The Campaign Finance Institute (CFI) is an unusual organization in the so-called campaign finance ‘reform’ community. Founded and led by Michael Malbin, it’s one of the few groups in the ‘reform’ constellation that isn’t utterly hysterical on the subject of money in politics, and its research tends to rely on sound data that at the very least makes interesting points. And unlike its fellow travelers, CFI has been willing to think beyond the simple sloganeering and dogma of the ‘reform’ movement.
That said, CFI’s research (or at least their analysis and recommendations) suffer from the fact that it makes assumptions that have no real basis in fact or reason to believe they are correct, and in fact there is often ample evidence suggesting that their core assumptions are faulty.
Yesterday’s release of a new study by CFI drives this point home. Titled Public Financing of Elections After Citizens United and Arizona Free Republic, the study assumes up front that campaigns funded primarily by donors making small contributions are inherently superior to campaign funded primarily by donors making large contributions. The beneficiary of these supposedly superior campaigns are the general public.
A few examples of these statements in the report include the following:
The bulk of the money spent on politics in the United States comes from a small number of people who can afford to give and spend large amounts… the problem with this fact in a democracy is that it produces unequal political power…
It is both constitutional and perfectly appropriate to promote participation by building up instead of squeezing down – to dilute the power of the few by increasing the number and importance of low-dollar donors and volunteers.
…small-donor matching funds, will improve participation – changing the sources of candidate funding by altering the incentives for both candidates and donors. Improving participation in turn will be good for representative government.
Having asserted that increasing the number of small contributors will produce magical benefits to the citizenry of a state, the report goes on to analyze campaign contribution information from six Midwestern states: Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin. These states were selected because Minnesota currently has a program that provides tax rebates for political contributions and partial tax financing of campaigns, and is supposed to be the model for the type of matching program for small donors that CFI is pushing these days.
There are two main measures CFI relies on: the total percentage of dollars raised by candidates from contributors giving $250 or less, and the total percentage of the voting age population that contributes to candidates.
At the high end of these measures, Minnesota candidates receive 57 percent of their funds from contributors giving $250 or less, and Rhode Island has 5.4 percent of their voting age population contributing to candidates (it’s 4.1 percent in Minnesota).
While full data isn’t provided for the low end, candidates in both Illinois and Indiana received only 4 percent of their funds from contributors giving $250 or less, and while they aren’t given in the report it is stated that contribution rates among the voting age population in the median state is only 1.5 percent, well below Minnesota’s.
I won’t bother describing in detail the rest of the study, given that in a few more paragraphs I’m about to explain how pointless it is. Suffice it to say the authors extrapolate data to show what the contributor mix would look like if the other states adopted some combination of lower contribution limits and a 5:1 match for small contributions. Under the hoped-for scenario, the contributor mix changes dramatically with between 61 and 72 percent of funds coming from donors under $250 (that’s not correct, though – in all states, the government is actually the source of over half of all campaign funds).
The conclusion of the study provides more flowery rhetoric about the self-evident (to CFI) benefits of this dramatic change in the source of campaign funds:
The system can be transformed through positive incentives designed to foster participation by small donors. The wealthy and powerful will continue to be heard, but there will be alternatives. Small donors will be asked to give and to volunteer because candidates will have an incentive to do so. Citizens will respond because they will know that their voices will matter.
…the matching [program is] “empowerment for citizens”… Is such empowerment an appropriate use of public funds? The argument in favor of matching funds is that citizen engagement is a public good… such an approach, if adopted, would be likely to have a very strong substantive impact.
Now, I have little reason to doubt that such a matching program would, in fact, increase the number of citizens contributing to candidates, especially if it was structured as a tax credit or rebate like in Minnesota. And I’ve no reason to think this would be a bad thing, and might even have some very modest benefit in terms of helping to demystify campaign contributions for some segment of the citizenry.
But where I’m deeply skeptical is that there would be a “very strong substantive impact” on any given state’s political culture from such a scheme, or that anything would be “transformed” to the general benefit of the citizenry. This renders the whole study and scheme proposed in it pointless – yes, it would increase the number of small contributors and make candidates more reliant on small contributors, but no, it would have no noticeable impact.
Even in their most optimistic scenario, the CFI report suggests that 4 percent of a state’s voting age population might become contributors to candidates. This, of course, leaves 96 percent not contributing.
And there’s no reason to believe that having candidates who rely primarily on small donors and unwilling taxpayers to fund their campaigns produces any benefits either. The experience of Arizona and Maine has been that, despite their so-called “clean elections” programs, neither state is appreciably better off in terms of economic, social, and quality of life measurements compared to states that don’t funnel tax dollars to political campaigns.
If, in fact, having a higher percentage of citizens contributing to political candidates or candidates relying more on small contributions was somehow superior and produced transformative change in government and substantive impact in the political process, we would expect to see those states with higher percentages faring noticeably better in terms of public policy.
A quick review shows this not to be the case, of course. While Rhode Island, New Mexico, Vermont, and Minnesota all lead in terms of the percentage of citizens contributing (all above 4 percent), there is no evidence offered or available showing that citizens in these states are noticeably better off than those in states with much lower percentages, or that the political culture is somehow superior.
The same goes for those states where candidates get a greater percentage of contributions from small dollar donors, Minnesota, Nebraska, Vermont, and Wisconsin (all over 34 percent, according to another CFI study, Small Donors, Big Democracy).
Each of these states have issues, problems, and public policy challenges that differ little from those in the other 44. For example:
- Minnesota’s government is currently shut down over budget differences between the governor and the legislature.
- Rhode Island’s unemployment rate is nearly 2 percentage points above the national average and the average for other New England states.
- New Mexico’s poverty rate is nearly 4 percentage points above the national median.
And I seem to recall some fuss over the last few months in Wisconsin, something about budgets and collective bargaining rights and State Supreme Court justices.
The point isn’t to single out these states as particularly troubled or less appealing states, because they aren’t. But it should be obvious to just about all that the relatively higher percentage of citizens contributing to candidates in these states, and the relatively higher percentage of candidate funds coming from smaller contributors, has not produced anything resembling the transformation or substantive impact that in governance, campaigning, or public policy choices that CFI thinks should follow.
Ultimately, CFI has managed to show that in some states citizens are more apt to contribute to candidates, and in some states candidates are more likely to rely on smaller contributions. Neither of these are necessarily bad things, but it’s hard to see any evidence that they are necessarily good things either. Given that the report suggests each state would be funneling tens of millions of dollars into political campaigns every two years if they adopted the matching scheme proposed by CFI, it’s hard to see that the benefits outweigh the massive costs.
