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Small Change
Money, Political Parties, and Campaign Finance Reform
By RAYMOND J. LA RAJA The University of Michigan Press
Copyright © 2008 University of Michigan
All right reserved. ISBN: 978-0-472-07028-2
Chapter One
Money and Politics For at least a century, the nation has struggled with how to reconcile the role of money in politics. Much of the public debate has focused on the potentially corrupting effects of political contributions to candidates and on how to curtail the influence of wealthy donors. Frequently ignored in these debates are the consequences of campaign finance regulations for political organizing and campaigns. These regulations matter not only as a way to prevent influence peddling-the classic quid pro quo-but also because they influence who has power in electoral politics. Campaign finance laws help some political organizations and candidates raise and spend political funds more easily than others. In turn, these laws can influence who gets elected to public office.
Seen from the perspective of electoral engagement, regulating money becomes not merely an issue concerning corruption but also one that raises questions about fairness in a broader sense. Who gains from changing campaign finance rules? How do these rules affect different groups? These are questions this book explores. Rather than focus on candidates or interest groups, as many studies do, this work focuses primarily on political parties. I examine how campaign finance laws affect the two major national party organizations, the Republican National Committee (RNC) and the Democratic National Committee (DNC), which have come to play significant roles in American political campaigns in recent decades. The goal is to understand how rules regulating political money have shaped the activities and influence of party organizations and, more indirectly, the groups and individuals that support these parties. In doing this, a broader purpose is to understand the dynamics of political reform, namely, the underlying motivations for pursuing reform and how rules generate consequences, both intended and unintended. This knowledge is then put to use in a specific context to assess how parties respond to the current configuration of laws under the new Bipartisan Campaign Reform Act (BCRA) of 2002.
The national party organizations have been in existence since the mid-nineteenth century, but they have traditionally been weak institutions in a system of decentralized political parties. Their chief task was to organize the national conventions, after which they virtually disappeared until four years later. Typically, American parties were most influential at the local level among party chieftains who controlled blocs of county or urban voters and the patronage jobs available in the cities and states. The intensely local nature of party politics has changed in the past thirty years. In the 1980s and 1990s national political parties emerged as stronger organizations to help candidates meet the growing expense of campaigns (Aldrich 1995; Cotter et al. 1984; Herrnson 1988; Schlesinger 1984). They came to possess critical electoral resources, giving them the potential to influence outcomes in presidential and congressional races. With permanent headquarters in Washington, staffed with professionals, both major parties became formidable fund-raisers and sources of expertise, controlling vast amounts of voter data. In the 2004 elections, national political committees combined to spend more than $1.2 billion, or more than one-third of the total reported spending in congressional and presidential elections (Federal Election Commission 2005a). Only three decades earlier in 1972 they spent just $11 million, which reflected just 5 percent of total campaign spending for federal races (Alexander 1976, 85-92).
There is wide consensus among political scientists that the emergence of stronger national parties is good for democracy. Parties have proven to be reliable mediating institutions that connect citizens to their government. Through their widely understood labels, parties help voters identify and select among candidates and policies. By contesting elections, parties also bring accountability to governing elites who must face the prospect of being challenged by an opposing party candidate if they are unresponsive to the public. In addition, political parties help to unite various interests through the give-and-take of coalition building necessary for winning elections in a two-party system. In theory, at least, the partisan goal of winning office should give the parties an incentive to mobilize underrepresented groups that lack other institutional bases of support (Key 1942). A strong national presence has the potential to tighten links between different political groups and bring together local, state, and federal candidates behind a common party platform.
While contemporary national parties appear to be thriving, they do so in a campaign environment highly dependent on money. Like other sectors of society-business, media, and nonprofits-politics has shifted from an activity supported by labor resources to one more dependent on technology and capital. Political campaigns compete for the attention of citizens through intense consumer advertising and leisure entertainment. For this reason, politics has turned to techniques of persuasion and mobilization to capture audiences. Modern campaigns now depend on the intensive use of mass media technology, which include the expert services of pollsters, media consultants, and direct mail marketers.
For the past two decades, spending in federal elections has outpaced the rate of inflation, abetted by the huge costs associated with television advertising (Ansolabehere, de Figueiredo, and Snyder 2003, 105-30). The amounts spent in political campaigns seem astonishing to the average American. In 2004, the presidential and congressional elections cost more than $4 billion, which was more than the gross domestic product (GDP) of Haiti (World Bank 2006). The fact that money has become so critical in elections creates fundamental tensions in the democratic system. In theory, the democratic process, at least since the twentieth century, is rooted in the principle of "one-person, one vote." But that principle appears undermined by a campaign finance system that allows unlimited political campaign contributions. Wealthy donors may receive privileged access to lawmakers or have disproportionate influence in electing candidates. Of even greater concern to many is the prospect that politicians could be corrupted by large donations. Rather than pursue policies in the public interest or for their constituents, they might create policies that favor donors in exchange for campaign money.
The potential for political corruption has brought forth numerous calls for reform throughout the twentieth century. A standard response since the Progressive Era at the turn of the twentieth century has been a "prohibitionist" approach that seeks to restrict the flow of money to parties and candidates, either through contribution or spending caps or both. The avowed goal has been to prevent the quid pro quo exchange between wealthy donors and public officials. In trying to prevent the wealthy from having undue influence, Progressives-and those who followed in their path-sought to shore up the legitimacy of the electoral system. In the Supreme Court case McConnell v. Federal Election Commission (2003), the majority opinion endorsed Progressive reformer and statesman Elihu Root, who argued that restrictions on political contributions would "strik[e] at a constantly growing evil which has done more to shake the confidence of the plain people of small means of this country in our political institutions than any other practice which has ever obtained since the foundation of our Government." Root's efforts, along with those of other Progressives, led to the first federal ban on contributions from corporations and banks under the Tillman Act of 1907. The rationale behind this act under-girded reforms that came later in the century to ban labor union contributions and cap contributions from wealthy donors.
The historical record at the turn of the twentieth century shows numerous efforts in the American states to regulate money. These efforts were integral to diminishing the influence of traditional party elites. American political parties were seen as antithetical to the Progressive goal of transforming democratic politics from partisan expressions of loyalty into a more individualized, rational, "educational," and nonpartisan form of political participation (McGerr 1986). Campaign finance regulation, while not central to the Progressive reform agenda, was part of a broader strategy to deemphasize the partisan nature of political campaigns, to elevate the quality of debate beyond emotional appeals, and to lessen the importance of material motives (such as patronage) as a reason for supporting candidates. The Progressives, with help from the Populists, passed legislation for direct primaries, initiatives, referendums, and campaign finance regulation, all of which challenged the party bosses who previously controlled nominations as well as significant political resources.
A RESOURCE-BASED MODEL OF POLITICAL REFORM
Seen from the historical perspective, campaign finance reforms have been party reforms because the regulations influence the scope of party activity in American elections. While the major thrust of the laws has been to prevent corruption, they have had important consequences on political parties that have yet to be fully explained. Reforms have typically pushed money "outside" the regulated electoral system, reflecting a pattern in which resources seeped away from central political actors, such as party organizations, and toward candidates and interest groups. The decentralizing effects of Progressive-style campaign finance laws have done little to staunch the flow of money in politics but have made it more difficult for broad-based political parties to assume responsibility for elections.
It is not my argument, however, that campaign finance laws caused candidate-centered American elections. Many other factors were at work-technological, institutional, and demographic-but the campaign finance laws surely encouraged and reinforced a movement away from political parties toward an individualized politics by shifting the flow of resources away from the formal party organization.
The partisan consequences of campaign finance reforms do not end here. Reform of any kind tends to favor one party or the other because laws enhance or diminish the value of particular electoral resources relative to others. Through their long histories, the Democrats and Republicans have possessed distinctive sets of resources, supplied by their diverse constituencies. Most obviously, the Republicans, as the party of business and middle class, appear to have access to a larger constituency of wealthy donors. Thus, the RNC tends to perform better than the DNC under regulatory regimes that are more laissez-faire. History shows, in fact, that the RNC has consistently raised more money than the DNC. The DNC, however, has relied heavily on labor unions to mobilize supporters, which provides them with a noncash resource to win elections. For this reason, Democrats tend to prefer restrictions on cash resources.
Democrats have also borne the additional burden of holding together a more heterogeneous coalition than Republicans. While having the support of different constituencies confers obvious electoral advantages, this diversity also increases the cost of organizing. The Democratic Party-divided more than Republicans by section, ethnicity, and ideology-finds it especially difficult to have a strong national apparatus. More than Republican campaigning, Democratic campaigning has been guided by local elites with strong ties to different constituencies. The decentralized nature of Democratic campaigning often means that electoral resources are not used in the most efficient manner. But this has not stopped the party from winning elections by keeping its coalition intact. The divided nature of Democrats has also increased the difficulty of raising money centrally through the DNC since party loyalties tend to be local. Given this disadvantage relative to Republicans, Democrats, I will show later, tend to prefer regulatory regimes that encourage dispersed and decentralized financing of politics, whereas Republicans tend to prefer regimes that allow the RNC to amass funds centrally.
Beyond the interparty effects of reform, rule changes also have partisan consequences within the party. The laws alter the balance of power within a coalition by giving some groups resource advantages over others. Laws that discourage cash contributions, for example, increase the party's dependency on outside groups that can mobilize their members, campaign on behalf of party candidates, or make endorsements. Party leaders adapt their electoral strategies to new laws, and in the process they become more or less dependent on factions within the party structure that can influence the outcome of political campaigns using their particular set of resources. The new dependencies generated by political reforms thus alter power relations between party factions since each group has bargaining power relative to its access to critical electoral resources (Panebianco 1988; Pfeffer and Salancik 1978).
These intraparty dimensions are rarely, if ever, addressed in research on campaign finance, but they have important implications for how we think about electoral reform. The process is fraught with potential for manipulation of rules for political gain. Partisans fight over rules because they control different configurations of electoral resources, which will be affected by new regulations. Reforms may enhance or diminish the value of resources they control, giving them more or less electoral influence. Individual political entrepreneurs, such as Senator John McCain, gain politically from passing reform. Not only do they garner the mantle of being called "reformers," which brings positive publicity, but they also diminish the power of party leaders, and the dominant factions that support the leaders, by helping to pass laws that curtail party-based resources. These entrepreneurs work with discontented factions in either party that desire to weaken the influence of dominant factions within the party.
In this book I argue that the emergence of new campaign finance laws can be tied to partisan strategies for influencing the value of one faction's resources relative to those of rivals. Most previous studies acknowledge the role of partisan interest in passing reform. The historical record illustrates, for example, how Democrats have tried repeatedly to diminish the cash advantages of Republicans and how Republicans in turn have tried to prevent nonparty groups from helping Democrats with in-kind support. But the story of intraparty rivalries in shaping reform has not been told. While descriptive accounts of reform allude to factional maneuvering in passing legislation, they fail to elaborate a theory of how this maneuvering results in particular reforms. Progressive Republicans in the early twentieth century, for example, had much to gain from loosening the ties between traditional Republican elites and corporate interests. Similarly, southern Democrats during the New Deal era were champions of reforms to limit the ability of labor unions and federal workers to campaign on behalf of New Deal Democrats. Campaign finance laws were shaped primarily by groups seeking greater electoral influence over rivals, even those within the same party.
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Excerpted from Small Change by RAYMOND J. LA RAJA Copyright © 2008 by University of Michigan . Excerpted by permission.
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