December 23, 1999

December 23, 1999 | Commentary on

How to End Campaign Corruption

There are many reasons to dislike Senator McCain's approach to campaign finance. Those who value the Constitution object to the fact that his plan would restrict speech and make it harder to participate in the political process. Republican loyalists are disgusted that McCain is pushing a plan that will further tilt the playing field to the Democrats. Those who believe in the democratic process condemn the way McCain's proposal would strengthen the power of incumbents.

Last, but not least, all of the above groups presumably are distressed that the media would become much more influential if McCain's new election controls were enacted. After all, once candidates and political parties are deprived of the resources they need to educate voters, the press will have much more power to dictate the tone and content of campaigns. This, of course, at least partially explains the fawning treatment that McCain is receiving from the press, particularly the thinly-veiled campaign commercial that ABC's Nightline provided for him and Senator Bradley when the pair hosted a forum on campaign finance in New Hampshire last week.

Yet while McCain has come up with a deeply flawed solution, he has accurately identified a problem. In short, campaign contributions do have a corrosive influence on public policy. And if the New Hampshire polls are correct, it appears that many Americans instinctively understand that the legislative process is corrupt.

But McCain's mistake - and it is a whopper - is that he is treating the symptom rather than the underlying disease. The real problem is not money, but rather the fact that politicians have accumulated an immense amount of power, and the use of that power, particularly the power to tax, spend, and regulate, has a multi-trillion dollar impact on the economy.

In other words, people contribute money because they care about how money will be spent, how it will be raised, and how the rules of the game will be affected by decisions in Washington. In some cases, people contribute money because they want politicians to take money from someone else and give it to them or they want politicians to tilt the playing field in their direction. This is called "rent-seeking" by economists, and it describes how interest groups use the coercive power of government to redistribute wealth in their favor.

Unfortunately, there are hundreds of examples of this kind of behavior. The ethanol subsidy, for instance, exists because a large agri-business gives substantial contributions to politicians in both parties. Contributions from labor unions are responsible for the Davis-Bacon law, which drives up federal construction costs and undermines the competitive position of non-unionized contractors. Big businesses, meanwhile, benefit from subsidies provided by the Overseas Private Investment Corporation.

In other cases, however, people contribute money in the hopes of convincing politicians either to lift a burden or to not impose new ones. Farmers give money in hopes that they can persuade politicians to repeal the death tax. Retailers contribute to sway lawmakers against protectionist policies that increase the cost of products. Microsoft has assembled a strong Washington operation, not because they want anything, but rather because they are trying to convince politicians to leave them alone.

If a picture is worth a thousand words, the accompanying chart should be more persuasive than anything written in this article. The graph shows the growth of federal spending since 1980 on one vertical axis and the growth of congressional campaign contributions on the other vertical axis. Not surprisingly, the two are rising in lock-step. The reason for this correlation is obvious: As government seizes more of the nation's wealth, it becomes worthwhile for people to contribute in the hope of getting a bigger slice of the pie (or in the hope of protecting their income from funding the pie).

So, yes, McCain is completely right when he points out that campaign contributions often dictate public policy, but he is being incredibly naïve when he assumes that new regulations, restrictions, and controls are going to solve the problem. As long as Washington has power, people will find a way to appease politicians.

Perhaps Senator McCain should review recent history. It was only 25 years ago, after all, that the Watergate-era reforms were approved and it was said that these new regulations would end campaign corruption. Needless to say, the law did not work and probably made things worse. There is every reason to believe a similar approach today would fail just as badly.

Fortunately, there is a way to reduce the influence of money. If politicians sincerely want to diminish the power of special interests, they should scale back the size and scope of government. Think of all the businesses that would fire their lobbyists and shut down their PACs if the Department of Commerce and the Department of Labor were eliminated. Think of all the interest groups that would vanish if the loophole-ridden tax code was replaced by a simple and fair flat tax.

To be fair, Senator McCain is one of the few lawmakers who actively fights wasteful government spending. He also has been very sympathetic to tax reform and economic deregulation (his nanny-state tobacco legislation being a puzzling aberration). So if the Senator truly wants to end the corrupting influence of money in politics, he should abandon his futile crusade for more campaign regulation and instead implore his colleagues to join him in a long-overdue effort to shrink the size of government.

Daniel J. Mitchell is the McKenna fellow in political economy at  The Heritage Foundation.

About the Author

Daniel J. Mitchell, Ph.D. McKenna Senior Fellow in Political Economy

First appeared in The Washington Times