Welfare for Politicians?: Taxpayer Financing of Campaigns

2. The Case against Taxpayer Financing:

A View from Massachusetts

Thomas M. Finneran

In 1998 a small part of the electorate in Massachusetts approved the so-called Clean Elections ballot initiative. This law established taxpayer financing for candidates for state office who agree to observe spending limits. The specific limits and funding vary according to the office in question. The law covers candidates for the six statewide offices (Governor, Lieutenant Governor, Attorney General, Treasurer, Secretary, and Auditor), the Governor’s Council, and the General Court (the Senate and the House of Representatives). The first election under the Clean Elections system took place in 2002. I have opposed this law for several reasons.

Public support for the so-called Clean Elections initiative is based on a raft of half-truths and illiberal theories. In general, the prevailing thought among those who support taxpayer-funded political campaigns can be summarized as follows: ‘‘Democracy is dying. The cancer that is killing it is the money in political campaigns. To restore democracy to health, we should inject more money into campaigns, albeit tax dollars, thereby leveling the playing field between incumbents and challengers to mute the effect of special interest donations.’’

My opposition to taxpayer-funded political campaigns is based on several arguments derived from more than 20 years of participation in electoral politics.

I reject the premise that democracy in Massachusetts or in theUnited States is dying.

I reject the premise that spending corrupts policymaking.

I believe that the vehicle designed to bring ‘‘reform’’ to Massachusetts democracy, the 1996 so-called Clean Elections law, is deeply flawed, with nearly nonexistent controls and laughably low barriers of entry.

I believe that ballot initiatives are dangerous in their simplistic and unamendable approach to complex issues, divorced from the realities of competing interests and choices, and corrosive of the constitutional framework of representative democracy.

Allow me to set out each argument in turn.

Democracy Lives

Proponents of taxpayer-funded political campaigns have argued that democracy is dying a slow death in the Commonwealth and across the nation. They base this claim on the dearth of contested House and Senate primary and general elections—supposedly due to the ability of incumbents to raise so-called ‘‘treasuries’’ of campaign donations to beat back challengers.

It should come as no surprise that there were fewer challenges to House seats in 2002 in Massachusetts than there were in the elections of 2000. The state budget had increased approximately 5 percent (nominally) over that time, providing ample opportunity for incumbent officials to fund new initiatives sought by the electorate and in many cases to bring state aid to their home districts. State funding for education, almost always the most popular public policy program among voters, has increased nearly $7 billion in the last 10 years alone. Add to that a record 42 tax cuts that have been passed by the House and Senate during the last 7 years, and perhaps it becomes easier to understand an election atmosphere that lacks outrage and impetus for change.

Put succinctly, incumbents are motivated toward reelection. Tending to a constituency is critically important to achieve reelection. Yet a candidate’s (or a body of candidates’) interest, desire, and ability to serve and satisfy constituent services is disregarded by reform advocates as being even partially responsible for reelecting incumbents. In truth, it would be disingenuous to assume that the electorate in Massachusetts is perfectly satisfied with their representatives and senators, and false to declare that this alone could contribute to a decrease in legislative contests. It is equally disingenuous, however, to completely disregard the effect of recent state spending and tax cuts as well as the ability of an individual elected official to acquire state aid for programs in his district. It seems these recent actions constitute a body of reasons that explain the reduction in political contests better than the elementary diagnosis of ‘‘political contributions’’ so freely thrown out during debate. In actual practice, challengers are primarily guided more by their perception of the incumbent’s ‘‘vulnerability’’ on key issues than by their own ability to raise money. Those who discover political vulnerability then find the means to fund the campaign. The breadth and depth of the perceived vulnerability will determine the amount raised.¹ Votes are not ‘‘bought.’’ Rather, they are found through the exposure of the political vulnerability and the proposal of alternatives. It is that process that is funded by campaign contributions.

It is also worthy of notice that reformers have paid no heed to the effect of redistricting, a wholly political process that typically gives preference to incumbent officials in the redrawing of district maps. The law does nothing to stop gerrymandering of districts on behalf of incumbents. To the contrary, the Voting Rights Act encourages majority-minority districts and allows those charged with redistricting to take political considerations such as party registration and voting patterns into account. Now, advanced computer software has made redistricting an even more precise process, thereby contributing to the success of incumbents.

Participation, Not Corruption

The advocates of taxpayer financing also assert that private campaign contributions are inherently corrupting. Absent from their claims is statistical evidence of any sort that might support their declarations that ‘‘corruptive’’ campaign contributions stymie electoral contests. They freely assert in the court of public opinion that campaign contributions are corrupting; and these claims go completely unchecked by the press and others. Auto insurance rates go up—blame that on the campaign contributions made by the auto insurance lobby. Electricity bills go up—blame that on the electric utility lobby. Prescription drug prices increase—blame that too on big pharmaceutical companies and their effect on the public policy by way of contributions to influential and pragmatic politicians. Yet there is no evidence for these libels nor is there any recognition of the broad array of social and economic factors that drive up the costs of the previously referenced products and services.

There is no evidence to support the supposed correlation between specific campaign contributions and changes in state laws or appropriations. It is malfeasant to make this false assumption without controlling for changes in demographics, positive changes in real incomes, changes in voter/candidate preferences and attitudes toward campaigns, the power of name recognition associated with incumbents, the relative success and popularity of incumbents, and absolute changes within districts caused by decennial redistricting. In my personal experience, greater economic opportunities in other industries, intrusive state ethics disclosure laws, a loss of privacy, and the aggressive growth of ambush journalism are all factors that potential candidates have cited as reasons for failing even to consider running for public offices.

Several professors from the Massachusetts Institute of Technology have recently concluded a statistical analysis of so-called political ‘‘rent-seeking,’’ which pointedly refutes the claim that campaign contributions by big business lobbyists have secured the public policy agenda of the nation.² Their results are stunning in that they statistically refute every claim made by advocates of taxpayer-funded campaigns. The professors specifically researched why there is such a huge discrepancy between the amounts of money contributed to federal political campaigns and the changes in federal appropriations. They concluded that the premise that campaign contributions are a form of rent seeking—that is, it is a marketplace where contributions ‘‘purchase’’ influence or votes—strains basic economic principles.

They concluded instead that campaign contributions are a form of political participation or consumption. They also determined that approximately 80 percent of political donations come from individuals who are more likely to participate in campaigns in other ways as well (for instance, canvassing voters or holding political signs). The authors go on to say that trends in aggregate spending over the last 100 years are explained entirely by growth in personal income, not in rent seeking. In other words, if there were a real expectation of a ‘‘fair return’’ for contributions, such contributions would track more closely—that is, increase—to increases in federal appropriations than to increases in personal growth.

Finally, the authors determined that campaign spending, as a percentage of national income, did not grow during the last nine decades of the 20th century—if anything it probably has fallen. Campaign contributions are not increasing out of control, as taxpayer-funded campaign advocates would have you believe. Although the study was about national political campaigns, the results are statistically significant and cannot be ignored. The authors’ findings can surely be extrapolated and used to further understand our political situation in Massachusetts. This challenges the general public discourse about reform.

Problems with the Law

Advocates for taxpayer-funded political campaigns have held up the so-called Clean Elections model as a cure for an allegedly ailing democracy. Yet little attention is paid to the ‘‘reform’’ itself, its potential for fraud, and its embedded perverse incentives that invite limited or one-issue candidates—those candidates who are normally weeded out by a regular election process.

In the 2002 election, the first year that the Clean Elections law was enacted and available for candidates for state office, at least one candidate did in fact cheat the system. Again, the incentives are perverse. Candidates must simply collect the required number of signatures and collect the required number of small donations and thereby qualify for several tens of thousands of dollars (in a legislative race) or millions of dollars (in a gubernatorial race) to be spent at their discretion to further their political agenda.

Shortcomings of Ballot Initiatives

My final argument against taxpayer-funded political campaigns is a more fundamental one: I appreciate and trust and respect the representative form of government set up by the Massachusetts Constitution in 1782. I believe that ballot referendums can be useful tools to guide the legislative process. But I also believe there is ample opportunity for mischief and abuse, especially when dealing with complex public policy matters. I find it unsettling to think that a small group or special interest can hijack a state’s legislative agenda via the ballot referendum.

The Clean Elections law illustrates why ballot questions are poor mechanisms for deciding complex issues. Funding of the Clean Elections advocacy group was provided by a small group of very wealthy, out-of-state donors. The gathering of the signatures required to achieve ballot placement was done by paid workers. The very question put to voters itself was deceptively misleading. Asking voters if they preferred ‘‘clean elections’’ (as opposed to preferring ‘‘dirty’’ elections?) is akin to seeking their views of motherhood and apple pie. In the 1998 state election, the Clean Elections referendum was successfully passed by the voters on the basis of such manipulative ballot language. The same measure was reworded and placed before the electorate again in 2002 and was easily defeated by the largest referendum margin in the state’s history. In contrast to 1998, the 2002 ballot language clearly and fairly described how tax revenues would be used to pay for political campaigns. In this corrected form, voters rejected that use of tax revenues and saw the Clean Elections issue for what it really was: a form of political welfare and a blatant misuse of public funds.

Advocates may make a Machiavellian argument that the ends might justify the taxpayer-funded means, but I find that to be weak, circular logic—logic that is debunked by a slew of one-issue candidates holding opposite positions on popular or important funding priorities. Such perversions of the referendum process have blossomed into a whole cottage industry of people eager to see their own special interests pursued, whether it be ‘‘clean’’ elections, animal rights, or socialized health care. As a result, the useful referendum measure has been hindered across many states. In Massachusetts, opposing certain ballot initiatives is deemed to be legislative leadership, while opposing certain others is vilified as democratic treason.

The Real Special Interests

Advocates for taxpayer financing in Massachusetts talk a lot about the alleged influence of special interests. But we should examine more closely those who are really making self-serving arguments.

The alleged public outcry for taxpayer-funded political campaigns has been coming from fringe activists whose demand for public funds is driven by the widespread resistance to their political agendas as well as by the refusal of private citizens to provide financial support for radical social and economic proposals. Ironically, it is doubtful that these same advocates for political and personal subsidies would support so enthusiastically this measure if libertarian, anti-tax, or pro-business candidates applied for Clean Elections funds to run for House and Senate seats. Alas, we are unlikely to enjoy such a spectacle of hypocrisy because the ideological inclination of these latter candidates is in strong opposition to public expenditures for private or personal objectives.

Advocates for taxpayer-funded campaigns are also strongly supported by the media, which also have a strong financial self-interest to see a Clean Elections–type law passed in this state. Most campaign contributions go to media enterprises in the form of political advertising, both in the print media and on the airwaves. A Clean Elections law would raise the amount of spending on such advertising to untold amounts, benefiting those specifically who claim the moral high ground on this issue.

Of course, one might present to the media a specific challenge to their editorial words and their corporate actions. If money in politics corrupts, then we should not infuse the process with more money (albeit ‘‘clean money’’). Better we should make it unnecessary to raise large treasuries in the first place. To wit, force news outlets, both print and electronic media, to offer free and equal political advertising in the name of good public policy. Ironically, this idea has not even been broached in our state, failing to be offered once in the newspapers or on television as a viable alternative to ‘‘improve’’ the electoral process. When a similar idea was put forward in Congress the media’s attack on it was predictably ferocious and self-serving.

Conclusion

Taxpayer funds spent on political campaigns—to buy balloons, bumper stickers, and buttons—are taxes diverted from other public policy initiatives. Tax expenditures for education, public safety, transportation, and certain forms of health care enjoy broad public support. Indeed, our present system of competitive and representative democracy has been remarkably successful in providing for the necessary health, education, and welfare of our citizens. Elected officials at all levels of government try to sift the incessant demand and clamor of claims on the public fisc to arrive at a mix and balance of interests and services. Our constitutional respect for individual liberty and freedom, as well as for private property and individual enterprise, have combined to give us the highest standard of living in the history of the world. That is no accident. Our political and economic systems have proved themselves over the long course of history. The hostile attacks of those who espouse different political and economic systems conveniently ignore the blessings of liberty and economic opportunity. They also conveniently overlook the toxic histories of nations, cultures, and systems that place the state at the center of society.

Notes

Academic studies confirm my observation. See Jay Goodliffe, ‘‘The Effect of War Chests on Challenger Entry in U.S. House Elections,’’American Journal of Political Science45 (2001): 830–44.

Stephen Ansolabehere, John M. de Figueiredo, and James M. Snyder Jr., ‘‘Why Is There So Little Money in U.S. Politics?’’Journal of Economic Perspectives17, no. 1 (Winter 2003): 105–30.

3. Three Lessons from Arizona

Chip Mellor

With high-blown rhetoric and promises to clean up corruption in elections, several states have passed a handful of campaign finance laws in recent years. Supporters of these laws hail them as the future of American politics. Yet experience to date should give all but the most partisan proponent reason to be wary of such a future. Indeed the lessons to be drawn from state experiments in campaign regulation reveal three consistent infirmities: (1) dubious constitutionality, (2) perverse incentives, and (3) chronic underfunding. Each of these alone denies the fundamental premises of campaign finance reform. Taken together, they constitute a fatally flawed intervention in electoral politics that threatens the very institution of American democracy. This article explores these three lessons and the real-world impact they have had in states that have led the way in campaign finance