To supporters, the McCain-Feingold campaign-finance reform merely fills in the loopholes in previous campaign-finance laws. Yet, like other government attempts at central planning, the law is incredibly complicated and results in unintended consequences. A special three-judge district court felt it necessary to issue an unheard of 1,600-page opinion on it. To try to sort things out, the Supreme Court will today consider four hours of oral arguments, longer than any other hearing since the last major campaign-finance law was argued there in November 1975.
The new law seems to cover just about everything. It restricts how much parties can give to candidates and what can be given to political parties. Contributions by minors are banned. Limits on individual contributions are being raised, but they are now adjusted by a formula that penalizes wealthy candidates from spending their own money. The law limits or bans advertising by outside groups, when the group mentions the name of candidates for federal office within 60 days of a general election or within 30 days of a primary. Even when politicians can appear at fundraisers is regulated.
Supporters predict that all these rules will reduce money’s role in politics and make elections more competitive, reduce corruption, and encourage more people to vote. Of course, this is what was predicted for past campaign-finance regulations. But instead of getting better, things have gotten worse.
Donation limits entrench incumbents, who can rely on voters’ greater familiarity with them as well as use government resources to help them campaign and generate news coverage. It is very difficult for challengers to raise a large number of small donations. Incumbents are at an advantage here, as they have had years to put together long mailing lists and make contacts. Allowing large donations would make it easier for newcomers to raise large sums from only a few sources. The long start required for fundraising means that if a candidate falters, it is virtually impossible for other candidates to enter in at the last moment.
Election data since World War II shows the impact of these rules. Prior to 1976, when donation limits began, House members lost 12 percent of their races; after 1976, it was just 6 percent. And senators moved from a 24-percent loss rate to 19 percent.
Research I did of state donation limits on all state-senate primary and general-election races, with data covering 1984 through the 2002 primaries, analyzed the impact of state regulations that are similar to those in McCain-Feingold. The regulations raised incumbents’ winning vote margin by at least four percentage points and the number of state-senate candidates running for office fell by an average of about 20 percent.
Rules that limit the help that parties can offer new candidates provide the greatest incumbent protection. Unknown challengers are usually highly dependent on party support.
For the U.S. House and Senate from 1984 to 2000, challengers in the House received a four-times greater share of their money than incumbents from their parties. In the Senate, challengers were about twice as dependent. Republican challengers were also more dependent on this help than Democrats. And the research on state-senate races shows that restrictions on party donations produce the biggest increases in incumbent win margins.
The 1974 reforms did nothing to stop the growth in campaign spending. McCain-Feingold will be no more successful. Regulations may change how the money is spent, such as moving it from the candidates to independent groups, but the total amount spent depends upon what is at stake. As government grows, the importance of winning office increases and so does spending.
When given a chance, donors would much prefer to give their donations to the candidate directly rather than to an independent organization simply because it provides a more consistent message to voters. Uncoordinated independent expenditures educate voters less per dollar spent.
With regulations, the possible loopholes are endless. Suppose independent groups were completely banned. Would that stop money from being spent on elections? Obviously not. Instead of political contributions, wealthy individuals or organizations can buy radio and television stations or newspapers. Unless the First Amendment is completely gutted, there is no way to regulate the number of favorable news stories given to different candidates.
Hillary Clinton has also shown the way this year on another loophole. Should Simon and Schuster’s promotional budget for her book be counted as a campaign donation? Undoubtedly, the money made Clinton appear to be a more-attractive presidential candidate. John McCain likewise benefited from a book tour for Faith of My Fathers, his book that came out the fall before the 2000 primaries. Yet, no one thus far has proposed that politicians cannot write and promote books.
Under Buckley v. Valeo, the Supreme Court held that the only permissible constitutional basis for government regulation was concern over the appearance or incidence of corruption. Yet, the government’s defense of McCain-Feingold basically relies on hard to interpret anecdotal evidence.
In passing the McCain-Feingold campaign-finance regulations, public-interest groups, and the press insist that donors supposedly only give money to politicians to bribe them. There is little doubt that campaign contributions and voting records often go together. But few mention that donors may be giving to candidates for another reason: They share that candidate’s views.
Fortunately, we can separate out these two motives. Consider a retiring politician. He has little reason to honor any “bribes,” for reelection is no longer an issue. Even if earlier there were corrupting influences from donations, the politician would now have freedom to vote according to his own preferences. Therefore, if contributions indeed bribe politicians to vote against their beliefs, there ought to be a change in the voting record when the politicians decide to retire.
Yet, this proves not to be the case. Together with Steve Bronars of the University of Texas, I have examined the voting records of the 731 congressmen who held office for at least two terms during the 1975 to 1990 period. We found that retiring congressmen continued voting the same way as they did previously, even after accounting for what they do after their retirement or focusing on their voting after they announce their retirement.
Despite retiring politicians only receiving 15 percent of their preceding term’s political-action committee (PAC) contributions, their voting pattern remains virtually the same: on average, they only alter their votes during their last term on only one out of every 450 votes. And even then it is the opposite of what the “bribing” theory would predict.
The voting records also reveal that, over their entire careers, politicians are extremely consistent in how they vote. Those who are the most conservative or liberal during their first terms are still ranked that way when they retire. Thus the young politician who does not yet receive money from a PAC does not suddenly change when that organization starts supporting him.
The data thus indicate that politicians vote according to their beliefs, and supporters are giving money to candidates who share their beliefs on important issues.
A reputation for sticking to certain values is important to politicians. This is why political ads often attack policy “flip-flops” by the opponent — if a politician merely tells people what they want to hear, voters lack assurance that he will vote for and push that policy when he no longer seeks reelection. Voters actually trust politicians who show a genuine passion for the issues.
If donations were really necessary to keep politicians in line, why would individual donors ever give money to a politician who is running for office for the last time?
Some point to PACs or corporations giving money to competing candidates in the same races as evidence of influence buying, but this claim is based upon a mistaken understanding of the data. The vast majority of PACs are banned by their charters from giving money to both sides in a race. The few exceptions occur when their own members are in races and the PAC feels obligated to encourage members to run for office. The confusion over the numbers often comes about because donations during primaries are often lumped together with donations made during a general election. Yet, while a PAC wants to try to get the best Republican and Democrat selected in their primaries, they will only support one of them in the general election.
Similar confusion exists over corporate donations. Corporations don’t give money to candidates. What happens is that the people who work for corporations give the money and it is not surprising that some people who work for a company like Republicans and others like Democrats. It makes no sense to say that the “company” is supporting both sides.
Despite all the rhetoric, past federal and state regulations have only succeeded in protecting incumbents from competition and divorced voters further from the political process. We shouldn’t expect a different outcome this time.
— John Lott, a resident scholar at the American Enterprise Institute, served as an unpaid expert witness for the plaintiffs in the McCain-Feingold case.