“The bill sends your taxpayer dollars to fund political campaigns. Not to build roads or bridges but to add 600 percent of taxpayer money to every small dollar donated by Americans. So let’s say Mary from Michigan donates $200 to her preferred candidate. Well, now you — the taxpayer — have just chipped in another 1,200 bucks.”
— House Minority Leader Kevin McCarthy (R-Calif.), in a video, March 6, 2019
The House of Representatives will be voting on H.R. 1, dubbed “For the People Act of 2019,” a complex, 622-page bill that aims to overhaul laws regarding voter registration, campaign finance and political ethics.
For purposes of this fact check, we’re going to focus on the first issue that McCarthy addresses in a video attack on the legislation. It’s a point that has been echoed by other Republican lawmakers.
“H.R. 1 creates public subsidies for campaigns through a six-to-one taxpayer match on small-donor campaign contributions of up to $200,” wrote Rep. Rodney Davis (R-Ill.), in the Hill on March 7. “For every $200, the federal government will pay $1,200 of taxpayer dollars to a congressional or presidential campaign. Meaning regardless of whether you support my bid for reelection, $1 million in public funds would have been to get me reelected last cycle had H.R. 1 been enacted.”
Is this really the case?
Public funding of campaigns is intended to minimize the impact of big donors and super PACs, what House Majority Leader Nancy Pelosi (D-Calif.) and Rep. John Sarbanes (D-Md.), the principal sponsor of the matching provision, say is the “grievous error” of Citizens United, the Supreme Court case that gave rise to super PACs.
In a March 4 report explaining the bill, the House Administration Committee noted that “in the 2018 midterms, only 0.47 percent of the population gave $200 or more to political campaigns,” but that represented “71 % of the money that went to federal candidates, PACs, parties, and outside groups.” Meanwhile, “small dollar donors of $200 or less contributed only 30 percent of the money raised in the 2018 midterms.” (This data is via the Center for Responsive Politics.)
“Candidates for office today face the difficult challenge of having to raise significant amounts of funds and to do so quickly if they want to be considered viable,” the report said. “Few can manage this without relying heavily on a network of donors and organized interests.”
The report pointed to voluntary public funding systems that it says have proved successful elsewhere, such as in New York City, where a $10 contribution from a New York City resident to a participating candidate could be worth as much as $90 to their campaign. The city matches up to $250 and most candidates participate. The result is that city candidates raise 90 percent of their money from the city’s census blocs, compared to 30 percent for state assembly candidates in the same areas and which do not receive matching funds, according to the Brennan Center for Justice.
The House bill would provide a 6-to-1 match for donations of $200 or less, as McCarthy and Davis said, but with significant caveats that are missing in the GOP talking points.
For instance, candidates must meet a certain threshold: They must raise at least $50,000 in small-dollar contributions from at least 1,000 individuals during the qualifying period.
Moreover, while individuals can currently contribute as much as $2,700 a cycle to congressional candidates, participants must agree to accept no contributions larger than $1,000.
The theory is that members of Congress tend to pay more attention to individuals who hit the maximum, cycle after cycle, and a lower maximum would level the playing field. With the matching contributions, a $200 donor would have more clout than a $1,000 donor.
Davis, ranking Republican on the Administration Committee, claimed that the bill, if passed into law, would add $1 million to his campaign coffers. That’s apparently based on the fact he raised $183,000 from $200 and lower donations. (That’s 5 percent of his total.) But he raised more than $500,000 from people who contributed $1,000 or more — money he would have to forgo if he agreed to participate in the program.
Courtney Parella, a spokeswoman for Republicans on the House Administration Committee, noted that Davis would still raise $1 million from the matching funds if he qualified.
Both McCarthy and Davis also claimed that the matching funds were taxpayer money. As the bill is now structured, that’s not correct. The money for the matching donations would come from a 2.75 percent fee assessed on civil and criminal financial penalties with the government, which then would be earmarked for a “Freedom From Influence Fund.”
Daniel Jacobs, a spokesman for Sarbanes, said there was no estimate for how much money this provision would raise. The Congressional Budget Office did not score the provision because the new tax on financial penalties was inserted as a manager’s amendment during Rules Committee markup, after the CBO report was completed. When the CBO examined the bill, the funding supposedly was going to be determined through future legislation.
“Expenditures for those programs would be limited to amounts designated in the proposed Freedom From Influence Fund,” the CBO wrote. “The bill would provide no source of funds for the Freedom From Influence Fund; without funding, those programs would not be implemented and thus those provisions would have no cost.”
“Fines will not be close enough to cover the 600 percent match rate,” said Erin Perrine, spokeswoman for McCarthy. “Since there will be an anticipated funding gap, the remaining funds for campaigns would come from general funds (also known as taxpayer dollars).”
The bill, however, explicitly says payments will be reduced if there is insufficient money in the fund and no money can be used from other sources: “In any case in which the Commission determines that there are insufficient moneys in the Fund to make payments to participating candidates under this title, moneys shall not be made available from any other source for the purpose of making such payments.”
Parella said Davis’s op-ed for the Hill was written before the Rules Committee markup. She said the money still would be “public funds.”
In any case, if the bill became law, a future Congress can always change how the program is funded. The current arrangement — essentially a tax on people and corporations caught in malfeasance — appears designed to avoid having the money being tagged as coming from taxpayer dollars.
Other public-funding programs at the state and city level, however, are funded through general funds — and this gambit did not prevent the GOP from claiming taxpayer dollars would be used.
The Pinocchio Test
The Fact Checker obviously takes no position on the merits of such a public-financing system. McCarthy’s video attack leaves out key points, especially the fact that lawmakers would be required to stop accepting any donation over $1,000. He misleadingly suggests that every small-dollar donation would be matched, but that’s only if certain thresholds are achieved.
As for whether taxpayer money would be involved, that’s not the current structure of the bill. So McCarthy’s statement on the funding is not quite right but not totally off-base. The funding at the time of the CBO score was a blank slate, leaving the bill open to attacks on this issue. Democrats waited until after the CBO score to come up with the funding mechanism. That’s often a suspicious sign.
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