Campaign Finance Reform: Lift All Limits

Article excerpt

In the waning days of the presidential race, the perennial issue of campaign finance reform bloomed after the news that the Democratic Party had solicited funds from foreign interests came to light. In California, when a business coalition raised nearly $40 million to defeat Proposition 211-a potentially devastating initiative to liberalize rules on shareholder lawsuits-the national scandal helped push a state campaign finance reform initiative to a lopsided 60-40 victory.

Although it is tempting to jump on the "too-much-money in politics" bandwagon, especially when big-labor is spending millions to malign important pro-business legislation, CEOs must resist the urge. Campaign finance restrictions, first implemented at the federal level in the wake of Watergate, represent a classic case of a familiar phenomenon: The failure of biggovernment regulatory solutions being held up by their supporters as justification for more of the same.

The primary goals of the 1974 reform legislation were to lower campaign costs, reduce the power of special interests, and open up the political process. But just as anti-poverty programs of the 1960s often induced more poverty, campaign finance reform of the 1970s generated more insider influence. Dollar spending on congressional campaigns increased nearly threefold between 1974 and 1992, according to a study by the Washington, D.C.-based Cato Institute. This study also notes that the ratio of House incumbent spending to challenger spending increased by more than 150 percent during this period and reelection rates reached "record highs."

"The present rules restrain candidates, especially those with bold ideas, and are demeaning to the American electorate," states Frank Baxter, chairman, president and CEO of Los Angeles-based Jefferies and Company, Inc., brokerage group. "They make it possible only for established parties or independently wealthy people to run for office."

That there is too much money in politics is taken as a given by reform enthusiasts, yet campaign spending is hardly out of control. "More money was spent to syndicate Seinfeld than we spend on the presidential election," points out Ed Crane, president and CEO of The Cato Institute. In fact, the Institute's study estimated total spending during the 1994 campaign cycle at between $7.50 and $10.00 per eligible voter.

Even the costly effort to defeat the triallawyer backed Proposition 211-which involved using television and billboard advertisements to educate California voters on the issue-is hardly a scandal. …