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This Is Reform?
Predicting the Impact of the New CampaignFinancing Regulations
by Patrick Basham
Patrick Basham is a senior fellow at the Cato Institute’s Center for Representative Government.
No. 78
McCain-style campaign finance regulation isthe new campaign reality. But what exactly willthis reformist utopia look like? Assessing the“reformed” campaign of the future against thestated desires and expectations of the principalcampaign finance regulators and their mediasupporters, this paper predicts the most impor-tant changes in political campaigning, changesthat will be experienced for the first time duringthe 2003–04 electoral cycle. Those changesinclude the following:
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The ban on soft money fundraising by thenational parties will make our elections sig-nificantly less competitive.
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The federal soft money ban will reducevoter turnout by approximately 2 percent
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As a result of the soft money ban, both theparties and their candidates will lose influ-ence over their own campaigns.
•
The prescribed channeling of third-partyadvertising through political action com-mittees (PACs), paid for only in hard moneydonations, will increase the number of PACs and the proliferation of PAC-runmicrocampaigns.
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The severe restrictions on independentadvertising will inadvertently produce bothlonger and more negative campaigns.Overall, the allegedly reformed campaign of the future will be less competitive, less controlledby candidates and their parties, and more influ-enced by the mainstream media and will involvefewer voters than the typical campaign of today.Most Americans support real campaign financereform, but clearly this is not the future promisedto them by the self-described reformers.
November 20, 2002
 
Introduction
The addition of President George W. Bush’ssignature to the campaign finance bill passed byCongress amounted to an anti-democratic tripleplay for advocates of heightened regulation of political activity.
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The new legislation, known asthe Bipartisan Campaign Reform Act, will makefuture campaigns less competitive, strengthenthe mainstream media’s grip on political dis-course, and run roughshod over the FirstAmendment’s protection of freedom of speech.In practice, this hot political bat will turn into anoutright victory for incumbency protection.McCain-style campaign finance regulationis the new campaign reality. The ban on softmoney (large and largely unregulated) dona-tions to the national parties,
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the increase inhard money (small, regulated, direct contribu-tions to candidates), and the severe limitationsplaced on independent political advertising col-lectively constitute the most significantchanges to campaign finance law since thepost-Watergate regulations of 1974.
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But what exactly will this reformist utopialook like? What will political life be like now thatthe BCRA has poked a stake in the heart of the“nexus of corruption”
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at the federal level? Asdescribed by pro-regulation Sen. Carl M. Levin(D-Mich.), the political campaign of the futurewill be better because “the political landscape . . .will be filled with more people and less influence,more contributors and smaller contributions,more democracy and less elitism.”
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Assessing the“reformed” campaign of the future against thestated desires and expectations of the principalcampaign finance regulators and their mediasupporters, this paper predicts the most impor-tant changes in political campaigning, changesthat will be experienced for the first time duringthe 2003–04 electoral cycle.
Principal Changes inPolitical Campaigning
Less Competitive Elections
The ban on soft money will have an anti-competitive impact on future electoral out-comes. Everyone (except perhaps members of Congress) favors more competitive elections.After all, in recent elections, 98 percent of incumbent members of the House success-fully sought reelection. Of 435 congressionaldistricts, only a few dozen experience trulycompetitive elections.
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According to pro-reg-ulation political columnist Albert R. Hunt,“The appalling lack of competition inCongressional elections is another void inthe system.”
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In the long term, most analystsand electoral participants agree that thisstate of affairs is clearly incompatible with ahealthy political system.Unfortunately, the ban on soft moneyfundraising by the national parties will makeour elections significantly more uncompeti-tive. How so? Both major parties currentlyuse soft money to increase the competitive-ness of individual congressional races.Without those partisan resources pouringinto targeted districts, fewer incumbents willbe threatened by serious challengers, whichwill further reduce political competition.Current federal law bans the use of corpo-rate- or union-donated soft money for adver-tisements that expressly advocate the elec-tion or defeat of a candidate for federaloffice. The new restrictions on independentadvertising will further hamper the efforts of the average challenger. Overall, independentadvertising campaigns funded by groups rep-resenting business, labor, or single-issueinterests are disproportionately critical of incumbents. Generally, those groups adver-tise their frustrations with the voting recordof particular elected officials, warning theirrespective memberships (and other poten-tially sympathetic segments of the electorate)about the likelihood of “more of the same,” if a given incumbent receives another electoralendorsement.Because the cumulative effect of the loss of soft money and constraints on independentadvertising will be to reduce political competi-tion, even fewer candidates will step forward tochallenge incumbents in the first place, therebyfurther reducing political choice.
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The new legisla-tion will turn intoan outright victo-ry for incumben-cy protection.
 
Fewer Voters
Campaign finance regulators decry publicapathy, especially as reflected in low levels of voter turnout on Election Day. SenateMajority Leader Tom Daschle (D-S.D.) asks,“Is it good enough that in every election theamount of [campaign] money spent goes upand the number of people voting goesdown?” According to Sen. John McCain (R-Ariz.), the principal force behind the newcampaign finance law, the new regulationswill “help to restore the public’s faith in gov-ernment.”
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Campaign finance regulatorsassert that the traditionally low levels of voterturnout in both presidential and midtermelections
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are attributable, in part, to cam-paign advertising that is allegedly too nega-tive in tone and too personal in nature.Hence the need, it is argued, to ban the softmoney contributions that, for example, payfor party advertising campaigns that are dis-proportionately critical of incumbents.What is ignored in this debate is the factthat the parties do much more with their softmoney revenue than simply fund negativeadvertising campaigns. The parties also usesoft money to register voters and conductget-out-the-vote efforts, especially amongminority voters. The inevitable reduction infinancial transfers from the national to thestate party organizations will handicap voteridentification and mobilization efforts at thelocal level.
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The best available research con-cludes that, because it costs a party organiza-tion $15–$20 to identify a new voter and thenget that new voter to the polls on ElectionDay, the federal soft money ban, which willdecrease party organizational expendituresby about 20 percent, will reduce voterturnout by approximately 2 percent.
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Parties and Candidates Lose Influence toSpecial Interests
The brazenly unconstitutional restric-tions on third-party advertising during the60 days preceding Election Day and the 30days prior to primary day are intended to“return control” over campaigns to the can-didates and their parties. However, as a resultof the soft money ban, both the parties andtheir candidates will lose influence over theirown campaigns. In fact, the BCRA arguablyconstitutes the unilateral disarmament of the major parties.The national parties currently coordinatetheir advertising campaigns with theirrespective senatorial and congressional can-didates. Once the implementation of the newcampaign finance regulations occurs afterthe 2002 midterm elections, the parties willhave less operational and strategic influenceover the campaigns conducted in specificstates and districts.The pro-regulation editorial writers of the
Washington Post 
naively assume that “lawmak-ers can wash some $500 million in big-moneycontributions out of the federal system: thecash from corporations, unions and wealthyindividuals that was supposed to be bannedfrom individual campaigns but that partiesand officeholders have learned to use for thebenefit of specific candidates.”
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That fore-cast is echoed by Sen. Daschle, who believesthat “we have the first real chance in a gener-ation to limit the access of special interests inthe political process.”
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On the contrary. Special interest groups, cor-porations, and labor unions will retain previouslydonated soft money funds. At an earlier point of the campaign, those groups will spend thatmoney independent of the parties and candi-dates. In addition, prior soft money contributionsfrom wealthy individuals will flow to these specialinterest campaigns instead of to their current des-tination—the national parties. For example, therole of the so-called nonpolitician 527 commit-tees,
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such as EMILY’s List, will remain unregu-lated by the BCRA after November 6, 2002.Therefore, as those political committees will beable to continue to raise large amounts of softmoney, their influence will expand significantlyvis-à-vis the political parties.
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The
Washington Post 
further predicts thatthe soft money ban “should take away someof the steam that drives the current, ever-expanding system. Those in business who saythey feel obliged to contribute in order toprotect their interests will have some insula-
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The federal softmoney ban willreduce voterturnout byapproximately 2percent.
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