When Campaign Funding Reform Works Too Well

Ronald Brownstein covers politics for the National Journal

When his big problem was debt, not sex, former Sen. Gary Hart often said his presidential campaign had so many unpaid bills because he wouldn't lower himself to accept money from pernicious political action committees (PACs).

As an explanation for his campaign's financial problems, that line belonged in the "we-slept-in-separate-boats" school of political rationalization.

Though most political activists don't realize it, PACs play almost no role in presidential politics. When presidential candidates say, as many do, that they won't take PAC money, they are practicing the kind of morality that politicians (like most of us) prefer: cheap and easy.

In the past three elections, PACs provided only 1.2%, 1.4% and 1.1%, respectively, of the funds raised by the presidential candidates, an amount so small as to be inconsequential. In this campaign, even Establishment Republicans such as Vice President George Bush and Senate Minority Leader Bob Dole of Kansas expect to receive only a minuscule percentage of their funds from PACs. Hart's 1984 debt of $4.7 million was almost four times as much as PACs contributed to all candidates in that election.

The virtual elimination of PACs from the presidential nomination process is one of the principal victories of the campaign finance reform law passed after Watergate. Almost since the day that law went into effect, reformers have wailed ever more loudly about the rising cost of congressional races and the candidates' growing reliance on special interests to pay the bills. Like an alcoholic recovering from a bender, many legislators came out of the last election convinced that something had to be done. And so legislation is now under consideration on the Senate floor to impose public financing and limit PAC contributions in congressional races.

But the bill ignores the most sensitive political contest of all: the presidential race. Two factors explain the omission. By and large, in the presidential race, the campaign finance reforms have worked. And what many consider the principal remaining problem--a contribution limit set too low --is not the sort of issue that attracts reformers.

Though regulations covering presidential campaign financing are complex, basic rules are simple. In the campaign finance law, Congress limited the amount candidates for the presidential nomination could spend, and the size of contributions they could receive. It barred contributions to the general-election presidential campaign and instead provided public financing for the nominees.

Those rules explain why PACs, playing such a significant role in congressional battles, stay out of the White House race. Because they can only give money to candidates in primaries, PACs are forced to select not between the parties, but among them. To most PACs, that doesn't make sense: Why should a business PAC pick Bush over Dole?

Labor bends this rule, spending heavily to rally members behind its favored candidate. In the last election, labor efforts on behalf of Walter F. Mondale amounted to an electoral jihad. University of Southern California political scientist Herbert E. Alexander, author of "Financing the 1984 Election," estimates that unions spent $10 million in the nomination process and $20 million in the general election to help Mondale. Unions are unlikely to play as great a role in this election, because labor leaders--faced with a field of unknowns--do not seem to be heading toward anointing a single candidate.

In theory, PACs can affect the presidential race through independent expenditures. But in practice they do little.

Consider the 1984 presidential campaign. Eight ideologically conservative PACs reported an impressive-sounding $16.2 million in pro-Reagan or anti-Mondale independent expenditures. The numbers were a mirage. During the presidential campaign, these groups did virtually nothing but raise money for themselves; 85% of the National Conservative Political Action Committee's pro-Reagan independent expenditures, for example, went into massive direct-mail appeals that used the presidential campaign as the hook. With conservative direct mail fund-raising still struggling, the prognosis for 1988 is for more of the same.

All this notwithstanding, special interests are heard in presidential politics. But their influence comes from the ability of groups such as unions, environmentalists, feminists, religious fundamentalists and anti-abortion activists to provide candidates with people--volunteers who make phone calls and voters who cast ballots.

People, quaintly enough, are at least as important to presidential candidates as money; with equal deference, Democrat and Republican presidential candidates routinely align their positions to suit the litmus tests of their party's most powerful constituency groups. No current Democratic contender wants to ban abortion; no Republican wants to leave the law unchanged. No Democrat supports aid to the Nicaraguan contras ; no Republican would cut them off.

But constituency groups who represent a real slice of the community are always going to influence politicians--there's no reason they shouldn't--and it has to be considered positive if the groups lure the candidates with voters, not dollars.

The law has had a similar effect by limiting individual contributions to $1,000. Before the limits, multimillionaires on the left and right regularly made campaigns viable with a stroke of the pen. Now, big contributors have been replaced by big collectors--people whose political strength is in the size of their address books, not their checkbooks.

Like the big donors, the collectors are routinely rewarded for their labors; former Labor Secretary Raymond J. Donovan apprenticed by collecting funds for Reagan in New Jersey. But the fund-raisers play a fundamentally different role than the huge donors did: Now, to produce funds, the money players have to convince other people to invest in their candidate. Ultimately, a successful presidential campaign requires tens of thousands of donors. In that way, the contribution limit has made fund-raising much more of a grass-roots activity.

The contribution limit, though, has also had a perverse effect and created the reform's great unintended consequence. The law allowed the spending limit to rise every four years with inflation; but Congress did not index the contribution limit. "There has been such an erosion of the dollar since 1975 that a $1,000 contribution today is worth just over $400 in constant dollars," said Alexander.

The frozen contribution limit has forced all candidates to devote more of their time to raising money. The time demands are greatest on the least-known candidates--without the name recognition to attract direct-mail donors or the star fund-raisers. Thus dark horses who most need to meet voters are forced, perversely, to spend the most time rubbing elbows at insider cocktail parties.

It is counterintuitive for reformers to believe that increasing contribution limits could improve the political process. But now many experts see that as the answer. "The reason for raising the limit is not because the candidates need more money," said Alexander, "but because candidates have had to spend more and more time raising money."

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