Questions About the Small-Donor Matching Program in the Democrats’ Campaign-Finance Reform Bill

I mentioned in a prior post that I wanted to raise certain specific issues with the small-donor, public financing program the House Democrats currently propose as their vision of campaign-finance reform.

This proposal is modeled on New York City’s small-donor matching program, which has been in existence for about 30 years. But there is one highly significant difference between the NYC program and the one the House voted for in H.R. 1. The NYC program provides public matching funds only for small-donor contributions made by city residents, while the federal proposal does not analogously limit its matching funds to contributions to candidates from residents of the House district at issue.

In my recent essay on small donors and political polarization, I discuss why this choice not to limit public matching funds to contributions from in-district residents is so significant:

When it comes to reducing the polarizing effects of multiplying small donations with a six-to-one match, this is a consequential choice. From a realpolitik perspective, it is easy to understand why House Democrats would not want to limit matching funds to in-district contributions. These days, a substantial percentage of House candidates’ funds from individual contributors come from out of state. This is a reflection of the greater nationalization of elections, as well as the greater national interest in individual House races when partisan control of the House is perceived to be up for grabs. In a major study of the 2004 elections, the average congressional district received contributions from seventy other districts, while in 1996, the figure had only been fifty-five. By 2004, a majority of individual contributions came from district residents in fewer than 20% of congressional districts. In nearly the same percentage of districts, outside money constituted 90% or more of the candidates’ individual contributions. Moreover, this money is mostly not coming from those who live in nearby districts, but from people living in a relatively small number of geographically distant areas, such as wealthy parts of New York, Los Angeles, Florida, Chicago, Maryland, New Jersey, Atlanta, and others. Indeed, 5% of congressional districts in this 2004 analysis provided more than 25% of all non-local money; a mere 20% of congressional districts provided a majority of the outside money. More recent work reaffirms this and concludes that the average House member receives just 11% of individual contributions from in-district donors, while donors come overwhelmingly from a small number of metropolitan areas, such as those noted above.

Moreover, it is hardly surprising that members who receive the most money from outside their districts are more ideologically extreme than their party’s other representatives. Indeed, even for members who represent moderate districts, if they receive more than $353,000 in outside funds, they vote in ways characteristic of the party’s ideological wing rather than the preferences of their more moderate constituents. Money that flows from New York and California to House districts across the country is almost inevitably going to reflect more nationalized, ideological motivations than in-district money. Out-of-state money will flow to those with the highest national profile, and those figures are not likely to be moderates. As one academic expert puts it, “all that outside funding may be leading to a more polarized Congress, as it appears to encourage members to pay attention to donors whose ideologies are more extreme than voters.”

To reduce the polarizing effects of individual contributions, a national small-donor matching bill could limit public matching funds to small-donor contributions from district residents. A direct ban or limit on the aggregate amount of out-of-district campaign contributions from American citizens would almost certainly be unconstitutional. But the constitutional question is considerably different when the government is subsidizing elections and deciding, on non-viewpoint-based grounds, that it wants to match only in-district contributions, for legitimate public policy purposes such as increasing local representatives’ responsiveness to their constituents. Limiting matching funds to district resident contributions would reduce the effects of the currently proposed matching program in stoking the fires of polarization. But because few individual contributions come from within the district, such a limitation would also mean the matching program would be limited in overall effect and would not provide as strong a countervailing force against the weight of larger individual contributions (or against outside spending, as well).

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