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"Hard Money" Reform Protects Incumbents

by Patrick Basham

Patrick Basham is senior fellow in the Center for Representative Government at the Cato Institute.

This article appeared on cato.org on April 4, 2001.

The Senate’s approval of campaign finance “reform” makes a bad situation worse. In particular, it makes it harder for newcomers to run for office because it strengthens the advantages incumbents enjoy. This is clear in the “reform” that raises the amount of money that individuals may give to candidates.

Under current law, a person may give up to $1,000 to a candidate. This is “hard money.” The candidate may use it directly for his own campaign. (“Soft money” may be used to advocate issues or a political party--but not for the candidate directly--and “soft money” amounts are not restricted.) The Senate’s campaign finance “reform” would raise the limit on “hard money” from $1,000 to $2,000.

The major media and the Senate are saying this is a good thing. That’s what they want you to believe because they’ve rigged this fix in their favor. But, one may ask, doesn’t the McCain- Feingold bill double the contribution limit? And won’t the higher limit result in a torrent of serious money flooding into the political system?

Not in real terms--no. And there’s the catch. If adjusted for inflation, the $1,000 contribution limit enacted back in 1974 would be worth around $3,000 today. So, while no rational observer should object to making a bad law a little better, viewed in relative terms the modest increase won’t address the fundamental problem of a largely uncompetitive political system. The most recent evidence is discomforting: November’s congressional election saw 392 of 399 House incumbents--98 percent--re-elected.

The factors contributing to this Soviet- style success rate among incumbent politicians include the usual suspects: millions of free mailings to constituents; large staffs both in Washington, D.C., and in district offices; free travel; free constituent service; and, most recently, free Web sites for campaigning--sorry, communicating--with the electorate.

In addition to being paid for by taxpayers, these vote-enhancing instruments share a common origin: all were self-bestowed benefits brought into effect by incumbent politicians seeking to reinforce their political invulnerability. Critically, limits on contributions to candidates were similarly designed (and are protected) to ensure the same outcome: an unlevel campaign-playing field.

The best political science scholarship confirms what politicians recognize at first glance--it’s difficult for a challenger to oust an incumbent without the former spending at least as much as, and probably more than, the latter during the campaign period.

Only by spending large sums on television advertising, direct mail solicitations, and grassroots organization can a challenger develop the levels of name recognition, issue identification, and voter mobilization to catch up with the years (frequently decades) of subsidized campaigning and pork barrel spending that so characterize an incumbent’s terms in office.

Under the rhetorical guise of warding off unspecified corruption, an incumbent is happy to limit himself to $1,000 or even $2,000 contributions. Certainly, he may detest the phone calls he has to make and the fundraising breakfasts, lunches, and dinners he has to attend. But at night he sleeps well in the knowledge that his challenger back home must do the same (more, if the challenger is serious about winning) without, in most cases, a comparable network of contacts, donors, and lobbyists whose longstanding collective investment in the incumbent’s career ensures their continuing financial commitment.

However, the Senate did overcome its fear of corruption long enough to raise the hard money limit up to $6,000 if a self-financed millionaire candidate is challenging the incumbent. It seems that the political advantages conferred by private wealth must be corrected for with new rules for threatened incumbents but the political advantages conferred by public subsidy apparently merit no such correcting mechanism.

With almost three decades of empirical evidence to reflect upon, it is clear that contribution limits have two insidious consequences. First, they greatly reduce the likelihood that a challenger will successfully oust an incumbent, thereby reducing the level of competition necessary for a healthy political system.

And, second, such long odds against success provide an enormous disincentive for qualified, successful people to put themselves forward as candidates in the first place, thereby reducing the quality of the pool of potential challengers and would-be successors should--by scandal, death, or resignation--an incumbent fail to gain or seek reelection.

The loudest of the cheers echoing around the nation’s capital following the passage of campaign finance reform belong to incumbent politicians. Challengers nationwide are silent, accepting their electoral fate, as are prospective challengers deciding not to run for office. Actual and prospective challengers won’t start cheering until Congress does away with contribution limits completely.