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The Campaign Finance Red Herring

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That campaign-finance nonsense is again on the public agenda. The recent episodes involving the Democratic National Committee, the White House, and House Speaker Newt Gingrich have renewed for the umpteenth time the calls for a drastic overhaul of how politics is funded in America.

The DNC unilaterally announced it would no longer take money from noncitizens or foreign corporations. It also said it would cap at $100,000 the amount of money it would accept from any one source. In Congress, Sen. John McCain (R-Ariz.) and Sen. Russell Feingold (D-Wis.) are pushing a bill to limit spending on federal campaigns in return for free television time. This is definitely the issue on which a politician can stake a claim to being Mr. or Ms. Clean.

Many reformers would like to see tax-funded political campaigns. That’s an abominable idea. Thomas Jefferson said that to force people to finance ideas with which they disagree is tyrannical. But that’s exactly what funding campaigns through taxation would do. Fifty-two percent of eligible voters chose not to vote in the 1996 presidential election. Should they have been forced to give money to the candidates? It would be more than absurd to compel participation in a political system that is theoretically based on freedom.

Another bad solution is a limit on contributions to campaigns. Any such limitation would violate the right of free association and speech. After the Watergate scandal, Congress limited how much anyone-including candidates-could contribute to a presidential campaign. The U.S. Supreme Court ruled that limits on the candidates’ personal financial contributions violate their First Amendment rights, but limits on others do not. That, to say the least, was illogical.

Limits also help keep incumbents in power. Challengers with low name recognition may need large contributions from a few donors to take on an incumbent. The $1,000 cap ensures that serious challenges will be seldom seen. (Sen. Eugene McCarthy mounted a credible campaign against President Lyndon Johnson in 1968, eventually driving him from the race, with the money of a few rich men. He could not have done that under today’s rules.)

If we look at this issue in terms of basic principle we see that the fuss about campaign finance is a clear case of worrying about symptoms while neglecting causes. If the method of funding campaigns is changed while the causes of the “money problem” are not, the corruption that worries people will rear its head somewhere else, perhaps in a less visible place.

Let’s begin with the obvious: big donors are trying to buy something. But donors can buy something only if someone else has something to sell. There are, then, two sides to this issue: the demand side and the supply side. The problem with the proposals for campaign finance is that they watch the demand side and ignore the supply side.

Much of what government does is tax the unorganized majority and distribute the money to well organized interests. What might big campaign donors be buying? Influence over the people who write laws and run programs that bring about those transfers. They want to ensure that when government takes from Peter and gives to Paul, they will be the Pauls who get the loot. The results of influence can be obvious, such as a cash subsidy for research and development or a law or tax restricting a competitor. The results can also be subtle, such as a seat on the airplane that carries the Secretary of Commerce to a foreign capital to promote American business. One way or another, donors are buying access to the people’s wealth. H.L. Mencken summed all this up when he said that “every election is a sort of advance auction sale of stolen goods.”

Would anyone be giving big bucks to politicians and parties if they had no transfer favors to sell? Obviously not. So the way to “get money out of politics” is to get politics out of the business of giving away other people’s money. It’s not rocket science.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.