The Landscape of Campaign Finance Reform
February 11, 2014
Feb 11, 2014
7 Min read time
In January, Lawrence Lessig walked across New Hampshire to put campaign finance reform back on the national agenda. Among his fellow marchers was Representative John Sarbanes (D-MD), who introduced the “Government by the People Act.” The Act would “offset the enormous incentives for politicians to court the very wealthy” by creating a system of contribution matching for donations of $150 or less. Despite more than 100 cosponsors (including one lonely Republican), the Act’s introduction received modest press attention, perhaps because no major overhaul has a chance of passing a deeply divided Congress.
The basic idea behind the bill—public funding for candidates who collect small donations and agree to abide by certain limits—is not new. Public funding of presidential campaigns dates back to 1976, and in 1996, Maine instituted a program allowing candidates to become eligible for public money by collecting a sufficient number of $5 contributions. (Ellen Miller, who was then the director of the Center for Responsive Politics where I now work, advocated for a similar system in Boston Review as early as 1993.) As of last year 14 states provided some form of public financing to candidates.
Today’s campaign finance landscape, however, is very different than in 1976 or 1996. Over the last eight congressional elections, total spending has grown more than 60 percent adjusting for inflation, and outside spending (“political expenditures made by groups or individuals independently of, and not coordinated with, candidates' committees,” per CRP’s definition) has increased much faster. Supreme Court decisions such as Citizens United v. FEC and SpeechNow v. FEC paved the way for the creation of “super PACs” that can accept unlimited contributions from corporations, unions, and individuals to use for outside spending. In this context, candidates need to raise astronomical sums just to keep up, rendering public campaign finance programs with caps on the amount candidates are allowed to spend—including presidential public funding—obsolete.
Why is public campaign financing still a compelling idea to reformers?
In this new environment, why is public campaign financing still a compelling idea to reformers? To answer this, I’ll examine some of the more creative proposals that have been put forward as remedies for problems created by money in politics, focusing on ideas that aim at curbing the growth or effects of outside spending.
Reformers have good reason to highlight the issue of outside money. “Citizens United”is convenient (if sometimes inaccurate) shorthand for the problem, and the case continues to poll poorly with voters, particularly in conjunction with “dark money” groups that don’t disclose their donors. The effects of outside spending are visible to the public in the campaign advertising that dominates the airwaves in swing states every other October. Moreover, sitting politicians have some incentive to curb outside spending, since it has contributed to the defeat of several longtime incumbents. Yet Citizens United’s opponents have had little success: the DISCLOSE Act put forward by congressional Democrats would have mandated that most entities engaged in political spending make the names of their large donors public, but it was unanimously filibustered by Republicans in 2010. Advocates of repealing Citizens United by constitutional amendment have scored symbolic victories but not much else. It is not hard to see why outside-the-box ideas for reform might be necessary.
Undoing the effects of unlimited outside money can be achieved either by discouraging donors from giving to the entities that do the spending (primarily super PACs and 501(c)(4) groups) or by making outside spending less attractive as a means of influencing elections. Most proposals that adopt those strategies tend to founder on two issues. First, the Supreme Court’s current interpretation of the First Amendment makes it difficult to enact sweeping reforms. Second, with comprehensive reform off the table, the only option is to tackle political spending piecemeal, but political money finds new channels when old ones are blocked. For instance, the post-Watergate campaign finance laws initially set very low contribution limits, which spurred the rise of unlimited contributions to political parties for nonfederal activities, also known as “soft money.”
With those difficulties in mind, how can reformers make outside spending groups less attractive to potential donors? The most commonly proposed solution is a beefed-up system of disclosure requirements for outside spenders, since the Supreme Court has effectively given transparency its blessing as regulation of independent political spending. In an ideal world, disclosure would allow voters to evaluate the interests behind attack ads and discount them accordingly; failing that, disclosure might deter mega-donors and corporations who shy away from the kind of publicity that George Soros or Target Corporation have received. In fact, political scientist Ray La Raja has found that the prospect of disclosure does turn away some donors at the margins. After the failure of the DISCLOSE Act, however, reformers have had to turn to stopgap solutions such as (unsuccessfully) lobbying the SEC to make corporations report their political activity to shareholders.
Alternatively, reformers could try to shepherd donors away from outside groups by making other potential recipients more attractive, and repealing limits on contributions to parties and candidates. Republican campaign lawyer Jan Baran has argued that the Bipartisan Campaign Reform Act of 2002 (better known as McCain-Feingold), which banned soft money, simply pushed major donors to outside groups. As a result, influence shifted from the parties to ideological groups, perhaps speeding up polarization. Baran clearly comes at the issue from a different perspective than the typical (progressive) reformer, who might share his concern about polarization but want a solution that addresses political inequality and “dependence corruption” as well. Still, Baran’s views are shared by some experts more sympathetic to the reform agenda, such as political scientist Jonathan Bernstein.
That said, those committed to campaign finance reform are unlikely to take the idea of repealing contribution limits seriously. For one thing, it doesn’t solve the problem of dark money–political spending by groups, such as 501(c)(4) nonprofits, that don’t disclose their donors. Even if all limits on contributions to parties and candidates were repealed, donors to dark money groups would presumably still want to stay anonymous, unless their preference for giving directly to parties and candidates is so strong that they’re willing to pay the price of having their names made public. Bernstein writes that, “without complex regulation, there’s a good chance that parties would never set up the secrecy infrastructure in the first place,” but that infrastructure already exists and is probably here to stay.
Reformers hoping to discourage outside spending itself, rather than contributions to outside groups, have also had their path blocked by the Supreme Court. The easiest way to deter outside spending is to set up a system in which outside money triggers an offsetting response. State laws that create such a trigger, however, were ruled unconstitutional in 2011’s McComish v. Bennett decision, which struck down an Arizona law providing public funding to candidates whose opponents exceeded a spending threshold. Subsequent proposals for deterring outside spending have had to work around this decision; Rep. Sarbanes’ bill, for example, makes additional public funding conditional on the total cost of the race, rather than spending by opponents.
Could the same effect be achieved without using tax dollars? Columbia professor and economics blogger Chris Blattman semi-facetiously suggested just such a private solution, which he called the “Mega PAC.” Armed with a few hundred million dollars, this PAC would set a per-candidate spending limit and announce that if any candidate’s super PAC exceeds the threshold, the Mega PAC will donate an offsetting amount to the super PAC associated with that candidate’s opponent. This plan has the advantage of being achievable with the support of just a few civic-minded billionaires, and if the deterrent is perfectly effective, the Mega PAC might not even have to spend any money.
Unfortunately, private attempts to combat outside spending still encounter the issue that shutting down one form of political spending tends to shunt it elsewhere. Outside money might simply migrate to state elections, for example, where it is already starting to show an impact. Pushing money from one venue to another can still be a good thing from a reformer’s perspective. For example, suppose that Jan Baran is right that banning soft money contributions to parties simply pushed that money to outside groups. Assuming that giving to outside groups is a less efficient means of buying influence and winning elections than giving to parties, banning soft money effectively functioned as a tax on mega-donors, forcing them to put in more money to achieve the same results. That’s why Blattman’s idea is worth considering, even if it won’t mean the end of big money in politics. But as long as the demand-side factors behind major political spending—deep-pocketed donors, polarized parties, and media-heavy campaigns—still exist, enterprising political operatives will find new vehicles to supply it.
In this way, debates about campaign finance parallel debates about economic inequality. Proposals that aim at the top end of the spectrum (taxing the wealthy, or placing limits on campaign contributions) poll well and appeal to our sense of fairness, but are difficult to implement because the wealthy have plenty of ways to move money around in response to regulation. As a result, reformers gravitate toward solutions that “raise the floor,” to use Jonathan Bernstein’s phrase. In economic terms, that might mean raising the minimum wage or instituting a basic income; in campaign finance, it means something like the Government by the People Act. Expect to see more reform efforts like this one for years to come.
Editor’s Note: The views expressed here in no way represent the Center for Responsive Politics, which takes no position on specific proposals for changes to the campaign finance system.
Image of Larry Lessig by Avelino Maestas.
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February 11, 2014
7 Min read time