Big Contributor/Small Contributor

Barack Obama’s fundraising prowess has been much discussed of late.  One question discussed is whether President-Elect Obama, by foregoing government funding of his campaign, betrayed his own stated principles in favor of tax funding of campaigns.  (For what it’s worth, I think the answer is obviously "yes," but I don’t hold that against him – people routinely must bend and violate their principles based on circumstance, and in few areas of life is that more true than in politics.  In fact, I give him cudos – better someone who violates a bad or unworkable principle than one who sticks ruthlessly to it).

Many of Obama’s supporters have justified his decision to rely on voluntary contributions rather than taxpayer subsidies by arguing that the Obama campaign was different.  It was a new type of "public financing," by  bringing in millions of small contributors, so Obama was still not beholden to special interests.  This is a nice dance tune, but it’s not entirely true:  yes, Obama did bring in unprecedented numbers of new donors, and did raise unprecedented amounts in small contributions, but he also raised unprecedented amounts in large contributions, at least as those have typically been defined in the field of campaign finance law, and his percentage of small donations is not much different than that of George W. Bush in his two presidential runs. 

These are findings of a recent report by the Campaign Finance Institute.  Bob Bauer (or, as I think of him, "the Inimitable Bauer), General Counsel to the Obama campaign, has written some trenchant commentary on the CFI report.  Bauer is critical of the way in which CFI slices up the data.  CFI calls donors of less than $200 "small donors," and donors of $1000 or more are "large donors," and donors in between are "mid-range" donors, including those who may have contributed, for example, $240 to the Obama campaign in 12 monthly $20 contributions.  Bauer argues that, "CFI does not appreciate, it would seem, the difference between the donor who can give $500 at all once, and the one who ekes out this sum over time, as she can."

This is a valid point I think, but let me suggest it ought to go further.  In the context of a presidential campaign, in which candidates are raising hundreds of millions of dollars, are there really any "large donors" under our present campaign finance regime?  After all, the maximum contribution is $2300, of $4600 if one gave the max for both the primary and general election.  This $4600 is about two-thirds of one one-thousandth of one percent of Obama’s total campaign take.  Can any of these donors really be called large in any meaningful context?  The average American adult spends $1200 per year on consumer electronics.  The average teenager  spends $350 per year on consumer electronics.  As for those "mid-range donors," as far back as 2002 the Cato Institute’s John Samples noted that the average two-person household with an income below the poverty line spent over $500 per year on lottery tickets.  That would allow that poverty household to become a "mid-range donor" and still spend $300 per year on the lottery.  Of course it is easier for well-to-do doctor to make that kind of contribution, but it is easier for rich people to do many things, including gaining political influence in other ways.

Regardless, the idea of "large donors" really makes no sense at all in the current system.  Under present contribution limits, all donors are small donors.  Surely, no serious observer can argue that the $2300 contributor, let alone the $1000 or $201 contributor, hopes to gain some "undue influence" by virtue of his or her contribution. 

Now, we here at CCP argue, of course, that we would be better off if contribution limits were substantially raised, or repealed entirely.  At some point, higher contribution limits would recreate something that all would recognize as "large donors" whose contributions might reasonably create some concern about undue influence.  But surely we are not even close to that level today (obligatory note that current federal contribution limits range from rougly one-quarter to one-half what they would be if adjusted for inflation since their enactment in 1974).  The only justification for the current low level must be to promote political equality – it is easier for the doctor to contribute $500 than for the one who "ekes out this sum over time," and the doctor may be able to go to $2300, but the two-person household at the poverty line cannot even if it gave up all spending on lottery tickets.  But equality, we all know (at least those of us in the biz), is a rationale that the Supreme Court has found to be insufficient to justify infringments of constitutionally protected speech in the form of campaign contributions (see Buckley v. Valeo). 

In Buckley, and later in Nixon v. Shrink Missouri Government PAC, the Supreme Court refused to take a "scapel" to the determinations of Congress as to what amounted to a contribution large enough to pose a serious threat of government corruption.  But it always recognized that at some point contribution limits could be unconstitutionally low, and in Randall v. Sorrell recently struck down a limit for the first time.  If the court was serious in Buckley that enforced equality of speech is "wholly at odds with the First Amendment," we think it would be a good time for the Court to start looking more seriously at the constitutionality of current contribution limits, which are flagrantly lower than needed to prevent any threat of "undue influence" or "corruption."


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