‘Fixing’ campaign finance is only making it worse

May 12

There are plenty of reasons one might want to limit the amount of money spent on political campaigns. Some are concerned that too much money in elections runs the risk of corrupting elected officials; perhaps you can really buy their votes with enough money. Others worry that spending by parties and their allies can make candidates too dependent upon partisan money, undermining their independent judgment and enhancing polarization. Still others simply worry that the amount of money being spent is unsavory, even obscene, and would be better spent on almost any other activity.

Regardless of what motivates it, campaign finance reform, coming in various incarnations and across various levels of government over the years, has been almost uniformly a failure. To be sure, the advent of financial disclosure has been a help to political watchdogs and election observers. But the overall attempt to limit the role of money in elections has simply not worked. Ever more money is spent with each election cycle. Indeed, spending in federal elections has increased at roughly 10 times the rate of inflation since the late 1990s.

Reformers might nonetheless take heart — yes, creative donors and parties are able to adapt to new campaign finance laws, but at least we’re doing something, and we might just be getting closer to that reform that actually does stem the growth of campaign money. But creating these laws is not a costless exercise. Limits on donations actually create more problems for democracy by undermining transparency and accountability.

For example, look at Colorado’s experience in the wake of Amendment 27, a campaign finance reform initiative that voters passed in 2002 in part to limit the influence of parties in state legislative elections. As described in the book “The Blueprint”, a wealthy group of liberal activists worked with the state’s Democratic Party to create a network of 527s and independent expenditure committees to channel millions of dollars toward competitive races where previously only thousands had been spent. The gambit worked; Democrats managed to take over the statehouse in 2004, the same year that Bush won the presidential race in that state. But not only had state legislative races seen more money than ever before, it was now profoundly harder to trace that money. Transactions that had once taken place solely between donors and candidates now involved multiple actors with only minimal reporting requirements.

Denver Post reporter Karen Crummy attempted to chart out the path of money between donors, 527s, candidates, and other interested groups in Colorado’s 2010 state legislative races. The results, which she estimates took her about 100 hours to compile, can be seen in the chart below.

Main 527s supporting Democratic state legislative campaigns in Colorado in 2010. (Karen Crummy/Denver Post)
Main 527s supporting Democratic state legislative campaigns in Colorado in 2010. (Karen Crummy/Denver Post)

The basic interpretation here is that campaign finance has become hopelessly complicated. Any semblance of transparency is gone; if you want to know who is supporting a particular candidate today, that question is largely unanswerable.

This is true at the federal level, as well. Innovative political actors responded to the restrictions of 2002′s Bipartisan Campaign Reform Act (BCRA) by generating new financing structures that got around the rules. In 2012, roughly one in every five dollars spent on a federal campaign was “outside” money, spent to influence elections but largely untraceable.

This isn’t to say that laws are irrelevant or that they’re being broken. Indeed, donors are paying close attention to the laws to figure out how to get their money to the campaigns that need them without running afoul of authorities. It’s just that donations used to proceed directly from a donor to a needy candidate and we had a record of it. You can put a wall between them, but donors still want to give money and candidates still want to spend it, so they’ll figure out a way to get the money to where they want it to go.

Many may find current levels of campaign spending problematic. But continued efforts to simply set limits on it will likely end like the previous ones, with even more money being spent in even less transparent ways.

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Erik Voeten · May 12