Some days it seems that just about everyone wants to change the influence of money on politics, in one direction or another. Two recent high-profile Supreme Court cases — Citizens United v. FEC and McCutcheon v. FEC — let more people and entities contribute more money than in the past. Lawrence Lessig, a Harvard Law professor, is running for president primarily to talk about reforming campaign finance laws.
But here’s a question few seem to be asking: How would any changes affect the candidates we elect?
With campaigns getting increasingly expensive, candidates are spending a substantial amount of time fundraising. A famous political scientist, E.E. Schattschneider, once wrote, “He who can make the nominations is the owner of the party.” Given that lawmakers are intensely interested in being reelected, we’d expect them to be very attentive to the people who can keep them in office — their campaign donors.
Presumably, then, their donors’ interests and ideologies should matter to candidates a great deal. And any change in campaign finance regulations may very well change that relationship.
Here’s how. As I discovered in my new research, forthcoming at the Journal of Politics, lower contribution limits can lead either to more moderate legislatures or to more polarized legislatures. It all depends on what type of money is limited.
Who’s giving the money? Their motives matter.
To show this, I use a new dataset of campaign contribution limits in the various U.S. states. While contribution limits are constant across the country for candidates for the U.S. House or Senate, state legislative candidates face dramatically different contribution limits in the different states.
For example, Utah has no contribution limits; individuals and interest groups can give unlimited sums of money to state legislative candidates. But in neighboring Colorado, individuals may give state legislative candidates no more than $200.
Moreover, state contribution limits have changed over time. For example, California, Illinois, Missouri, and Ohio all used to allow unlimited contributions — but now impose contribution limits that range from $500 to $6,000.
By comparing what happens with these limits, I estimated how the state legislature changed when either individuals or interest groups could give them more money. When individuals can give more, the legislature gets more polarized, as lawmakers with more extreme views get elected. But when political action committees (PACs, or interest groups) can give more money, the legislature gets less polarized, as more moderate lawmakers get elected.
Why is there such a difference? The answer, I suggest, is that the different groups of donors give money with different motives.
Individual donors want more ideologically committed lawmakers.
Individual donors tend to care about candidates’ ideologies. And individual donors tend to be more ideologically extreme themselves.
The figure below shows the relationship between candidates’ ideologies and how much of their money comes from individual donors. The horizontal axis measures the ideology of candidates. Candidates at the left and right side of the graph have more extreme views, while candidates in the middle are more moderate. The “U” shaped relationship suggests that extreme candidates tend to get more of their money from individual donors. Allowing these individual donors to give more helps candidates at the extremes.
Interest groups just want to be able to work with the lawmakers.
On the other hand, interest groups tend to worry less about a candidate’s ideology. They’re more concerned with being able to influence legislation, as scholars have shown. They donate so they can talk with lawmakers as they’re writing bills and passing laws.
Today’s political parties don’t have well-formed positions on many of the subjects that interest groups care about — say, policy that affects the National Cattleman’s Beef Association PAC or the National Association of Realtors PAC. Therefore, interest groups care less about ideology and more about giving just to open the door to a working relationship. That’s borne out by the fact that many interest groups divide their money between candidates from both parties.
And that’s what you’ll see in the figure below. The horizontal axis again shows the ideology of candidates. The vertical axis now shows the proportion of money raised by these candidates from interest groups. As a result, the “U” shaped pattern we saw when individual donors could give more is almost precisely flipped over into its opposite. Moderate candidates (those toward the middle of the horizontal axis) tend to raise more of their money from interest groups.
When interest groups can give more money, more moderate lawmakers get the advantage.
So what’s the takeaway for those involved in reforming campaign finance?
Many reformers suggest that the best way to overhaul campaign finance laws is by empowering small individual donors. It’s true that doing so might reduce the influence of interest groups — but such a change may have the unintended consequence of polarizing legislatures still more. And many people are just as concerned about gridlock and polarization as they are about allowing unlimited amounts of money into politics.
Not all money is created equal. Big money from individuals and big money from organizations can have dramatically different motivations — and dramatically different consequences for our politics.