Campaign And Party Finance In North America And Western Europe

Arthur B. Gunlicks

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429715068
• Edition: 1
• Topic: Business
• Subtopic: Finance
• Index: Business

This book provides information about how policies and practices regarding public financing abroad, focusing on North America and several Western European countries, can help Americans develop their own ideas about reform possibilities.

PART ONE
Political Finance in Comparative Perspective

1
Introduction

Arthur B. Gunlicks

As the 1992 elections approached, it was clear that many Americans were not only concerned and even apprehensive about the economy and the general state of the nation; they were also angry and frustrated about politics and politicians. Evidence was easy to find. Polls noted that seven of ten Americans thought the country was off track, an equal proportion thought that the government was controlled by special interests, and only three in ten had confidence that government would do the right thing all or most of the time.¹ There was widespread talk of term limitations for members of Congress and the state legislatures, and limitations were actually imposed on state legislators in California, Colorado, and Oklahoma. The arguments for such limitations were fueled in part by a series of financial ethics scandals in the late 1980s that led to the resignations of the Speaker of the House of Representatives, the Democratic Whip in the House, and a congressman from New York; a senator was disciplined for soliciting and accepting more money in speaking and other fees than was permitted. There were several sex scandals as well, but they did not appear to involve money.²

In March 1992 a check-writing scandal involving many members of the House of Representatives became a major news item, and it contributed much to the loss of primary election contests by several members of Congress. The growing role and potentially devastating influence of PACs (political action committees) and special interests were again revealed for all to see and hear for several months in 1991 during the dramatic hearings in the U.S. Senate on the "Keating Five." These were five senators accused of helping Lincoln Savings and Loan President, Charles H. Keating, Jr., avoid or delay regulatory oversight while his company was losing hundreds of millions of dollars in bad loans, Keating had contributed large sums of money to the senators and to the Democratic and Republican Parties, and he indicated in a news conference that he certainly expected his donations to have had some effect in his favor. Other, sometimes bizarre, scandals involving state legislators and governors in various political financing schemes have been revealed in more than one-half of the states in recent years. When Americans were asked in a poll conducted in the fall of 1991 whether politicians generally were "financially corrupt" or "honest," it was no surprise that only 34 percent answered, "honest."³

The role of money in American politics was more apparent than ever before in the elections of 1988. More than $2.7 billion was spent for elections and referenda at all levels: $500 million for the presidential elections, and $458 million for congressional elections, including in both cases primary elections. In addition, the Democratic and Republican national parties spent over $328 million.⁴ This was more than double the $1.2 billion spent in 1980 and nine times the expenditures of 1968 (not adjusted for inflation). In constant dollars, the increase in presidential spending alone from 1968 to 1988 was 268 percent.⁵ Total congressional campaign expenditures in 1987-88 were $457 million. The average House winner spent about $400,000, the average Senate winner almost $4 million (which means he had to raise on average about $13,000 every week for six years). Most incumbents were able to raise large amounts of money, most challengers were not.⁶ Herbert Alexander has noted that

[fallowing the 1988 congressional elections, House incumbents held 25 percent more cash in reserve than their challengers had spent in the entire campaign. And the reelection rate in the House topped 98 percent for the second election cycle in a row. Few would argue that these two sets of statistics were unrelated,⁷

In the meantime, Congress has wrestled with a number of competing proposals for campaign finance reform. In the House of Representatives the Democrats have insisted on caps on PAC donations, some public subsidies, and campaign expenditure limits. These proposals have been rejected by the Republicans, including President Bush, who oppose both spending limits and public financing. The House and Senate passed a campaign finance bill in 1991, and differences between the two measures were ironed out in a conference committee meeting in early April 1992⁸; however, it was clear that the President would not sign the bill.

While American frustration with political money is anything but new,⁹ there does seem to be a powerful desire today to "do something." One purpose of this volume is to make the reader aware of a wide variety of alternatives to the American system of political financing that can be found in various Western democracies. While it may not be feasible or even wise to borrow wholesale from the Canadian or Western European examples cited, there is surely no reason to believe that the experience of others is of no relevance at all to potential reform efforts in the United States.

Public Finance in Democratic Systems

According to Herbert Alexander, 21 countries had some form of public political financing in the mid-1980s,¹⁰ which is more than half of the total number of countries that would have qualified as liberal democracies at that time. Since then the French have enacted public financing legislation, and a number of countries in Eastern Europe that have emerged from the collapse of Communism have already or will probably introduce some form of public party and campaign finance.

Why have so many democracies introduced public campaign and party financing in recent decades? The reasons are numerous and generally well known. The costs of party activities, both for routine organizational purposes and election campaigns, have risen everywhere, and in many countries the increases have been dramatic. Traditional sources of income, such as party dues, revenues from party meetings, profits from party newspapers, and generally small or modest contributions from the candidates themselves and their families and friends have become inadequate. Parties and candidates have turned increasingly to wealthy individuals and powerful interest groups for contributions. Political money from the private sector, however, can be based on a wide variety of motivations, ranging from the desire to participate as a good citizen in the political process to gaining access to decision makers, influencing the direction of public policy in specific cases, or even engaging in bribery. Citizens interested in running for office may lack the necessary funds for a campaign, and the parties and groups with which they identify may not be able to provide adequate financial assistance. Parties that do not appeal to powerful private interests may be unable to attract candidates in certain districts or regions due to lack of funding. Candidates and office holders who have few resources of their own or from their party may become dependent on private contributions, with obvious negative consequences for the political process. The issue of public finance, then, is concerned with questions of fairness, equal opportunity, competition, corruption, and with public assessments of the political process. It is, ultimately, a question of great importance to the political culture of a democratic society.

Some reformers have argued that tightening the regulation of parties and candidates, such as improved disclosure and reporting procedures, would "clean up" problems of political finance. Karl-Heinz Nassmacher suggests that the "puritan" streak in American political culture perhaps encourages such efforts, especially if they do not cost the taxpayers any money. Others have argued that public financing is the key to solving many of the problems raised by private money, whether by matching funds from private donors or by substituting public money for such funds. Still others have suggested, however, that government might become a new source of dependency, relieving the parties and office holders from their accountability to their voters and supporters.¹¹ We will see below, for example, in the chapter by Hans Herbert von Arnim and Peter Losche, that this is a genuine concern in Germany, where public subsidies are among the most generous in the world.

The chapters that follow by Paul Herrnson and Ruth Jones on public campaign finance at the American national and state levels, respectively, show clearly that public subsidies in the United States, with the exception of the presidential campaign, are very limited when compared with most of the other countries in this volume. This can be demonstrated by numerous examples. Only the campaign expenses of the candidates running for President in the primary and general elections are covered in large part by public funds. There is no public funding for congressional candidates. The only public subsidy received by the political parties from the federal government is for the national presidential nomination convention every four years. The United States is the only country in which there is no free television and radio time made available to political parties; instead, parties and, especially, candidates at all levels may purchase as much time as they can afford. In the other countries the purchase of television and radio time by individual candidates is forbidden, and only in a few countries may the parties purchase a limited amount of time. There is no free poster space in the United States. Thanks to the Supreme Court, legal limits may not be placed on the personal expenditures of candidates or on so-called "independent expenditures" by groups not an official part of the campaign of individual candidates, on the grounds that such limits would be restrictions on free speech.¹² This has not prevented the Canadians and British, who presumably are also in favor of free speech, from limiting the amounts of money that individual candidates may spend in their own behalf, or, in the case of the British, from banning expenditures not authorized by the candidates or parties. In the 1970s the United States introduced the innovative and now inadequate $1 tax "check-off," but for presidential elections only. In the 1980s only 20-30 percent of the taxpayers participated in this scheme, with the rate of participation dropping over the decade. As Ruth Jones notes, almost two-thirds of the American states have considered or enacted some form of public subsidy, generally financed by tax "check-off" or "add-on" schemes.¹³ In the latter case participation has been no higher than 2 percent. Not surprisingly, the amounts of money provided in the states are generally modest and limited to certain offices. In the two dozen states that have public financing, only eight provide some money for the political parties in contrast to candidates. The very limited federal tax deductions and credits for political contributions were eliminated by the tax reform legislation of 1986, whereas other countries—especially Germany, where tax credits and deductions are exceptionally generous-encourage citizen participation through their tax policies. It is sometimes argued that the American PACs encourage citizen participation by offering citizens the opportunity to promote specific interests (though without any tax benefits); however, as Paul Herrnson notes in his chapter on campaign financing in federal elections, the PACs have weakened American parties and raised serious questions about the fragmenting and even atomizing effects of "special interests" in the political process. As a number of contributing authors note in their chapters, politics in the United States is candidate oriented, rather than party oriented, as in most other democracies, and this fundamental difference is reflected in public financing efforts as well as in the legal regulations that affect candidates, parties, and elections.

Political Systems, Party Systems and Political Finance

The contributors to this volume demonstrate in their respective chapters that there are numerous differences as well as similarities in the public financing measures of North American and European democracies. What is particularly striking, however, are the differences between the United States and the other countries. As Karl-Heinz Nassmacher notes, little theory has been developed in comparative politics to help us understand why these differences and similarities exist.

A number of potential explanations offer themselves. Ruth Jones, for example, notes that American federalism has encouraged the proliferation of elective offices, which are regulated by state law, and the effect has been to strengthen state parties at the expense of the national parties. This could help explain both candidate orientation and the relatively weak national efforts to enact general reforms or broader schemes of public finance. But federalism per se cannot explain the widespread opposition to public financing in the United States, because Canada, Germany, and, to a lesser extent, Austria, are also federal systems, and all three countries—especially the latter two—have more comprehensive and generous public financing schemes than the United States.

A factor that might explain the candidate orientation in the United States, and thus the weakness of the parties and their inability to bring about serious reform in their favor, is the single member district, plurality electoral system. While there can be no doubt that this system encourages a focus on the individual candidate, often at the expense of the party, this effect seems to be far more acute in the United States than in Canada and Great Britain, which also have single ballot, single member plurality systems. Yet the parties in these two countries, expecially in Great Britain, are far more important in the political process than their American counterparts. And while the British, like the Americans, have failed to introduce public financing for legislative candidates, they have placed restrictions on spending and banned the purchase of television time for candidates as well as parties.

A third factor that we might consider is the effect of the American presidential system versus the parliamentary systems of the other countries. It certainly seems plausible that this general system difference might be crucial in explaining the focus on candidates in the United States in contrast to the role played by parties in the other countries. After all, the majority party or the majority coalition of parties must have a high level of discipline and cohesion to sustain the government (cabinet), whereas the separation of powers in the United States permits the President and Congress to go in different directions with no danger of a negative vote of confidence by the Congress or a dissolution of the legislature by the President. On the other hand, the British have a parliamentary system with strong parties, and yet they have done little in the area of party and campaign financing beyond indirect measures such as providing free television and radio time during elections and placing limitations on the personal expenditures of individual candidates. One might note also that the French Fifth Republic, which is a semi-presidential or semi-parliamentary system, in which the political parties were generally weaker than elsewhere in Europe, now has a comprehensive system of public finance.

This may leave us with a fourth factor as the most important of ail: political culture. Attitudes generally hostile to taxes and big government, or even to government at all, were tapped and further encouraged by the Reagan Administration during the 1980s, and public campaign and party financing certainly smacks of more government. Even without a recession, the support by Americans for public financing schemes is very limited, as can be seen in the l-to-2 percent rate of taxpayer participation in state tax "add-on" programs. The public outciy against increasing the salaries of members of Congress, which can be seen also as a means of providing more financial independence and security for elected officials, is further evidence of public hostility toward politicians. It may be that voters in all democracies are skeptical of public subsidies for parties and candidates, but there appears to have been a more successful effort by political leaders in the other countries to persuade enough voters that public funding in principle is a means of bringing about a number of desirable benefits, such as lessening the influence of wealthy individuals and special interests and providing for fairer, more open and equal elections.

Political Finance in Comparison

As noted in the preface, political finance is a concept that can have different connotations. In North America, it generally refers to campaign finance for individual candidates, whereas it suggests party finance for both elections and routine organizational costs in Europe. The term might also incorporate the regulation of donations of money or contributions in kind to parties and candidates by individuals, groups and various special interests. While the chapters contained in this volume provide some information about the regulations affecting the financing of campaigns and parties, the focus is on direct and indirect public financing schemes.

Paul Herrnson reports that in the 1988 f...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Preface
• PART ONE POLITICAL FINANCE IN COMPARATIVE PERSPECTIVE
• PART TWO POLITICAL FINANCE IN NORTH AMERICA
• PART THREE POLITICAL FINANCE IN WESTERN EUROPE
• PART FOUR POLITICAL FINANCE ON THE RESEARCH AGENDA IN COMPARATIVE POLITICS
• About the Contributors
• Index