The Undermining of American Democracy

How Campaign Contributions Corrupt our System and Harm Us All

Clayton D. Peoples

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000576658
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political Corruption & Misconduct
• Index: Politics & International Relations

The public believes that politicians in the US favor special interests over their constituents and that our political institutions have become corrupt—and they are right. A growing body of evidence shows that special interests have disproportionate sway over policy via campaign contributions and lobbying. In this book, the author presents this evidence in a logical, understandable way; he then illustrates how campaign contributions harm our economy, exacerbate inequality, and undermine our democracy. One of the most startling findings of the book is that campaign contributions led to the Financial Crisis and Great Recession. The author concludes that campaign contributions have effectively created an oligarchy in the US, and, thus, reform is needed to save our democracy. The final chapter of the book suggests a number of different reforms that could be pursued—and highlights some ways in which these reforms can be achieved.

1 Introduction

The 2016 federal elections in the US were the most expensive on record: a total of $6.5billion was spent on presidential, house, and senate races combined (Center for Responsive Politics 2019a). Moreover, as a result of the Citizens United decision six years prior, lone donors were able to contribute tens of millions of dollars to SuperPACs in the 2016 elections. For instance, Sheldon Adelson gave over $77million, and Thomas Steyer donated a whopping $89million (Center for Responsive Politics 2019b).

The US campaign finance system is unique. Unlike other countries— where political campaigns are relatively inexpensive and are largely funded with public money—the US has very expensive campaigns that are mostly financed with private donations. Our campaign finance system allows private individuals and entities (e.g. businesses) to donate money to politicians and political organizations (e.g. SuperPACs) in copious sums. Although there are some limits on contributions, a large amount of money—totaling billions of dollars, as above—is donated each election cycle. Moreover, a very small number of individuals and entities account for the vast majority of that money (Olsen-Phillips et al. 2015).

With so much money in politics coming from a small number of private donors, there are some questions that are worth asking: Are politicians influenced by their donors when making decisions? Does policy reflect the interests of contributors rather than the interest of the general populace? If the answers to the above questions are “yes,” an important follow-up question is warranted: Do these patterns have an adverse impact on society?

Looking at public opinion polls, it is clear that most Americans feel the answer to the above questions is “yes.” The public believes that the current campaign finance system in the US is flawed and that political bodies, such as Congress, have become corrupt. A 2011 CBS News poll found that people believe special interests have more influence than ordinary citizens. A more recent poll showed that 69 percent of the population believe that Congress favors special interests over constituent concerns, and more than 50 percent believe Congress is corrupt (Dugan 2015).

Anecdotal cases of bribery and campaign finance violations in recent years seem to support the public’s beliefs. Members of Congress such as Bob Ney of Ohio, James Traficant (also of Ohio), Randall “Duke” Cunningham of California, and William Jefferson of Louisiana were all involved in cases of alleged malfeasance and/or bribery—and all of them were found guilty and spent time in prison. Infamous lobbyist Jack Abramoff also pleaded guilty to corruption/conspiracy and served a prison term for his crimes. And in August of 2018, Michael Cohen, a former lawyer to President Trump, pleaded guilty to two counts of violating campaign finance laws during the 2016 election and was subsequently sentenced to three years in prison.

Although bribery cases and political wrongdoing make for interesting reading, they may not be reflective of broader patterns. Put differently, it may be that the politicians and others mentioned in the previous paragraph were just a “few bad apples” and the rest are more honorable. This was the argument forwarded by Representative Ken Calvert when some of the above scandals broke. In an interview, he said, “People should recognize that 99 percent of [lawmakers] are honest and hard-working, but unfortunately there are a few bad apples” (Barrera 2006). What is the truth?

Politicians are, indeed, influenced by their donors when making policy decisions. Although the literature on this topic was mixed prior to the 2000s, more recent studies have produced a definitive answer: contributors influence policy. Meta-analyses—statistical analysis of many studies all at once—estimate that around one in three roll call votes in Congress is influenced by political action committee (PAC) contributions (Stratmann 2005; Roscoe and Jenkins 2005). My own study of more than 7,000 votes across a sixteen-year period in Congress yields similar findings—contributions significantly sway legislative votes (Peoples 2010).

Policy reflects the interests of wealthy donors rather than the wishes of the general public. Research by Gilens and Page (2014) shows that policy more closely matches the views of the elite than the preferences of the public. This corroborates long-standing work by Domhoff (e.g. 1967, 2014), which argues that it is the wealthy upper class in the US that largely dictates policy—and, by extension, gets what it wants.

This leads us to arguably the most important question of all: Does contributor influence have an adverse impact on society? One could make the case that contributors may act as benevolent powers whose influence still benefits others in society; an alternative argument, however, is that their influence enriches them at the expense of everyone else. Unfortunately, evidence is emerging that lends support to the latter stance: contributors get what they want to the detriment of the rest of society.

I will present new evidence in this book that shows how contributors helped create the Financial Crisis and ensuing Great Recession, which cost the economy about $14trillion (Luttrell et al. 2013) and caused millions of people to lose their jobs and their homes (Institute for Policy Research 2014). There are two bills—the Gramm-Leach-Bliley Act (GLBA) of 1999 and the Commodity Futures Modernization Act (CFMA) of 2000—that led directly to the Financial Crisis. Donors wanted these acts to become law, and policymakers voted on these bills accordingly. The single greatest determinant of voting on these acts was campaign contributions. In other words, campaign donations influenced passage of the GLBA and the CFMA, which, in turn, created the conditions that brought about the Financial Crisis and the Great Recession.

I will also provide evidence in the book that illustrates how campaign contributions can create and exacerbate social inequality. Research shows that political donations can give some firms an advantage over others with respect to government contracts (Hogan et al. 2006). Additional scholarship shows that campaign contributions can result in generous subsidies for particular industries (Lopez 2003), which not only creates inequality between industries, but also takes funding away from initiatives that could help the general public. But perhaps the biggest source of inequality connected to campaign contributions is alterations in the tax code. Although the US technically has a progressive tax system, it is not nearly as progressive as it could be. The wealthy pay a far lower share of taxes in the US than they do in other countries, and corporations have been paying an ever-decreasing proportion of the total taxes collected in the US since the 1950s. Campaign contributions likely play a significant role in shaping tax policy in the US, as Clawson et al. (1998) find that PAC officers brag that tax code changes are among their most important accomplishments.

Sadly, the influence of campaign contributions on policy—and its damaging impacts on our society—suggest that our democracy is withering. Democracy refers to rule by the people, and is characterized by free and fair elections, freedom of speech, and easy access to one’s political representatives. Elections are anything but free and fair in the US because of our campaign finance system. The candidates with the most money typically win—even controlling for things like incumbency advantage. Although we do have “freedom of speech” in the traditional sense, the reality is that our speech is typically only heard by lawmakers if accompanied by a generous campaign contribution. This means that we have only limited access to our political representatives—access that is dictated largely by money. It’s essentially a “pay to play” system: if we have given a contribution, we can get the ear of Washington politicians; if we haven’t provided a campaign donation, we will not be heard. Instead of being a democratic system, our government has effectively become an oligarchy.

The above patterns carry significant implications for political theory. There are three main theories that seek to explain power structure: pluralist theory, which argues that the government is open to input from a variety of groups; elite-power theory, which contends that our political system is mostly only open to elite influence; and state-centered theory, which posits that governmental actors are autonomous, impervious to outside influences. Elite power theory is best supported by the findings highlighted above. Moneyed interests and the elite have significant sway over policy and generally get what they want. The rest of society suffers for it, as does our political system itself. Clearly, some kind of reform is needed.

There are numerous options to pursue in terms of campaign finance reform, from stricter limits all the way to full public financing of political campaigns. There are also a number of other possibilities that might reduce the impact of political donations on policy. Some options include changing the policymaking process to reduce the avenues through which contributors and lobbyists can shape legislation, closing the revolving door that allows politicians to secure lucrative lobbying posts once they’ve left office, and reducing conflicts of interest. These reforms could be pursued via any number of paths, from traditional (e.g. Congress or the Supreme Court) to citizen-initiated (e.g. social movements such as the “Democracy for All” movement). The final chapter of the book—Chapter 8—will discuss these possibilities in much greater detail. But before that, other chapters will provide a background on campaign finance in the US and outline the many problems with our system.

Chapter 2 will provide a basic picture of the campaign finance landscape in the US by briefly discussing its history and highlighting current campaign finance laws. Chapter 3 will outline the benefits of campaign donations for the recipients (politicians), such as increased electoral chances and lucrative opportunities outside of politics (e.g. lobbying); it will also delineate the returns for the donors, such as access and policy influence. Chapter 4 will dive into the implications of contribution influence for our economy, highlighting the case of the Financial Crisis and ensuing Great Recession. In a related vein, Chapter 5 will underscore how campaign contributions impact not just our economy, but also our inequality structure through things mentioned earlier (e.g. contracts, subsidies, the tax code). Chapter 6 will then discuss the implications of contribution influence for our political system—and will argue that we have effectively become an oligarchy rather than a democracy. Chapter 7 will show how these patterns speak to the debates around power structure—and how they illustrate that elite-power theory is the best explanation of power in the US today. Finally, Chapter 8 will discuss the reform possibilities noted above.

References

1. Barrera, Edward. 2006. “FBI Reviews Calvert Links: Association with Lewis Unlikely to Thwart Representative’s Bid for House Appropriations Seat.” San Bernardino Sun (06/18/2006).
2. Center for Responsive Politics. 2019a. “Cost of Election.” OpenSecrets. www.opensecrets.org/overview/cost.php/
3. Center for Responsive Politics. 2019b. “Top Individual Contributors to Super PACs.” OpenSecrets. www.opensecrets.org/overview/topindivs.php?cycle=2016&view=sp
4. Clawson, Dan, Alan Neustadtl, and Mark Weller. 1998. Dollars and Votes: How Business Campaign Contributions Subvert Democracy. Philadelphia: Temple University Press.
5. Domhoff, G. William. 1967. Who Rules America? Englewood Cliffs, NJ: Prentice Hall.
6. Domhoff, G. William. 2014. Who Rules America? The Triumph of the Corporate Rich. 7th Ed. New York: McGraw-Hill.
7. Dugan, Andrew. 2015. “Majority of Americans See Congress as Out of Touch, Corrupt.” Gallup. https://news.gallup.com/poll/185918/majority-americans-congress-touch-corrupt.aspx
8. Gilens, Martin, and Benjamin I. Page. 2014. “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.” Perspectives on Politics 12:564–581.
9. Hogan, Michael J., Michael A. Long, and Paul B. Stretesky. 2006. “Campaign Contributions, Post-War Reconstruction Contracts, and State Crime.” Deviant Behavior 27:269–297.
10. Institute for Policy Research. 2014. “The Great Recession: Over but Not Gone?” Institute for Policy Research (IPR). www.ipr.northwestern.edu/about/news/2014/IPR-research-Great-Recession-unemployment-foreclosures-safety-net-fertility-public-opinion.html
11. Lopez, Rigoberto A. 2003. “Campaign Contributions and Agricultural Subsidies.” Economics and Politics 13:257–279. https://doi.org/10.1111/1468-0343.00093
12. Luttrell, David, Tyler Atkinson and Harvey Rosenblum. 2013. “Assessing the Costs and Consequences of the 2007–09 Financial Crisis and Its Aftermath.” DallasFed, Economic Letter. www.dallasfed.org/~/media/Documents/research/eclett/2013/el1307.ashx
13. Olsen-Phillips, Peter, Russ Choma, Sarah Bryner and Doug Weber. 2015. “The Political One Percent of the One Percent in 2014: Mega Donors Fuel Rising Cost of Elections.” OpenSecrets News. Center for Responsive Politics. www.opensecrets.org/news/2015/04/the-political-one-percent-of-the-one-percent-in-2014-mega-donors-fuel-rising-cost-of-elections/
14. Peoples, Clayton D. 2010. “Contributor Influence in Congress: Social Ties and PAC Effects on U.S. House Policymaking.” The Sociological Quarterly 51:649–677.
15. Roscoe, Douglas D. and Shannon Jenkins. 2005. “A Meta-Analysis of Campaign Contributions’ Impact on Roll Call Voting.” Social Science Quarterly 86:52–68.
16. Stratmann, Thomas. 2005. “Some Talk: Money in Politics: A (Partial) Review of the Literature.” Public Choice 124...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication Page
• Table of Contents
• List of Illustrations
• Preface
• Acknowledgements
• 1 Introduction
• 2 Campaign Finance Landscape
• 3 What Contributions Do
• 4 Implications for the Economy
• 5 Implications for Social Inequality
• 6 Implications for our Democracy
• 7 Implications for Theories of Power Structure
• 8 Political Reform
• Index