Voting with Dollars: A New Paradigm for Campaign Finance.

Vol. 14 No. 9 (September 2004), pp.704-707

VOTING WITH DOLLARS: A NEW PARADIGM FOR CAMPAIGN FINANCE, by Bruce Ackerman and Ian Ayres. New Haven: Yale University Press, 2002. 303pp. Cloth $35.00. ISBN: 0-300-09262-8. Paper $18.00. ISBN: 030010149X.

Reviewed by Stephen K. Medvic, Department of Government, Franklin & Marshall College. Email: smedvic@fandm.edu .

Only the most naïve good government-types believed that the Bipartisan Campaign Reform Act (BCRA) of 2002 was going to create a clean system of campaign finance in the United States. Only the most cynical political observers believed it would have no impact. Both were wrong, though a case could be made that the cynics were a bit more prescient than the reformers.

The rapid rise of tax-exempt political organizations (a.k.a. 527s) suggests that the “hydraulic metaphor” – “Like water seeking its own level, private money will push its way through the doctrinal exemptions, and around the reform barriers, to swamp the democratic process” (p.112) – is useful in anticipating the effectiveness of reform efforts. In addition, the vast sums of “hard dollars” raised by the two major party presidential nominees and the continued “soft money” funding of the national conventions (which topped $100 million in 2004, nearly twice the level of private funding for the two conventions in 2000) must be disappointing to those who hoped BCRA would reduce the role of money in campaigns.

To be sure, BCRA is far from a total failure. Beginning in 2005 (per a Federal Election Commission [FEC] rule), sham “issue ads” will have been eliminated, at least within the 60-day period prior to a general election. And, conventions notwithstanding, federal candidates and the political parties are no longer in the soft money hunt. But reformers are likely to head right back to the drawing board after the 2004 election cycle. As they do, they would be well served to consult VOTING WITH DOLLARS.

There are two central aspects to the campaign finance paradigm proffered by Bruce Ackerman and Ian Ayres in this book. The first is a system of partial public funding of campaigns the authors refer to as the “Patriot program.” Under this plan, all registered voters would be given 50 Patriot dollars to be used with electronic cards at automatic teller machines. Voters would be able to distribute those dollars to candidates of their choice, subject to some restrictions (e.g., separate limits on contributions to House, Senate and presidential candidates).

Under the Patriot program, private contributions would still be legal (and contribution limits would be raised significantly), though the intention is to limit their impact. To begin with, private contributions would be made anonymously in a process described below. Furthermore, a “stabilization algorithm” would be used to guarantee that private contributions do not permanently “swamp” Patriot [*705] contributions; specifically, the former will not be allowed to account for more than half the aggregate amount of Patriot contributions. If they were to do so in a given cycle, the algorithm would be used to increase the amount of Patriot dollars allocated to each registered voter in the next cycle. (The stabilization algorithm would also be used to avoid a “drought” – i.e., less money given in one cycle than in the previous cycle – in the total amount of money given to political campaigns.)

Political action committees (PACs) and political parties would be eligible to receive Patriot contributions, which they would then pass on to candidates of their choice. Voters may wish to use this option if they believe that their favorite PAC or the party they identify with is more knowledgeable about which races would most benefit from contributions. The only restriction on PACs that receive Patriot dollars is that they use the money for contributions to candidates and not for their own communication efforts. PACs that wish to engage in independent expenditures must raise private dollars for that purpose.

The second major aspect of Ackerman’s and Ayres’ paradigm is an anonymous contribution process or “secret donation booth.” The basic structure of the donation booth is that all campaign contributions – either to candidates or political organizations – are to be given anonymously to a blind trust established by the FEC. The trust, in turn, dispenses the money to the candidates and organizations.

Contributors of private dollars can authorize the FEC to acknowledge donations of up to $200; for contributions of more than that, a statement from the FEC would verify only that the individual has given “$200 or more.” In addition, the authors would allow a PAC redistributing Patriot dollars to candidates to publicize the amount of money it has contributed. This is justified, according to Ackerman and Ayres, “because the dollars funding the patriotic PAC have been collected on an egalitarian basis” (p.73).

Donors might try to circumvent the process by, for example, producing cancelled checks to the blind trust. Furthermore, extremely wealthy donors might write very large checks and tell a candidate to watch for a significant increase in his/her campaign account on a given day. To handle the first problem, the authors suggest a five-day window within which a person could ask for his/her money back from the trust. Politicians would never know whether a person claiming to have contributed – and even showing a cancelled check – would really have done so. To handle the second loophole, the authors would employ a “secrecy algorithm” that would parcel large contributions to candidates in much smaller chunks and over a period of days or weeks. Thus, no one contribution could produce a large jump in a candidate’s account.

It is important to recognize how different the secret donation booth is from the “old paradigm” of full disclosure. Ackerman and Ayres argue that full disclosure is not enough to neutralize the cozy relationship between special interests and politicians. But if politicians had no way of verifying who had given them money, their willingness to be of assistance to those interests would be greatly diminished. [*706]

A third part of the proposal – which receives less attention in the book but is the authors’ most practical reform idea – is a revamped Federal Election Commission. The new FEC would be nonpartisan, and its five (as opposed to the current six) commissioners would be chosen from the ranks of retired federal judges. In addition, the authors argue that the budget of the FEC should be insulated from annual congressional review. Ackerman and Ayres maintain that this new and improved FEC would only work in conjunction with the Patriot program and the secret donation booth. In fact, this part of the proposal could stand on its own, and, given the dire need for FEC reform, it ought to be considered regardless of how seriously the Patriot program is taken by members of Congress.

Policy change in the United States is incremental. The Patriot program, however, is sweeping. Indeed, there is an “ivory tower” feel to Ackerman and Ayres’s proposal, despite the fact that the book is extremely detailed, addresses “real world” objections to the plan and even includes a 35-page model statute at the back of the book. The value of this book – and it is valuable – is as much its challenge of the existing “command and control” paradigm of campaign finance regulation as it is its actual statutory proposal.

Nevertheless, there remain some open questions. To being with, the level of participation in Patriot will have to be sufficient to support the program. Specifically, the Patriot proposal requires the ratio of Patriot to private dollars to be 2-to-1. Ackerman and Ayres estimate that four million people made political contributions in 2000 and that roughly $3 billion of private money was given to parties and candidates (though this includes only “hard” dollars; soft money contributions to the parties amounted to nearly $500 million). Under Patriot, the total number of contributors would undoubtedly increase, since potential donors will no longer have to consider giving their own money. And the authors argue that the amount of private dollars would shrink because donors can no longer expect something in return for their money. In estimating the level of participation under their plan, Ackerman and Ayres assume that 100 million Americans – roughly the number that voted in 2000 – will contribute Patriot dollars. If they did, their contributions would amount to $5 billion; combined with a drop in private giving, the program could reasonably be expected to function according to plan.

But, will that many people participate? Citizens are socialized to view voting as a civic duty, and yet barely one-half of all eligible voters fulfill that duty. It will be years before people come to believe that they are equally obligated to contribute to a campaign. The ease of contributing – citizens can transfer their Patriot dollars anytime they visit an ATM – may make the number of contributors large. But contributing will also require paying attention to campaigns far earlier than many people are willing to engage. In the end, it may be difficult to secure participation from enough people to maintain the 2-to-1 ratio of Patriot to private dollars. Even if private giving were to be cut in half, 60 million Americans would have to give Patriot dollars to satisfy the requirement. [*707]

One other concern about the proposal is that it does little to control independent expenditures. The assumption is that such spending will play a minor role in the system compared to direct contributions of $6-$7 billion (Patriot dollars plus the reduced private contributions). However, Ackerman and Ayres allow organizations to raise “unlimted funds from named donors, without recourse to the secret donation booth” (p.126) as long as their spending is truly not coordinated with a candidate. As a result, these organizations might become havens for private dollars and may gain clout with politicians as their influence in the system grows.

A solution would be to restrict the ability of organizations to expressly advocate the election or defeat of a candidate using unlimited contributions, at least close to Election Day, as BCRA does. Ackerman and Ayres completed their book before McCain-Feingold had even passed the House. But they were skeptical that “the present Court would uphold such a definition [of express advocacy]” (p.119). Of course, in MCCONNELL v. FEC it did just that, and as a result, this regulation ought to be preserved in the Patriot program.

The Patriot program would likely have a number of positive benefits. It would establish a more egalitarian campaign finance system and would all but eliminate special favors for big donors. It might even improve the tone of our campaigns as politicians would be forced to appeal to average Americans, whose distaste for negative campaigning is enormous, for financial support. Ultimately, the goal of Ackerman and Ayres is “to establish citizen sovereignty as the central reality of campaign finance” (p.112). That is a worthy goal, but one wonders whether it will ever be achieved.

CASE REFERENCES:

MCCONNELL v. FEC, No. 02-1674 (2003).

*****************************************************