The Dog That Didn't Bark

Elementary, Watson, public campaign financing has come a cropper

If you think public financing of elections is a cure for all that ails American politics, I've got some depressing news. It doesn't work. At least not very well. At least not in Los Angeles.

Los Angeles is one of four major US cities with "partial" public financing for city council elections: Any candidate who raises at least $25,000 in small contributions is entitled to matching funds for all private donations. The quid pro quo is acceptance of voluntary spending limits of $300,000 in primaries and $200,000 in runoffs. Los Angeles began this system in 1990, and it has been in effect for over three election cycles.

Daniel Kaufman of the University of California, San Diego, and I compared the performance of Los Angeles's electoral system during these three cycles to that under private financing in the three previous cycles.

Under the old system of private financing, incumbents were virtually unbeatable, largely because of their preferential access to campaign donors. Even when a seat became open, it was typically the biggest spender who won.

If public financing truly increased competition in this "market for political representation," we theorized, both incumbents and "big spenders" would be less likely to win because challengers would have more access to money. At the same time, both the victory margin and spending gap between the winners and losers would narrow while more and better qualified candidates would enter the races.

The data, however, did not strongly support any of these hypotheses. Most revealing, both incumbents and big spenders won with almost the same frequency. We found some weak evidence of a narrowed spending gap as well as a reduction in total campaign spending, but these factors never changed the electoral results. Finally, the "more and better qualified candidates" hypothesis had to be rejected.

But the data offered a few silver linings. Challengers who received matching funds did have more electoral success than those who did not. Competition in "open seat" races, with no incumbent running, seemed marginally improved. A case in point: In 1995 a relative unknown, Mike Feuer, defeated Barbara Yaroslavsky for an open seat. As the wife of a prominent Los Angeles politician, Ms. Yaroslavsky had much better access to raising cash. But the system seemed to "work" in the sense that, with the help of matching funds, Mr. Feuer was able to raise enough money to compete.

TERM limits, which greatly increase open seat races, might be an important adjunct of a public financing system. However, a federal judge in California has ruled term limits unconstitutional. If the Supreme Court agrees, the death of term limits would all but kill public financing as a reformist tool.

More broadly, like Sherlock Holmes's "dog that didn't bark," the lack of strong evidence in support of public financing is important, particularly when public financing is emerging as a political panacea. Indeed, at both the state and county levels, a number of important pieces of legislation, referendums, and initiatives were passed by voters in 1996, including a groundbreaking public-financing initiative in Maine, which promised "full" public financing for candidates who abide by spending limits and other rules.

Moreover, Gallup polls and interviews last summer showed an impressive jump nationally in support for full public financing - 59 percent in favor, 29 percent against. Voters said they would overwhelmingly support (68 percent to 47 percent) a proposal modeled on the Maine initiative. Even Republicans, who are traditionally more opposed to public-financing reforms, said they would back the proposal by a 2-to-1 margin.

Having run for office several times myself and seen firsthand the powers of incumbency, my sense at this point is that we are now faced with one of two options, neither of which is particularly appealing - except perhaps when compared to the status quo.

First, to go the liberal-populist route, Congress or the Supreme Court would have to change or interpret the Constitution in a way that allows both public financing and strict spending limits in elections. This would at least force all candidates - from millionaires like Michael Huffington to well-heeled incumbents - to play on a level playing field with any challengers.

Such a constitutional change is necessary, because under a 1976 Supreme Court decision, Buckley v. Valeo, it is impossible for the government to impose spending limits on political candidates. The best any system can do is offer matching funds in exchange for the promise that the candidate will accept a spending cap. However, this still means that any candidate who chooses not to "play" can raise whatever funds he or she wants. That's precisely what the vast majority of incumbents have done under the Los Angeles system, and it's precisely because incumbency gives officeholders access to donors that a challenger has little chance of attracting.

Second, we could go the conservative-libertarian free-market route and do away with contribution limits altogether. At least some challengers might find a few deep-pocket donors to offset the typically much broader donor bases of incumbents, and there might at least be a few more upsets than is the case now.

Until we move to one of these two ideological poles, we will remain in today's netherworld where incumbents have a tremendous advantage over challengers, elections almost always go to the highest bidder, and the highest bidders are generally special interests seeking government favors rather than idealists "investing in good government."

I wish I had better news, but please don't shoot the messenger.

* Peter Navarro, associate professor of economics and public policy at the Graduate School of Management, University of California, Irvine, was outspent by more than 2-to-1 in runs for mayor of San Diego and the US Congress.

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