Pushing The Limit: The Impacts Of Raising Federal Limits On Contributions To Campaigns

6/1/1999

Executive Summary

At least five proposals to increase limits on contributions by individuals to congressional candidates -- either as stand-alone measures or as part of a package of campaign finance measures -- have been floated by important political groups and individuals in the past year.

The following paper analyzes the likely impact of these proposals on which candidates get elected and on the power of wealthy interests vs. the general public in governmental decision making.

Our analysis concludes that all of the proposals to increase contribution limits fail -- in varying degrees -- to move our political system toward the goal of a democracy of the people, by the people, and for the people. In other words, they are not in the public interest.

Instead, they are the wrong solutions to the wrong problems at the wrong time.

These failings fit into three categories:

1. The proposals will give even more power to wealthy individuals. Raising individual contribution limits will result in an even greater percentage of campaign money coming from wealthy donors -- thereby making it more likely that candidates sympathetic to wealthy interests will be elected and lean in their donors' direction when governing. Raising limits will not benefit candidates who don't know anyone that has $1,000 available to contribute to them, much less $3,000 or more.

Banning soft money contributions in exchange for an increase in individual contribution limits will also not reduce the influence of wealthy donors on campaigns. An increase in the individual contribution limit to $2,500 will likely allow wealthy donors to contribute at least an additional $318 million in hard money, more than the $224 million removed by a soft money ban.

2. The proposals fail solve the problems they claim to address:

* The proposals will not cause candidates to spend less time raising money. In any competitive race without spending limits, candidates never think they have "enough" money. The fact that they can raise, say, $1 million in less time because of higher contribution limits will not cause a candidate to relax if his or her opponent is raising $1 million at the same pace. It will tend to prompt them to raise another $1 million.

* The proposals will not help challengers. There is not conclusive evidence that states that have lowered contribution limits have experienced any significant difference in the success rate of challengers. Likewise, states such as California, which have no contribution limits, have not experienced significantly lower incumbent reelection rates than Congress or other states that have lower contribution limits.

* The proposals will not restore the intent of the 1974 campaign finance law after inflation. The 1974 law limited both campaign contributions and spending, creating a balance between the two. These proposals raise the contribution limits -- which were already too high in 1974 -- to offset inflation, but do not set spending limits for all candidates -- even at the same level as in 1974 after adjustment for inflation.

3. The proposals attack problems that either do not exist or which are not serious concerns:

* Candidate spending has not been seriously limited by current contribution limits. Candidate spending has gone up at a rate 50% greater than the rate of inflation since 1974 and 2.3 times the rate of increase in the wages of ordinary Americans.

* Parties will not be crippled by the banning of soft money contributions, a concern that some proposals claim justifies an increase in individual contributions to candidates and parties. Parties already raise twice as much "hard" money as "soft" money. Moreover, parties thrived long before they discovered the loophole in FEC regulations that allowed them to solicit and accept soft money contributions.