Q&A with... Jeff Milyo:
How much does campaign financing influence the political process?

Jeff Milyo, Assistant Professor in the Harris Graduate School of Public Policy Studies, is among a small group of scholars in the United States who study the effects of campaign finance laws. His contrary views on this highly charged topic challenge widely held assumptions about the impact of money on the political process. Milyo, who was a political-economy fellow at both Washington University in St. Louis and at Harvard/M.I.T., currently teaches political economy of law, American democratic processes and reform, and policy analysis and political choice at the Harris School.

Jeff Milyo, Assistant Professor in the Irving B. Harris Graduate School of Public Policy Studies

Where do most people begin in their analysis of campaign financing?

Most of the press and campaign finance reform advocates have absolutely no doubt that elective office is distributed to the highest bidder. In their view, campaign contributions are very much like bribes. People are disgusted; ordinary citizens are alienated. It’s the cause of low voter turnout and all manner of political and social problems. The health reform advocates say, “We’ll get health care reform only when we get campaign finance reform.” And on it goes. And, of course, big corporations make big and easy targets.”

And your analysis?

Among those of us who specialize in studying campaign financing as economists and political scientists, I think there’s a strong recognition that while we may have some notions about the subject, there are a lot of puzzles to be worked out. What I have tried to do in my scholarship is to bring those puzzles to the forefront and not let people become too complacent with fixed views about money and politics. Policy comes after understanding how a process works, and people have been jumping into this issue at the policy stage without looking at the process. I’ve been pushing to make people aware of the evidence––that marginal effects of campaign spending are near zero; that corporations give far more to charity than they spend on lobbying, and far more on lobbying than they do on soft-money donations. We need to reconcile that with all these easy assumptions about this issue. A number of scholars take it as a given that there is a kind of market for political favors out there, and then they run with that as the basis for their work.”

This suggests that you define the democratic process a bit differently.

I start with the belief that democracy is a process and not an end in itself. The idea that monied interests have some influence on that process isn’t necessarily a bad thing. I disagree with the view of some that anything that deviates from majority rule is bad. That view leads to simplistic histories of one industry giving money to one politician that inevitably means corruption. In my scholarly work, I’ve been trying to say that though I grant that campaign contributions to a candidate creates an interest, I want to consider whether that is bad on its face. And what is the extent of that interest? There are always tradeoffs between the ideals of free speech and association on the one hand and the democratic ideal of equality on the other. We’re really only beginning to understand the terms of that tradeoff.”

Where are you conducting your analysis of money and politics?

At present, in the state legislatures. States differ quite dramatically in their campaign finance regulations, and there has been a fair amount of change over time. So they’re ideal for studying the effect of a soft-money ban or the effect of direct corporate contributions to candidates.

We’re seeing candidates vow to refuse soft money much like a vow of chastity. What is your take on this?

Let’s look at the Lazio/Clinton contest in New York. The New York Times recently ran an editorial praising their separate decisions to refuse soft money. The editorial then expressed the hope that the Sierra Club and the National Abortion and Reproductive Rights Action League, among others, would place civic mindedness above self-interest and refrain from weighing in on the contest. That’s backwards! That’s a recommendation to restrict participation in the democratic process.

Are some states awash in soft money?

California has no limits on individual or corporate contributions to candidates. With no cap, elections are very expensive. Yet if you compare this state to state, for example, California to Wisconsin, where there is public funding of campaigns, there is no demonstrably higher level of corruption in California where the rules are wide open.

What is one puzzle that needs to be solved?

We can say with certainty that if there’s more spending in a political campaign, there will be higher voter turnout, but no one has proved this is cause and effect. It’s by no means clear that spending has this impact, that the advertising is bringing people out. Maybe it’s simply because it’s two closely matched candidates.

What about the phenomenon of self-financed campaigns that we see both nationally and locally?

Under current law, government can only justify limits on campaign contributions for the purpose of preventing corruption. So, people cannot corrupt themselves by contributing to their own campaigns, and thus you can’t limit personal financing. If you believe offices are for sale to the highest bidder, then where are “President” Perot and “President” Forbes? I studied incumbents in the U.S. House of Representatives using financial disclose reports to try to see whether wealth correlates directly to their incumbency. The data showed that wealthier candidates don’t win by greater margins than their less-wealthy colleagues. Did their net worth scare away challengers? This was not borne out by the data either. Did they raise more money because they are wealthy and have connections to other wealthy people? Again, the answer was no. Wealth has no affect on these things.

What you seem to be saying is that campaign financing is something of a red herring?

It’s not clear that the campaign finance system is the reason we have a Presidential contest between the son of a former President and the son of a deceased former Senator. The Kennedy’s had personal wealth and public acclaim before they entered politics. If you had a system where all candidates were publicly financed and put on level ground, that would seem to heighten the importance of fame and other attributes. Money, in the current case, acts as a counter-balance.

What additional hard data are you using?

Most of what we know about campaign financing up to this point comes from studies of the U.S. House. The states have been less studied. Groups like Common Cause in Washington are great resources for researchers because they carefully document contributions and have very nice search engines on their Web sites. But that’s where their value ends because they always assume that any monetary transaction is evidence of corruption. They will cite the case of a senator who has received contributions from the gun industry for 10 years and make a direct connection to the list of bills for which he voted. But again, that’s not necessarily cause and effect. Almost everyone who studies campaign finance agrees that there is really no “cash on the barrelhead” market for political favors. Not that it never happens, but as a generic description of American politics, that is not a fair description.

So how do you quantify the influence?

As I’ve said, that is very hard to do. There are caps on contributions, and as more money is spent, obviously the marginal value of each dollar goes down. So if you want to give one more dollar, it’s not worth that much. And there is also a fundamental contract problem: you can promise to give me a tax break, but others can take it away the next year. What can a politician really deliver? It’s not that obvious. This is not like buying an orange at the market.

So why do large institutions spend money on politics?

There are many reasons and they’re by no means all bad. A big company wants to be involved and be heard. There’s sometimes a genuinely philanthropic motive. It is simply naive to think that the people who run Political Action Committees believe they are buying votes. It is more correct to say that they think of campaign contributions as reminders: ‘We’re out there, and at some point we may want to talk to you, and this will facilitate the relationship.’ If you just look at roll-call votes and money, you’ll find that once you control a member’s political party, his or her committee assignments, their length of service, and other factors, there is no dominant relationship between how legislators behave and the contributions they’ve received. And there’s another aspect that blurs the picture––people give money to good candidates. The attributes that make you likeable to voters make you likeable to contributors.

You’ll concede that there’s more money than ever in the political process?

Sure. It’s growing at a rate that’s definitely greater than inflation. But we’re in an era of close elections with legislative dominance in the balance. When competition is high, time and money increase significantly. That doesn’t totally account for the increase in campaign money but it’s a big factor.