Campaign Finance “Reform” is a Wolf in Sheep’s Clothing

Good afternoon. My name is Nathan Benefield; I am the Director of Policy Research for the Commonwealth Foundation, a public policy research and educational institution based in Harrisburg. I would like to thank Representative Josephs and the members of this committee for inviting me to give our thoughts on HB 1497 and HB 1720.

While we commend the intent of both Rep. Vitali and Rep. Levdansky for offering serious attempts to deliver much-needed reforms to state government, we believe that expanding the power of elected and appointed officials to control campaign funding will not have the desired effects.

Limiting campaign contributions and putting election finance under government control only serves to protect incumbents from challengers. Those with name recognition—and under HB 1497, ties to government agents—benefit when we curb the free speech of their opponents. The power to fund or silence speech about candidates will certainly be abused by those who benefit and control the system.

There are two primary justifications used to support campaign finance laws such as these—that there is “too much money in politics” and that special interests have too much influence under current campaign finance laws.

There have been a number of recent news stories that mention the high costs of elections—these stories usually mention the 2008 presidential election will cost over $1 billion for all candidates. Is this too much money? Let me suggest that it is not even close. Though much of this money goes to staff and travel, mostly it is advertising, as the campaign is advertising a candidate. But this amount is relatively small in comparison with corporate advertising spending. The top spending presidential candidate may spend $400 million over 20 months of campaigning. In 2003 (which likely understates current spending, but illustrates the point nonetheless), General Motors spent $3.43 billion in advertising, Procter and Gamble spent $3.23 billion, and Time Warner spent $3.1 billion. This list of the top 25 companies ends with Microsoft, which spent $1.15 billion.

Each of these companies spends more than twice in advertising than the cost of any presidential candidate’s entire campaign. So I don’t believe we can say there is too much money flowing into political campaigns. I want to know more about a potential leader of the free world—or about a potential governor, or even a school board member—than I do about the side effects of Viagra. Campaign finance limits restrict the public’s ability to get more information about candidates, and undermines the deliberative process.

Second, the concern about special interests is warranted, but does not justify either piece of legislation under consideration. These bills are designed to prevent wealthy individuals and special interest PACs from controlling who gets money for campaign expenditures. It would replace them with government bureaucrats and legislators determining who and how individuals get campaign funds. Many advocates of campaign finance reform mistrust wealthy individuals, along with special interest PACs, and want to limit their influence. But just as many, including the Commonwealth Foundation, are equally mistrustful of government bureaucrats and legislators, and fear legislation to expand their influence, while limiting that of the private sector.

Under current law, individuals are free to support (or not support) candidates of their choosing. They can contribute to the candidate they feel best represents their views, or the candidate they think is mostly likely to win, or merely a friend.

Certainly this system presents opportunities for corruption. Candidates and donors may enter into a quid pro quo (even though this is currently banned by law)—promising to exchange future votes or favors for campaign donations. Donors may also try to buy access or “face time” with a candidate.

But candidates today have to find multiple donors to their campaign. They have to find supporter from different walks of life, different businesses, and different interests. This balancing act requires them to appeal to a broad array of supporters, and not be obliged to a single individual or group. This ensures that candidates have a broad public appeal, and are not simply propped up by a government program gone awry.

Under government financed campaigns, such as those proposed under HB 1497, candidates only have to appeal to one funding source. And individuals have no choice about who they will support—their taxes will be used to finance the campaigns chosen by law and by a government agency. Instead of needing to appeal to a broad group of supporters, candidates only need to get support from those who control the system.

Candidates are also currently required to disclose their list of donors, allowing the public, media, and watchdog groups to see who their supporters are. With donation limits, contributors will simply funnel money through additional PACs, or donate in the name of friends, to get around this limit. This will result in less information being made available.

Campaign contribution limits will reinforce the advantages incumbents have in name recognition, staff, media exposure, and office budgets—particularly when taxpayers fund “public service announcements” and mailing of calendars with incumbents’ names and pictures. Campaign limits also benefit those who start early—which quite clearly favors incumbents, given the number of fundraisers held in Harrisburg by General Assembly members, which are held from beginning to end of the two-year legislative session.

Furthermore, campaign finance laws such as these have failed to deliver their promised benefits. Consider federal campaign finance contribution limits, similar to those as HB 1720 would create. Campaign contribution limits have not “cleaned up” national politics. Public approval of Congress is lower than ever. Congress is plagued by scandals, earmarks, and corruption. And there is little evidence that “special interests” have less influence.

Contribution limits undoubtedly hindered efforts by minor party and independent candidates. The exceptions being those who bankroll their own campaign, such as Ross Perot, as federal and state laws cannot limit individuals from supporting their own candidacy.

And instead of making elections more competitive, incumbent Congressmen have become more shielded. Since campaign finance limits were passed, incumbent re-election rates declined, with less than 2% of incumbents losing in elections. Retirements, death, and even indictment account for more turnover in Congress. Taxpayer financed campaigns, such as those proposed under HB 1497, have even worse track records. The number of individuals participating in the Presidential Campaign fund has been declining every year. In 2004 only 9.2% of taxpayers elected to contribute to this fund, contrasted with 28.7% in 1980—indicating voters are becoming dissatisfied with this system. Even though contributing to the Presidential Campaign Fund only requires checking a box on a tax return, and only costs $3—more than twice as many people contribute to individual presidential campaigns, and in amounts far exceeding $3. I can only conclude that voters would rather spend their own money, than have government spend it for them.

Arizona’s public financing of elections has not had the desired effect either. Since the “Clean Elections Law” was passed in 1998, the incumbent success rate increased. The number of candidates for office has declined. And Arizona voters have far more information about privately-funded campaigns than about “Clean Election” candidates.

Finally, Rep. Vitali has stated the HB 1497 is based on New Jersey’s system of publicly financing gubernatorial elections. It should be noted that Gov. Corzine refused to participate in the publicly financed system in 2005, spending $43 million of his own money instead. His chief opponent also bankrolled his own campaign, spending tens of millions of his own money. If the goal of this legislation is to ensure a race between multi-millionaire and multi-millionaire, I promise you, it will succeed.

Campaign finance limits and taxpayer-funded elections will not clean up state government. They will not reduce the influence of special interest groups. They will not create greater accountability.

These laws may disguise corruption, and they may result in less information being available about the influence of special interests. They are likely to decrease public confidence in government and participation in elections.

Finally, we are concerned that campaign finance laws like these will serve to protect incumbents from criticism during their re-election campaigns, and will limit the ability of their challengers and other groups from getting their messages heard—effectively denying freedom of speech for the most critical type of speech of all: political speech.

Thank you, I look forward to any questions you may have and to discussing this issue further.

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NOTE: Click here for a Policy Point on Campaign Finance Limits and Public Funding.

Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (, an independent, nonprofit public policy research and educational institute based in Harrisburg.