Notice that you no longer hear what was, until recently, an incessant rhetorical drumbeat--the campaign finance reformers' lament about there being "too much money in politics." What happened? Liberals discovered that they could raise lots of money. They rejoiced when Howard Dean so effectively mined the Internet for contributions that he opted out of public financing and its spending limits, causing John Kerry to follow suit. So liberals have adjusted their rhetoric, and their principles, such as they ever were.
--George Will, August 2004
To its supporters, our most recent round of campaign finance reform legislation, the Bipartisan Campaign Reform Act (McCain-Feingold, in shorthaud), merely fills in the loopholes in the campaign finance laws passed during the 1970s. Yet, like other government attempts at central planning, the law is incredibly complicated and produces unwelcome results unimagined by its supporters. To analyze these new regulations, a special three-judge district court panel felt it necessary to issue an unheard-of 1,600-page opinion. A sharply divided Supreme Court weighed in early this year with a mere 298 pages, and still left many complex issues unresolved.
The new law seems to cover just about everything. It restricts how much political parties can give to candidates and what individuals can give to parties. Contributions by minors are banned. Upper limits on individual contributions are raised, but they are now adjusted by a formula that penalizes wealthy candidates for spending their own money. The law even controls the timing of ads from independent groups for candidates for federal office.
As before, supporters predicted these rules would reduce the role of money in politics, make elections more competitive, reduce corruption, and encourage more people to vote. But, as with every previous round of regulations, things have become worse.
Take the issue of donation limits: Prior to 1976, when such limits were first introduced, House members lost 12 percent of their races (according to data since World War II). After 1976, it was just 6 percent. Senators moved from a 24 percent loss rate to 19 percent. My own research on donation limits on primary and general election races for state senators--with data covering 1984 through the 2002 primaries--analyzed the impact of state regulations similar to those in McCain-Feingold. These regulations increased the incumbents' winning vote margin by at least 4 percentage points, and the number of state senate candidates running for office fell by an average of about 20 percent.
Why did this happen? First of all, incumbents have built-in advantages, such as better name recognition and the use of government resources to help them campaign and generate news coverage. Incumbents are also at an advantage in the difficult task of building a large number of small donations, having had years in office to put together long mailing lists and make contacts. As the law stands, the long head start required for fundraising means that, if a candidate falters late in the race, it is virtually impossible for other candidates to enter at the last minute and remain competitive.
Current rules limiting the support that parties can offer to candidates provide the greatest incumbent protection, as new, relatively unknown candidates rely on party support more heavily than well-known incumbents. While both incumbents and challengers received help from their parties, challengers were between 77 and 307 percent more dependent on party help than were incumbents for the U.S. House and Senate races from 1984 to 2000. Indeed, in the nine elections surveyed during this period, there is only one case (the Democratic Senate races in 2000) in which the incumbents received more help from the party than did the challengers.
The 1974 reforms did nothing to stop the growth in campaign spending, either, and McCain-Feingold …