Public-Private Contracting and Political Reciprocity

By Zullo, Roland | Political Research Quarterly, June 2006 | Go to article overview

Public-Private Contracting and Political Reciprocity


Zullo, Roland, Political Research Quarterly


Prior research linking public-private contracts with political donations has not examined the dynamics of exchange. Evaluating data from Wisconsin, I test for a temporal association between the awarding of public-private construction contracts and political donations by construction firm owners and executives. My findings indicate that donation activity peaks near the months when contracts are approved; that contract-related donation premiums are comparable in magnitude to election cycle premiums; and that political giving varies across three separate procurement processes. I deduce that patterns of political giving reflect strategic expenditures during the negotiation phase of the public-private procurement process. These findings have implications for campaign finance reform and privatization policy.

(ProQuest Information and Learning: ... denotes formulae omitted.)

Reciprocity between elected officials and private industry is a controversial and contemporary topic (Center for Public Integrity 2003). Representational equity (Schattschneider 1960), the fidelity of government regulatory systems (Stigler 1971), and the health of pluralistic democracy (Etzioni 1984) have been described as compromised by deal-making between public leaders and private interests. Social scientists have accordingly sought to understand transactions across private and public institutions with the aim of assessing whether political leaders disproportionately direct collective or public assets to their benefactors in the private sector, or the corollary, that private benefactors aid in the election of candidates who support narrow commercial interests at the expense of the general population.

Yet despite broad interest in this topic, few have modeled the dynamics of exchange. Prior research, in particular, has not matched the timing of private giving with the distribution of public assets, and therefore has not addressed the causal direction of exchange. We explore quid pro quo behavior by examining patterns of political support from the owners and managers of private firms securing public-private construction contracts. The political jurisdiction is Wisconsin, 1991 through 2000, a time period when public-private contracting expanded under the directive of Wisconsin's former Governor, Tommy Thompson. By modeling private political donations to Thompson as a function of the approval of public-private construction contracts, we are able to analyze the temporal order of these activities. We then compare the magnitude of contract-related donations with election-cycle donations, and discuss exchange behavior in relation to the public-private contracting processes.

LITERATURE REVIEW

Smith's (1995) review of the political contribution literature itemizes the conditions where campaign contributions are said to positively affect political decision-making: (1) when the economic payoffs to the contributors are clear and the costs dispersed across the electorate; (2) when the issue is non-partisan and non-ideological; (3) when the public is indifferent, divided, or ignorant; and (4) when the position advocated by an interest group is unopposed by any other interest groups. In many respects, contracts issued by the state meet these criteria. Unlike the heterogeneous benefits that accrue through legislation, private firms reap direct economic rewards from public-private contracts, and costs are typically borne by taxpayers. Moreover, once fiscal policy is determined and department budgets are finalized, the technical details of agency expenditures rarely attract broad public scrutiny or serious opposition from organized interests. Judged by these standards, public-private contracting is ripe for observing exchange between politicians and private interests.

Prior research generally does report a correlation between commercial activity with government and corporate political activity. Masters and Keim (1985), Zardkoohi (1985), and Humphries (1991) model the existence of corporate PACs as a function of the ratio of industrial output purchased by the federal government, which is an average aggregated at (or near) the two-digit Standard Industrial Classification (SlC) code level and then applied across all firms in each SIC category. …

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