Presidential campaigns cost a lot.

Photographer: Andrew Harrer/Bloomberg

Clinton Can't Force Big Money Out of Politics

Paula Dwyer writes editorials on economics, finance and politics for Bloomberg View. She was London bureau chief for Businessweek and Washington economics editor for the New York Times, and is a co-author of “Take on the Street: How to Fight for Your Financial Future.”
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The money in politics always sounds excessive. The 2012 presidential campaign cost $2.6 billion, up from $2.4 billion in 2008, which doubled 2004's $1.2 billion. But consider this: The cost per vote in 2012 was a mere $20.60, if you divide it by the 126 million ballots cast. McDonald's alone spent $1.9 billion promoting its hamburgers in the U.S. during the two years that overlapped with the election cycle. 

This provides some context for assessing Hillary Clinton's recent proposals to rein in the influence of Big Money in politics. Her ideas are unconvincing -- and not just because she decries the money chase while outraising most other candidates.

Campaign Finance

No, it's because her reforms rest largely on revoking the U.S. Supreme Court's 2010 Citizens United decision, the aim being to close off outside money from wealthy people with special interests. She would also encourage small-dollar donations to presidential and congressional elections by matching their money with federal dollars. 

First, history shows that basing any policy on overturning a Supreme Court decision is a lost cause. It relies on the next president (or several) nominating -- and the Senate confirming -- enough justices who will agree, as a condition of their appointment, to overturn the 2010 decision. 

Second, Clinton is encouraging the fallacy that campaigns can be run on a dime. So are her Democratic rivals, Bernie Sanders and Lawrence Lessig, who has made reform of the system the centerpiece of his campaign. 

Telling voters that it's possible to remove big money from politics makes sense only if elections are publicly financed. And, as we know, Americans don't like the idea of paying the bill for that. 

Only 6 percent of taxpayers in 2013 checked the box on their federal income-tax forms to contribute $3 to the presidential election, even though it didn't affect the amount of taxes owed or refunds due. Candidates don't like the check-off system either, because taking the money requires them to limit their spending in return.

When Congress limits various forms of donations, such as the 2002 McCain-Feingold law's ban on soft money -- the unlimited contributions to political parties -- money eventually finds its way into the system, like water running downhill. McCain-Feingold opened the floodgates to so-called 527s, the independent groups organized under the tax code's Section 527 that can accept unlimited donations but can't directly urge someone's election or defeat. They were the forerunners to today's super-PACs, which can advocate for or against candidates. 

The 2002 reforms also increased the power of individuals at the expense of parties. Today, billionaires are underwriting the super-PACs, which are supporting single candidates, sometimes singlehandedly. Super-PACs behind Ted Cruz, for example, raised almost $38 million in the first half of this year. Of that, two wealthy financiers gave $21 million.

In 2012, the Republican primaries dragged on for weeks because Republican megadonors Sheldon Adelson and Foster Friess kept the candidacies of Newt Gingrich and Rick Santorum, respectively, alive. Adelson, the Las Vegas casino magnate, hasn't yet decided which of the 17 Republicans to back, but no matter who it is, the candidate will be a staunch backer of Israel, Adelson's single issue.

Whether the money comes from conservatives like Adelson and Charles and David Koch, or from liberals like George Soros and Tom Steyer, the upshot is that the parties' traditional role has been eroded, making it possible for most of those 17 Republicans to stay in the race far longer than if the party or voters made that call. The U.S.'s two-party system has its flaws, but party erosion has left gaps in candidate recruitment, platform design, message discipline and fundraising. Some political scientists say party atrophy has tilted the U.S. toward political extremes. 

Instead of focusing on the amount of money, we should be concentrating on its source. This is where Clinton has one good idea that deserves attention. She would require more disclosure of check-writers' names. She wants the Securities and Exchange Commission to require public companies to disclose their political contributions, and she would make federal contractors do the same. 

Why not go all out and require that campaign contributions or independent spending in any amount be publicly disclosed online, and within 24 hours? Such a system would be cheap, simple, immediate and informative. It would recognize that modern campaigns are expensive and that, as long as ordinary citizens refuse to fund elections, candidates will need resources that only wealthy people can provide. 

Knowing who those individuals are, and what they want, would provide far more transparency than the current system pretends to offer. It would also preserve the constitution's free-speech protections -- for both donors and candidates.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Paula Dwyer at pdwyer11@bloomberg.net

To contact the editor responsible for this story:
Katy Roberts at kroberts29@bloomberg.net