A New Direction for Campaign Finance Reform

Senator Obama’s recent fundraising success calls for a complete re-evaluation of the campaign finance reform agenda that has been prominent in recent years.

Campaign finance reform has been focused primarily on limiting the outsize influence that moneyed special interests have on our electoral process. This reliance on big donors inevitably draws our elected officials away from representing the broader, long-term interests of all of their constituents, and pushes them toward decisions that will please and benefit their largest campaign contributors. One need look no further than the recent Abramoff scandals for an example of the corrupting influence of campaign contributions on democratic governance.

Congressional efforts to address this and other campaign finance concerns have included the Federal Elections Campaign Act of 1971 ( FECA) which requires candidates for Federal office to report all campaign contributions and expenditures, and offers public financing to Presidential candidates who accept voluntary limits on expenditures. In 2002 the Bi-Partisan Campaign Reform Act (“BCRA” or “McCain-Feingold”) went further by trying to regulate ‘soft money’ – expenditures by third-party organizations seeking to influence the outcome of specific elections under the guise of “issue advocacy. “

As well intended as these efforts may have been, they have not in any substantive way reduced the flow of special interest money into the political process (cf. Abramoff and friends). Nor have these efforts leveled the playing field at all for candidates unable to attract special interest money. In fact, our campaign finance laws – now consisting of 500+ pages of small-type, double-column Federal Election Commission regulations — have in practice served only to intimidate grass-roots candidates with minimal financial or legal resources, and to favor incumbent and well-funded candidates who can afford the necessary compliance.

Just when it’s becoming clear that these laws have failed utterly to achieve their goals, we now discover – courtesy of Barack Obama – that one of the primary justifications for the legislation has disappeared altogether. Obama has demonstrated that in the age of the World Wide Web, candidates have options other than relying on large donors: almost half of his record-shattering haul of $150 million (September 2008) came in individual contributions of $200 or less. Although his campaign certainly benefited from large contributions as well, Obama’s extensive small donor base (over 2 million contributors) makes him far less beholden to big givers. It seems the Internet has leveled the playing field far more effectively than Congress ever could.

Does this mean the system is now working fine, and that no regulation is needed at all? Certainly not: the transparency achieved through public reporting of campaign finance activities is surely a good thing, and this type of regulation – perhaps in a simplified form –should be continued. However, attempts to limit the amounts and sources of contributions appear doomed to failure: the more regulations the FEC writes, the more creative big contributors become in their evasion of the limits. Most recently, fundraisers have learned to side-step individual contribution limits by allowing contributors to bundle their donations to specific candidates (limited by law) with larger contributions to the party’s general campaign committee.

Perhaps a more effective regulatory approach would be one that limits the total amount of money that can be spent on a campaign. What might be the effect, for example, of limiting total expenditures on presidential general elections to $250 million per candidate? Arguably if a candidate needs more than that to make his or her case to the American electorate, maybe what we’re getting isn’t a better understanding of the candidate, but more spin and fancier packaging. And if no one candidate can spend more than $250 million, a level playing field is achieved regardless of the source of funds.

Unfortunately, any initiative to limit total campaign spending must be structured in a way that will overcome the Supreme Court’s flawed and widely criticized Buckley v. Valeo decision (1976), in which the Court ruled unconstitutional any effort to limit campaign expenditures, equating it to an abridgement of free speech. One approach, therefore, might be a constitutional amendment such as the one proposed at www.amendment-28.com, in which Congress and the State Legislatures set spending limits for each Federal general election. Perhaps a future Supreme Court may see fit to revisit Buckley in light of the status quo neutrality arguments of Sunstein and others (Cass Sunstein, Democracy and the Problem of Free Speech, The Free Press, 1995).

In the meantime, the cost of campaigning continues to rise – there are apparently an infinite number of pollsters, consultants, strategists and advisors that can be hired for any given campaign.  And as long as our election laws are focused on trying to limit contributions rather than spending, our elections will continue to be more and more about money and fundraising, and less and less about issues and candidate qualifications.

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