Governor Roemer shares the growing optimism among reformers that campaign-finance laws designed to empower small donors will improve our democracy. The reasoning behind this proposal seems sound. Increasing campaign contributions from individuals diminishes the relative importance of money from interest groups, which should in turn weaken the influence of those groups in Congress. Governor Roemer harps on the gap between the interests of voters and of special interests. But just as significant a gap exists between the policy preferences of voters and of small donors.
Dysfunction in Congress owes at least as much to the heightened state of partisan polarization as it does to special interests. As a group, small donors are fiercely partisan and have concentrated their support on the most ideologically polarizing candidates. Governor Roemer should give serious thought to the effect of small donors on Congressional polarization.
A common misconception is that polarization goes hand-in-hand with lobbying and special interests. On the contrary, corporations and industry groups typically pursue bipartisan strategies. In fact, contributions from industry PACs, corporate executives, and lobbyists flow more freely to the ideological center than to the ideological extremes. For better or worse, lobbyists and interest groups seek to build coalitions, and this often requires engaging the lawmakers most likely to be pivotal.
Political contributions are often portrayed as a means by which special interests hash out quid pro quo deals. In truth, they more closely resemble a form of expensive targeted advertising. Lobbyists value lawmakers who can understand, internalize, and act on their concerns. This puts a premium on lawmakers who obtain positions of power on important committees or establish themselves as policy experts, but lobbyists will ultimately attempt to persuade anyone willing to listen.
Fund-raising from small donors calls for a different set of talents. The most successful small-money fund-raisers mix media exposure with partisan taunting and ideological appeals. Fund-raising superstars Alan Grayson and Michele Bachmann have demonstrated this. During the 2010 election cycle, small donors (those who contribute $200 or less) gave $3.4 million to Grayson and a record-shattering $7.5 million to Bachmann. Overall, ten percent of House candidates raised over fifty percent of small-donor dollars. Moderates were less successful in attracting small donors. In fact, Bachmann alone raised more from small donors than the combined amount raised by all 48 Blue Dog Democrats running for reelection.
Fund-raising from small donors is about partisan taunting and ideological appeals.
We have also learned that controversy pays better than policy expertise. Representative Joe Wilson stumbled upon small-money gold after his notorious outburst during President Obama’s speech on health care, raising over $2 million in the following weeks. If I were to suggest an addition to Governor Roemer’s four principles for fixing campaign finance, it would be to avoid systems that make heckling an effective fund-raising strategy.
In the 2010 Senate elections, small donors bankrolled a wave of primary challenges against sitting incumbents and presumptive nominees deemed too moderate. Without this funding, the campaigns of William Halter (D-AR), Christine O’Donnell (R-DE), J.D. Hayworth (R-AZ), Marco Rubio (R-FL), Joe Miller (R-AK), Pat Toomey (R-PA) then Joe Sestak (D-PA), and Sharon Angle (R-NV) would have struggled to remain competitive. These primary challengers raised $45 million in small donations, accounting for 43.6 percent of their total funds; their primary opponents raised a paltry $4.4 million in small amounts, accounting for just 6.6 percent of their total funds.
Meanwhile bipartisanship, long seen as a virtue by voters and essential to the workings of the Senate, has become an offense worthy of punishment. And small donors are eager to dole it out. Olympia Snowe (R-ME), Richard Lugar (R-IN), and Orrin Hatch (R-UT) will face primary challenges in 2012 from opponents who will no doubt rely heavily on funds raised from small donors.
The relationship between small donors and polarization does not mean we should abandon campaign-finance reform, but it does suggest we should favor some proposals over others. For instance, restricting matching funds to residents of a candidate’s constituency, a feature of New York City elections since 1989, might diminish the polarizing influence of out-of-state money. We can take this idea a step further with a tiered system of matching funds that places a large premium on first-time donors. A seldom acknowledged feature of small donations is that much of it originates from individuals who spread thousands of dollars over dozens of candidates. We can forgo subsidizing these big donors, who just give in small amounts, by diminishing the subsidy with each additional dollar donated—think of a system similar to earned-income tax credits. Short of a voucher system, giving citizens incentives to becoming first-time donors seems essential to expanding the donor pool.
I do not share Governor Roemer’s optimism towards meaningful campaign-finance reform. Even Roemer himself concedes that no one has the “perfect answer.” He calls for continued debate, but the debate has continued for decades now. Scores of very smart people have searched for a solution that adequately regulates special interests, but no one has succeeded and those interests will almost certainly find ways to circumvent or adapt to new laws. This only feeds my suspicions that campaign-finance reform is a distraction.