Campaign Finance Reform: Making a Bad Problem Worse

The Colorado Freedom Report:  A libertarian journal of politics and culture.

The Colorado Freedom

Campaign Finance Reform: Making a Bad Problem Worse

by Ari Armstrong

The state legislature recently tabled a bill from Rob Fairbank (R-Littleton) that would raise the campaign contribution caps set by the 1996 ballot initiative Amendment 15. As introduced the bill would have eliminated limits on campaign contributions, but with amendments it will likely raise the caps, when and if it is reconsidered by the House later this session. For example, individuals are now limited to $100 contributions to state representatives; this limit is expected to rise to $500.

The revisions, then, will likely improve the laws but not wholly revise them. The law will remain problematic and incapable of stopping special interests from buying favors from politicians. The campaign laws on the books do more harm than good, but libertarian theory provides a workable solution to the problem of political corruption.

The current law, which can be found on-line in the Colorado Statutes starting with section 1-45-101, states its purpose as follows:

The people of the state of Colorado hereby find and declare that large campaign contributions to political candidates allow wealthy contributors and special interest groups to exercise a disproportionate level of influence over the political process; that large campaign contributions create the potential for corruption and the appearance of corruption; that the rising costs of campaigning for political office prevent qualified citizens from running for political office; and that the interests of the public are best served by limiting campaign contributions, encouraging voluntary campaign spending limits, full and timely disclosure of campaign contributions, and strong enforcement of campaign laws.

The law specifies a number of restrictions on campaign contributions which supposedly uphold "the interests of the public." These are the main restrictions.

  • Caps on contributions from individuals and organizations to political candidates, parties, and committees.
  • Limits on contributions from political committees to candidates.
  • Restrictions on contributions from political parties to candidates.
  • Disclosure rules for independent expenditures made for or against a candidate.

There are four main problems with the Amendment 15 campaign finance laws. First, they are not very effective. The main way people have avoided the law is to set up independent organizations to sway voters, usually under the fictitious wording of "educating" rather than directly influencing the elections. (For more on this matter, see my article on non-profits in this issue.) Far from making elections more accessible to average "qualified candidates," then, the current laws have handed the advantage to the politically savvy, who know how to thread money through legal loopholes.

Second, the current campaign laws permit subjective interpretation. "Independent expenditures" are defined as those "not controlled by, or coordinated with, any candidate or any agent of such candidate." A "conduit" is defined as "a person who transmits more than one contribution from another person directly to a candidate or candidate committee" (with certain qualifications). Both of these definitions are ambiguous enough to raise problems.

For example, according to Peter Maysmith of Colorado Common Cause, an independent group bought $7,000 worth of T-shirts and delivered them to Gail Schoettler's campaign committee for the 1998 gubernatorial race, resulting in fines for both organizations. Darryl Eskin, Executive Director of the Democratic Party of Colorado, interprets the events differently. According to Eskin, the official committee did not solicit the expenditure, did not "coordinate" it, and did not receive the T-shirts. Rather, a person, though a volunteer for Schoettler's campaign, independently bought the shirts and independently distributed them at the General Assembly. Further, suggests Eskin, Common Cause was "nit picking" in attacking this case, looking to make an example out of the first suspected violation of the law. So which side is right? Were the T-shirts paid for independently or coordinated with the campaign? We might as well flip a coin, for there is no rational basis to decide.

General hypotheticals can also make the point. If a friend of a candidate decides to make independent expenditures, surely the friend is going to have a fairly intimate knowledge of what points the candidate is running on. If a person reads of a committee's goals in the newspaper, and then decides to make expenditures to advance these goals, is this "coordination?" What about a member of the official committee who is close friends with an independent spender? Spotting a "conduit" can be just as difficult. If a husband convinces his wife to match his contribution, is he a "conduit?"

Also, telling the difference between an "education" group, which can organize as a non-profit and escape the disclosure rules, and an advocacy group is tricky at best. For example, Common Cause registered a complaint against the non-profit group Centennial Spirit, which "educated" voters about the flaws of Democratic tax records and the virtues of Republican tax records. Eskin, as head of the opposing party, characterized the TV spots of Centennial Spirit as indistinguishable from the official advertisements. So does this activity rightly fall within the disclosure rules? There's no clear way to evaluate it. Subjective law opens the door to abuse (not to mention hefty legal fees).

The third problem with the current campaign finance laws is that they hand the advantage to rich candidates, who can spend any amount of their own money on their own campaigns. A candidate of average means must rely on the contributions of others, and so is hurt by caps on contributions.

Finally, the current laws hurt the chances of third parties. The smaller the party, the more important it is that its members be able to contribute to campaigns.

The Paradox of Campaign Finance Reform

In a recent conversation, I asked Representative Ron Tupa, a Democrat from Boulder who favors even tighter restrictions on campaign contributions, why we shouldn't just trust the voters to decide when an election has been unfairly bought.

"If people were more knowledgeable, we wouldn't need the campaign finance laws," Tupa replied. In other words, if people were smart enough to vote against sell-out politicians, we wouldn't need the reforms.

But this creates a peculiar paradox. If people are so dumb that they vote for corrupt politicians, as the campaign finance movement assumes, then how can they be smart enough to enact good campaign finance legislation?

Categorizing the possible motives of the voters who passed Amendment 15 may help resolve this paradox. I've thought of eight groups.

1) It's always important to remember that less than half of the eligible population votes in elections these days. According to the League of Women Voters, only 82% of eligible Colorado residents registered in 1996, and only 53% of those who registered actually voted, which means that only 43% of the qualified population voted. About two-thirds of those who voted supported Amendment 15, so the law passed with less than 30% support. (Bill Clinton, our "twice popularly elected President," earned less than a quarter of the total potential votes in 1996. It depends on what your definition of "majority," is, I suppose.) Among those who don't vote are a group I'll call "very cynical," those who know what's going on in politics but who don't vote either on moral grounds or on Public Choice grounds (because a single vote is insignificant). The very cynical don't participate in democracy, don't trust it, and have either given up on the system or want radical reform. These types are either libertarian or close to the libertarian camp.

2) The other group of non-voters is the "disinterested." Such people avoid politics altogether either on Public Choice grounds or because they are ignorant concerning politics. While these people will probably never directly participate in the libertarian movement, their existence does bolster the argument that voting isn't really about "rule by the people."

3) Of those who voted, around a third voted against Amendment 15. One group who voted against it is "happy." These happy voters realize that special interest groups are involved in politics, but either don't believe this causes a significant problem or don't believe the reform laws will help. Members of this group may vary in how informed they are about the issues and candidates.

4) Others who voted against the contribution caps are "market reformers." This group believes the laws limiting campaign funds are ambiguous, an infringement on liberty, and beneficial to wealthy individuals and major parties. Market reformers lean libertarian in their thinking.

5) The final people to vote against campaign finance reforms are the "special interest elitists," those who actually buy favors from the politicians and blatantly loot the public.

6) The first group that voted for Amendment 15 is "welfare-liberal elitist." These people believe that most other voters are basically dumb and incapable of seeing past glossy advertisements to vote for candidates of integrity. The "welfare-liberal elitist" group sees democracy not as an inherently noble system, but rather as a tool to be used, by them, to reform society. Basically, people have to be duped into voting the right way. These elitists claim to believe in majority rule, but what they really believe is that, while other people cannot be trusted (hence the need for campaign reform), democracy is still an effective way for the elite to retain their hegemony.

7) Others who voted for campaign finance reform are "romantically naive" of politics. (They may be well-informed in other areas.) They don't understand how special interest groups buy politicians any more than they understand the implications of the campaign finance laws. They recognize that they're not generally able to tell good candidates from bad, and they have a vague notion that campaign finance reform might weed out the bad politicians for them. They vote because they believe the propaganda they learned in government schools concerning the nobility of democracy; they truly believe that voting is the mechanism by which "the people" govern themselves.

8) Finally, the third group that voted for Amendment 15 is "cynical." This group lashed out at the political process per se by passing Amendment 15 and making running for office more difficult for everyone. The cynical voters have all along known that they've been voting for politicians funded by special interests, but they simply haven't cared, or they've believed the opposing candidates to be just as corrupt. These voters have generally been voting for the lesser of two evils, rather than a candidate they really believed in. They voted for the campaign laws, not to improve the system, but to register general discontent.

It would seem, then, that only a small portion of the population voted for Amendment 15 while believing it would actually improve the political system. Of that group, some believe that most of the population is too poorly informed to vote wisely, and the rest really are too poorly informed to vote wisely. Both cases suggest that political reform should be much more radical than the mere limitation of campaign contributions.

Indeed, the libertarian case is supported by the existence of all but happy voters. Those who are cynical deserve real reform. The elitists should not be trusted with power, and the romantics should not be trusted to give it to them. The promise and problem of libertarianism is to enable those who desire freedom to escape the power-lust of the Statist elites and the ignorance of the Statist romantics into a system of voluntarism.

A Libertarian Critique of Campaign Finance Restrictions

In libertarian theory, people are permitted to spend their money in any peaceable way. The only restrictions are against criminal behavior. For instance, it remains illegal for people to purchase the services of a hit-man to take care of an annoying party. If a hit-man does murder someone, both the hit-man and the person who paid the hit-man are liable.

People remain free, in libertarianism, to purchase goods and services for self-defense. For instance, a person may purchase a gun to protect against criminals and may purchase security systems and personnel. In short, money for self-defense is good, money for criminal activity is bad.

This principle applies to the political process. People should not be restricted from spending money to protect themselves from political plunder. A contribution to a candidate supportive of the free market is merely a form of self-defense.

On the flip side, many contributions are made to gain the fruits of political plunder, to gain political favors such as subsidies and protective regulations. Ideally from a libertarian perspective, contributions made in political self-defense would not be restricted, while contributions made for political plunder would be eliminated completely. However, this raises problems of subjective law, and besides it would be impossible to implement.

Given the fact that bad contributions cannot be thrown out apart from good, the strongest libertarian case is that neither should be restricted. An analogy is gun rights: just because a small segment of the population uses guns irresponsibly or criminally, doesn't mean the rest of us should suffer a restriction of our rights. Similarly, a limit on legitimate campaign contributions is not justified by the prevalence of illegitimate ones.

The campaign reforms must also be rejected on more pragmatic grounds, as campaign finance laws are subjective and they benefit political insiders over ordinary people and major parties over third parties (including the Libertarian Party).

The more ambitious of the campaign reformers would agree with some of the pragmatic points I make concerning the problems of the current law. Their answer would be, not to repeal all restrictions, but to move to a system of tax-funded campaigns. Not only would this further entrench the major political parties, but it would introduce at the state level the morally repugnant practice of forcing people to pay for the publication of ideas with which they vehemently disagree.

It helps but little to "allow" people to divert some of their tax dollars to campaigns, as this doesn't serve to reduce government spending and so merely increases the government deficit or decreases the surplus. In other words, I am hurt if my neighbors choose to divert their tax dollars to campaigns. (Besides, a choice of how to pay a tax is no replacement for the choice of whether to pay a tax.)

A strictly voluntary system of campaign restrictions would never serve to adequately reform politics, because the system is fundamentally corrupt. The campaign reformers implicitly admit this, because they pursue mainly coercive reforms. A voluntary system of funding cannot save a basically involuntary political system.

A Libertarian Solution to Campaign Corruption

Special interests are able to buy candidates for one simple reason: politicians have great power to issue government subsidies and protective regulations to the favored elite. If politicians didn't have any power, there would be no reason to buy them.

The libertarian solution to campaign corruption is simple, then: divest the politicians of their power. If the budget and regulatory ability of Colorado's government were cut by 90%, the problem of corrupt campaigns would disappear overnight. It's pointless to buy access to the levers of power, if pulling those levers doesn't do anything.

There I go again, offering a radical solution. But today's welfare-liberals created the very problems they now seek to resolve. When politicians spend nearly half of everyone's wealth and regulate nearly all aspects of life, there simply is going to be corruption, and no piece-meal reform is going to correct the problem. The only workable solution is to move toward a system of economic liberty and social voluntarism. Accountability and responsibility exist only to the extent that society is organized by choice rather than by force. Politicians take money by force. No polite phrasing will change this fundamental fact, and no campaign finance reform can prevent the resulting corruption.

The Colorado Freedom