The Corner

Campaign-Finance Fail

In Monday’s 5–4 decision in McComish v. Bennett, the Supreme Court struck down Arizona’s taxpayer funding for political campaigns. Surprisingly, the dissenting opinion by liberals on the Supreme Court conceded that traditional campaign-finance laws have failed. Speaking for the other liberal justices, Elena Kagan wrote:

[Campaign-finance laws] cap campaign contributions; require disclosure of substantial donations; and create an optional public financing program that gives candidates a fixed public subsidy if they refrain from private fundraising. But these measures do not work. . . . Simple disclosure fails to prevent shady dealing. . . . the State remains afflicted with corruption.

This concession is important because, despite the many obvious problems created by campaign-finance regulations, supporters have long justified them as eliminating corruption, or at least the appearance of corruption. Without that justification, one would think that even the liberal members of the Court would have had to strike down these traditional regulations.

To the liberal members of the court, the solution is to force candidates to participate in a publicly financed system — a system that penalizes any candidate who would spend more than a predetermined minimum amount, even if those additional expenditures were entirely financed by the candidate. But the liberal justices refuse to recognize that the ability to influence elections isn’t just limited to direct campaign expenditures. If donations to a candidate are banned, donors can give to independent organizations, ranging from unions to the NRA. How do you ban all political activity by third parties? Already liberals on the court have supported banning everything from books to movies, any activity that might support a candidate during an election.

Fortunately, last year in Citizens United v. Federal Election Commission, the Supreme Court rejected that claim. But even if the liberals could enforce those bans, it still wouldn’t have been enough. What happens when supporters buy newspapers or other media? The next logical step would be measuring the content of newspapers and television — would they be comfortable with that?

Justice Kagan and the other liberal justices believe that public financing promotes “a healthy, vibrant political system full of robust discussion and debate.” Yet, having politicians or voters pass up a chance to use campaign regulations to protect candidates they like is about as likely as politicians passing up the chance to gerrymander legislative districts. In this case, public financing entrenched incumbents.

The Arizona law effectively imposed campaign spending limits. The Constitution won’t let the governments ban candidates from raising money, so Arizona tried a less direct approach: Whenever a candidate raised more money than was provided by public financing, their opponents were given more taxpayer dollars to spend. This certainly discourages fundraising, which is actually a rather expensive activity. If a candidate is really lucky, raising $100 may take only $50 in fundraising costs. Only $50 is left over for real campaigning. Direct-mail fundraising is particularly costly for challengers and often ends up costing more money than is raised. There is little incentive to raise money if your opponent gets $100 without the cost and effort.

Obviously, the law was meant to discourage fundraising, and in effect forced everyone to take public financing and limited spending to the same amount per candidate. Such spending limits clearly favor incumbents, who thanks to their past campaigns and media coverage while in office are already much better known than their challengers. Take the extreme case: Suppose that campaign expenditure limits were set at zero. Voters would never get to know the lesser-known challenger and the incumbent would sail to reelection. The trick for incumbents, who pass these regulations, is to set limits so low that challengers never really overcome the incumbent’s reputational advantage.

With federal spending at $3.82 trillion, we really don’t spend very much on political campaigns. All the presidential candidates together spent about $1.8 billion on the 2008 race. Is it really that outrageous to spend an amount equal to about five hundredths of one percent of the federal government’s annual budget informing Americans what the candidates plan to spend the money on? Last year, Microsoft spent $400 million launching Windows Phone 7. Do you remember many of the ads? But two years earlier, John McCain took public financing and was limited to just $84 million in the general election.

In 1976, the Supreme Court ruled in Buckley v. Valeo that public financing was constitutional as long as candidates were free not to participate. But, as we have just seen, candidates aren’t free to do that. For each $50 or less they raise after fundraising costs, their opponent might get $100. Public financing and campaign-expenditure limits have been a disaster for competition. One need only look at the impact on presidential campaigns. Incumbent presidents rarely face serious primary challenges. That lets them save up their campaign funds until the challenger in the opposing party is selected. After a bruising primary battle, challengers are often already up against their spending limits. When the challenger finally captures the nomination, there is little money left to counter attacks from the sitting president. We have seen this time after time, in 1984, 1996, and 2004.

Hopefully, Americans will remember that Kagan wasn’t even arguing that things would have been worse without the traditional campaign-finance regulations. With liberal justices conceding that the traditional campaign-finance regulations have failed by their own standards, there is no remaining legal reason to continue them. Unfortunately, the rules have entrenched incumbents, reduced the number of challengers, and, with fewer contested races, reduced voter turnout.

John R. Lott Jr. is a contributor. He is an economist and author of the revised edition of More Guns, Less Crime (University of Chicago Press, 2010).


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