A Better Way To Do Campaign Finance Reform

~by Dan Miller

Elias wrote a great post about campaign finance reform, and I think it raised some important issues.  But I think this discussion–like most discussions of campaign finance–missed a key point.  Many people believe that any significant restriction on campaign finance is necessarily a huge imposition on freedom of speech, and strikes at the very heart of the first amendment.  Another large group of people believes that the wealthy and connected abuse the campaign finance system to essentially bribe politicians and secure unfair advantage for themselves, and that this represents a breakdown of government that needs to be rectified.  Both sides have a point.  But I believe there’s a way to satisfy both liberals and libertarians, and increase the quality of our politics to boot.  The key is to realize that electoral spending is pretty damn insignificant in the context of the governmental budget.

For starters, I think we should concede the obvious: a lot of current campaign “donations” are investments in disguise.  Boeing gave $31,750 to Buck McKeon (R-CA) and $20,000 to Norm Dicks (D-WA) because they’re high-ranking members of defense committees, not out of some principled support for the ideological stances of either.  Dicks and McKeon solicited that money because it will help them win election and gain influence, and Boeing gave it to them because it thinks it will make more money in the long run than not giving it.  It’s a business expense, same as a corporate retreat or any other expenditure (even if we can’t trace any specific action on the part of the Congresscritters in question to any specific donation, just like we can’t credit any particular dollar in Boeing’s profits to the team-building exercises on the retreat).  Even large donations that are made to sincerely advance a candidate’s ideology–like those from an Adelson or a Soros–reflect wealth buying inordinate political power.  And inequality in the political sphere is troubling in a way that inequality in Bentley consumption is not.  Hopefully this is all still relatively non-controversial.

So there’s a demand for this money–from lawmakers who are desperate for cash, and in a position of power over potential donors–and a supply of it, from donors who frequently see massive returns on their spending,r simply have more money than they know what to do with (Adelson et al).  Until now, most of the efforts have been focused on trying to reduce the supply of cash.  Limit contributions to candidates! Get rid of super PACs! But it’s clear this strategy has reached the end of its rope.  Citizens United and the like have basically gutted the post-2002 campaign finance regime.  And even if that ruling were to be overturned, as a civil libertarian I get extremely nervous about regulations that get that close to the core of the First Amendment, even if they’re done with the best of intentions.  It’s the equivalent of risky brain surgery on democracy, not a first-best outcome.

Luckily, there’s a better option.  Rather than focusing on supply, we can focus on demand.  Politicians want money to win elections and influence colleagues; but they’re not picky about where it comes from.  If we can introduce significant sources of money into politics that are less inherently corrupting than Boeing, we can dilute its influence.  To introduce some numbers: in 2010, total spending by all federal candidates was $4 billion.  Presidential years will obviously be more expensive–let’s say $6 billion for a presidential cycle, or about $1 billion for each major party candidate plus all the Congressional spending.  That works out to $10 billion over a 4-year cycle, or about $2.5 billion/year.  If we were to introduce double this level of spending ($5 billion/year), it would amount to a significant program, but certainly not one that would break the bank–it’s simply not comparable to new entitlement programs, tax cuts, projected defense increases, or any other truly big-ticket government expenditure.  However, it would have a massive impact on the amount and source of funds that are available to politicians.  It would make it possible to run a competitive campaign without needing signoff from the hyperrich or the corporate boardroom.  It would finally bring about detente in the campaign finance wars.

How can we introduce this kind of money into the political system? There are a bunch of options.  Matching funds for small donors.  A Voting With Dollars scheme where every citizen is given the ability to channel donations to the candidates or political groups of their choice.  Whatever.  The Roberts court has placed some restrictions on how public financing can be disbursed, but it’s pretty easy to design a system or systems that works within these restrictions.  And doing so would increase political equality, allow a slew of voices into the political system that are currently muted, and not hamper anyone’s right to free speech.  The downside from a libertarian perspective would of course be the expenditure, but I think it’s easy to argue that the benefits of such a scheme would outweigh the (fairly minimal) costs.  And from a liberal perspective, this offers a way forward on campaign finance reform that has much less chance of being shot down by the courts or impinging on free speech.

What do you think?