Posts Tagged ‘gubernatorial elections’

Benefits and Inequalities of Matching Funds

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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