Has Tax Funding of Presidential Elections Been a Success?

Last week, the campaign finance pro-regulatory community launched a coordinated media effort to drum up support for increasing the federal budget earmark for presidential campaign subsidies.  This effort included lengthy posts by Trevor Potter and Fred Wertheimer at the web sites of the pro-regulatory organizations Democracy 21 and Campaign Legal Center; an op-ed from the liberal Washington Post columnist E.J. Dionne, and, naturally, an editorial in the New York Times, which one can read here.

 The goal is to increase the amount of taxpayer dollars earmarked for presidential campaign subsidies, in order to "save the system."  My general take on the system can be found here. 

What I want to address in this post – in an essay far more brief than the topic deserves – is the claim by those supporting this tax increase that the current taxpayer financing system has been a success.  The New York Times claims that, "Public financing has served the nation well;" Messrs. Potter and Wertheimer conclude that, "the presidential public financing system has served the country well;" Columnist Dionne claims that "public financing of presidential campaigns… was that rare reform that accomplished exactly what it was supposed to achieve," and adds this quote from Senator Russ Feingold: "I see this presidential financing system as one of the few things you can turn to and say: ‘This was well conceived and it actually worked.’"

Dionne and the Times both mention Watergate, the 1973 scandal that stemmed, in part, from the Committee to Re-elect the President doing things that were already illegal.  We are to presume (and Mr. Dionne explicitly tells us) that absent tax financing of the presidential campaigns, we will have another Watergate.  (In an ironic twist, however, Messrs. Potter and Wertheimer argue that it is wrong to blame campaign finance regulation for failing to prevent scandals such as Jack Abramoff and Duke Cunningham because bribery is already illegal.  But this would undercut any argument that campaign finance laws, and especially tax financing of elections, have prevented another Watergate, as the elements of Watergate – breaking and entering, burglary, obstruction of justice, warrentless wiretapping, perjury, lying to the FBI, lying to a grand jury, and violation of campaign finance disclosure laws – were already illegal.  Apparently, we are to believe that a carefully tailored campaign finance law is very effective at preventing breaking and entering, burglary, and perjury, but helpless to prevent the abuse of public office in the form of bribery and influence peddling.)

But for all this, none of the three columns tell us how the taxpayer financing system has actually "served the nation well."  The closest any of the three come is the Potter/Wertheimer piece, which notes two acheivements besides preventing another Watergate (not to mention another Teapot Dome, Credit Mobilier, or Citizen Genet).  First, every major party candidate has taken the money, at least in the general election; and second, challengers have defeated incumbents in 3 of six tries under the system.  But the first seems to us not a measure of success at all, any more than we might measure the success of welfare by the number of welfare recipients, rather than any benefits to those recipients or to society, or any more than we would argue that the proliferation of government earmarks must be a good thing, since there are so many of them.  Offer candidates a bunch of tax dollars, and restrict their ability to raise private money, and it’s hardly a surprise that people take he subsidy.  Mere participation cannot be a measure of success.  

The second argument at least has a ring of merit.  Campaign finance laws are often criticized as pro-incumbent (I have made that criticism), so the fact that challengers can beat incumbents under the tax financing system, while not necessarily a plus for the system (it is a valid criticism if self-dealing campaign finance laws rig the system to make it more difficult for challengers to compete with incumbents, but there is nothing inherently beneficial in having challengers beat incumbents under a fair system), it would on the surface seem to at least refute a major criticism of the system.  But I am unconvinced.  First, one of those incumbents defeated under the tax system was the unelected post-Watergate President Gerry Ford, whose popularity never recovered from his pardon of Richard Nixon.  That Ford ran much closer to Democrat Jimmy Carter than congressional Republicans did to congressional Democrats actually suggests that the system may have benefited him.  Another defeated incumbent, Jimmy Carter, sought re-election in the face of double digit inflation and unemployment and the Iranian Hostage crisis.  More importantly, though, we do not believe that campaign finance laws have the same pro-incumbency effect at the presidential level as in lower level congressional races, where spending money to gain name recognition and issue identification is far more important – all major party presidential candidates "get their message out."  And if we look back, we can see that competition has always been tougher at the presidential level, even before tax financing.  For example, in two of the last five elections preceding the institution of the tax financing scheme in which an incumbent initially sought re-election – 1952 and 1968 – that incumbent was forced out of the race long before the general election. 

So let us think about how one might more legitimately measure success.  One way would be by voter turnout.  For many, high voter turnout is equated with a healthy democracy.  Yet voter turnout is no higher today in the U.S. than it was in 1972, the last pre-tax financing election. In fact turnout, which began to decline after 1960, continued its decline after 1972, with two notable exceptions – 1992, when Ross Perot ran a major national campaign using his personal wealth, without participating in the tax financing system; and the 2000 and 2004 elections, when eventual major party nominees for the first time opted out of the tax financing system, at least for the primaries.  Nor can it be lost on observers that these last two elections – when turnout has finally improved – are the ones that have led the regulatory advocates to declare that the system is broken and must be saved.  Yet it is only in these two cycles that the trend of declining turnout seems to have been broken, and that turnout has risen back to pre-tax financing levels.

Another possible criterion might be the level of public knowledge about candidates and issues.  We might deem the system a success if it has increased public knowledge about politics and government.  But there is no indication that this is true.  The public seems no more knowledgeable than before tax-financing.

There are other possible criteria.  For example, some would prefer less negative campaigns – yet by 2002, after nearly 30 years of tax-financed presidential campaigns, fall elections had grown so nasty and negative that the McCain-Feingold reform bill included a "stand by your ad" provision intended to take the negativity out of campaigns.  There is general agreement among political scientists that campaigns have grown more negative since tax financing was instituted.  Others would argue that the goal of tax financing is to prevent candidates from being beholden to "special interests.  This one is tough to measure, but anecdotally, I see no reason to believe that John Kerry, Howard Dean, or George Bush became less ethical or less independent of "special interests" when they declined tax financing in the 2004 presidential primaries.  Indeed, I find it hard to believe that anyone would take that argument seriously. 

One might argue that tax financing creates a general environment that increases confidence in government, and perhaps makes officials more conscious of their ethical obligations.  If we consider that Mr. Dionne and the New York Times editorial board, are serious in raising Watergate as a reason for "repairing" the tax financing system, it can only be on this ground.  But if that is the case, then we must consider whether there is evidence that this is true.  And here, the pro-regulatory party finds itself trapped – it has, as an article of faith, adopted the view that political life remains as corrupt as ever.  Certainly, if pork in the federal budget is the measure, the tax-financing system has failed.

Or one might argue that public support for the program is itself a measure of success.  But if by that we mean public participation, then the program is a failure.  Fewer than ten percent of taxpayers now earmark their tax dollars to the presidential campaign fund, and the number has been in decline for over 25 years.  It is odd that Messrs. Wertheimer and Potter consider it a mark of success if candidates, put in a situation in which it is otherwise difficult to compete, take tax dollars, but do not consider it a mark of failure when citizens, with nothing directly to lose, still refuse to earmark tax dollars.

In summary, those supporting an increase in tax earmarking for what they call public financing – that is, tax financing, as opposed to voluntary public contributions – seem to feel that if they simply repeat often enough that the system has been a success, wishing will make it so. 

But perhaps there are other measures of success that I have not considered.  If so, I would like to know what they are, and how tax financing has made progress toward acheiving them.

The Center for Competitive Politics is now the Institute for Free Speech.