NCPA - National Center for Policy Analysis

Competition Is The Key To Campaign Reform

September 14, 1999

"Leveling the playing field" or achieving "fairness" are the wrong goals for campaign finance reform, says former Reagan cabinet officer James C. Miller III. The goal of reform should be to increase the competitiveness of the political market, which incumbents tend to monopolize.

Excessive campaign spending is not the problem. For instance, federal campaign spending during 1995-96 was approximately $2.2 billion -- compared with commercial advertising expenditures of $175 billion and federal outlays of $1.56 trillion in 1996.

Nor has campaign spending risen dramatically.

  • Comparing the 1982 and 1996 election cycles, spending per candidate grew only 80 percent as fast as federal outlays.
  • And contributions by Political Action Committees (PACs) grew only 10 percent faster than gross domestic product.

The majority of campaign funds come from individual contributors -- despite the fact that the $1,000 limit on personal contributions set in 1974 is now worth only $307 due to inflation. By contrast, PACs provide a little more than one-third of contributions to House races and only one-fifth of Senate campaign contributions.

Unfortunately, the main congressional reform bill -- McCain- Feingold in the Senate and Shays-Meehan in the House -- proposes a $600,000 spending limit for U.S. House races.

  • In 1996 every incumbent who spent less than $500,000 won versus only 3 percent of challengers who spent that little.
  • Challengers who spent between $500,000 and $1 million won 40 percent of the time, and of those challengers who spent more than $1 million, five of six won.
  • With respect the proposal's limit for Senate races of $1.5 million to $8.25 million -- depending on state size -- in 1994 and 1996 every challenger whose spending kept within those limits lost and every incumbent won.

Thus limiting campaign spending would have the perverse effect of giving incumbents even greater advantages over challengers.

Source: James C. Miller III (Hoover Institution), Monopoly Politics (Stanford, Calif.: Hoover Institution Press, 1999).


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