campaign finance.

Donnelly, Fine, and Miller support what they call the "Clean Money Option," a version of which has been enacted by Maine voters. Under this system, candidates will be encouraged to agree to spending limits, in return for their campaign funds being almost entirely provided by the state.

If you glance at a map you will quickly notice that Maine is very far away from California, where I reside. I cannot say how the Clean Money Option will work in Maine, but I sincerely hope it will have beneficial effects.

There are many differences between Maine and California besides geographical location. Among the most important are that they have more lobsters and we have more people. Whatever the effects of the Clean Money Option may be in Maine, I am afraid they would be quite harmful in the unlikely event it were applied on a larger scale, such as in congressional elections or in big states like California.2

I have this fear primarily because of what I believe are the answers to three questions that Donnelly, Fine, and Miller never even consider:

1. How much will the Clean Money Option cost?

2. Will the amounts made available to candidates be sufficient for vigorous, competitive campaigns?

3. Who will decide, and on what basis, how much will be spent in campaigns?

These questions are interrelated. The answer to the third, presumably, is either the state legislature or the electorate in initiative campaigns such as the one in Maine. Either way, there will be a strong bias toward low amounts, for several reasons: the political and budgetary need to keep public costs down (see Question 1); the widespread perception, exploited by writers like Donnelly, Fine, and Miller, that "too much" is spent on campaigns; and the benefit to incumbents of keeping campaign expenditures below a competitive level. Since no reason appears why the setting of campaign spending limits should be exempt from the forces of self-interest and demagoguery that attend most political decision-making, it is predictable that the answer to Question 2 is a distinct "no."

I asked a couple of California campaign consultants (one Democrat and one Republican) what they would regard as an appropriate amount to spend for a talented but not well-known candidate challenging an incumbent in a competitive, high-turnout, California congressional district. The lower of the two figures I received was $800,000. If that amount were given to two candidates in each House district, the cost would be nearly $700 million. Add about two-thirds as much for the Senate elections that take place in a given election year, and the total--with nothing included for primaries or independent or third-party candidates--would be well over a billion dollars for a two-year cycle. Congress is very unlikely to spend so much.

The Clean Money Option would be disastrous for electoral competition, which according to Donnelly, Fine, and Miller should be enhanced by campaign finance regulation. One of the most consistent findings in political science research in the last two decades is that challengers typically need to spend large amounts to have a chance to defeat incumbents. The Clean Money Option encourages incumbent legislators to guarantee their own electoral security by limiting their challengers' campaigns.

Even if incumbents' self interest did not prevent funding of campaigns at fully competitive levels, ordinary principles of fiscal prudence would do so. To pay two candidates in every district the amount that challengers could usefully spend in the most competitive districts would be extremely wasteful. For this reason, many public financing proposals work by matching private contributions with public funds. But for a number of reasons, some of which are well-stated by Donnelly, Fine, and Miller, matching is also an inefficient means of allocating public funding.

What is needed is an allocation of public funds based on reliable political judgment of where the money can be used to enhance electoral competition. Obviously, no government agency can be trusted to make such judgments, so reformers have assumed they must employ mechanical allocation devices, all of which are seriously flawed.

But sensible allocation of funds is possible, by the simple expedient of entrusting the allocation to the political parties. Such a system would provide vastly more bang for the public buck than any of the typical public funding schemes proposed by reformers, including the Clean Money Option. Because of the more efficient allocation, the system would increase the level of electoral competition while minimizing the reliance on private contributions that causes conflicts of interest.

Space does not permit setting forth the details of such a plan, but I have done so in the article cited in a footnote above, and will be glad to send copies on request. One point should be added here. Neither the Clean Money Option nor any of the reform ideas that Donnelly, Fine, and Miller criticize addresses the fundamental cause of the campaign finance problem. That fundamental cause is the need for voters to receive information on large numbers of candidates. Voters increasingly believe they should vote for the "best candidate" rather than for the party. Whatever else may be said about this idea, it vastly increases the information needs of the voter. But most voters are turned off to politics and do not seek out such information. Candidates have no choice but to spend ever-greater sums to force information into unreceptive minds.

The campaign finance problem is in large part the result of a candidate-oriented rather than a party-oriented electoral system. Public financing channeled through party leaders, in addition to its great advantages of efficiency, would be a small step in the direction of a cheaper, more accountable electoral system, which is to say a more party-oriented system.

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1 As I have previously argued, it is usually more accurate to think of campaign finance in terms of conflict of interest than in terms of corruption or, worse, the appearance of corruption. See my article, "On Campaign Finance Reform: The Root of All Evil Is Deeply Rooted," Hofstra Law Review 18 (1989): 301-67. The same article contains a detailed proposal for campaign finance regulation along the lines suggested briefly at the end of the present commentary.

2Ironically, the system is well suited to the largest-scale election of all, the presidential election. The reason is that presidential elections do not depend on campaign spending by challengers in order to be competitive.