Subsidizing Democracy: How Public Funding Changes Elections and How It Can Work in the Future

1. Why Public Funding?

1 Why Public Funding? In American politics, money matters. As the role of political money has changed over time, campaign finance reforms have tried to keep pace. Regulations have been constructed to restore fairness, opportunity, and integrity to American elections. Fair elections are essential to any democratic system, but so is the absence of unreasonable restrictions on political speech. Even before the advent of mass media, money expanded the ability of political parties and individual candidates to communicate with voters. That said, elections in America today are expensive, and the high price of running is often a barrier to entry for prospective candidates. Policies that seek to regulate the flow of money in politics must therefore straddle a fine line as the freedom of those with the means to project their voices collides with the need for broad democratic dialogue. Many jurisdictions in the United States have attempted to resolve this tension by implementing voluntary systems of public election finance. Public funding systems are variously constructed, but the reasons cited for their creation are almost always the same: to control the growth of Why Public Funding 13 spending, to diminish the role of “special interest” contributors looking for political favors, to enhance electoral competition, and to improve representation . Whether these goals are attainable, or whether they should be pursued, is debatable. Yet the use of public dollars in American politics has steadily expanded in the past quarter-century. Given the development of often expensive policy under conditions of such uncertainty, it is a worthwhile exercise to consider the objectives of public financing in America and how it shapes the behavior of candidates and voters. Before considering the effects of public funding on campaigns, we must first examine where the programs come from and what we already know about their effects. The Roots of Regulation Money has always played a crucial role in American elections. Indeed, candidates leveraging campaign cash predate both the federal Constitution and modern political parties. “Treating” political supporters to alcoholic beverages on Election Day was common practice in the colonies as early as the seventeenth century; it was rooted in English tradition and was generally seen as good candidate manners (Mutch 2001). As party organizations established themselves in the early to mid-1800s, they consolidated control of campaign finances, spreading “walking around” money on Election Day as an enticement to vote with premade party tickets; such blatant bribery was sufficiently worrisome that all states had enacted legislation banning the practice by middle of the nineteenth century (Bensel 2004, 58). Despite this step, voter bribery remained a relatively common phenomenon throughout much of the nineteenth century, and it was not until the widespread adoption of the secret Australian ballot in the late 1800s that party attempts to put preprinted tickets in the hands of whiskey-softened supporters were thwarted (Mutch 2001). As the parties spent money on ticket printing and voter compensation, they tapped funding streams that flowed from members in government. During the era of civil service patronage, from the Jackson administration until the early 1880s, parties exploited their position within government to raise funds from political appointees, who kicked back a portion of their wages (Corrado 2005). In the first act of federal campaign finance reform in U.S. history, Congress added a provision to the Naval Appropriations 14 Subsidizing Democracy Act of 1867 banning government employees from soliciting political contributions of naval workers. The practice of party extortion was dealt a more serious blow with the passage of the Pendleton Act in 1883, which ended the spoils system and eliminated the assessments levied by parties on patronage appointees. State governments soon followed suit (Gross and Goidel 2003). As patronage evaporated, parties turned elsewhere for financial support . Large business interests and wealthy individuals of the Gilded Age soon supplanted rank-and-file patronage appointees as the primary source of party funds, often donating vast sums (Corrado 2005). The election of 1896 marked a watershed of elite involvement in political campaigns, as new Republican chairman Mark Hanna created a funding system in which business interests appropriated a fixed percentage of their revenue to help the Republican cause. Many Republican candidates for federal office that year ran with the explicit promise that businesses would be more profitable under Republican guidance, and most business leaders believed them (Corrado 2005). While corporations were pouring money into the political system at the end of the nineteenth...