The rich are dominating campaigns. Here’s why that’s about to get worse.

April 23

 


Republican activist Shaun McCutcheon, of Hoover, Ala. walks past the Capitol in Washington as he leaves the Supreme Court on Oct. 8, 2013, after the court’s hearing on campaign finance. (Susan Walsh/ AP)

This is the first of two guest posts by Stanford political scientist Adam Bonica and lawyer Jenny Shen about the recent McCutcheon v. FEC decision.

In McCutcheon v. FEC, the Supreme Court struck down limits on the total amount individuals can donate to candidates and committees in federal elections. The key question is how this decision will reshape political fundraising. By looking at how a small group of wealthy donors has behaved in the past, we can get a sense of why the ruling matters, how much it matters, and who stands to benefit the most.

Most observers have predicted that the McCutcheon ruling will increase money in politics. And it will. But this isn’t in itself a concern. Much of the growth in campaign donations over the past three decades derives from a massive expansion in the number of individuals contributing to campaigns. This is arguably a positive development. What really is at stake is McCutcheon’s effect on political inequality.

Even as contributing to campaigns has become more widespread, it has become more concentrated. In a recent study, Bonica, McCarty, Poole and Rosenthal examined rising inequality in income and political donations by comparing the income share of the top 0.01 percent of households with the share of campaign contributions made by the top 0.01 percent of the voting age population (a total of only 24,092 individuals in 2012).


Campaign contributions are about 10 times as concentrated as income. Moreover, as both income and campaign contributions have become more concentrated in the top 0.01 percent, inequality in campaign contributions have needed to grow at ten times the rate of income growth — that is, each 1 percent increase in the top 0.01 percent share of income needed to be matched by a 10 percent increase in the top 0.01 percent share of contributions. The ruling in McCutcheon makes it that much more likely that this trend will continue unabated.

Past changes in the aggregate biennial limits also help us predict how McCutcheon will impact donations. For example, the aggregate biennial limit nearly doubled before the 2004 election, from $50,000 to $95,000, following the passage of the Bipartisan Campaign Reform Act in 2002. In the 2004 cycle, 3,547 donors contributed in excess of $50,000. Their donations sum to $164.8 million, none of which would have, in theory, been permissible prior to the change. This accounted for over half of the growth in the top 0.01 percent’s share of contributions between 2002 and 2004, with the remainder of the growth due to increased giving to 527s.

McCutcheon’s effect on political inequality will be at least as large. It could be even more pronounced if candidates and parties begin to actively court these mega-donors, just as they learned to court bundlers.

At the same time, it’s important to remember that the McCutcheon decision is not a sharp break from the past. The barriers to giving unlimited amounts have never been as formidable as we often like to think. Before McCutcheon, there were super PACs, 527s, and soft money for political parties.

Moreover, the aggregate biennial limits struck down by McCutcheon were only nominally enforced by the Federal Election Commission. Ironically, McCutcheon could likely have given to as many candidates as he pleased without any repercussions. (Recall that McCutcheon initiated the case against the FEC, not the other way around.) Congress had never provided the FEC with effective means to enforce limits. The FEC could only publicize the aggregate biennial limits and promote self-compliance.

Nevertheless, there is still good reason to enact meaningful campaign finance reform. Given ongoing resistance to the DISCLOSE Act, perhaps the most promising proposal at the moment is John Sarbanes’ (D-Md.) Grassroots Democracy Act, designed to promote fundraising from small donors. Although small donors can have a polarizing influence, thoughtfully crafted legislation could counteract this by providing vouchers to voters, thereby broadening the population of donors. And unlike with the DISCLOSE Act, many Republicans in Congress could benefit from legislation designed to promote small donors, even if they have yet to realize it.

(Our next post will address who stands to benefit the most from the McCutcheon decision.)

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