Some problems with taxpayer-funded political campaigns.

• Author: Smith, Bradley A.

INTRODUCTION

If one were trying to identify the world's healthiest democracy, the United States--with its long history of peaceful transitions of power, independent judiciary, sound record in human rights, expansive personal liberties, low inflation and unemployment, balanced government budgets, high standard of living, and relatively low taxes--would seem as good a candidate as any. Despite this, for literally decades we have been bombarded with complaints and warnings that this democracy was fundamentally unhealthy due to its reliance on private funds to finance political campaigns. Given the long-term record though, I think it prudent to presume that we ought to retain our traditional, private system of campaign finance, and that a high burden of proof should be placed on those proposing radical change.

When all is said and done, the indictment of private financing of campaigns rests on two arguments: it violates equality and fosters corruption. The system is unequal because not every citizen can give the same amount and because not every candidate or party can raise the same amount. They lack "equal" influence. It is "corrupt" because officeholders might feel beholden either to those who gave them money in the last election or to those who might give them money in future elections. These officeholders will thus lose the ability to act freely in carrying out their duties: they are subject to "undue influence."

For these reasons, twentieth-century America has witnessed a steadily expanding set of rules and regulations aimed at controlling the raising and spending of private campaign funds. But these efforts to regulate the private system of campaign finance have failed to accomplish their objectives, in part due to mistaken assumptions about the effects of money in politics, in part due to poorly designed legislation, and in part due to the role of the federal courts, which have struck down many aspects of regulation on First Amendment grounds. In short, regulating the private campaign finance system has, so far, been a flop. Law has its limits.

Frustration with the failure of regulation to cure the alleged evils of a private finance system have contributed to intellectual support for financing all campaigns with tax dollars. Though this is usually called "public" funding, that term is a misnomer. Campaigns are funded by the public now--by hundreds of thousands, even millions of citizens who make voluntary contributions to various candidates and organizations. What is euphemistically called "public" funding actually means "government" funded campaigns, or "tax" funding of campaigns, and I will address it as such. Government-funded campaigns are attractive because they can potentially take monetary inequality out of the equation, and because, by eliminating the need for candidates to rely on private donors, they can free officeholders to ignore the wishes of these donors, presumably to act in accordance with the individual officeholder's own conception of the public good.

Part I of this Article addresses some of the difficult issues in designing a system of government financing, in the process pointing out some often overlooked advantages to a private finance system. Part II reexamines the more fundamental justifications behind the push for tax financing--the questions of equality and corruption. Part III questions whether, even if all of these concerns are addressed, we will actually accomplish anything by extending tax financing to congressional and senatorial races.

1. EASIER SAID THAN DONE: SOME DIFFICULT ISSUES FOR GOVERNMENT FINANCING

   To say that one favors government financing of campaigns is a bit like saying that one enjoys sports. Are we talking football? Kayaking? Downhill skiing? Ballroom dancing? Chess? The options are endless. Many people may favor government financing in principle, but oppose many, or even most, particular plans for government financing. Say, for example, one proposed a government financing plan providing that incumbents would receive twenty times the amount of money as challengers--I think it would have little support.(1) Thus, let me begin not by criticizing government financing, but by considering a few criteria by which any campaign finance system ought to be measured, and compare how well government-financed plans generally fulfill these criteria relative to private finance schemes.

   Here are my proposed criteria:(2)

   Administrability:. First, a system of campaign finance should be easy to administer.

   Flexibility:. Second, it should be flexible--able to adapt quickly to changing political environments, new technologies, and evolving campaign techniques.

   Opportunity: Third, it should, if not necessarily foster more candidacies and entries into politics by political newcomers, at least not overly discourage such challenges.

   Competitiveness. Fourth, it should, if not necessarily promote more competitive races, at least not overly insulate incumbents from challenge.

   Communication: Finally, it should provide candidates with adequate funds to communicate with and educate voters.

   For now, I will leave off of the list what are arguably the two most important criteria: the system should promote equality, and the system should insulate legislators from the influence of money (the "corruption" thesis). These I will take up in Part II. Readers who consider those to be the juicy questions in this debate can skip ahead. As for the five goals listed above, I do not know that this is by any means an exhaustive list, but it is certainly enough to get us started, and I think that most of these goals are relatively non-controversial. Although there are potential advantages for government-financed systems in meeting some of these criteria, in none of the five criteria listed above is it at all clear that government-financed systems are preferable to private ones.

   1. Administrability

      Campaign finance regulation creates compliance costs, both for government and for private political actors. Many systems will require substantial government resources to be devoted to monitoring and enforcement. A system that is too complex can create significant administrative, compliance, and funding difficulties for candidates, and this burden is likely to weigh heaviest on those candidates and groups which are new to political wars.(3)

      When it comes to ease of administration, no system can beat that of a private, unregulated system of funding, such as existed in all parts of the United States until very late in the nineteenth century, when laws regulating campaign finance first appeared. A completely unregulated system of campaign finance requires no government monitoring, auditing, or enforcement. There need be no federal agency of any kind entrusted with regulating the system.(4) Similarly, on the candidate side there is no need to devote resources to compliance, and recordkeeping can be done with the needs of the candidate, rather than government monitors, foremost in mind. Against a baseline of unregulated private finance, extending government financing to congressional races loses the test on ease of administration every time.

      We do not, however, have an unregulated system of private finance, but rather one that, at the federal level, is quite heavily regulated. It is unlikely that all regulation will end anytime soon; at a minimum, disclosure of private campaign contributions seems here to stay for the foreseeable future.(5) Thus, a system of government financing of congressional campaigns may actually reduce administrative costs from their current levels, though probably not to the level they would be in a deregulated system. From a government perspective, for example, the Federal Election Commission ("FEC") devotes far fewer resources to administration of the federal presidential campaign fund than to enforcement, audits, and disclosure.(6) At the congressional level, the lion's share of those enforcement, auditing, and disclosure costs are incurred because the system relies on regulated private financing. If a government financing system were established that succeeded in gaining the participation of most congressional candidates, and were sufficiently simple to administer, it might lower government administrative costs. Moreover, it might actually lower costs for candidates as well, particularly if it succeeded in getting candidates out of the time-consuming and expensive fundraising business altogether.

      Coming up with such a simple system is not so easy. For one thing, the Constitution, as correctly interpreted in Buckley v. Valeo,(7) prevents the government from simply requiring all candidates to take public funds and limiting candidates' private spending. Thus candidates must be drawn into, as this resolution puts it, "optional public financing" and "voluntary spending limits." This could probably be done with ease if we were willing to fund campaigns adequately from the government till. We could provide, for example, a major party Senate nominee in California with $30 million for the general election, a Senate nominee in Ohio with $8 million, or a House nominee in any district with $2 million or more. If we did, and such amounts were indexed for inflation, I suspect that most candidates would accept the government subsidy and the accompanying spending limit. Money, after all, has diminishing returns, and beyond the type of spending levels suggested above additional spending will not be expected to translate into many votes, if any. Candidates would probably find it worthwhile to take the money, accept the spending cap, and devote time to activities other than fundraising.(8)

      The problem is that we are not inclined to provide government financing at such lavish levels. For example, Annelise Anderson has estimated the cost of a reasonable communications program for a presidential campaign to be at least $600,000,000.(9) We presently provide major party presidential nominees with less...