Sham Reform
The problem with Shays-Meehan.

By John Samples & Tom G. Palmer. John Samples directs the Center for Representative Government at the Cato Institute. Tom G. Palmer is senior fellow at Cato.
February 15, 2002 8:30 a.m.

he perennial effort to "reform" campaign finance took a big step forward in the House when the Shays-Meehan bill passed early Thursday morning. While the bill may still face a filibuster in the Senate by Mitch McConnell (R., Ky.), the chances are much better that new regulations on campaign finance will restrict participation in the 2003-2004 election cycle.

The sponsors of these new restrictions claim their bill is a bipartisan effort to rid Washington of corruption and to return government to the American people. They thereby appeal to Americans who are genuinely frustrated and worried about their nation. Unfortunately, Shays-Meehan is really a sham reform that will harm rather than revive American democracy.

Campaign-finance restrictions are presented as a bipartisan reform: Of the four sponsors of the legislation in the House and the Senate, two are Republicans and two are Democrats. Bipartisanship appeals to many Americans. It suggests campaign-finance reform transcends narrow partisan interests and advances the good of the nation.

The proposed restrictions are in fact structured to favor one party over the other.

This week, 18 percent of House Republicans voted for Shays-Meehan in the most crucial vote. 94 percent of House Democrats voted for the bill. This suggests that partisan interests, not the public interest, may have been at stake last night in the voting.

The underlying realities of campaign finance suggest why the final votes were so divided by party.

House Democrats have 70 million reasons to be in favor Shays-Meehan's ban on soft money. If the status quo in campaign finance were to prevail and current trends were to persist, the Republican party would raise $70 million more than the Democrats in soft money in the 2003-4 election cycle. Little wonder last year Rep. Dick Gephardt (D., Mo.) said of the Republicans and soft money: "They always raise more than we do….I don't think it's good for the political system. I know it's not good for the Democratic party." Ninety-four percent of House Democrats agreed this week.

This is not a partisan point. If the Republicans were looking at a $70 million gap, they too might be thinking up legislative remedies for fundraising shortfalls. Mere partisan squabbles, however, should not be passed off as a moral crusade to revive American democracy. Many Americans hope for a revival of faith in their leaders. The bitter truth about Shays-Meehan may betray that hope and undermine their faith in the political system.

Democracy, like the market, works well when voters have choices provided by competition. Campaign-finance regulations usually reduce competition, and Shays-Meehan is no different. Hard money goes overwhelmingly to incumbents. Parties often use soft money to fund challengers that have a chance to unseat an incumbent. The Cato Institute just published a study that shows limits on party contributions similar to the Shays-Meehan restrictions on soft money have made state elections less competitive. A ban on soft money means fewer challenges to incumbents in Congress and fewer choices for Americans at the polls.

Shays-Meehan also restricts independently financed political ads by business and labor unions; it also requires extensive disclosure of the funding for such ads by interest groups. A majority of Congress has decided to prohibit or to burden criticism of candidates for election when such advertising matters the most. It's hard to see how this part of the bill will pass constitutional muster.

The restrictions on broadcast ads are partisan: They protect the only party represented in Congress, the Incumbent party. In the election of 2000, many members of Congress were attacked by television ads paid for by soft money. Shays-Meehan protects incumbents directly from the discomfort of similar criticism in 2004. Some of the ads may have been unfair and false. But so were many newspaper articles and editorials. The First Amendment does not say Congress may make laws restricting unfair and false speech. It says, "Congress shall make no law…."

Restrictions on campaign finance are unlikely to lead to cleaner government or to diminish the power of special interests. Judging by previous restrictions on campaign finance, they are more likely to entrench the incumbent party and to be used as yet another tool for partisan interests. The American people deserve better.