Supply-Side Campaign Reform

Just once, it would make some professor’s constitutional day to read the lead paragraph of a news report on a Supreme Court decision and see high-level judicial reasoning (who thought what) rather than bottom-line ox-goring (who lost what) taken seriously. Wednesday, when the Court’s decision in McCutcheon v. FEC was announced, was not that day. The decision, which ruled that overall limits on individual contributions to federal campaigns and committees violate the First Amendment, would, the New York Times’ first story reported, “most likely increase the already large role money plays in American politics.” The Washington Post’s immediate report was more confident: The decision was “sure to increase the role of money in political campaigns.”

It probably will, but the overtones the reader is supposed to infer are sinister. Money, being the root of evil, has no place in the holy of holies—that being democracy—unless, one supposes, newspapers are spending it to propagate editorial views.

Anyway: The real question these analyses overlook is why money is such a persistent presence in American politics. Even accepting the underlying framework—that the motive for contributing to campaigns is a sordid form of legalized bribery—reformers take the predictably puritan approach: X is regrettable; legislate a limit on X.

But whence X? Why the supply in the first place? The supply-side perspective reveals the answer: the government is in the business of distributing micro-advantages whose exchange for comparatively small contributions is economically rational. Expel government from that business, and those contributions that actually are “legalized bribery” evaporate.

There are, to be sure, false assumptions built into the reformers’ premises. One is that the expenditure of money is an index of corruption. In other contexts it is often taken to be the very signature of virtue. One does not, after all, expect to read a newspaper lead dreading “the already large role money plays in homeless shelters.” But political donors, too, can be understood to be engaged in a philanthropic act: They have a certain vision for their communities or country and are willing to give their money to achieve it. We assume this for the waitress who scrounges her tips for $25 to send to Barack Obama or Mitt Romney; there is no inherent reason the reasoning does not scale to $25,000.

But, the cynic says, surely that $25,000 is intended to buy something: namely, public goods. And the exchange of contributions for public goods sounds like bribery—except that the era in which bulging briefcases were passed under draped tables in smoky rooms is long gone. Contributions go to campaigns, which means they are used to secure votes. The real issue is the exchange of electoral benefits for public goods. And if the exchange of electoral benefits for public goods constitutes bribery, all manner of complications ensue. Is the aforementioned $25, if sent in hopes the candidate will enact a health care bill to the donor’s liking, a bribe? Is, for that matter, Social Security—$1.3 trillion of public goods given in exchange for votes each year—one gigantic act of corruption?

But, the cynic continues, $25,000 buys something $25 does not: access. And, to be sure, anyone who has spent any time around politics knows this is true. Here we arrive at the supply-side solution to campaign reform. The supply-side reformer asks the question this way: Access for what? Why, precisely, is the spigot of campaign contributions open at all?

Assume—against reason and experience—universally corrupt political donors, all economically self-seeking, giving solely because they get more back in public goods than they pay in donations. One solution is to focus on the donations. That has proven constitutionally problematic and, from a policy perspective, chronically unworkable.

But the other is to focus on the remaining variable: the goods they receive in return. If government does not distribute discrete and discretionary economic advantages, there is no self-seeking motive for contributions. Consider an income tax without deductions. It need not be flat: it could be graduated at, say, 10, 25 and 40 percent of income. But if opportunities for particular companies or individuals to haggle over specialized loopholes were closed, so would be their incentive to donate in exchange for access. The same goes with targeted appropriations, regulations and the like.

The point is that it is micro-government—not big government, not small government, but government in the permanent business of distributing and regulating ever smaller economic advantages—that creates access points that, in turn, drive the supply of self-interested contributions. By contrast, a government that does a few things, even big things, and does them well—without picking winners and losers—will find itself bereft of self-seeking contributions because there will be no motive to give them.

There is little doubt there are many such self-interested contributions today. They are not the whole of campaign finance, or even the main of it. Still, there is also little doubt the miniaturizing nature of the regime breeds them. If we are looking for corruption, that is the place to start.