A Modest Proposal for Campaign Finance Reform

The following post is quite long--be forewarned.

Traditionally, campaign finance laws have been justified under the guise of prevent corruption or the appearance of corruption. Today, the concept has been carried forward by so-called "reformers" to include the concept of "circumvention," meaning that money men and women will look for ways around the laws. The fact that circumvention might happed does not take a great leap of congnition.

The problem with the current campaign finance system is not special interest money. Here are some facts.

• In 1976, when the Federal Election Campaign Act as upheld by the Supreme Court in Buckely v. Valeo first applied to federal campaigns the average cost of a campaign for the House of Representatives was just over $80,000. The maximum PAC contribution of $10,000 ($5,000 for the primary and $5,000 for the general election) comprised about 13% of a campaigns budget.


• In 2004, the average House campaign was $534,200 (this is for all candidates), meaning that a $10,000 contribution from a PAC comprised just 1.8% of their budget.

The simple fact remains, the impact of the special interest dollar is far less today that it was 30 years ago when campaign finance law really took effect. So the reform community really can't argue with the financially reduced impact of PAC or special interest money--even when pooled together. Furthermore, according the FEC statistics, "Contributions from individuals totaled $613 million and continue to be the largest source of receipts for Congressional candidates, representing 62% of all fundraising." (note that the FEC includes Senate races in those totals).

Is the problem money in general? Perhaps, but a greater concern should not be money in general, but the distrbution of money in the system. In most of my examples, I will be using House of Representatives data from 2004 because it is relatively recent and House races are roughly equal. While some district face higher advertising costs, those districts tend to be much more compact, making travel cheaper. For more geographcially large districts, the advertising costs are smaller, but travel costs are higher. In the end, the average house campaign is roughly equal in population and general costs.

• Incumbents by far reap among the $613.8 million dollars raised by House candidates in 2004, incumbents received $445.9 million or 72% of the money and that was not for 435 candidates, but 405 incumbents, an average of $1.1 million per incumbent.


• Challengers to incumbents garner far less funds, just $91.7 million or just shy of 15% of funds. For the 650 challenger candidates running for the House 2004, that equates to an average of $141,000 per candidates or a little more than 10% of the average incumbent war chest.


• Open seat candidates gathered the remaining 13% of funds, totaling $76.2 million. But spread over just 94 candidates, the average open seat House candidate raised $810,000--a competitive sum.

As a result of the vast inequties of funding distrubution, open seat and challengers tend to rely on their own sources of funding, in the form of candidate contributions and loans from the candidates themselves. For all House candidates in 2004, candidate contributions and loans totaled $25.7 million or just over 4% of all sources of funding. But in 2004, incumbents turned to themselves for just $1.38 million of the $25.7 million. Meaning that candidate contributions to incumbent races equated to just 0.3% of funds raised by incumbents.

On the other hand, challengers went to their own pockets for $14.94 million, representing 16.3 percent of their funding. Open seat candidates raided their own piggy banks for $9.39 million, which comprises 12.3% of their fundraising. Open seat and challengers must spend of their own funds regularly just to compete. Adding insult to injury, Congress enacted the Millionaire's Amendment, which grants candidates facing self-funded candidates the right to raise funds under increased limits. Since, as we have seen, incumbent rarely self-fund, the candidates most likely to benefit from the Millionaire's Amendment increased limits are incumbents, further exacerbating the funding inequities.

So what can be done to relieve the funding inequities in congressional campaigns. One proposal has been to institute some sort of public financing of campaigns with voluntary limits on spending in order to obtain the public funds. However, the need for money in campaigns may far outstrip the willingness of taxpayers to support the system. Furthermore, I would object to having my tax dollars spent to enable someone to get elected.

Expenditure limits have been expressly struck down by the courts as violative of First Amendment rights. But oddly enough limits on receipts are okay. The Buckley logic still escapes me since the disclosure regime would ensure that candidates pass the "red-face" test on all contributions. Large contributions from individuals would have to be explained--something neither the candidate or the contributor may be willing to do.

However, what if the window of fundraising were limited. Already many states have a prohibition on fundraising during the legislative session. Clearly, limiting fundraising to periods when Congress is in recess would not work in a national legislature generally in session all the time. But what if the fundraising time for all candidates was limited in time by some other mechanism. Now the heart of the proposal.

I propose the passage of legislation that would:

• Ban the raising of all funds for re-election or election campaigns until Jan. 1 of the year of the general election. Essentially, fundraising for campaigns would take place only in even numbered years.


• Prohibit the carrying over of funds from previous elections. One common means to scaring off challengers is have a big bank balance, if all candidates have to start at zero or some de minimis amount, like $10,000 or so, the early funding advantage for incumbents is eliminated.


• Those who are elected and have debts may raise funds to pay down the debts, but no more until the start of the next even numbered year.


• For those who are elected, the candidate must dispose of excess campaign funds by March 31 of the following year in the means currently allowed, usually throught contribution to party committees or charities.


• Special election fundraising can only begin when the governor declares the vacancy and all candidates must start from scratch.


• Political parties and PACs would be able to continue to raise funds at all times.


• Allowances for Presidential campaigns can be made, allowing fundraising to begin fundraising earlier.

This proposal does not completely elminiate the incumbent advantage since incumbents will still be able to command more from PACs and other contributors, but it does eliminate a significant advantage available to incumbents--fundraising during the off-year to build a treasury to scare off challengers. With everyone starting at zero, or close to it, the playing field is leveled to a good extent. The limited fundraising window may also serve to increase the competitiveness of elections, allowing candidates who otherwise would be so far behind in the fundraising competition that they simply do not enter the race.

Money is the life-blood of politics, it cannot be escaped and the efforts of reform groups to eliminate money from politics engage in a quixotic quest. The lack of turnover in Congress is also troubling, this proposal may not be the ultimate solution, but it is a start to try to truly level the playing field.