Posts Tagged ‘Elections’

Benefits and Inequalities of Matching Funds

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crowdfunding2

In 1977, New Jersey became the first state in the nation to implement public financing for gubernatorial elections.  According to New Jersey’s Election Law Enforcement Commission, the program “allows persons of limited financial means to seek election to the State’s highest office and to conduct campaigns free from improper influence.”   The statement evokes two clear goals of NJ’s matching funds program: 1) greater equality among competitors, and 2) less “improper influence.”

I am sympathetic to these goals, and find these programs difficult to reject on normative grounds. However in my opinion they are practically unworkable, and thus, impossible not to reject on practical grounds.  The key reason being that these programs do not work as intended and if anything, lead to less equality and a greater degree of “improper influence.”  I discuss my reasoning below.

Greater Equality?:

Because “elections aren’t won with prayers,” the reality of the political economic environment necessitates the use of money to translate political ideas into political speech.  Without an option of public funding, federal candidates must rely on wealthy donors, interest groups, and political parties (or themselves) for resources and financial support.  The outcome is that some candidates will inevitably have more resources than others.

Matching funds seeks to bridge the gap. Yet because of a Supreme Court case in 1976 (Buckley v. Valeo) that rendered campaign-spending limits unconstitutional, states may not compel candidates to participate in public programs, which almost always have caps on how much a candidate may spend.[1]  As long as candidates have this de facto “opt-out” alternative, the practical reality is that the only candidates that will use the public funds are the ones that need to.

The best example of this is New Jersey’s gubernatorial race.  There is little reason for Chris Christie to willingly limit his spending in order to participate in the public funds program, when he can raise money so quickly and easily.  On the other hand, his opponent, Barbara Buono, is all but forced to participate in the matching funds program. With a more limited fundraising operation, it is her best shot of maximizing the amount of campaign resources.

Of course, this is only a disadvantage to participants in matching funds programs if they shoulder some kind of significant burden that non-participants do not. Do they?  In a word, yes.  In order to receive the matching funds in New Jersey, the campaign must submit reports to the state every two weeks (accelerating to every week as the election nears).  These reports must include:

  • Donor name
  • Address
  • Employer & Occupation
  • Address of donor’s employer
  • Copy of the original check
  • Copy of the deposit slip (before depositing),
  • Copy of a stamped receipt of the deposit slip (after deposit)

In the case that the contributor was an LLC, then it must also be accompanied by a signed letter stating what individual the contribution should be attributed to.   In the case of credit card contributions, the campaign must obtain an original signature from each contributor, regardless of amount.  In case all this were not enough, all of this information needs to be submitted via proprietary database software that allows for one scan at a time, comes with many bugs, and will reject transactions for including full words such as: “avenue,” “street,” “boulevard,” “road,” “post office box,” “organization,” “committee,” and my favorite, “New Jersey”…plus approximately forty others.

In short, the fact that participants in matching funds programs are held to such high expectations in order to receive funds not only substantially increases their workload, but also engenders intense budget uncertainty, as it seems transactions can get rejected for nearly anything.   In New Jersey, this law that was intended to promote greater equality has led to an outcome whereby quite literally, the two major general election candidates are being held to different standards and expectations, and the underdog is far worse off.

Improper Influence?:

The second noted reason for implementing matching funds programs is to mitigate those seeking to influence politicians. …Influence politicians how exactly?  Pre-eminent scholars of campaign finance cannot agree on how money actually influences politics.  Let’s assume that “influence” means “to affect legislative policy in a way that without such influence, would otherwise have been different.”  This is the conception employed by political scientists Wayman and Hall (1990), who argue that money mobilizes legislators to write more favorable policy.  Taken to its greatest logical extent, this type of relationship between money and politicians can lead to bribery and corruption.

Yet more contemporary scholars observing the same outcomes arrive at far different conclusions.  Esterling (2007) argues the reverse – that PACs contribute to members that he calls the “workhorses” in Congress; those that write more policy, have greater leadership qualities, and value policy substance over style.  This conception of money in politics, as a reward for good work, undermines those that are based on the assumption that money is inherently corrupting.

Let’s assume that the term “influence” does not mean “to affect legislative policy or decisions of legislators.” Rather let’s assume “influence” means “some degree of donor representation.” And again, let’s use the example of New Jersey.  New Jersey’s matching funds program matches qualifying contributions 3:1.  It is not limited to individuals and organizations in New Jersey.  Rather, it includes contributions from any American individual, corporation, PAC, union, etc. from all 50 states.  It is not far-fetched to say that with Chris Christie up for re-election, that this race may attract national interest. For a campaign in a small state like New Jersey to be attracting national attention, it is not unfathomable to imagine a scenario where a substantial portion of contributions comes from out-of-state PACs, individuals, and organizations. This presents a thorny question: how is it that a program that could grant out-of-state interests three times as much “influence” as they would otherwise have, possibly lead to greater representativeness for the citizens of New Jersey?.[2]

MisMatched:

While money may be a necessary component of affecting political outcomes, it is in no way synonymous with, or by itself sufficient to achieve influence. Moreover, there is little evidence that matching funds programs leads to greater equality. This article did not touch on how matching funds programs has the potential to significantly widen the fundraising gender gap I discussed last month.  Nor does it discuss the costs of implementing the programs. Tangential benefits, such as greater voter participation, are also questionable. After implementing the public matching funds program in NYC, most recent mayoral election of 2009 witnessed the lowest voter turnout its had since the 1960’s.   In short, matching funds programs need to be seriously reconsidered. Legislating policy based on untested assumptions and before thinking through the potential outcomes is unwise at best and dangerous at worst.



[1] Note: spending limits are not the same as contribution limits, or how much a candidate can receive.

[2] I discuss this topic in greater detail here.

 

By Erinn Larkin, Compliance Director, PACs and Parties

 

Is it a Problem that the Vast Majority of our Electoral System is Financed by Men?

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A significant amount of journalistic attention is devoted to examining how campaign contributions influence who we elect to the U.S. Congress.  Such concern over the potential for “special interests” to exert inordinate amounts of power on our elected officials is clear; it is  antithetical to the notion of the “common interest” that underlies the foundation of our democracy (previously discussed here).   However, while it is often the case that special interests are presumed to be narrow interests  (i.e. “big oil,” unions, corporations, etc.), there is relatively less attention paid to how our campaign finance system affects groups that are too broad or cross-cutting to be called “special interest,” but may nevertheless be significantly impacted by the current campaign finance system. Specifically, the question I address here is whether it is possible that the campaign finance system is contributing to the gender disparity in Congress.  Is it a problem that the vast majority of our electoral system is financed by men?

Why the Gap?  How does the campaign finance system contribute to the problem?

Those that argue overt discrimination against women is a thing of the past note that women perform just as well as men in general elections. For example, no one was shocked this past April when Robin Kelly was elected in a special election to fill the seat previously held by Jesse Jackson Jr. in Illinois.  However it is also true that women generally have to raise more money to perform as well as men at the polls, while at the same time women perceive fundraising to be more difficult than men.  But why?

I suggest two reasons.  The first is the undisputed gender gap in resources: men make up a larger percentage of the work force and earn a higher income on average.  They therefore have more resources at their disposal to contribute to campaigns than women do.  The second, less obvious reason has to do with a particular FEC regulation governing the rules of “Separate Segregated Funds”  (SSFs), which comprise the vast majority of PACs that contribute to candidates and include corporations, membership organizations, unions, etc.  The regulation specifies that the only members of a company or organization that can be limitlessly asked to donate to the PAC are its executives, stockholders, and notably – their spouses.

While the 2012 Fortune 500 “boasted” a record number female CEOs, the grand total came to 18, just 3.6%.  The reality is that the majority of executives and stockholders are male, that in essence, are able to make contributions on their own accord as well as on behalf of their spouses. Taken to its furthest logical extent, the result is that a greater number of men enjoy de facto doubled contribution limits.

Gender of Contributor and Preferences Toward Male/Female Candidates

Of course for any of this to matter to gender fundraising disparity, it must be the case that women prefer female candidates and men prefer male candidates. To see whether there was any evidence for this, I took a sample that included 2975 individuals who made contributions to a subset of eight pairs of freshman candidates (one male and one female in each pair) within the critical first 100 days of the start of their respective campaigns.[1]

The table below presents the results of a quick analysis. I classified contributors that do not have employers and that list occupations such as “homemaker,” “self-employed,” “mother,” and “volunteer” as “working inside the home.”  Unsurprisingly, males constitute a higher proportion of overall contributors. When I exclude contributors (both male and female) that work inside the home, the average contribution for females declines substantially while the average contribution for males increases just slightly.  It also results in a decrease in the percentage of female contributors to 26%.  It is interesting to note that this percentage roughly corresponds to the percentage of women in Congress. (While this does imply causal relationship, it is nevertheless a fun number…not unlike Romney getting 47% of the popular vote in 2012).   Lastly, it is evident that females seem to prefer female candidates and males seem to prefer male candidates.

Does the Discrepancy Matter?

Arguably, the gender imbalance in Congress is only relevant insofar as it has an independent effect on legislative output that cannot be explained by other factors, such as partisanship.  In other words, if gender has no impact on an elected official’s behavior, then an imbalance, however disproportionate, may be functionally irrelevant.  Yet studies show female legislators devote more time and energy to what are informally referred to as “women’s issues,” including healthcare, children and families, women’s rights, gun control, and others.  Stylistically, women demonstrate more cooperative legislative strategies and collaborative approaches, while men tend to prefer more competitive, hierarchical tactics.  Thus it is reasonable to posit that a change in the proportion of women in Congress would have an impact on the nature and type of legislative output.

Particularly in a political time in which fundraising continues to grow in importance, it is important to be aware of how seemingly non-discriminatory formal institutions, such as the campaign finance system, may nevertheless result in discriminatory outcomes.

Contribution Statistics by Gender

Recipient Candidate

Male

Female

Total

Proportion

Average

Contributor

Male

1165 (58%)

870 (42%)

2035

68%

$899

Female

448(47%)

492 (53%)

490

32%

$920

Excluding Contributors Working Inside  Home

Recipient Candidate

Male

Female

Total

Proportion

Average

Contributor

Male

1150 (57%)

867 (42%)

2017

74%

$911

Female

336 (46%)

382 (54%)

718

26%

$799

Gender and Work Status of Contributor and Gender and Party of Recipient Candidate

Total

Mean

Work Inside

Average

Work Outside

Average

Males

To Male Democrats

801

$869

15

$582

786

$875

To Female Democrats

598

$857

3

$1525

595

$852

To Male Republicans

364

$1091

0

$0

364

$1094

To Female  Republicans

272

$901

0

$0

272

$901

Females

To Male Democrats

316

$1028

70

$1493

246

$874

To Female Democrats

379

$791

82

$972

297

$727

To Male Republicans

132

$1219

42

$1591

90

$942

To Female  Republicans

113

$795

28

$1019

85

$692


[1] The eight pairs, or sixteen total candidates, consist of individuals competing for Congressional office for the first time.  All chosen candidates won their elections in 2008 and subsequently were sworn-in during the 111th Congress.  The pairs were chosen based on the similarity of their ideology, district qualities, and partisan orientation.

 

By Erinn Larkin, Compliance Director, PACs and Parties

Choosing the Right Lt Gov can be a Game Changer

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Over the next 17 months, there will be 37 governors who will either be elected or reelected. In many of these states the candidates running for governor will have to choose a Lieutenant Governor candidate. One of the key factors to consider is the fundraising support they can add to the ticket.

Here is my analysis of what kind of candidates might exist out there for a gubernatorial candidate to help maximize his or hers’ fundraising potential heading into a general election.

  • The Millionaire – any candidate who has the ability to self-fund can instantly change the fundraising ability of a gubernatorial candidate and his ticket. This would likely be the best match for a candidate who needs cash fast in order to level the playing field. Any Lt Gov who can quickly infuse a few hundred thousand into a close race could be a game changer.
  • The War Chest – some politicians have been around for years stockpiling huge sums of cash. Anyone that has done this would be a great person to add to the ticket as instantly bring cold, hard cash ready to be used. Only a few potential candidates have significant war chests that could make them a good candidate.
  • The Instigator – in recent years we have seen many politicians become very successful fundraisers by always being at the center of controversy. “Wingnuts” as many of them are referred to as; usually make great fundraisers but terrible candidates. Think Michelle Bachman, Alan Grayson, or even Sarah Palin.

While there are many, many ways for a good Lieutenant Governor candidate to add to their tickets fundraising successes these are just a few categories that they might want to consider before deciding on who to slate with them for next election.

By Nick Daggers, Vice President, Fundraising

 

What is the Point of Campaign Finance Reform?

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Adam Lioz’s recent article titled “Half a Step Forward and a Full Step Back: Can Connecticut Maintain its Leadership on Money in Politics?” calls attention to the on-going trend of weakening campaign finance regulations across the country.  His argument included a litany of potential policy options aimed at reversing this trend. Some of the suggestions included eliminating spending caps for publicly funded candidates, a greater ratio of matching funds, and tax credits that incentivize more people to contribute.

While the policy alternatives put forth have interesting implications, an expansion of them is beyond the scope of what I seek to achieve today.  Rather, my purpose here is to discuss the critical flaw imbedded within various calls for reform (including this one), which is that there is a conspicuous absence of any specific goals that reformers hope to achieve through policy change.

First, the foundational arguments upon which progressives pursue campaign finance reform continue to be unclear.  For example, the author first speaks of Connecticut’s Citizens’ Election Program as welcomed solution to the “scandal and malfeasance” within Connecticut state politics in the early 2000’s.  He then goes on to proclaim, “the point of the Citizens’ Election Program is to give ordinary citizens and not wealthy donors the power to control who runs for office and who wins elections—so that elected officials will be accountable to their voting constituents, not a separate class of “cash constituents.” The difference between these two purported goals are subtle, yet profound. The former purports strict campaign finance regulations to be a means of mitigating corruption and malfeasance.  The latter professes notions of equality and constituent representation to be the primary goals of regulation.

Context also needs to be addressed. As the author notes, the Connecticut laws arose as a reaction to crisis. Thus it seems reasonable to assume that a decade later, it might be necessary to reevaluate the law to determine whether the changes were effective.

Lastly, the author refers to Senator Chris Murphy and his characterization of campaign fundraising as “soul-crushing.” Many officials have made similar complaints – often in reference to the time and energy they necessarily have to devote to raising money for their campaigns. I would agree with the author that this is problematic. However it remains unclear to me how a system by which officials are forced to spend a greater amount of time and effort in order to attract lower dollar contributions from individuals less likely to want to contribute is an efficient means of solving the problem.

Until there is agreement on specific goals that can be attained through policy change, I feel the general public will be unwilling to listen to their arguments, and will remain unconvinced that reformers are not fundamentally motivated by their own bias. For example, there was little complaint about notions of equality from progressives regarding the vast fundraising discrepancy between presidential candidates John McCain and Barack Obama.

As I noted on this topic in December, my criticism of progressive calls for reform is not to suggest that it is an unworthy cause or that it should be abandoned. Rather, it is a plead for reformers to eliminate fuzzy objectives that could best be described as “better government,” in favor of clear, established goals. Only then will reformers be able to demonstrate precise ways in which their policy proposals solve specific problems.  And only then will they have a chance of garnering public support for their cause.

By Erinn Larkin, Compliance Director, PACs and Parties

What Can We See in Q1 Reports?

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In addition to being tax day, April 15 was the deadline for federal campaign committees to file their first fundraising report of 2014.

The amount of activity contained in these reports helps us speculate about what implications these numbers may have with respect to the 2014 elections.

Power of Incumbency – One of the most obvious signs of these early reports demonstrates is the advantage of being an incumbent. This past January, eighty-one freshman members of the US House were sworn in. Of those eighty-one, twenty-five raised over $250,000 in the first quarter of this year. Many of these incumbents are expected to be somewhat vulnerable heading into the next election.    Challengers simply do not have the resources and apparatus to  raise the kind of money that incumbents can at such an early point in the election cycle; many of them have yet to even declare their candidacy.

Therefore,  incumbents have the benefit of a de facto head-start in the fundraising race. Only a handful of vulnerable members have opponents eighteen months before the next election.   This means that  incumbents often have somewhere between a  $300,000-$500,000 head start before they even have a declared opponent.

A Glimpse of the Future – These numbers may also provide insight into whether an incumbent is considering a run for higher office in 2014.

House members Gary Peters (D-MI) and Tom Cotton (R-AR) are two potential examples of this. Peters proved his fundraising ability by netting $371,000, and in turn, demonstrated that his legitimacy as a possible contender to replace the retiring Senator Carl Levin (D-MI). Cotton is rumored to be considering a challenge to Senator Mark Pryor (D-AR); he raised $526,000 over the past three months, which places him at the front of the pack for Senate challengers.

These reports also show the opposite; that some incumbents are not ready or willing to make a run for higher office. Many in the Tea Party had dreams of Steve King (R-IA) running for the open Senate seat in his state, even though the Republican establishment was rooting for his colleague Tom Latham (R-IA). Latham seems to have won this round by raising $300,000 – more than three times what King raised(amounting to just under $93,000).

Thinking about a Comeback? – We can also look at the reports of members who lost in November to see who is plotting a comeback bid. The quickest way to identify a candidate not considering a bid is to look at who has terminated their campaign committees. Already over 100 campaign committees from 2012 have closed including defeated incumbents on both sides of the aisle.

We can also look at committees that remain open to see who might be thinking of a comeback or considering retirement. The outspoken former Congressman Allen West is likely not considering another bid; his committee transferred $400,000 from his committee to his non-profit foundation. There are also signs from losing candidates that might be considering another bid. Those committees tend to hold onto as much of their cash-on-hand as possible and spend on some limited expenses like polling, fundraising, and paying down debt that could inhibit a future run.

By Nick Daggers, Vice President, Fundraising

What will it cost to win back the House?

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By Nick Daggers
Follow Nick on Twitter @nickdaggerscfo 

With the 2012 election in our rearview mirror we are all looking down the road to 2014. After a successful cycle the Democrats gained eight seats in the House but are still 18 seats short of the majority. There are plenty of race trackers and analysts that can offer their thoughts on which seats will be in play and why. I would like to offer a quick demonstration of what we can expect to see spent in a race for the majority.

A good case study to establish an estimate for 2014 spending is to look at the six (8, 10, 11, 12, 13, 17) competitive races in Illinois from 2012. According to the Center for Responsive Politics in the five districts won by the Democrats the campaigns and their allies spent a total of $20.5m, or an average of $4.1m per Democratic pickup.

The Illinois’ 11th and 17th Congressional Districts provide a microcosm of districts across the country that Democrats must win in order to take back the House. In both cases the DCCC was able to help recruit strong Democratic challengers (which will be key again in 2014) to take on popular Republican incumbents. In order to take back the house in 2014, Democrats will likely have to defeat at-least 20-25 Republican incumbents.

In the IL11 Bill Foster defeated Judy Biggert. Foster and his allies had to spend $4.88m in order to secure victory. The IL11 covers a diverse swath of the Western Suburbs of Chicago. Meanwhile two hours to the west is the IL17. In this district, Cheri Bustos defeated one-term Congressman Bobby Schilling. Bustos and her allies had to spend just shy of $4.7m to win.

While the races had many similarities they also had one glaring difference, they both fell into two very different media markets. The IL11 is in the Chicago media market, the third largest in the country, and the IL17 covers the Rockford, Quad Cities, and Peoria media markets, of which only the Quad Cities are a top 100 market.  Since both districts cost about the same to win it helps demonstrate that no matter the media market, Democrats can expect to spend about $4.75m per Republican incumbent they can defeat.

The Democrats are looking at needing to spend $120m just to defeat Republican incumbents. That number does not include the 201 seats we will have to defend and the 100 plus seats that are safely in the Republican column, which can probably be estimated at-least another $200m.

Over the next 18 months we will see exactly how these races play out and if the Democrats and their allies can raise to take back the House. While we won’t know that final number for months to come, we can already guess that just like the past three election cycle we should all expect it to be another record year for campaign spending in the battle for the Speaker’s Gavel!

 

Nick Daggers is a Vice President of Development for CFO. He has spent the last five years working as a fundraiser for political campaigns and non-profits.