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"System Down"--A Commentary by Profs. Bruce Ackerman and Ian Ayres


(This essay was originally published on the American Prospect Online on December 12, 2003.)

System Down

McCain-Feingold helped doom the current model of public financing for campaigns. Fixing it will take some imagination.

By Bruce Ackerman, Sterling Professor of Law and Political Science, and Ian Ayres, William K. Townsend Professor of Law

This has been a momentous month for campaign finance reform. Although the McCain-Feingold law has now been upheld by the Supreme Court, the traditional public funding system has been killed by a remarkable alliance between Howard Dean, John Kerry and President Bush.

The two events are related. McCain-Feingold cut off the supply of large "soft money" contributions. But it did so at the price of allowing each contributor to double his "hard money" donation from $1,000 to $2,000. These higher limits radically reduced the attractiveness of public funding. During the primary campaign, major candidates could obtain $19 million in federal funding if they limited their private fundraising to about $25 million. But this bargain became much less attractive once hard money could be raised in $2,000 chunks. Now leading Democrats are better off refusing the $19 million to compete for unlimited private funds. Indeed, it would be suicidal to do otherwise while President Bush is raising $200 million from his private backers.

The emerging no-subsidy system may end up increasing the influence of the upper class. Only one-quarter of 1 percent of American voters gave $200 or more in the 2002 election cycle. And yet their contributions added up to half of the total. Now that McCain-Feingold doubles contribution limits, financial power will become even more concentrated. Rather than congratulating themselves on their great victory before the Supreme Court, advocates of reform must turn at once to the reconstruction of public finance.

Patching the old system won't suffice. Candidates have a constitutional right to raise private funds and the High Court's recent decision doesn't change this fundamental point. For a subsidy program to work, it must be sufficiently attractive to induce all major candidates voluntarily to accept stringent limitations on their private fundraising. Worse yet, recent experience shows that the traditional system is unstable: Once a single candidate opts out, serious competitors must do the same or face a crushing media blitz.

This strategic dynamic can be checked by a shift to a decentralized approach. At present, individual citizens are mere bystanders to the key decision made by candidates on whether or not to take federal money. But an alternative financing structure would transform citizens into the key decision makers -- and would make opting out of the system a strategic non-starter.

Under this new paradigm, voters would receive a special credit-card account containing $50 that they can only spend on federal election campaigns. Armed with their cards, voters could go to local ATM machines whenever they like and send their "patriot dollars" to the candidates or political organizations of their choice.

This voter-centered reform would force Bush and Dean to confront a very different strategic choice. Currently, when they opt out of the public financing system, their decision doesn't change the options available to their rivals. Whatever Dean may do, Dick Gephardt and Joe Lieberman will still receive $18.7 million apiece if they agree to limit their overall expenditures to about $45 million on the presidential primaries.

Not so, under our proposal. If Bush or Dean opt out of the new system, they leave their rivals a much-improved opportunity to fish in the pool of patriot dollars. Tens of millions of patriot dollars that would have gone to Dean would now go to Lieberman or Gephardt instead.

Even President Bush would likely think twice before leaving so much money on the table. At present he is unchallenged for his party's nomination. But the 50 patriot dollars in each Republican pocket would tempt new rivals into the race. The best way for Bush to preempt serious challengers would be to stay within the public system and dominate the competition for Republican patriot dollars.

So this paradigm would be much more stable than the disintegrating older system. But this is only one of its virtues. Many conservatives object in principle to taxpayers subsidizing speech with which they disagree. The new paradigm would avoid this complaint. Rather than giving large sums to potentially obnoxious candidates, taxpayers would be providing small sums to millions of citizens, leaving them free to support the candidates of their choice.

These decentralized decisions will add up in ways that will decisively change the balance of economic power in our democracy. About 100 million voters cast ballots in the 2000 election. If they also had a chance to "vote" with their 50 patriot dollars, they would have sent $5 billion flowing into the political marketplace, overwhelming the $3 billion private dollars spent by all candidates for all federal offices. Even if no further restrictions were imposed on private fundraising, patriot dollars would enable ordinary Americans to reclaim a large role in shaping the course of campaigns.

To be sure, this program of patriot dollars wouldn't appeal to the sort of patriotism that thrills the present incumbent in the White House. But a Democratic president could make it a high-priority item without making it a highly partisan one. He should reach out to leading Republican reformers such as Rep. Christopher Shays (R-Conn.), who has already expressed a willingness to consider patriot dollars. It may well be possible to put together broad bipartisan support for a reform that would allow Americans to build a better system out of the wreckage of the disintegrating status quo.


Bruce Ackerman and Ian Ayres, professors at Yale Law School, are authors of Voting with Dollars: A New Paradigm for Campaign Finance.