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It’s the Spending, Stupid! 
Understanding Campaign Finance in the Big-Government Era 
by Patrick Basham
Patrick Basham isa senior fellow in the Cato Institute’sCenter for Representative Government.
No. 64
Proponents of new restrictions on campaignfinance often argue that the United States spendstoo much money on campaigns and elections.That proposition is difficult to sustain since thenation spends so little of its wealth on campaigns.Advocates of new regulations also decryincreases in overall spending on elections. Suchspending has increased in nominal terms overtime and especially in recent decades. However,the increases should be seen in perspective.General inflation accounts for a significant partof the rise in campaign spending; Americansnow spend more on everything than they did inthe past.The increase in election spending should alsobe seen in the light of five other “mores”: moreelections are held, more wealth is available forpolitics, more voters take part, more advertisingmust be bought, and more campaign financeregulations must be honored.The most important factor driving campaignfinance upward is “more government.” Taxesand regulations on society have increased theambit of government at all levels. Increasinggovernment activity leads to more efforts toinfluence political decisions including spendingon campaigns, a relationship confirmed byscholarly studies.Efforts to restrict or ban campaign spendingwill be futile. The only sure way to lower cam-paign spending would be to restrict governmentto its constitutional powers.
July 18, 2001
 
Introduction
Rep. John Lewis (D-Ga.) recently said,“There’s too much money in the campaignsystem.”
1
That view is quite common amongcampaign finance “reformers” and respon-dents to public opinion polls.
2
If there is toomuch money in elections, the reasoning goes,Congress should pass new regulations thatreduce spending and restrict fundraising.Opponents of such new regulations gen-erally deny that the United States spends toomuch on elections. After all, the nation as awhole devotes far less than 1 percent of grossnational product to campaigns. At most, thatmeans the nation lays out $15 per eligiblevoter to fund elections and campaigns.Looked at another way, the United Statesspends more on either potato chips or bat-teries than on elections.
3
Put in perspective,the worry that “there’s too much money inthe campaign system” seems wildly wrong.This paper addresses a different but equal-ly important question: why has campaignspending gone up? An episode of NBC-TV’sliberal series
West Wing 
suggests an answer.Fictitious White House CommunicationsDirector Toby Ziegler explains to a staffer that,because the State Department has no seriousspending or regulatory power, it has no pow-erful domestic constituency, and thus few lob-byists offer members of the Senate Committeeon Foreign Relations the tantalizing carrot ofcampaign contributions. The committee,Ziegler notes, attracts few members ofCongress. What self-interested politicianwould waste his or her time pursuing so self-less an exercise? The
West Wing 
episode indi-cates the real reason for rising campaignspending: big government. Simply stated, thegrowth of government spending fosters thegrowth of campaign spending.
The Growth of CampaignSpending
The 2000 election cycle saw total spend-ing by parties and candidates at all levels
2
Put in perspective,the worry that“there’s too muchmoney in thecampaign system”seems wildlywrong.
00.511.522.533.51952195619641968197619841988199219962000
Figure 1Campaign Spending at the Federal Level
Sources: Federal Election Commission; Center for Responsive Politics; Common Cause; and Herbert E.Alexander,
Financing Politics: Money, Elections, and Political Reform
(Washington: CQ Press, 1992).
 
reach $3 billion (Figure 1), including the$301 million spent by the respective presi-dential campaigns of then-governor GeorgeW. Bush and then–vice president Al Gore.The two major parties raised 90 percent ofthe total spent in the last election as a combi-nation of so-called hard (regulated and limit-ed) and soft (unregulated and unlimited)money. Unregulated funding, or soft money,so detested by Sens. John McCain (R-Ariz.)and Russ Feingold (D-Wis.), has increasedover the past decade.
4
Economist Alan Reynolds recentlyreminded us that “one of the avowed pur-poses of reform was to cheapen the cost ofcampaigns.”
5
Judged by that standard, cam-paign finance reform has been a failure.Nonetheless, “reformers” continue to cite ris-ing spending as a justification for restrictingcontributions and placing limits on cam-paign finance. They argue that rising cam-paign spending reflects private efforts to cor-rupt public officials. Restrict or ban cam-paign contributions, they continue, and youwill end corruption. Increased spending onelections, however, is not a morality playfilled with people wearing white and blackhats. Spending on campaigns has risen forcomplex reasons, all of which should beunderstood before Congress enacts onerousnew restrictions on campaign finance.
Some Perspective onCampaign Spending
We can best understand electoral spend-ing by studying the history of campaignfinance and applying a more precise mea-surement of political spending. In
Unfree Speech: The Folly of Campaign Finance Reform,
acomprehensive and refreshingly unconven-tional treatment of the history of campaignfinance regulation, Federal ElectionCommission member Bradley A. Smith iden-tifies the major influences behind the rise incampaign spending.First, there is inflation. Looking at nomi-nal sums from the 1970s, much less the 19thcentury, tells us little about real trends incampaign spending. Taking inflation intoaccount, the rise in spending over the pastcentury has been much gentler than contem-porary Capitol Hill rhetoric suggests. If onecompares 20th-century campaign spendingwith 19th-century political spending, the for-mer appears less profligate. For example, in1876 Republican Rutherford B. Hayes andDemocrat Samuel J. Tilden each spent theequivalent of $11 million today on theirrespective presidential campaigns.The pinnacle of 19th-century politicalfundraising, however, came in the 1896 presi-dential election during which Republicanaspirant William McKinley spent a then-record nominal sum of $7 million on his suc-cessful campaign against Democratic candi-date William Jennings Bryan. Given that aturn-of-the-20th-century dollar was worthabout $20 by the end of the century, theMcKinley campaign raised an amount equiva-lent to $145 million in 1999 dollars (compara-ble to the funds raised by the 2000 Bush cam-paign).
6
Economic historian Niall Fergusonmakes a similar point about recent history:Those . . . figures from the FEC arerather less impressive whenallowances are made for inflationand economic growth. Addingtogether presidential campaignreceipts and the disbursements ofcongressional candidates, the nomi-nal cost of the federal electoralprocess has indeed doubled since1987–88. But in real terms, theincrease has been 39 percent; and asa proportion of GNP a mere fourpercent.
7
Second, the rise in campaign spendingtook place during a rapid rise in Americans’standard of living. In 1940 the nation’s annu-al gross domestic product stood at $96.7 bil-lion; in 1970 GDP surpassed one
trillion dol- lars 
. The end of the century saw GDP reach$9.8 trillion.
8
As Smith observes, “As thestandard of living increases, more money
3
Spending oncampaigns hasrisen for complexreasons, all ofwhich should beunderstoodbefore Congressenacts onerousnew restrictionson campaignfinance.
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