A Test of the Structure of PAC Contracts: An Analysis of House Gun Control Votes in the 1980s.

• Author: McGarrity, Joseph P.
• Position: Political action committees

Joseph P. McGarrity [*]

Daniel Sutter [+]

We examine roll call votes on gun control in the U.S. House of Representatives during the 1980s to determine whether political action committees (PACs) make spot market purchases, prepay for votes in the prior election cycle, or make long-term investments. Previous tests generally employ PAC contributions from only one cycle, which could impose the wrong structure on contracts between PACs and politicians, causing researchers to misestimate a contribution's impact. We find that money from more than one election cycle influences roll call votes, which suggests that PAC expenditures are not simple spot market or one-period prepayment contracts. Most remarkably, we find that the National Rifle Association buys votes with contributions from three election cycles.

Enactment of the bill was a major victory for the National Rifle Association, which had worked for years to win relaxation of the landmark Gun Control Act of 1968.

Congressional Quarterly Almanac (1986, p. 82)

1. Introduction

   Every election the same political action committees (PACs) contribute millions of dollars to candidates for office. Well-informed participants in the political process surely must get value for their money. Yet empirical research fails to provide systematic evidence that campaign contributions influence congressional roll call votes. [1]

   A mischaracterization of the exchange between PACs and politicians may produce these contradictory results. Empirical studies of roll call voting typically use PAC contributions from only one election cycle. Earlier studies generally assume prepayment in the prior Congress, while more contemporary studies assume a spot exchange. Recent empirical work, however, suggests another possibility: Interest groups may buy current influence with money spent over multiple election cycles. Stratmann (1995) shows that contributions from both the current and the previous election cycles influence floor votes on agricultural price supports. Snyder (1990, 1992) presents evidence that interest groups make long-term investments in politicians. Previous studies, by arbitrarily imposing a payment structure, may have produced erroneous estimates of the influence of PAC money on legislative votes.

   We examine roll call votes on gun control in the U.S. House of Representatives during the 1980s to determine whether PACs make spot market purchases, prepay for votes in the prior election cycle, or make long-term investments. We investigate whether PAC contributions have a durable, long-term investment effect, as Snyder (1992) suggests. We consider two types of evidence concerning the campaign contribution contract. First, we examine the pattern of expenditures by the two dominant interest groups concerned with gun control: the National Rifle Association (NRA) and Hand Gun Control (HGC). Their expenditures provide strong evidence against the spot market exchange hypothesis: Both groups made significant expenditures in sessions of Congress in which no floor vote occurred. Nor were these expenditures purchasing services such as committee work in a spot market exchange. Further, 1986 NRA expenditures are significantly higher for first-term representatives, which is consistent with long-term investments but con tradicts a spot exchange (since freshmen have the least influence to sell).

   Second, we include expenditures from both the current and the five previous election cycles as separate independent variables in a model of roll call voting. To date, no empirical paper tests whether PAC money from more than two cycles influences roll call voting, and only Stratmann (1995) and Grenzke (1989) use a model that specifies money from more than one cycle in an equation explaining roll call votes. Our probit estimates indicate that NRA expenditures in the three most recent election cycles and HOC expenditures in the two most recent cycles buy votes. The independent effect of expenditures from different cycles suggests that contributions are neither an unqualified one-session prepayment nor a spot exchange. The influence of NRA expenditures two sessions prior to the roll call votes is evidence of a long-term investment.

   The literature on the determinants of roll call voting assumes that PAC contributions alter representatives' votes. Interest groups might instead simply provide campaign assistance to their supporters to affect the composition of Congress (Stratmann 1991; Bronars and Lott 1997). If a difficult to quantify variable (and thus omitted from regressions) signals a representative's true position and interest groups make campaign contributions on the basis of this variable, PAC contributions might appear to influence votes. The pattern of contributions and votes on gun control, however, indicates attempts by the NRA and HGC to influence votes, not merely the composition of Congress. In particular, neither group targeted contributions to supporters in greatest electoral danger, and almost 60 representatives switched their position on gun control between 1986 and 1988.

   We proceed as follows. Section 2 discusses the advantages of the three different payment plans and the appropriateness of gun control as an issue for distinguishing between these alternatives. Section 3 specifies our econometric model of roll call voting. Section 4 examines evidence from the pattern of PAC contributions. Section 5 presents our econometric results. Section 6 contains stability tests of our model that provide evidence that the NRA and HGC are not primarily buying services other than floor votes. Section 7 considers the issue of reverse causality. Section 8 concludes.

2. Alternative Payment Plans for Buying Votes

   Incumbent legislators seek to win reelection. Legislators can use a roll call vote to directly attract constituent support or to secure contributions that might indirectly win votes by funding campaign activities. In a world of imperfect information, legislators must advertise those acts that benefit their constituents. Voting against constituent interests improves reelection prospects if the expected number of votes lost because of this roll call is less than the positive impact of campaigning. Constituency interests determine the representative's reservation price for a roll call vote, and at least some representatives should be willing to trade their votes for a modest contribution. [2]

   What type of payment scheme will interest groups employ in making contributions to politicians? Each of the three arrangements has beneficial properties. The simplest exchange involves PACs and representatives transacting in a spot market, trading roll call votes for contributions in the present election cycle. In such a trade, expenditures in the 1997-1998 cycle influence a 1998 vote. Advantages of a spot market exchange stem from potentially high transaction costs in a political market. The lack of court enforcement subjects political bargains to opportunism. A spot market allows a nearly simultaneous exchange, reducing the ability of one party to renege after the other performs.

   Alternatively, a single payment for a current House vote could occur in the immediately previous election cycle. Prepayment allows interest groups to influence both the composition of the Congress that casts the roll call vote and the candidates' announced positions (Stratmann 1991). Political deals involving prepayment must be self-enforcing. Reputation effects may suffice to prevent a politician from accepting prepayment and then reneging on the promised vote. [3]

   Prepayment allows representatives to access contributions by selling future votes today. The money can be used to deal with immediate challengers or banked in the campaign war chest to deter potential competition. Selling commitments on possible votes in the next session benefits congressmen by smoothing out their contributions. Of course, a PAC will not pay the full value of a vote since the issue may not come to the floor. The payment will not exceed the product of the vote's value if cast, the probability a vote occurs, and the probability the candidate wins the intervening election. Since a floor vote can occur in any future Congress, a PAC will make a contribution each session. With spot exchanges, only interest groups concerned with the issues brought to a vote in a particular Congress make contributions, which consequently may vary enormously between sessions.

   The third option entails purchasing a vote with several payments. Long-term investment buys votes occurring in future sessions on the "installment plan." Investments, like a one-session prepayment, also smooth out contributions. Furthermore, PACS may need to spread their payments over several sessions if campaign finance laws set the limit for the maximum contribution at less than the price of a legislator's vote. [4] Long-term contracts further separate payment from delivery, however, and so increase the potential for opportunistic behavior. However, Snyder argues that "since this self-enforcement must be based on something like trust or reputation, it is not obvious that the long-term contract is much more difficult to sustain than the short-term one" (1992, p. 18). Long-term investments are subject to electoral attrition: A representative you contribute to now may be defeated (or retire) before he can reciprocate. [5]

   The structure that best characterizes exchanges in the roll call market is an empirical question. Studies typically assume either prepayment or a spot market purchase and implicitly ignore the installment plan alternative. The absence of econometric evidence for the payment arrangement employed effectively renders the choice arbitrary. Specifying the wrong payment scheme may yield an erroneous estimate of the influence of PAC money.

   Determining the form of PAC transactions when Congress votes on an issue each session is practically impossible. Today's contribution may pay only for a...