The Real Issue with Campaign Finance Reform

Bernie Sanders and Hillary Clinton constantly talk about campaign finance reform and overturning Citizens United, the infamous Supreme Court case that allows individuals and corporations to give unlimited campaign donations as long as it is done indirectly through a Super PAC. But Sanders and Clinton get it all wrong.

Now, there is no doubt that corruption exists in our government. Politicians vote “yes” and “no” on bills all the time in order to placate their donor base. For this reason, the argument for restricting campaign donations are seductive. However, we run into legitimate problems when we attempt to restrict campaign spending, like how Citizens United finally put an end to the two party party duopoly over campaign contributions and how campaign contributions are a form of political speech protected by the 1st amendment.

Beyond those two issues, there are other problems with campaign finance reform, such as the evidence suggesting restrictions on donations benefit incumbents at the expense of the challenger, meaning democracy may be limited after reform (also see the duopoly link, which argues Citizens United increases democratic diversity), and research by the Mercatus Center suggesting campaign finance reform does little to reduce corruption.

Either way, let’s assume Clinton and Sanders have it right: Campaign contributions are pernicious and the Citizens United ruling unjust. Is the case for campaign finance reform strengthened? Not really.

Economist Dan Mitchell has an interesting blog post up which I will excerpt below. I highly recommend readers go and check it out.

Mitchell quotes a NY Times article called the “Conservative Case for Campaign Finance Reform.” Here’s the crux of the argument:

big money in politics encourages big government. Campaign contributions drive spending on earmarks and other wasteful programs — bridges to nowhere, contracts for equipment the military does not need, solar energy companies that go bankrupt on the government’s dime… When politicians are dependent on campaign money from contractors and lobbyists, they’re incapable of holding spending programs to account. Campaign contributions also breed more regulation. Companies in heavily regulated industries such as banking, health care and energy are among the largest contributors. Such companies donate with the hope of winning narrowly tailored exceptions to regulations that help them and disadvantage their competitors

But, as Mitchell argues, the article misses the point. The NY Times article gets it mixed up. As Mitchell writes:

The sun doesn’t rise because roosters crow. It’s the other way around. What Mr. Painter fails to understand is that there’s a lot of money in politics for the simple reason that government has massive powers to tax, spend, and regulate.
Politicians in Washington every year redistribute more than $4 trillion, so interest groups have an incentive to “invest” money in campaigns so they can get some of that loot. Those politicians have created a 75,000-page tax code that is a Byzantine web of special preferences, so interest groups have an incentive to “invest” money in campaigns so they get favorable treatment. And the politicians also have created a massive regulatory morass, so interest groups have an incentive to “invest” so that red tape can be used to create an unlevel playing field for their advantage.

In other words, we don’t need to get money out of politics; we need to get politics out of money. Even assuming every claim Clinton and Sanders have said is true (and, as I noted above, most of them aren’t), the case in favor of campaign finance reform is weak, at best, and at worst, doing little to solve the problem while trampling on the first amendment rights of thousands of Americans.

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One thought on “The Real Issue with Campaign Finance Reform

  1. Pingback: Boston University Study Says Regulation INCREASES Corporate Profits | Rekonomics

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