US Campaign Finance: Reining In America’s Oligarchs

The U.S. election system is a stark outlier among wealthy democracies. Nearly all other wealthy democracies tightly proscribe campaign contributions and independent political spending to prevent political inequality, the distortion of public opinion and corrupted lawmakers.

Another goal is to prevent American-style polarization caused by negative advertising. Particulars vary, but nearly all mimic Germany and the United Kingdom in preventing what is called pay-to-play in the United States by sharply capping electioneering campaign spending.

Subsidizing candidates

Moreover, peer nations also subsidize candidates and small donors to further free political parties and candidates from reliance on large donors.

These higher quality democracies also restrict political TV and radio advertising opportunities, with those limited opportunities usually provided free or inexpensively.

Election campaigns are limited to a few months in duration as well. In addition, financial contributions by corporations and entities that are independent of candidates and political parties (similar to Warren Buffett or the Koch brothers’ Americans for Prosperity) are prohibited or strictly circumscribed during elections on behalf of politicians or policies.

As a result, American-style negative advertising on TV and elsewhere is absent in virtually all Western democracies. (The glaring exception everywhere are social media).

There are tight limits on electioneering spending by parties or candidates in higher quality democracies. For instance, the nationwide campaign spending by the CDU, German chancellor Angela Merkel’s party in 2013 was $27 million. It was even lower in France in 2012 and 2017.

Influencing election outcomes

Other tight limits apply to citizen donations and independent spending. Voters in other wealthy democracies are comfortable with such tight caps. They would be shocked if opaque, powerful groups could spend unlimited amounts of money for years to mold public opinion and influence election outcomes. Heavy-spending individuals such as the billionaires Sheldon Adelson or Paul Singer are effectively allowed to speak with the voice of tens of millions.

Indeed, peer nations are so determined to avoid vote buying that even the Financial Times — Britain’s equivalent of the Wall Street Journal — rather remarkably demanded in a 2015 editorial that private contributions be entirely abolished. British politics should be funded solely by taxpayers:

“If the political class at Westminster is to have any chance of winning back public trust, it needs to end the suspicion that the culture of political donations is corruptible. The only way to do this is a system of taxpayer funding . . .”

Britain and the Declaration of Independence

This is more than ironic. Britain — the abhorred example of political corruption for colonial Americans — has come to hew far more closely than the United States to the original intent of the founding fathers to excise all political corruption, defined most broadly.

Australia is the only wealthy democracy other than the United States to allow unlimited political donations and independent third-party political spending, including by corporations.

The similarities end there, however. Australian pay-to-play is on a tiny scale. The ten biggest donor corporations, for instance, contributed a total of $3 million during the 2016 general election there — a rounding error in American pay-to-play.

Limiting electioneering spending

More than 70 nations further reduce the need for private campaign donations by providing candidates with public funding to defray electioneering costs. The goal is to avail citizens of a factual, full airing of genuine policy differences between candidates and between political parties.

The outcome is robust and highly competitive elections where the weight of ideas and policy prescriptions are the determining factors rather than weight of wallet.

European nations provide candidates and their political parties an average of about $5 per voter in public funding, with the greatest level at $15 in Norway.

Such subsidies represent about 40% of spending by candidates and political parties over an election cycle. In France, for instance, public subsidies equal 47.5% of permitted electioneering spending.

The balance of campaign funding is derived from small donations, typically incentivized by tax credit as in Canada, France and Germany. Political parties in Germany garnering 0.5% of votes for Bundestag (federal) candidates receive €1 ($1.25) for each of their first four million votes and 83 cents per vote received thereafter. Plus, there is an upper cap on tax credits granted for individual and total donations.

Combining a limited need for campaign donations with public funding has successfully freed lawmakers from reliance on wealthy contributors. The proof is voter sovereignty: Policy outcomes of other wealthy democracies do not reflect an American-style income bias.

Editor’s note: This feature is adapted from Billionaire Democracy: The Hijacking of the American Political System (BenBella Books, 2018).