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A Somewhat Tardy, Most Respectful, and Needed Reply to Mr. Cost
Published on July 9, 2007
Category: Contributions & Limits
Jay Cost blogs on political issues at the enormously popular Real Clear Politics site. Cost is one of the best of the political commentators to come up through the blogosphere, in large part because of his rigorous analysis and insistence on data and empirical evidence. Thus we were disappointed with Cost’s recent foray into the field of campaign finance commentary.
It’s not that Cost is not entirely in agreement with positions usually espoused here at Campaignfreedom.org. He is not, but he generally seems to agree with us that campaign finance is too regulated and ought to be deregulated. Cost’s expressed concern, however, triggered by my recent article in the Wall Street Journal (click here for the full article from which the WSJ piece is based), is with “soft money,” which Cost believes should be regulated. What was disappointing to us was not so much Cost’s view on regulating soft money as his justification for these views.
Before we get into Cost’s post, however, let’s briefly review what soft money is. There is no formal definition of “soft money” anywhere in the law or in court decisions interpreting the law. Federal Election Commission regulations do not attempt to define or use the term. But here is what I think is the best definition of “soft money:” “Soft money” is simply money that is not regulated under the Federal Election Campaign Act. Contrary to the impression most people have, “soft money” is not something new – for most of our nation’s history, all political spending has been in the form of “soft money” – that is, money not regulated by the federal government. The federal government only got into the field of regulating political money with the passage of the Tillman Act in 1907, but even after that, until the 1974 amendments to the Federal Election Campaign Act, most money in politics was “soft” – i.e. unregulated – money. In 1976, in Buckley v. Valeo, the Supreme Court ruled that, with certain exceptions, such as for candidate and political party committees, the government could not limit political money that did not “expressly advocate” the election or defeat of candidates. And in 1979 the Federal Election Commission ruled that political parties could raise and spend “soft money” for other activities, such as supporting the party’s message on issues, or spending on state races in states with higher limits than federal law (or no limits at all). Over time, parties learned that so long as they avoided “expressly advocating” the election or defeat of a candidate, they could use this “soft money” for quite aggressive ads attacking the opposing party’s candidates on issues, or praising their own. One purpose of McCain-Feingold was to stop this practice. Thus, when most people speak about “soft money,” what they mean is the limited period between the 1979 FEC ruling and the passage of McCain-Feingold in 2002, which prohibited national parties from accepting or spending unregulated funds – i.e. “soft money” – and that is where we focus our discussion today.
Now, back to Cost. Cost writes, “If AT&T and Coca-Cola could write $50 million checks and pay for each party's political conventions - as they could before the BCRA (the Bipartisan Campaign Reform Act, a.k.a. McCain-Feingold) - it seems to me that the overall effect is one that thwarts 'political freedom.'" Whoa! In the entire soft money era, there was not a single corporation or union that made $50 million in soft money contributions – not just in any election, but over the entire 23 year period. In fact, no union or corporation ever contributed as much as $10 million to a political party in an election cycle. Now this doesn’t mean that Mr. Cost’s concern is wrong – much smaller numbers than $50 million may still lead to the dilemma he detects – but it is not like Mr. Cost to engage in such hyperbole. Obviously, there is a substantial difference between the idea of multiple corporations writing $50 million checks and no corporation ever writing a check for even one-fifth that amount.
Cost continues, “These large corporations … gave large quantities of money to both parties…” Whoa! It is true that some corporations (and unions) gave to both parties. But this was hardly the norm that Mr. Cost’s statement seems to imply. In fact, in the last election cycle of the “soft money” era, 2002 (when soft money contributions still made up less than half of party receipts), there were just over 100 soft money donors - barely 15 percent of the total number of soft money donors – that gave as much as $100,000 to each party (an amount that would be a little over one-one hundredth of one percent (.0001%) of the party’s income). Nearly 60 percent of soft money donors gave only to one party. And, or course, the vast majority of corporations and unions made no soft money contributions at all. Again, this does not mean it did not happen – obviously it did – nor that this might not raise questions as to why they gave. But the issue starts to look different when we consider real numbers, rather than the false view that corporations routinely made large contributions to both parties. Again, Cost’s statements are not literally false, but they are sloppy and misleading in a way one does not expect from Jay Cost. With the dimensions of the issue in better perspective, what is Mr. Cost’s concern? Specifically, Cost notes that even though there may be little evidence that dollars buy much if anything in terms of legislative votes, it can, “mobilize legislators already predisposed to support the group's position. … While previous research on these same issues provided little evidence that PAC money purchased members' votes, it apparently did buy marginal time, energy, and legislative resources that committee participation requires.” (quoting from Richard Hall and Frank Wayman, Buying Time: Moneyed Interests and the Mobilization of Bias in Congressional Committees. 84 American Political Science Review 797 (1990). From this point of legitimate concern, however, the usually critical Cost lapses into a host of “reform” banalities:
· “if special interest money does not acquire special interests anything at all - why would they contribute so much? In other words, a rational view of interests groups induces us to expect that they get something from their contributions.” (emphasis in original)
· “If these entities are ‘buying time,’ to what extent is the government not conducting the people's business,…”
· “[T]hese large soft money checks were not dedicated to electioneering. These large corporations did not give this money so that the public could hear their views, or their favored politicians' views, in the public forum. Rather, they gave large quantities of money to both parties so as to avoid their issues being considered in the public forum.” (emphasis in original)
· “it is just true that there are some campaign financing activities that can and do undermine our political process. In those instances, the government can and should regulate it.”
Let’s tackle this one issue at a time. First, why might interests “contribute so much” (even if not nearly the amounts Cost suggest)?” There are many reasons. We might begin by asking another question – why do corporations spend approximately 100 times – yes 100 times – as much on charitable giving as on all political contributions? Yes, corporations want to be seen as good public citizens, and presumably a public climate disposed to think of corporations as worthy entities will create a regulatory climate more hospitable to them. But obviously we would not think of this spending as somehow bad for society, just because it might buy legislative results in some attenuated way.
In fact, we think the better question is this, posed thirty years ago by Gordon Tullock and reviewed in 2002 by MIT Political Scientists Stephen Ansolabehere, John de Figueiredo, and James Snyder: Why is there so little money in U.S. Politics? 17 Journal of Economic Perspectives 105 (2003). The MIT group concludes, “campaign contributions are not a form of policy buying, but are rather a form of political participation and consumption.” They point out that if campaign contributions were really of particular value to a corporation’s bottom line, we would expect much more would be spent. Cost asks the question “why would they contribute so much?” and the answer he clearly expects, but does not state, is “because it buys them a positive return on their ‘investment.’” But if that is correct, it is probably not a very good return, since corporations spend far more money on other things, such as charitable giving, that are not only unrelated to their business, but seemingly less attenuated to any political gain. Ansolabehere et al. find that most corporate political giving is a way for people to participate in politics – that executives might sometimes do so using corporate rather than personal dollars merely makes that participation sweeter. This jives with what I have experienced when I ask why people give – they almost uniformly begin by saying that they give because a) they believe in the candidate on issues, and b) they are asked. We also note here another interesting study by Professors Ansolabehere, Snyder, and Micheko Ueda, Did Firms Profit from Soft Money? 2 Election Law Journal 193 (2004). In this study, the MIT group finds that stock prices of firms giving soft money reflect no value from that giving.
This indirectly leads us to the next point. On the basic notion of “buying time,” Cost does not explain why this is bad. As the Hall/Wayman study (with which we are quite familiar) notes, money only seems to motivate those already attuned to a group’s position to devote time to those issues; contributions “ha[ve] either a negligible or negative effect on [the] participation” of representatives not already disposed to a group’s position. A recent study by Professor Kevin Esterling can be seen as largely confirming the Hall/Wayman study, but the conclusions Esterling draws are quite different. Hall and Wayman (and Cost) seem to assume it is a bad thing if legislators are drawn to put more effort into issues they already care about and agree on. But why is this bad? Esterling reviewed committee hearings over a four year period, from 2000 to 2003, and determined that members could be loosely broken in two types – “show horses” and “work horses.” Work horses were those who engaged in detailed policy analysis and discussion; show horses tended to focus on personal vignettes and sound bites. Esterling found that campaign contributions provided lawmakers already disposed to a particular view on an issue with an incentive to become more analytical, more familiar with facts, and more focused on the difficult details of an issue. Kevin Esterling, Buying Expertise: Campaign Contributions and Attention to Policy Analysis in Congressional Committees, 101 American Political Science Review 93 (2007). In other words, they became what we would normally think of as better legislators.
Cost claims that when legislators devote more time, energy, and legislative resources to an issue, they are shirking “the people’s business.” This is the most hoary form of political populism. Is it not the “people’s business” for legislators to devote time, energy and resources to really learning about and discussing the legislation and regulatory issues in which Congress is so deeply engaged? At this point, we expect Mr. Cost to argue that it is somehow wrong because this involvement is driven by “special interests.” By why does that matter? First, on virtually every issue in Washington, from the most obscure to the most visible, there are “special interests” engaged on both sides. Moreover, one still needs the votes to pass the final product. In other words, good policy needs the same roll call votes as bad policy. If –as Cost admits – the evidence doesn’t show that you can buy the votes with contributions – then is there really harm if the people already disposed to favor legislation are motivated, for whatever reason, to learn about the issue and make sound policy proposals, rather than proposals based on sound bites and often unrepresentative anecdotal evidence? Is this not the interplay that ought to take place? Where is the “people’s business” ignored, and how do we know just what that “people’s business” is absent the actions of the representatives elected by those “people” to conduct that “business?”
Mr. Cost’s next point is that the corporations gave the money to avoid having their views heard in a public forum. Here, one hardly knows where to begin. The reason McCain-Feingold banned party soft money was precisely because that money was being used for public communications that supporters of the legislation thought would influence elections – i.e. for electioneering. In short, soft money was banned precisely because it was being used to communicate with voters. This was particularly true of soft money not given to the parties but spent directly by corporations and unions to address candidate positions on issues. In what public forum were these views not addressed? We will sometimes hear of provisions snuck into bills late at night and the like, but to the extent such exists – and we note that earmarks, for example, are a miniscule part of the federal budget - these are the result of lobbying, on which roughly ten times as much is spent as on all political campaign spending combined. We could go on, but without something more than this populist soundbite, we don’t see the point. Ultimately, if we believe in republican self government, we must believe that the people will vote for policies that they favor, and that bad policy will cost parties elections.
So Mr. Cost finally ends with a declaratory statement, but one hardly supported by what has come before, that, “some campaign financing activities that can and do undermine our political process.” We’re not really told how this undermines the process, even if true, or how changing it should be done. Moreover, Mr. Cost provides no basis for one to think about what should be done. This may be unfair – Cost’s post was already lengthy, and it is not incumbent on him to answer every potential issue or lay out some complete program of reform. But where is the problem?. Cost makes clear that he thinks $50 million checks are a problem, but as we have seen, no one was writing $50 million checks, or even $10 million checks. So how about $1 million checks? In the 2002 election cycle, the last with soft money, fewer than twenty corporations made total soft money contributions in excess of $1 million dollars. Is this a problem? We don't know, because Mr. Cost does not define what he means by “soft money” other than the non-existent $50 million contribution.
Remember, soft money is merely money unregulated by federal law. So unless he means to say that he thinks the current campaign contribution limits are just right – which we do not think he does – then Mr. Cost in fact favors allowing some of what would currently be called “soft money” into the system. How much? $50,000? $100,000? Remember that allowing $25,000 would be more than ten times the current federal limit on individual contributions, and $25,000 more than the current federal limit on corporate and union contributions. Or does Mr. Cost favor the existing federal ban on any corporate and union contributions? Does he really believe that that is necessary to force officeholders to “conduct the people’s business.” If so, does he believe that this can be seen in improved federal government since 2002, when soft money was driven from the system? And what price is he willing to pay for such improvements as he believes might result? Does he trust Congress to legislate in this area? Does he believe that Madison and other framers of the Constitution trusted government to regulate in this area?
In other words, it may be unfair to ask Mr. Cost to provide some detailed position on where he would draw the lines, but it seems very fair – indeed, it is what we expect from a person of Cost’s ability and stature in the blogosphere – that he should have given this a bit more thought. And if, as we suspect from some of his commentary in the post in question, Mr. Cost basically agrees with us that the direction of policy ought to be toward less regulation, rather than more (even if he would not go so far in deregulating as we here at Campaignfreedom.org), we hope that future columns will be focused on moving the debate in that direction, rather than slipping into “reform” arguments that merely whip up populist misconceptions about money and politics that lead to calls for more regulation.
Friends – and we would consider Mr. Cost (whom we do not know) a political friend – can usually best advance their views by finding points of agreement, not disagreement.
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