Archive for the ‘Parallel Campaigns’ Category

Will corporations rush to increase spending in US elections?

February 22, 2010

A fascinating article at Politico discusses the likely impact of the United States Supreme Court’s decision in Citizens United. Briefly, the Supreme Court found that a prohibition on corporations and unions engaging in electioneering communication or expressly advocating for the election or defeat of a candidate was a violation of the First Amendment right to free speech.  There has been something of a Chicken Little response to the decision, as the video in Jesse’s comment below points out.

Anyway, the Politico article suggests that the response from corporates may be quite modest.  The article identifies a number of reasons why many corporations have been trying to get out of political giving:

In the past decade, corporations have actually been trying to get out of the business of big political giving. They sided with reform advocates when the McCain-Feingold law was first challenged in 2003 and testified on behalf of its ban on unlimited corporate giving to the political parties, which were dubbed “soft money” donations.

The reasons for this reluctance were complex. Some executives hated the way politicians always had their hands out, making appeals that were difficult to turn down for fear of retribution in the legislative process. Others didn’t like the lack of control they had over how their money was spent.

The court ruling would give corporate officials that control, but many of them may decide — especially those in publicly held companies — to keep the cash for their real business needs.

Running attack ads against political targets would create real risks of alienating customers and shareholders. And, given voters’ sentiments toward corporations today, most politicians would probably not welcome a glowing ad campaign on their behalf that was funded by Big Business.

The article goes on to note that:

The penchant CEOs have shown for keeping a low political profile for their businesses has been reinforced lately by shareholder groups that are pressing companies to publicly disclose their political spending and the process by which they distribute that money.

Currently, about 70 firms, or roughly half of the Standard & Poor’s top 100 companies including Microsoft, Aetna, and Time Warner, have adopted such practices.

Bruce Freed, head of the Center for Political Accountability, an organization that advocates for such disclosures, said he will redouble his efforts in light of the court ruling. He expects success largely because a shareholder disclosure policy will be a corporations best reason “to resist the heightened pressure” to give to political groups.

It will be interesting to watch the upcoming US midterm elections and see how corporates and unions respond to the Supreme Court’s decision.

What do political donors get for their money?

February 18, 2010

A reasonable concern about the potentially corrupting influence of campaign donations is one of the key rationales for campaign finance regulation.  As Professor Milyo of the University of Missouri puts it:

“Conventional wisdom holds that money plays a central and nefarious role in American politics. Underlying this belief are two fundamental assumptions: (1) elective offices are effectively sold to the highest bidder, and (2) campaign contributions are the functional equivalent of bribes.”

Stephen’s post below (“The Mischief Rule”) touches on the first of these assumptions, which he thinks – and I agree – is quite weak.  But the second assumption about the nature of campaign contributions is trickier.

Large donations (or cumulatively large series of donations from associated donors) create plausible corruption concerns.  Mandatory disclosure rules for large contributions respond to this concern.  The government’s approach in the latest round of reforms is to strengthen the disclosure regime by introducing a requirement for parties to disclose the total amount they receive “in bands, including donations that fall under the [current] threshold for disclosure.”  The government also plans to develop an “associated persons” test to try to prevent donors from circumventing the disclosure threshold by using related entities to make donations just under the disclosure threshold.  While the devil is often in the detail, these reforms seem sensible.

However, some countries (like the United States) go further by limiting the amount of money that a person can contribute to candidates.  The Ministry of Justice considered such limits in its Issues Paper but the idea was not adopted in the reform package.  A related but slightly different kind of concern probably motivates such limitations – i.e., public knowledge of large donations may not address the potential risk that politicians could become beholden to large donors and use the legislative process to confer legal advantages on them.

Stephen Ansolabehere, John de Figueiredo, and James Snyder have published an interesting article looking at this issue, “Why is There so Little Money in US Politics?” (2003) 17 Journal of Economic Perspectives 105.  They consider whether there is a “market for public policy” in which, “donations come from firms, associations and individuals that seek private benefits in the form of subsidies, favourable regulations and other policies set by the government” (109).  Their provocative title reflects their observation that, while a vast amount of money gets donated or spent on lobbying, the total sum donated is nonetheless small relative to total government spending.  For example, the Washington Post columnist, George Will, once contrasted the amount donated to presidential candidates with the amount of money spent each year on Easter eggs:

“Reformers desperate to resuscitate taxpayer funding cite the supposedly scandalous fact that each party’s 2008 presidential campaign may spend $500 million. If so, Americans volunteering to fund the dissemination of speech about candidates for the nation’s most consequential office will contribute $1 billion, which is about half the sum they spend annually on Easter candy. Some scandal.”

This raises the question of why interest groups don’t donate even more money to try to obtain rents from the government.

I can’t do justice to Ansolabehere, de Figueiredo, and Snyder’s full analysis – and I know Stephen has some ideas on why it’s sometimes harder than it might seem for a politician to directly reward a contributor.

But one of their suggestions is particularly interesting: “campaign contributions should be viewed primarily as a type of consumption good, rather than a market for buying political benefits” (105).  In other words, most “individuals give because they are ideologically motivated, because they are excited by the politics of particular elections, because they are asked by their friends and colleagues and because they have the resources to engage in this particular form of participation” (118).  They suggest that we should consider whether political fundraisers act more like people selling investment products or consumption products.  Political fundraisers often bring in celebrities and musicians and hold exciting events to entertain donors.  They encourage donors to feel that they are part of a community.  In other words, the motivations of many political donors might be similar to charitable donors – i.e., the individual donor’s payoff is the sense of satisfaction from helping the cause and attending events with other like-minded people.

Ansolabehere, de Figueiredo, and Snyder say that the “consumer contributors” unintentionally make it harder for the other “investment” donors to obtain returns.  The “consumer contributors” provide a source of campaign contributions motivated by personal and ideological considerations rather than the expectation that they will receive a concentrated policy benefit (like a subsidy or favourable regulation) for their money.  Their reward was shaking hands with the candidate, or the satisfaction of being part of the political cause, or seeing their favourite band play at the rally.  So, indirectly, “20 million individuals in the United States protect themselves and their fellow citizens from special interest power with their donations of about $100 dollars each” (at 127).  (Of course, this doesn’t suggest that the status quo is necessarily acceptable.  But it does suggest that additional restrictions on political donations might inadvertently make the situation worse.)

No, yes, no. Will parallel campaigners be allowed to publish positive advertisements?

February 18, 2010

“No”, “yes”, “no”. No, not the New Zealand batsmen’s calling during their second innings in Hamilton but the answer to whether parallel campaigners are going to be allowed to publish advertisements encouraging voters to vote for a particular party or candidate.

Earlier in the week the government announced its reform package for electoral finance laws. I hope to blog my thoughts about the package shortly but in the meantime I want to say something about the regulation of parallel campaigns (third parties under the Electoral Finance Act 2007) and make a couple of comments about the select committee’s upcoming consideration of the Bill (when it is introduced into the House).

After the government initially announced the package it was unclear whether third parties would be allowed to publish advertisements encouraging voters to vote for a particular candidate or party without first being authorised by the candidate or party. (Parallel campaigners are required to obtain authorisation under the Electoral Act 1993 as it stands at the moment.)

Paragraph 75 of the Minister of Justice’s paper to the Cabinet Domestic Policy Committee seemed to make it plain that the requirement was being retained (parallel campaigners would not be allowed to run positive ads):

This will effectively create a more transparent regime than under the status quo, where the only requirement is for parallel campaigners to place their name and address on an election advertisement and obtain written authorisation where advertising supports the election of a constituency candidate or political party. Instead there will also be a central point where the details of parallel campaigners could be readily accessed by the public and the media, making it easier for people to inquire into the identities of parallel campaigners. (My emphasis.)

However Colin Espiner wrote that the authorisation requirement was being ditched and that positive ads would be allowed:

In addition, lobby groups will be able to advertise for as well as against political parties – raising the possibility of “back door” donations that get around the limits on what politicians can spend.

When David Farrar disagreed, Espiner responded on his blog saying that he had tripled-checked with Power’s office (and later blogged about the issue):

I have triple-checked this with Simon Power’s office (have you?) and I have been told emphatically that there will be NO restrictions on positive third-party ads, and they WILL NOT count towards a party’s campaign spending limit.

Power then made some ambiguous comments in the House in response to questions from Metiria Turei which could have been read as indicating that there would be no restrictions on third parties running positive advertisements.

The confusion was eventually cleared up when Espiner reported that the current authorisation requirements would be retained:

[Power] also announced that lobbyists running supportive campaigns for a party would have to seek the party’s consent, and they would count towards that party’s spending limit.

The upshot is that parallel campaigners will once again be restricted from endorsing candidates and parties without their consent. (Jesse also already blogged about the value of advertising here.)

However parallel campaigners may be subject to further regulation, with Power seemingly leaving the door open to the government accepting a cap on how much parallel campaigners can spend if consensus can be reached in the select committee. Espiner reports that:

Power confirmed in Parliament yesterday that under legislation being drafted to replace the repealed Electoral Finance Act, parallel campaigners would not face restrictions on spending or what they said during campaigns.

However, after an outcry from Labour and the Greens, Power said he was prepared to revisit the proposal if a select committee could agree on a suitable alternative.

This raises the interesting prospect that the select committee may make significant changes to the reform package. If the select committee does that the public may be denied an opportunity to have any comment on those changes. This was a danger that the New Zealand Law Society warned of in its submission to the Ministry of Justice in response to the Ministry’s Proposal Document:

2.2 … The usual select committee process can result in a committee recommending significant amendments to a bill based on public submissions, officials’ recommendations, and caucus input. These recommendations are then reported to the House without the opportunity for further public input on these amendments or how they have been drafted. In order to create legislation that is both clear and durable, the select committee that considers the bill should release an interim report seeking submissions on any amendments it proposes before it finally reports to the House.

2.3 The consultation process will of course be determined by the select committee that considers the bill and not by the Government or the Minister of Justice. However the Society encourages all members of Parliament, when referring the Bill to the Select Committee to:

(a) encourage the select committee to seek a second round of submissions on amendments that the committee proposes to recommend; and

(b) set a report back timetable for the bill that allows this to occur.

As far as I am aware, the government has not responded to the Law Society’s submission (if anyone knows of any government response, please let me know). Given that it appears that significant amendments could be made by the select committee, I hope that Parliament will follow the Law Society’s urging. It is one thing for parliamentarians to agree that their own spending should be capped but it would be quite another for them to decide that the spending of non-party and candidate groups should be capped, especially without giving the public an opportunity to comment on the proposal.

One final thought. The government appears to have committed itself to not acting unless there is a broad consensus in favour of any new rules. As Professor Geddis has noted, the government’s main concern appears to be to ensure that “the current political players are all on board with any alteration to the law”. As David Farrar has pointed out, objections from Labour and the Greens to changing the broadcasting rules has effectively killed any reform in this area.

Does this mean that if any of the other parties in Parliament object to capping the spending of parallel campaigners, such an amendment is also off the table? If it does, my reading of ACT’s submission is that they would be opposed to any cap on spending by parallel campaigners.