The False Promise of Tax-Funding in Political Campaigns

June 9, 2010   •  By Allison Hayward
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In May 2010, the Government Accountability Office, or GAO, released its follow-up report on taxpayer funding for political campaigns.  This report supplemented GAO’s initial study from 2003, which found that the two states with full tax funding – Maine and Arizona – enjoyed none of the promised benefits from those programs.  Section 310 of the Bipartisan Campaign Reform Act of 2002 mandated that GAO study and report on these laws.  Since the first tax-funded legislative races were only held in 2000, the GAO’s disappointing findings in 2003 could be explained by the lack of data.  Advocates hoped that this latest report, which includes data from elections in 2004 through 2008, would provide welcome support for these reforms, such as the Fair Elections Now Act currently before Congress.

Unfortunately for supporters of tax funding, the GAO’s 2010 report concludes, once again, that the benefits supposedly derived from tax funding don’t occur in any way that can be shown by generally accepted techniques of analysis.  This result wasn’t for a lack of effort in GAO’s part.  A team of 15 at GAO not only collected data about participation by candidates, wins and losses, and victory margins as it had for the 2003 report, the Office also compared changes with four comparison states, to observe whether changes in Maine and Arizona were different than changes observed in these states.  In addition, the GAO interviewed by telephone a number of candidates and interest group representatives from each state.  The GAO used two statistical techniques, faxed effects regression and hierarchial loglinear modeling, to evaluate how competitiveness in Maine and Arizona elections (and the comparison states) changed with the implementation of tax funding.

How did GAO decide what goals to analyze?  It took proponents’ promises seriously.  GAO found that tax funding programs promise five benefits:

1)      Increased electoral competition

2)      Increased voter choice

3)      Reduced increases in campaign costs

4)      Reduced interest group influence

5)      Increased voter participation

Given that these goals were the ones chosen by tax funding advocates, it would seem fair to evaluate tax financing programs to see whether any of these benefits can be traced to the programs.

Admittedly, GAO did find changes.  It found, for example, that candidate participation in the programs grew over time.  This may stand for nothing more than the well-worn observation that if something is subsidized, we will see more of it. 

But the other findings should be depressing for advocates of tax funding.  In evaluating electoral competition, GAO found no measurable changes in the number of candidates running per race (what it called “contestedness”).  Nor did incumbent reelection rates decrease (in Maine the reelection rate was 88% before tax funding, 90% after; in Arizona it was 98% before and 97% after).  GAO did observe a decrease in the margins of victory, but could not rule out that the cause was something besides the adoption of tax funding for campaigns.  Even with using two distinct statistical modeling techniques, the GAO could not say that this result was not instead affected by something difficult to measure like “candidate popularity” or GAO’s choices of comparison states.

As for the other benefits?  There were no statistically significant increases in voter choice, or decreases in campaign spending or interest group influence from adopting tax funding for campaigns.  GAO also could not find a voter turnout effect connected to tax funding, but admitted that data problems including inconsistencies in how “turnout” is measured precluded drawing any conclusions.

Perhaps the most revealing elements in this report come from the GAO’s interviews with candidates and interest group representatives.  On the changes in electoral competition, GAO reports:

Most candidates we interviewed in Maine (8 of 11) believed that the advantage of incumbent candidates neither increased nor decreased as a result of the public financing program. Further, 2 of 11 candidates said that incumbents’ advantage had increased under the public financing program.

And in Arizona:

Arizona candidates had mixed perceptions on the effect of the public financing program on incumbents’ advantage. Four of 11 candidates said that the advantage of incumbents neither increased nor decreased as a result of the public financing program, citing incumbents’ benefits such as name recognition, experience in running a successful election campaign, and access to funding. Three candidates said that incumbents’ advantage increased. One of these candidates explained that participating incumbent candidates did not have to do as much outreach to voters as they would have if they needed to raise private funds. However, 3 candidates we interviewed stated that the advantage of incumbent candidates has decreased.

So that’s 17 out of 22 candidates interviewed who say that state “clean elections” efforts didn’t change or actually increased the benefits enjoyed by incumbents.  But certainly removing private money from campaigns would reduce special interest influence?  According to the individuals GAO interviewed — not so fast:

In Maine, a little over half of the candidates (6 of 11) said that the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or interest groups neither increased nor decreased as a result of the public financing program. One of these candidates said the public financing program has not met the goal of decreasing the influence of interest groups, since interest groups will always find ways to influence legislators and the election process. However, 4 candidates we interviewed in Maine-all of whom participated in the public financing program-said that that likelihood that elected officials serve free of influence by individuals or groups greatly increased or increased.


For Arizona, about half of the candidates interviewed (5 of 11) said that the public financing program did not affect the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or groups. One of these candidates said that the influence of special interest groups still exists, even if it does not come in the form of direct contributions. She explained that interest groups approach candidates with questionnaires and ask them to take pledges on different policy issues and also send their members voter guides and scorecards that rate candidates. Two other Arizona candidates we interviewed commented that under the public financing program, interest groups have been contributing to campaigns in different ways, such as providing campaign volunteers, and collecting $5 qualifying contributions for participating candidates. In contrast, 4 of the 11 candidates said that the likelihood that elected officials serve the interests of their constituents had decreased as a result of the public financing program.

So 13 of 22 candidates interviewed saw no change, and four more believed the influence of special interest had increased.  Moreover, when GAO polled members of the public, their perceptions provide no support for the notion that tax funding increases public confidence in government:

In 2002 and 2009, the percentage of voting-age citizens in Maine and Arizona who said that their confidence in state government had somewhat or greatly decreased was not significantly different from those who said that their confidence had somewhat or greatly increased as a result of the public financing law. Additionally, the predominant response in both states was that respondents did not believe that the public financing program had any effect on their confidence in state government….

The lesson of both GAO Reports is that, despite the relentless rhetoric of tax-funding supporters, subsidizing political campaigns doesn’t improve campaigns, or even how people feel about politics.  Moreover, there are burdens imposed in these systems not considered by GAO, such as paperwork requirement to establish a campaign’s qualifications and government audits to inspect how campaigns used their funding.  Tax funding systems also possess a fatal conceit by presuming that the state can calibrate how much funding is the right amount – an impossible task in a system where only some seats are competitive, there are vast differences in voter population per district, and campaigns will be adopting ever-changing technologies.

One should not expect a sea-change in the perspective of tax-financing advocates.  A pitched effort in California attempted to pass Proposition 15, which would have established a pilot public funding program for the Secretary of State’s campaign.  The campaign in favor, notwithstanding the evidence, repeated the claims that tax financing will decrease campaign spending, reduce special interest influence, and restore confidence in state politics.  These claims were then picked up by newspaper editorial boards and political commentators without expressing any doubt about their self-evident validity. 

The belief in reform through tax funding for campaigns is not based on fact.  Like an article of religious faith, it is a belief that transcends proof.  It may be based on a general antipathy toward politics or capitalism, or a unfounded confidence that some “silver bullet” can be found to make governance less contentious.  The GAO Report thus will likely have little influence on the debate about reform.  Unfortunately, the movement toward taxpayer funding reform will proceed at a level of abstraction that is not just unrealistic, but misleading.



Allison Hayward

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