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Expert FAQ: Do We Need Campaign Finance Reform?

Sept. 4, 2012
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by Susan Lyon

Money is power, and to become the next U.S. president these days you have to have a lot of both.  Whenever a Presidential Election looms, we start hearing a lot more about the funding of campaigns and the absurd amounts of money that are thrown into elections every cycle.

With total 2012 election spending projected at as much as $9.8 billion, we have to ask: when will the madness end?  Based on current campaign finance laws, we can confidently answer: if things stay the same, then never.  Both the candidate’s own bank account, as well as contributions from supportive donors and deep pocketed Super PACS, fund modern elections to an extent that dramatically outpaces years past.

Fundraising Nuts and Bolts: Where We Stand Today

Here’s the state of play in fundraising today:

  • Spending is skyrocketing on both sides of the presidential election, with Romney outpacing Obama, though Obama was ahead in the early funding stages.
  • The projected total spending in the 2012 election cycle – not just presidential candidate spending – is outpacing past years by an estimated margin of about $2.8 billion, compared to 2008.
  • Recent legal changes from court rulings such as Citizens United and SpeechNow.org have made it a lot easier in recent years for large corporations, unions, and political action committees to donate money to a cause, if not a particular candidate’s campaign.

Campaign finance is a complicated beast, and a lot has been done over the years to shape and limit the amounts and types of money that can be donated to a cause (the ACLU’s list of relevant court cases is available here).  Depending on whom you ask, there are various ways in which it should be reformed to even the playing field, focus attention on the policies rather than the politics or respond to other concerns around electoral fairness.

Getting Past Citizens United

The Supreme Court’s Citizens United decision of 2010 dramatically changed the course of corporate political spending.  It changed the spending guidelines to allow corporations and unions to donate unlimited amounts of money to campaigning: defined as “electioneering communication,” opening the floodgates to a new wave of money that had been restricted in elections past.  President Obama recently advocated using a constitutional amendment to overturn the ruling.

When it comes to talking political money, there are at least three big questions that set the reform agenda:

  • Should campaigns be funded privately or by taxpayers?
  • Should there be contribution limits?
  • Should PACs be allowed?

Expert Opinions: How to Approach Campaign Finance Reform

Indeed, it seems like the sky’s the limit.  But should there be more caps on donor contributions?  To be sure, a fair amount of money is needed to fund any nationwide race.  It takes a seemingly insane amount of cash to run a campaign these days.  For example, both Bill and Hilary Clinton – among several other political celebrity names – are still in debt from their respective presidential bids, despite massive fundraising pushes.

We interviewed two professors to get their expert opinions on the biggest problems facing the campaign finance system today – and how we can fix them:

  • John G. Geer, the Gertrude Conaway Vanderbilt Professor of Political Science at Vanderbilt University, gives a unique take on why money doesn’t matter in nationwide elections as much as some fear, but transparency and financial disclosure do:

“We don’t know a lot about how a post Citizens United world will work, but I don’t think much will change when it comes to presidential elections.  Both sides already have plenty of money, and there’s not a lot of evidence that the campaign that spends the most money wins.  The ruling will have a greater impact on elections as we go down the ladder, to state level races like gubernatorial, congressional, and district level elections where money could make the difference.  Certainly, the ruling raises concerns and we need to monitor it, but if you compare the current amount of campaign funds being spent to the amount of money large corporations pay to advertise – like Toyota car ads – it’s not that different.  A year ago everyone was convinced that Obama would have way more funding on hand than the presumptive Republican nominee, but that has proven untrue with Mitt Romney in recent months.

In general, the main reform I’d like to see would be more transparency at all levels about where money is going, who gave it and how much.  For instance, I’m less concerned about the Super PACS we’re seeing today than I am by the 527 organizations we saw in the 2004 cycle, because they are clearly tied to candidates and/or parties unlike the 527 groups were. At the end of the day I’m not a big believer that money determines elections outright, but I am an advocate of financial disclosure.”

  • Michael Miller, Assistant Professor of Political Science at the University of Illinois Springfield, raises to light the combined effects of the Citizens United ruling and the lesser known SpeechNow.org v. FEC ruling of 2010:

“The Citizens United ruling ushered in an era where corporations and unions can spend without limits in modern campaigns.  They still can’t contribute directly to candidates, but they can purchase advertising, and it’s not always clear who’s footing the bill for those ads. The D.C. Circuit Court of Appeal’s SpeechNow.org ruling was mainly responsible for the establishment of Super PACs, groups that can accept unlimited donations from private citizens as long as they remain independent of particular candidates or parties, and spend only on communications activities. Contrast this to the old system, in which PACs could contribute to candidates, but they were subjected to the same donor limits as campaigns. What we have now is a system in which the amount of money that any individual can contribute to a campaign is practically limitless, unless you believe that there is no coordination between the campaign and the Super PAC.

We’re fooling ourselves if we think that Super PACs are working independently of campaigns, or that million-dollar donors expect no attention to their preferred policies if the candidate is elected. However, we don’t know what effects—if any—the new unregulated contributions will have on the political system. Certainly there is an argument to be made here about political speech—it seems reasonable for people to assert that they should be allowed to spend large sums of money on political donations if they want to. However, we should also be concerned about the integrity of the system, as even the appearance of untoward relationships can shake confidence in a functional representative democracy.

I see the solution as simply more education. Even though there’s a growing movement now to address these issues, if citizens at large don’t know the size of the problem or what a Super PAC is, it will be hard to sell them on the necessity of new policies. Given the position of the federal courts, should we decide that new policies are desirable, I see a constitutional amendment as the only way to accomplish anything in this area. Meanwhile, transparency and disclosure are also easy goals that we should be working toward.  Free speech is one thing, and we should be very careful before we seek to regulate it – but at a minimum, I would as a citizen like to know who’s speaking.”

See Also:

For additional election resources, please visit NerdWallet’s Expert FAQ series around the 2012 elections:

  • NerdWallet’s election tracker that calculates the statistical odds of the Electoral College electing each candidate, based on past presidential elections’ polling accuracy.
  • NerdWallet’s Expert FAQ on Voter ID Laws
  • NerdWallet’s Expert FAQ on the Electoral College System