Campaign Finance, Part II: Motivations

In the last post, I looked at the money going to each political party in elections over the past decade, and whether unregulated, non-transparent spending is a greater problem now than in the past.  In this post, I delve more into the politics of the debate over campaign finance, looking at the incentives for both sides.  What motivates the groups that are spending through unregulated avenues, and why did the administration choose to focus on this as a campaign issue over the weeks leading up to the election?

The Outside Spenders

Why did special interest groups give more money to Republicans this year, and why did they give more in the form of outside spending, in particular?  Let’s think about this from the point of view of these groups, and assume that these special interests (corporations, unions, trade organizations, and political organizations) view contributing to campaigns as investments that will hopefully pay off with a reasonable return for their members or donors in the future.  (This return doesn’t have to be money; there are some organizations that hope for a return in the form of the furthering of some cause.)

Much of the time, these groups might donate to candidates so that the candidates they support will have more money behind them and therefore will be more likely to win.  This is not the only reason to donate to a candidate, however.  Some groups donate to a candidate in the hopes that they will gain better access to that candidate in the future or that their interests will be a higher priority for that candidate.  Since it doesn’t help very much to have greater access to someone no longer in office, special interest groups like to donate to winners.  This year, Republicans seemed to have momentum early, so it is not surprising that Republicans have benefitted the most from spending by outside groups.

I can only speculate as to why these groups are consistently spending through unregulated avenues.  One explanation could be that this is simply the easiest way to get around the caps on donations to other entities.  Now that soft money is no longer allowed, if an organization wants to give more than a couple thousand dollars to the same candidate or committee or general cause, it can only support that cause by contributing to some other group that is not regulated by campaign finance law.

Finally, many of these groups and their donors see campaign spending as a tradeoff between political efforts and other types of spending.  A lot of organizations, particularly corporations, that contribute to political campaigns have other operations where that money could be spent.  Although I haven’t looked into the empirical evidence for this, in times where interest rates are low and demand is suppressed, even if there is no increase in potential returns for political donations, the relative benefit from political contributions could increase.  If that is true, an increase in corporate spending may reflect a shift in priorities and a response to the economic environment for corporations and other groups rather than an increase in corporate influence in politics.

The Administration

So why did the administration and other Democrats harp on the campaign finance issue leading up to the election?  There are a few possible explanations.  First, it’s possible that the President genuinely believes that a lack of transparency in campaign finance is a serious problem.  He made it clear from the beginning that he was not a fan of the Supreme Court’s decision in the Citizens United case.  The rhetoric that he used then about foreign interference and the rise of special interests mirrors the rhetoric of the administration and the Democratic party over the past few weeks.

When the President decided to turn down public financing, avoiding limits on fundraising, in 2008, he claimed that the “system was broken.”  He argued that putting limits on his campaign would not be fair because his opponents in the Republican party were receiving so much money from outside interests.  The President has been consistent on this issue, regularly criticizing the use of unlimited funds and non-transparent funds from corporations and special interests.  A counterpoint to this would be the fact that the Democratic party was supported by more outside funding than the Republican party in 2008.  It is not clear how much this matters in determing the motives of the President.  It would depend on the extent to which the President controlled spending by outside interests on Democrats in that campaign.

Another possibility is that the White House thought that talking about this kind of funding would help the Democrats in 2010.  Saying that your opponent is backed by illegitimate funds may lead voters to question the overall legitimacy of that candidate.  Candidates this campaign season liked to focus on how much money their opponents raised from outside the state or district.  It’s difficult to tell, even now, whether this message resonated with voters.  Though the Democrats did poorly in the election, its not clear whether they would have done better or worse had the administration chosen to focus on other issues.  Some have argued, and I would agree, that in this economic climate the details of campaign financing are pretty low on the voters’ list of priorities.  That would suggest that the argument about campaign fund transparency probably did not significantly sway any election results two nights ago.

Finally, it is possible that the administration focused on this issue because they are looking forward to 2012.  The President might expect to have the same interests aligned against him in two years, perhaps even on a greater scale.  If he is able to pass legislation through Congress that makes donations transparent, the President may hope to curb some of the spending by these interests, or at least give himself further ammunition in criticizing his opponents over their donors.  By talking about this subject during the election, he keeps the topic salient to the political debate going into the new Congress, and may improve the chances for passing this type of legislation.

Another way that focusing on campaign finance can help the President in 2012 is that he could hope to gain a legislative victory on this topic that would give him some political points.  The President could be laying the foundation now to take credit for passing laws that mandate transparency in the future.  Right now, it seems that the new Republican majority might not be willing to pass legislation that requires full disclosure of campaign finances, given that Republican Senators filibustered such a measure less than 2 months ago.  But there is reason to believe that, when the Republicans are in a position of leadership, this is a topic where they and the administration can find common ground.  Several of the new House leaders have said things to that effect.  I’ve also seen conservative pundits appear amenable to the prospect of campaign finance disclosure legislation, though I’m not sure how widespread that opinion is.

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