[Senate Hearing 106-19]
[From the U.S. Government Publishing Office]
S. Hrg. 106-19
CAMPAIGN CONTRIBUTION LIMITS
=======================================================================
HEARING
before the
COMMITTEE ON
RULES AND ADMINISTRATION
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
on
CAMPAIGN CONTRIBUTION LIMITS
__________
MARCH 24, 1999
__________
Printed for the use of the Committee on Rules and Administration
U.S. GOVERNMENT PRINTING OFFICE
55-770 WASHINGTON : 1999
COMMITTEE ON RULES AND ADMINISTRATION
MITCH McCONNELL, Kentucky, Chairman
JESSE HELMS, North Carolina CHRISTOPHER J. DODD, Connecticut
TED STEVENS, Alaska ROBERT C. BYRD, West Virginia
JOHN WARNER, Virginia DANIEL K. INOUYE, Hawaii
THAD COCHRAN, Mississippi DANIEL PATRICK MOYNIHAN, New York
RICK SANTORUM, Pennsylvania DIANNE FEINSTEIN, California
DON NICKLES, Oklahoma ROBERT G. TORRICELLI, New Jersey
TRENT LOTT, Mississippi CHARLES E. SCHUMER, New York
KAY BAILEY HUTCHISON, Texas
Tamara Somerville, Staff Director
G. Hunter Bates, Chief Counsel
Kennie L. Gill, Democratic Staff Director and Chief Counsel
(II)
C O N T E N T S
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Page
Opening statement of:
Hon. Mitch McConnell, chairman, a U.S. Senator from the State
of Kentucky................................................ 1
Hon. Christopher J. Dodd, ranking member, a U.S. Senator from
the State of Connecticut................................... 2
Hon. Rick Santorum, member, a U.S. Senator from the State of
Pennsylvania............................................... 4
Testimony of:
Hon. Dan Coats, former U.S. Senator from the State of
Indiana, and Special Counsel, Verner, Liipfert, Bernhard,
McPherson and Hand......................................... 5
Dr. Demaris Miller, McLean, VA............................... 28
Karen Sheridan, Executive Vice President, SMY Media, inc..... 46
John R. Lott, Jr., University of Chicago School of Law....... 59
Prepared statement of:
Hon. Dan Coats, former U.S. Senator from the State of
Indiana, and Special Counsel, Verner, Liipfert, Bernhard,
McPherson and Hand......................................... 11
Dr. Demaris Miller, McLean, VA............................... 31
Karen Sheridan, Executive Vice President, SMY Media, inc..... 51
John R. Lott, Jr., University of Chicago School of Law....... 64
Appendix 1. Opening Statement for the Record of Hon. Dianne
Feinstein, U.S. Senator from the State of California........... 75
Appendix 2. Exhibits to testimony of Hon. Dan Coats.............. 79
(III)
CAMPAIGN CONTRIBUTION LIMITS
----------
WEDNESDAY, MARCH 24, 1999
U.S. Senate,
Committee on Rules and Administration,
Washington, DC.
The committee met, pursuant to notice, at 9:35 a.m., in
Room SR-301, Russell Senate Office Building, Hon. Mitch
McConnell, chairman of the committee, presiding.
Present: Senators McConnell, Santorum, and Dodd.
The Chairman. This hearing will come to order.
We are beginning a series of campaign finance hearings that
will go on, most of them, later in the spring. Today we focus
on an issue upon which there is growing and widespread
agreement, and that is the need to increase the Federal or hard
money contribution limits. This is the one area where there
seems to be wide bipartisan agreement. As I think almost
everyone knows, I have not exactly been in a bipartisan mode
over the years for a variety of good reasons, in my judgment.
But this is the one area upon which there seems to be a good
deal of uniformity of opinion.
I have advocated an increase in hard money limits for
several years now, but I am encouraged by the recent signs that
some of the more strident voices for reform of the sort that I
think would be unconstitutional and inappropriate, are
nevertheless acknowledging a need to increase the hard money
limit.
President Clinton has called for an increase in the
severely restrictive hard money limits that the parties
currently live under. Senator John McCain has indicated support
for an increase in hard money limits. Representative Chris
Shays, who introduced the House version of Senator McCain's
bill, said last week that a weakness in his bill is that it
does not increase the party hard money limits.
My counterpart at the Democratic Senatorial Campaign
Committee in a Rules Committee hearing 2 years ago, said that
the individual limit should be increased. And two groups that
are adopting a high profile in the campaign finance debate--the
Committee for Economic Development and Jerome Kohlberg's
Campaign for America--have recently come out in favor of
increasing hard money limits. These groups are seriously
misguided in other aspects, but their wisdom in this respect is
refreshing.
I would like to welcome the witnesses who have taken time
out of their schedules to be with us today. Their testimony
promises to be edifying for those of us in the room and anyone
who may be watching on television.
In the rancor over reform, precious little attention has
been paid to the existing and seriously outdated regime of
contribution limits which severely impact the ability of
candidates to mount campaigns, parties to support their
nominees, and private citizens to assist the candidates and
parties of their choosing.
Soft money utilized by political parties and other
entities, which is a subject for another day and another
hearing, is to a great degree merely a symptom of the results
of the 1974 contribution limits. These limits have been
whittled away over the past quarter of a century by inflation,
as reflected in the Consumer Price Index, but also factors
peculiar to politics, including the growing difficulty of
reaching an increasingly dispersed electorate. Those
candidates, such as for the Senate, who must utilize television
to communicate with our millions of constituents are struggling
to cope with the demands placed on our campaigns by an
increasingly complex and expensive medium in which some viewers
have hundreds of channels to choose from. And, courtesy of
their VCRs, can tape television shows and later fast-forward
through our advertisements that our campaigns have paid for.
Remote controls even give viewers the power to just snuff us
out.
On top of all this, as we speak, the world in which
political campaigns are waged is transforming even more
dramatically with the advent of the Internet. The growth of
this revolutionary medium is as stunning as it is exciting. We
had better consider that all that time spent on the Internet is
pulling voters away from other activities, namely, television
viewing.
What effect that will have on the ability of our campaigns
in the future to reach voters we cannot know for sure, but I
will venture to predict that it will not make political
campaigns any cheaper, causing candidates to work even harder
to raise funds to communicate with voters.
Alternately, their campaigns will starve, their voices will
be quieted, and our democracy will suffer for it. Unless
contribution limits are adjusted to reflect the realities of
campaigning in the 21st century.
On that note, I will see if my colleague, Senator Dodd, has
any opening observations, and then we go to Senator Coats and
Dr. Miller.
Senator Dodd. Well, thank you very much, Mr. Chairman. Let
me begin. This is our first formal hearing, I believe--well, we
had one, I guess, sort of a business session, but it is the
first oversight hearing in your term as Chair, and, again, we
congratulate you publicly for taking on this responsibility.
And it is appropriate, I guess, that we are beginning the first
public hearing on a subject matter that is both near and dear
to our hearts: the financing of Federal campaigns and Federal
elections.
I want to also at the very outset of these brief remarks
extend a very warm welcome to our former colleague, Dan Coats,
whom we will hear from shortly, and I had the privilege and
pleasure of serving with Dan on the Labor Committee for a
number of years. I don't know how many, but it was quite a few,
anyway--10 years--and we worked very closely on a number of
issues together and cosponsored a number of pieces of
legislation together. And I have read his testimony, and it is
very thoughtful testimony. I look forward to his presentation
before the committee.
I just would like to take a few minutes, Mr. Chairman, and
share some thoughts. I am really here to listen myself this
morning. I have sponsored or cosponsored campaign finance
reform measures during almost all of my years in Congress, but
I have never been directly involved in a committee other than
this one in an indirect way on the FEC issues and so forth with
the campaign finance reform questions. But I am hopeful--and
you and I have had some very brief, informal conversations. My
hope is that we may find some common ground on how best to deal
with the issue of financing our Federal elections.
Where we may disagree is on how to stop what I call sort of
the insanity of the money chase without infringing on the
legitimate rights of individuals and organizations to have
their voices heard. That is the quandary we find ourselves in.
There are very legitimate questions on both sides.
So I welcome the hearing, and I am concerned about and I
hope the committee will be sensitive to the fact that there are
important cases moving through the courts that call into
question key provisions of the Federal Election Campaign Act. I
would respectfully suggest that it would be, I think,
inappropriate for the courts to interpret our congeniality on
this issue today on a question where I think there may be some
consensus to mean that there is either total bipartisan or
congressional support for overturning the decision of the
Supreme Court in Buckley v. Valeo, nor is there yet a consensus
that contribution limits should be raised.
So before I give the chairman my proxy on his reform
efforts here--which I am sure he would love to have, but I will
reserve that for a while--let me state for the record that I
view the problem still as one of too much money in the system,
not too little. There is a fundamental disagreement on that
point.
Let me just share, if I can, for a second or so some
examples of what I consider to be the ridiculous magnitude of
the money chase.
The 1997-98 election cycle marked the first time in the
history of the United States that congressional candidates in
national parties raised and spent in excess of $1 billion in a
Federal election. Now, included in this total is the explosion
in independent expenditures and so-called issue ads. In Senate
races, winning candidates raised a total of $161 million for an
average cost of just under $5 million. In fact, our colleague
Senator Coats goes into this a little bit and talks about the
rise of these costs.
To raise that amount, a winning candidate on the average
would have to raise approximately $12,000 a week per week,
every week, for the entire 6 years of your Senate career. And
that number doesn't seem to be abating in any way as we look
down the road towards future campaigns.
One of our former colleagues, the former chairman, in fact,
of this committee and ranking member of this committee, Senator
Ford, retired from service rather than face the fact, as he
described it, of the need to raise $100,000 per week during the
last 2 years of his election cycle. And I know others of our
colleagues have made similar statements about the problem here.
I know we will be hearing from witnesses today that will
share with this committee their view that the answer to this
problem is to raise hard money limits so that Senators and
challengers do not have to spend as much time raising money. As
someone who has been in seven races--eight races, actually,
forgive me if I am a little bit skeptical about it in terms of
putting limitations on ourselves in terms of how much we raise,
knowing what can happen in campaigns and even in the last weeks
of a campaign, always making sure we have enough in our
arsenals to be able to handle the crises. The idea of sort of
self-regulating in terms of how much we actually raise is
something I am somewhat skeptical about.
There may be some very good reasons to raise hard money
limits, and I wouldn't reject that out of hand at all. Doing so
without other reforms will not end the money chase, nor will it
substantially reduce the amount of time members spend raising
money, in my view. It could just increase the overall amount of
money in the system, and that in itself, of course, is not
reform.
However, as I said at the outset, Mr. Chairman, I am very
interested to sit and listen today and hear some of the
comments and thoughts of our witnesses, particularly our former
colleague, for whom I have the highest regard and respect.
So, with that, Mr. Chairman, I will just ask that these
remarks be included in the record.
The Chairman. Thank you, Senator Dodd.
Senator Santorum, would you like to comment?
Senator Santorum. Just to congratulate you, Mr. Chairman,
for holding this, and I, too, want to welcome my former
colleague and dear friend, Senator Coats, from Indiana, and I
look forward to his testimony. I have actually read his
testimony, but I won't be able to stay for it. I have another
meeting to go to, and I want to apologize in advance.
I just want to echo the chairman's thoughts on this issue.
I have a very good basis of comparison, looking at my Governor
and how he raises money versus how I raise money. Pennsylvania
doesn't have any contribution limits. I know my Governor
doesn't spend 10 percent of the time raising money that I
spend. He just doesn't have to spend that kind of time because
he is able to raise it in larger chunks and can raise the
smaller money through direct mail.
For us to be saddled with a $1,000 limit on individual
contributions that is worth pennies, almost pennies of what it
was worth in media buying power in the 1970s creates the
problem that we have seen. This growth in soft money is a
direct result of the limitation of hard dollar contributions. I
mean, let's just be honest about it. That is exactly what is
going on here. And unless we raise the hard dollar
contribution, that money that will flow to political campaigns
will flow in other avenues. It just won't flow directly to the
candidate.
I think if you are really concerned about integrity in
elections, you want the money flowing to the candidate who is
accountable for disclosure and for the kind of campaign they
want to run, not flowing to somebody else for them to spend the
way they see fit outside of the candidate's control.
So I think the greatest campaign reform we could have would
be to increase the hard dollar contribution limits. It may not
completely do away with soft money, depending on how much we
raise the limit, but it will greatly limit the impact of soft
money and the need for soft money, which I agree is not the
best way to run a campaign, and certainly one that is a system
based on disclosure.
So I congratulate you, Mr. Chairman. I hope, not just
because I am up for election--and I don't care whether we do it
for this time or next, I mean, it doesn't matter to me. Just we
need to do it because it is the best way to reform the campaign
system in a bipartisan way, at least to start. We should
learn--you know, one of the things that is a hard lesson for me
to learn as someone who wants to do everything yesterday, that
we take sort of what you can get done and get it done, try to
improve it incrementally if you can, and then, you know, if we
want to fight the other battles some other way down the road,
fine. But let's try to get what we can get done that is
sensible and that can be done in a bipartisan way done, and I
think this is one thing we can do. So I would encourage that
tack.
Thank you.
The Chairman. Thank you, Senator Santorum. That is
precisely what the hearing is about today, the inflation that
has occurred and the business of campaigning over the last 25
years since the contribution limit was set.
We would like to welcome our former colleague and still
friend, Senator Coats, to come up and, Dr. Miller, you may come
up as well. We will hear first from our colleague, Dan Coats.
STATEMENTS OF HON. DAN COATS, VERNER, LIIPFERT, BERNHARD,
McPHERSON HAND, WASHINGTON, DC; AND DEMARIS MILLER, McLEAN, VA
Senator Coats. Well, Mr. Chairman, thank you very much. It
really is an honor to be back, really my first official time
back in the United States Senate, a place where I served for 10
years, culminating 24 years of public service, and a place that
holds great and fond memories.
People say, ``What do you miss about the Senate?'' I must
say I miss my friends in the Senate more than I miss the
process of the Senate. I couldn't help but tune in last evening
on my way home from work to the debate going on on the Senate
floor. The Senate was tied up in a procedural conundrum that
was all too familiar at 6:30 p.m. on a Tuesday evening where
the chairman of the Appropriations Committee was desperately
trying to get to a vote on his supplemental bill and others
wanted to move the Kosovo issue, and people had been hollering
about standing and waiting for 3 hours to get their chance to
talk. And I thought, yes, I miss my friends, but not so much
the process.
The Chairman. You were reassured that nothing has changed,
however.
Senator Coats. I was reassured that not much had changed.
It was an honor here to serve, and I think as I reflect
back on my time of service, probably the frustration that rises
to the top of the list is the frustration of the crush of
campaign and elections and the almost insatiable need to raise
a sufficient amount of money to be competitive in that race,
and the time that it takes away from what I believe we are
really elected to do.
I want to just share some summary thoughts with you. Having
been on the other side of this table and implored witness after
witness after witness not to read their full statement but to
summarize their remarks, sometimes I am tempted to get even by
coming and sitting and reading the whole statement.
The Chairman. Your full statement will be made a part of
the record.
Senator Coats. Thank you, Mr. Chairman.
The Chairman. We look forward to your comments. [Laughter.]
Senator Coats. I will summarize it very briefly, if I
could.
Since the passage of the campaign limits in 1974, five
Presidents have occupied the White House. Four Senators have
occupied the Senate seat that I occupied in the State of
Indiana. Time moves quickly. In that time, much has changed.
I just came from the weekly Senate prayer breakfast. The
price of breakfast has gone from $2 to $6.50 in just 10 years.
I still get my haircuts downstairs. That price is now $20. I
remember the days when people were complaining about Senators
getting these free or virtually no-cost haircuts. Well, for the
record, it is now 20 bucks for a trim. And I don't have all
that much hair to trim. If they charged by the hair, I probably
would do all right. But they don't do that.
Now, I make those points to say that prices have changed
dramatically since 1974 in virtually every commodity that we
purchase, except the ability to raise money to provide for the
cost of campaigning.
If you index that for inflation, you come up with a figure
that is more than three times the current hard money limit. If
you add to that the growth in the population that we have to
serve, which is about a 42 percent growth, you are over five
times the limit of what is currently imposed, the $1,000 limit
of contributions, the $5,000 on PACs, and the overall $25,000.
Now, I think all of us who have run for office understand
that the costs of campaigning exceed the cost-of-living index.
You will hear testimony later from media people and others
about the cost of buying an ad, the cost of putting your
message on the airwaves so you can reach people.
When I first ran for office, most communities had access to
about, if they were fortunate, three TV stations on which to
get their news and message, maybe four. Today we all sit there
with our channel changer with up to 100, 150 channels. We have
our favorites that we can pick and choose through. We are
looking at commercial ads that are far more glitzy and
attractive than what we are able to pay for, and the habit of
people of switching channels on a whim.
So I think without question--and there are statistics to
back this up--without question, the cost of purchasing the
opportunity to provide our message has increased dramatically,
and I would suggest quite a bit more than just the cost-of-
living index.
And so as you look back and I look back to my first
congressional race in 1980--and I did some charts showing what
Senators spent for statewide races in 1980, and I was astounded
to learn that not one single Senate candidate in 1980 spent
more than $4 million. Today, $4 million for a statewide Senate
campaign is considered an inexpensive campaign. The costs in
Indiana for running a Senate campaign have increased from $1
million to $2 million to $4 million to the estimate provided to
me by those that were advising my campaign for a race had I run
in 1998 of approaching $10 million.
When you break that down, as you did, Mr. Chairman, into
the amount of money that needs to be raised on a daily basis,
it quickly becomes apparent that we no longer have the luxury
as Senators of spending 4 years basically attending to the
duties of the Senate and reserving those last 2 years of our
term for preparing for our next election. That has been the
historical pattern of how the Senate operated, and the Founders
designed it that way so that we would have the opportunity to
step back from the pressures of campaigning, of raising money,
of doing all the things that are necessary to run a competitive
campaign, and focus on the longer-term issues. That is what we
come here for. That is why many want to move to the Senate, so
that they have the luxury of taking the broader, longer view.
But when you break down now the average cost of a campaign,
which, as I said, not one Senator, not even our former
colleague Senator D'Amato from New York, probably the most
expensive State, spent more than $4 million in 1980. And when
you look at it today and you look at the number of Senators
that have to spend that $4 million as a floor, not a ceiling,
you realize the extent of the problem.
Now, I know the issue of the constitutionality of getting
our message out, the limitations on that is an issue that I
assume this committee will address. That is really not why I am
here today. I am here today to state that at the very minimum,
this committee and the Congress need to realistically look at
the limitations that are imposed on the amounts that can be
raised from individuals, from PACs, and from the total amount
that any single individual can give for Federal campaigns, and
make a reasonable adjustment for the increasing costs that have
occurred since 1974.
As I said earlier, that cycle of 4 years of primary, almost
total focus on the work of the Senate and then 2 years of a
balance of work of the Senate and preparing for a campaign is
no longer operative. The amount of money that has to be raised
on a daily basis requires for many a 6-year continuous effort.
Let's look at the quotes on this chart.
This is an all-too-common refrain. Senator Dodd referred to
Wendell Ford's decision to leave. ``I spent $425,000 to run for
the Senate in 1974,'' he said. ``If I ran for election next
year, it would cost about $5 million.'' And this is a small
State. This is your State, Mr. Chairman, Kentucky. ``The money
chase was the straw not to seek reelection. I have no doubt
that I could have raised the money, but going across the
country didn't sit well with me.''
Our colleague Paul Simon, who served with Senator Dodd and
me on the Labor Committee--and I thank you, Senator Dodd, for
the chance to serve with you and your kind remarks and wish you
success on that committee--``To run again would mean raising
$10 million,'' Senator Simon said. ``It means also taking at
least one-third of my time the last 2 years in office to raise
money. That is not a prudent use of time.''
Senator DeConcini has a statement. Senator Lautenberg said:
``The compelling factor was the searing reality that I would
have had to spend half of every day between now and the next
election fundraising.''
Senator Kerry has a quote there also, and on and on it
goes.
This is what we talk about in the cloakrooms. This is what
we talk about at our lunches. This is what we talk about down
in the gym and when we have private moments, about this ever
escalating demand on our time to raise these funds.
So, clearly, I think the case can be made for increasing
the limits to allow us to free up the time so that we don't
have to use such a substantial portion of our time doing that.
Let me just state a couple of other points here, and then
turn it over to Dr. Miller, and then be available for your
questions.
Some have raised the question about raising the limits or
increasing the amount that any one person can give as a
corrupting influence. I just have two points to make on that.
In all my years of service, 18 in the Congress and 24 in public
service altogether, I have never come across or heard one
instance in which one elected official used his position or her
position as a way of extorting funds to run for public office.
I have never heard of an instance in which an individual used
his power to change a vote, to modify a position in return for
a contribution. I just think that is a red herring that is
raised by those who oppose any changes in the campaign
financing laws and, in fact, want to tighten them even further.
I would also state to you in the second point that the
notion that $1,000 or $5,000 or even $10,000 out of the total
figure of $4, $5, $8, $10 million is a very small percentage of
the total. Most of us couldn't even go through and identify
exactly who gave what, we are so busy trying to do all that we
need to do, both as elected office holders and as those
campaigning for office, that at the end of the day pretty much
say: What is our total? How much do we have? How much money do
we have to put in the next campaign ad buy or whatever, without
saying give me the list, I want to know who gave what?
But even with that, even if you did that, the percentage,
usually amounts to one-tenth of 1 percent or less of the total
contributions by any one single entity. It is so small compared
to the total that it is ridiculous, I think to claim it has a
corrupting influence.
The Chairman. Could I interrupt just for a second on that
point?
Senator Coats. You sure may.
The Chairman. I chaired the Ethics Committee for 4 years
and was ranking, vice chairman, as we called it, for 2 years
before that. We never got a single complaint on that issue. Not
one. And being a floor manager on this issue, the broader
issue--not the issue we are talking about today specifically
but the broader issue of campaign finance reform--I have
repeatedly suggested to colleagues who would use the corruption
argument to give me an example. Never got one in 10 years of
handling that debate.
It is truly a red herring, it seems to me, based on my own
personal experience and, listening to you, Senator Coats,
apparently your experience as well. So I would just interject
with that point.
Senator Coats. That is my experience, and let me just
conclude by touching a little bit on this independent
expenditure effort. You are going to hear later from Professor
Lott, I think no relation to the majority leader, but Professor
Lott will testify that expenditures are a much less accurate,
much less desirable, and less efficient way of communicating
support or opposition to a candidate than lawful direct
contributions. I think all of us have been faced with a
situation where we turn on the television or somebody brings
our attention to an ad, running supposedly in our favor,
supporting us, and saying, well, wait a minute, that is not the
message I am trying to convey, that is not what we have chosen
to be the themes of the campaign. An outside group has decided
that is what the themes of the campaign ought to be. That
places the candidate in a situation of saying: Do we have the
money to clarify what our position is? And then being told by
our financial people, no, we barely have enough money to run
what we had planned to run, and now we are faced with this and
are going to have to divert funds over here or change our
message or whatever to either counter an issue ad or to clarify
one even by those well-intended groups that are trying to
support us.
Now, the point is here that it is impossible
constitutionally, and rightfully so, to deny citizens the right
to state their views about a candidate, or about an issue. I
think any action that this committee or this Congress would do
to limit that right would be immediately thrown out by the
court as unconstitutional.
But the issue before us today is: How can we obtain more
control of our own message? How can we garner the resources and
the funds necessary to direct our own campaigns in a way that
soft money isn't as influential, doesn't play such a large
role, isn't so tempting? And how can independent expenditure
groups or individuals better fund us to make sure that the
reason why they are supporting us and the message that we are
advocating is heard?
Some are frustrated by the fact that we are not able to
convey the message that we are trying to get out. So my point
on independent expenditures is that one of the ways--maybe not
the complete way, but one of the ways that we can address that
problem is to raise those hard money limits and give us more
resources in which to make our own message, mitigating the need
for independent expenditures.
Mr. Chairman, let me just conclude by saying that I think
elected representatives spend too much time raising money for
political campaigns, and the remedy for that problem that is
achievable is, at a minimum, to raise contribution limits. It
is not to limit free speech. I think that is a non-starter
politically, and I think it is a non-starter constitutionally.
I think it is a non-starter from our ability to enact good
policy.
I agree with Senator Santorum. If we can't do the whole
thing, let's at least do what we can do. A good way to start
and the very foundation of whatever package comes together
ought to be a very realistic reassessment of the hard money
limits.
With that, Mr. Chairman, I want to thank you for the
opportunity to come back and testify and be back in the Senate.
I want to thank both you and Senator Dodd for your friendship
and support over the years, and even though we are on different
sides of the aisle, Senator Dodd said we found common ground on
a number of issues and we did. It was a pleasure and a
privilege to work with you, Senator Dodd, and, Mr. Chairman,
with you.
[The prepared statement of Senator Coats follows:]
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The Chairman. Thank you, Senator Coats. Will you be able to
stick around for a little bit?
Senator Coats. Yes.
The Chairman. Dr. Miller, then we will hear from you, and
then we will have questions for both of you. Go right ahead.
STATEMENT OF DEMARIS MILLER
Ms. Miller. Thank you, Mr. Chairman, Senator Dodd. It is a
pleasure to be here today. I am Demaris Miller. I am from
McLean, Virginia, which is right across the Potomac River from
here.
I would like to submit my remarks for the record, but I
just want to briefly summarize them now.
The Chairman. Your full statement will be made a part of
the record.
Ms. Miller. Thank you.
I have been a public school teacher, I have been a
registered nurse, I have been a research psychologist, I have
been a wife, a mother and a grandmother, and last year I was a
candidate for Congress from the 8th District of Virginia. I
took great pleasure in that. I have never enjoyed anything more
in my life. And I am not here today to rationalize my loss or
to criticize my opponent. We ran a very clean campaign, and so
did he. But I am here to use my experience as a challenger
candidate against an incumbent to illustrate the hurdles that a
challenger faces and to make one point very clear.
Despite the popular belief that campaign financing limits
make elections more fair and more democratic, the opposite is
true. Contribution limits increase the advantages of incumbents
at the expense of challengers. Now, I know incumbents have
natural and inescapable advantages. I am not trying to do away
with those. Incumbents are better known. They can legitimately
claim they have experience in the job, they have much better
voter contact, they have better press contacts, they can hold
public meetings, and they are invited to many speaking
engagements. All of that is natural.
But there are also some advantages of incumbency that are
artificial. They have free phones, they have Web sites, they
have Internet access, they have the frank. And when I had to
send out mail or put up a Web site or use the Internet, I had
to pay for it. And for all of those public appearances that my
incumbent opponent was able to achieve without cost, I had to
buy my media coverage. My opponent was even a regular on a very
popular CNBC talk show. And after the election, the host of
that show said, ``Wow. All of his regulars were re-elected,''
and I thought, ``Wow. What a surprise.''
All of this makes it even more important, if we really want
to level the playing field, to make it possible for us to be
unencumbered in raising and spending money because a limit on
raising money is also a spending limit. Despite all of my
efforts, cable advertising, targeted mailings, appearances at
local candidate forums, Metro stops everywhere, and in spending
almost half a million dollars on my campaign and getting full
support from the National Republican Campaign Committee, there
were an awful lot of voters who showed up at the polls on
Election Day and said, ``Who is this Miller fellow and what
does he stand for?'' [Laughter.]
It is true that political scientists generally agree that,
to have a fair chance of winning, a challenger has to outspend
an incumbent. So spending limits and campaign fund-raising
limits are a much greater burden for challengers than for
incumbents who already have the advantage.
I believe the 1974 law is an example of good intentions
gone bad. Anything that makes raising money more difficult,
particularly from individuals, puts challengers at a greater
disadvantage.
In my campaign, I raised almost half a million dollars. I
came out of a primary $24,000 in debt. My opponent, like many
incumbents, did not have a primary, but at that time he already
had $700,000 in the bank. This is a tremendous hurdle to
overcome, and much of that is carryover. This is quite normal.
But putting fund-raising limits on me did make a difference.
Could I have raised more? Yes. I had a number of friends and
supporters who were willing to give more. One man from Texas
sent me $5,000, and I called him and said, ``This is wonderful,
except that I cannot accept $5,000,'' and we had to send money
back, and that happened time and again.
I also had a good friend who wanted to contribute to my
campaign and discovered he could not give me a dime because he
had already reached his aggregate $25,000 limit. So here was
someone who agreed with my stands on the issues, and he could
not support me.
My major problem, though, was getting my message out. Even
though we look at the inflation adjuster, I think Senator Coats
was absolutely correct in pointing out that the cost of
campaigning has gone up much faster than inflation. Candidates
on congressional campaigns are spending more than ninefold more
now than they were in 1974.
So if we were trying to increase it, we would have to
increase it faster than the rate of inflation. The major reason
is the information age, but the growth in the population is
also a reason. My area was covered by three broadcast stations
in 1974. It is now covered by four broadcast networks, three
cable systems and the satellite. That is an awful lot of media
to cover, and it means that every media purchase you make is,
first, more expensive because it covers a broader area and,
second, it covers fewer of your own constituents. So you have
to make more buys to make up the difference.
I know that you are concerned about the constant grind of
raising money. Part of that is because of the 1974 law. If I
were limited to buying gasoline one gallon at a time, I would
have to stop 15 times to fill my truck. And because you are
limited to making individual contributions $1,000 or one gallon
at a time, it takes a lot longer to raise the necessary funds
than it did in 1974.
Also, Senator Coats mentioned the issue of influence buying
and how much is too much for a campaign contribution. The
inflation adjuster is certainly one way of looking at it, but I
think it's the inappropriate way. I think we have to look more
at the cost of campaigning, as opposed to inflation. Since the
costs of campaigning appear to have increased for congressional
campaigns at least ninefold, and possibly more for Senate
campaigns, assuming the potential for corruption is a function
of the percentage that each contribution represents of the
total spending, that ninefold increase means that if a thousand
dollars was not corrupting in 1974, then surely $9,000 would
not be corrupting in 1999. And besides that, this is just not
the way my supporters view elections. Like you, Senator
McConnell, and like Senator Coats, I have never had anyone
suggest that a contribution to my campaign was buying a vote
for any particular issue.
I am urging you to put aside the popular myths about
campaign finance and realize that campaign financing limits do
help incumbents at the expense of challengers, and I admire
what you are doing to address this issue because, after all,
you are incumbents, and even though the fund-raising is a grind
for you, these limits are an advantage for incumbents in
office.
I believe that there is a democratic principle here that
transcends just fairness to challengers. If we do not have fair
rules for political contests, we risk the effectiveness and
credibility of our political system. And if I, as a candidate
from any party, am not able to get my message out, and I think
that was very clear, if I could not get my gender across,
surely they were not hearing my campaign message, then there is
something seriously wrong with the system because I was
seriously constrained by this 25-year-old spending limit.
Please give us real campaign reform. Ease the restrictions
on fund-raising. Do not increase them. If you want to make
political markets more competitive; that is, more fair and more
democratic, at least raise the fund-raising limits. My personal
preference would be to do away with contribution limits for
individuals. But at the very least, individual contributions
should be able to be at least as great as those of PACs. And
there is a differential between incumbents and challengers and
the ability to raise PAC money. Eighty-five percent of my funds
came from individuals, almost half of his came from PACs, and
this is normal. This is natural, and you can see why it
happens. But it emphasizes the importance of individual
contributions, especially for challenger candidates.
I look forward to your serious consideration of this issue,
and I strongly urge you to seriously consider removing them
altogether. But if not, please do raise the limits.
Thank you again for this opportunity to testify, and I
would be more than happy to answer your questions.
[The prepared statement of Ms. Miller follows:]
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The Chairman. Thank you, Dr. Miller. I am not here to
testify, but I do want to make an observation, just listening
to both of you about the distorting impact of the 1974
contribution limit. You mentioned, Dr. Miller, the impact on a
House race. Senator Coats, you mentioned the impact on a Senate
race.
Let us talk about the presidential contest for a minute. A
candidate running for President of the United States can only
raise a thousand dollars pre-convention from an individual. It
has an enormously distorting effect on competition. In my
party, we are all familiar with the Steve Forbes/Jack Kemp
matter in 1996, they were the best of friends. Steve Forbes',
apparently, first choice for President was Jack Kemp. If he
wanted to help Jack Kemp, he could give him a thousand dollars.
But if he ran himself, he could do anything he wanted to. So
Steve Forbes ended up running for President, and Jack Kemp
ended up not running for President.
Coming up to the current contest, Bill Bradley trying to
take on a sitting Vice President. It is a difficult task. The
thousand dollar contribution limit benefits the well known,
like the Vice President, or the well off, like Steve Forbes.
But the candidate who might be coming from behind or just have
a regional base, because of the contribution limit, has a very
difficult time pulling together enough resources to be
competitive.
On our side, the well-known, favorite candidate, George W.
Bush, he is probably okay with the contribution limit. Somebody
trying to come from behind, with a regional base, like our
colleague, Senator Bob Smith, who might have a corps of
supporters who would help him pull together enough resources,
is stuck there under the thousand dollar contribution limit.
In addition to the problems you have testified to about
simply the cost of campaigning, it ends up having a big impact
on who runs. It makes it less open for everyone. And in this
country, we would like for anybody to feel like, if they could
get enough supporters, they could get in the game.
So excuse me for testifying a bit on that, but I think the
same kind of thing you are talking about impacts not only House
and Senate races, but the race for the most important job in
American politics.
On the corruption question, Senator Coats, I was pleased to
hear you indicate your view of the corruption issue. It is the
same as mine. And, Dr. Miller, you said the same thing. It
simply is not connected with campaign contributions or, if it
is, neither of us in all of these years we have been in
politics, in my case 20/21 years, have experienced that.
I have detected a bit more caution on the part of some of
the reform groups in regard to just sort of throwing out
charges of corruption. Increasingly, I hear them stress that
they are not saying anyone in Congress is corrupt, but there is
a public perception of rampant corruption that should compel us
to enact a host of restrictions on the ability of private
citizens, candidates, groups and parties to participate in our
democracy. Might one reasonably conclude that such a perception
is driven not by fact, but by the incessant, cynical and
inflammatory rhetoric which has been employed on both sides of
the aisle to propel various reforms aimed at protecting America
from these evil politicians.
Do you suppose that if people were told the truth, that
members' votes are driven by ideology, party, and geography,
they would be less cynical about elected officials?
Senator Coats. Well, there is always that tendency and
propensity, I think, of opposition groups to characterize their
target in an unfavorable way, and I think the tendency toward
edging toward the allegation of less-than-a-full integrity, in
terms of their public service, is too tempting, and groups go
over the line. I do not find that coming from ordinary
citizens. I do not find that coming from the people that I used
to speak to in the Rotary Clubs or the county fairs or the
candidate forums or the town meetings. I would only find it
coming from, generally, organized groups that basically wanted
to cast a negative light on the current system and sometimes
from people who just had a fundamental misunderstanding of the
whole nature of fund-raising.
If I could coin a phrase, I guess, which described that
what we really needed to do was we need a bias toward hard
money and hard disclosure. It seems to me that, if that is a
problem, disclosure addresses that problem better than any
other way. Let people have the facts. Let them know how much
money we raised, and who we raised it from, make it a public
record, make it a timely public record, and then I think people
see it in its proper context, or at least it can be debated in
its proper context. It is the innuendo, it is the story
floating around, it is the rumor that cannot be immediately
addressed by the facts that I think leads to the public
cynicism.
And so hard money, hard disclosure, that is the direction I
would go.
The Chairman. I have always been perplexed by the
corruption argument. Did a campaign contribution ever influence
your decision to vote on legislation?
Senator Coats. No, it certainly did not. Because it is just
folly to think that one campaign contribution would change a
decision. We make decisions on a number of reasons/bases.
Obviously, we are looking to do what is best for the country as
a whole. We are looking to do what is best and the most sound
public judgment. But we are also conscious of the fact that we
represent X number of million people in our States and that we
are there to represent them. And we are also, frankly,
conscious of the fact that we would like to be re-elected. We
would like put ourselves in a position where the majority of
the people we represent say that was a sensible thing to do.
Nothing more jeopardizes a career, to change a fundamental core
position, a conviction, a publicly stated position, to go
against the wishes of the people that we represent than trading
a vote for a contribution.
And as I said, the infinitesimal percentage of an
individual contribution toward the total amount that you raise
makes the whole question ludicrous.
The Chairman. And all fully disclosed anyway. So if anybody
wants to make an issue of it--
Senator Coats. And all fully disclosed anyway.
The Chairman. Dr. Miller, I wanted to ask you about the
Virginia law. You live in Virginia. They do not limit
contributions at all. They just have full disclosure; is that
correct?
Ms. Miller. That is correct, and it is really a delightful
situation. So much of what Senator Coats addressed, special
interest money, did not come into the latest gubernatorial
campaign because we had both candidates capable of raising
money fully, without any restrictions, and everything was fully
disclosed. So the public was aware of where the money was
coming from, but at the same time the campaigns really focused
on the issues, and you saw very, very little of the negative
campaigning that is common in other places.
The Chairman. Is Virginia mired in corruption as a result
of that?
Ms. Miller. I think Virginia has far less corruption of any
kind than most States. We have had very little indication of it
in campaigns. And we have a very active group, based in
Virginia, the Voting Integrity Project, that has not found
major issues anywhere in Virginia that indicate corruption.
The Chairman. And the absence of a contribution limit in
Virginia, does it have the effect of making it easier for a
challenger to pull together enough resources to compete?
Ms. Miller. Absolutely. I think we have excellent evidence
of that just in our last three governors. Our current governor
is the son of a butcher. He ran against a very, very wealthy
businessman, but he was able to run a good race and raise
enough money, and people voted for him for the issues. The
previous governor was the son of a football coach, and the
governor before that was only one generation removed from
slavery, and all of this happened under a system where there
were no restrictions on the amount of a contribution.
The Chairman. So if you are sort of an underdog in a
Virginia race, if you have a few people who are for you, they
can potentially pull together enough resources to give you a
chance to compete against somebody that might have a broader
array of support. Is that, essentially, the point?
Ms. Miller. That is correct. And I think sometimes the lack
of spending limits allows people to show the degree of their
enthusiasm for a campaign, as opposed to just their general
support of a campaign.
The Chairman. And then, presumably, with full disclosure,
if a candidate has a large contribution from somebody that is
controversial, it becomes an issue in the campaign and is
hashed out by the voters; is that right?
Ms. Miller. Well, absolutely. The law requires them to
report it, and the press lets the public know, and the public
responds accordingly.
The Chairman. Thank you. Senator Dodd?
Senator Dodd. Well, thank you, Mr. Chairman. Let me thank
our witnesses again for their comments and statements this
morning.
Just a couple of observations. I think it is probably just
a fundamental sort of difference of how you look at the
situation. There is some question, in my view, as to whether or
not, by raising the limits, we would actually free up members
of Congress to spend more time on issues. I mean, there is an
assumption, inherent in the argument, that this is going to
happen because you will be raising the same amount of money.
You will just need less time to do it because you can get it in
larger chunks.
There is a former colleague of the United States who is
since deceased, and it goes back to a different era before any
of us were here in the Congress, but I remember talking to him
before he passed away a number of years ago, and told me how he
used to do his fund-raising and was very candid about the whole
thing, a very fine member, I might add, by anyone's estimation,
of this body. And, basically, he would have a friend of his
held his dinner for--this is when a race would run the average
of about $4- to $500,000 for a Senate seat in the country--and
he would have a dinner. A friend would host it. They would
invite ten friends. They would divide up the amount, and they
would each write a check for it, and that was the entire level
of his fund-raising activity.
Now, it saved him a lot of time, and he certainly had a lot
more time to work on issues, I might argue. And I do not know
anything that would suggest that this individual, by the way,
would subscribe to the notion of the corruption piece, but I
will come back to that in a second. So, in a sense, it is, I
suppose, the ideal world. He was one individual with 10 or 15
people who each divided up the amount of money. He was free
then to legislate freely.
There is something, I think, that is disturbing, however,
in the notion today that the idea that, because you can do this
with 10 people or 15 people or 20 people, that you are
achieving a more pure environment in the sense of how we run
our campaigns and how we function as legislators. There is
something to be said for the notion of involving people in the
political process through contributions, while the other is
much more efficient and gives you, as I say, more time.
My second concern, in this sense, is something that, again,
you may want to address. But my experience is, with incumbents
and/or challengers, that people have a tendency to raise as
much money as they can, not as much money as they think they
are going to need. I mean, obviously, you have a goal in mind
of what you think you can raise.
But we all know, having been in races where you come down,
and you do not know what is going to happen in October of an
election year; whether there is some event that occurs that you
have no control over, happens on the outside, and it skewers
the political environment and climate for you so that you have
to be prepared to answer it, to respond to it, to deal with it.
And so the tendency is to raise as much as you can to prepare
for that.
Now, unless you know for weeks out that you have an
incumbent that is so debilitated or incapacitated as a
candidate that is not going to pose a difficulty. But in
competitive races, it is why we see more and more people who
are elected with treasuries, as was in your case, Dr. Miller,
where your opponent was left with a previous campaign with
excess.
Today, if you look over our colleagues in the Senate, you
will find the vast majority come out of campaigns, and if they
do not have an excess amount, they will quickly try to build
one up.
So I am concerned that the notion somehow that by raising
the individual amounts of hard money, that we are somehow going
to simultaneously restrain the overall amounts that get spent
in the campaigns. You did not say that directly, but there is
an implied suggestion here that we will free up more time and
there will be no more money that will have to be raised. I
suspect it may be just the opposite. We will find the volume
being raised in terms of total dollars.
Let me just say to my colleague, and the Chairman, too,
when he talks about the presidential race, about how people who
are not as well known, I remember when Gene McCarthy had a
wonderful line, in talking about the Senate, but I think it
also can apply to presidential candidates, he once said that
the Senate ought to be a place where people of reputation come,
not where you come to make a reputation. And in a sense, one
might make the same suggestion about presidential candidates;
in the sense where there ought to be people of reputation who
are there, not where you come to seek a reputation as a
presidential candidate.
But in a sense, the ability in the presidential race, I
think one of the problems--maybe we can save this for another
day--but it seems to me by front-loading the process here and
requiring that people be in a position to spend a lot of money
very quickly is probably going to have as much of an influence
on how much money has to be raised, who can get involved in the
race. In previous years, it was that stretching out of the
process so that a candidate who did well in the front would
have an ability to make a case that they could raise the
dollars to face a California primary.
The Chairman. If you would yield, we are sort of testifying
ourselves here. But you mentioned Gene McCarthy. You have
probably heard--Gene has testified before our committee on this
issue a number of times----
Senator Dodd. I know he has.
The Chairman [continuing]. And has indicated that he could
not have brought President Lyndon Johnson down in 1968 had
there been a thousand dollar contribution limit. In fact, he
has been one of the most vocal opponents of the 1974 law, under
which we have been operating. And he tells the story about how
eight or ten people put together the resources for him to go to
New Hampshire and to take on a sitting President of the United
States over an issue of deep conviction, the Vietnam War, and
has testified before this committee passionately on a number of
occasions.
Senator Dodd. Oh, I know.
The Chairman. And had this law been in effect, he could not
have carried his case to New Hampshire. So that is a classic
example of the distorting effect that you all have been
testifying to.
Senator Dodd. I quoted Gene McCarthy for a different
reason--[Laughter.]
But, also, I would disagree with him. I think, in fact, in
1968, there was an army of young people--a great trivia
question, of course, is who won the New Hampshire primary, and
Lyndon Johnson was a write-in candidate in New Hampshire and
actually won the primary that year. But, nonetheless, I think
he would have done very well in the absence of it because he
did have a cause and an issue, and it was not the finances that
made him a competitive candidate, it was an issue in which he
attracted literally thousands and thousands of people who cared
and decided they felt they wanted to give of their time.
I want to agree with you on the corruption comment that was
made here. I never bought into the notion of--as we understand
corruption that was a legitimate case. I think we ought to be
careful how we confuse this, though, in a sense, what we
perceive as corruption. There is a corrosive element to this,
in a sense, and I do not think you can get away from that.
To the extent that people have to go to major sources of
people who can write checks--I mean, there are not many people
who can write a check for $2-, $3-, $4 thousand, working
families and so forth out there who cannot participate at that
level--and to the extent you are going to disregard the $100,
and $50, and $25 contributor because it just is not worth your
time to spend on them to ask them to get involved in this,
because it is easier to go to that person who can, depending on
what the proposal is here, to go to $2,000 or $4,000 or $5,000,
then, clearly, we are awfully naive if we do not think the
American public feel there is not some sense of obligation,
just as we feel a sense of obligation to people who vote for
us, organizations that support us and so forth.
As human beings, when the issue comes down, you have got
three places you can be, and there is a group that opposed you,
a group that supported you, a group that helped finance your
campaign. We all know in a process of politics that your
attention is drawn clearly to those who have been able to help
you out, get you to where you are. I do not think that is
corrupt. I think that is human nature, in a sense.
And I think to say and suggestion somehow that this is a
good thing or it is not a bad thing worries me because I do
think it is unhealthy. As more and more people--last election,
a billion dollars spent in congressional races, the lowest
participation and turnout in almost half a century. There is
something more fundamentally going on in our process of
politics in this country that needs to be addressed. Again, my
concern is that what we are going to see is more money come
into the process here. Eighty percent of the campaign dollar
gets spent on TV. And I have still always questioned why it is
not, with licenses and so forth--others have made this
suggestion, some people do it voluntarily--but TV stations and
networks that use the public airwaves that we allow them to,
the privilege of doing so, why they do not have a greater sense
of responsibility of providing the time so that candidates can
be heard, other than at 2 a.m. in the morning, so that you, Dr.
Miller, would have a chance to express your views to the voters
of this area without having to go out and raise a fortune in
order to compete effectively for that time.
I, again, appreciate your testimony here today. It is a
pleasure always to see good friends like Dan Coats go back up
and testify and think we need to look at this. There is a
fundamental disagreement about whether or not we agree there is
too much money in politics. And if you think there is not, then
we have a different approach to this. Someone once described it
as looking at sort of the Mississippi River and the delta. And
if you just try and deal with the tributaries, then you are
never--there will always be other tributaries, other ways for
money to find its way into the process.
You have to go back and deal, it seems to me, with the
overall question of flow coming in and ask yourself what is
this doing to the political process in the country? Are people
participating more? Are voters engaged more in the process? Is
there some way in which we can get our message out better to
encourage people to become candidates, to make it easier for
people to challenge effectively?
And, again, I do not know, Ms. Miller, but it seems to me
that even if you raise these limits, your incumbent is still
going to have a tremendous advantage. I do not see how this
gets closer to the incumbent, being able to challenge, in a
sense, if the incumbent is able to take advantage of this hard-
dollar question, which is always the advantage--and I do not
disagree with you there--so you are going to have that
continued disparity it seems. It may even be greater.
Ms. Miller. May I respond to that?
Senator Dodd. Certainly. I would like you to.
Ms. Miller. It is true that the incumbent would always have
much, much more money, especially starting with three-quarters
of a million dollars, as he did. My point is that having the
limits that I had, I never had enough money to reach that
threshold to even get to the point that people knew I existed,
let alone know who I was. There were young staff members on the
staff of this committee living in my district, active in
politics, and they did not know until they walked in on
Election Day that there was a Republican running.
Senator Dodd. What would make you think the TV stations
would not raise the cost of your ad to go on television now
that they know you can raise more money?
Ms. Miller. As an inveterate capitalist, I am willing to
take that chance that they will take my money if I have enough
of it. [Laughter.]
Senator Dodd. Well, I do not suggest they will not. I am
sure they will. They love to do it. They also do editorials
about campaign finance reform. But my point to you being is
that if they continue to raise the amount it costs per unit,
the fact that you could raise $100 before and not quite make it
because the TV cost $200, you now raise $200, but they have
raised the cost to $400. It seems to me, all we have done is
bring more money into the process, but we have not increased
your ability to communicate any more effectively with that
voting population who, as you described, did not know who you
were when they showed up at that polling booth on Election Day.
Do you understand my point?
Ms. Miller. I can guarantee you I could have gotten my
message out better if I had been able to raise more money from
those individuals who were willing and ready to support me.
The Chairman. We have had, I must just say on that point,
we have had witnesses before the committee, off and on, over
the years, who have made the point that spending beyond a
certain point for incumbents really does not make any
difference. The real point is: Can the challenger get enough,
as you put it, Dr. Miller, to meet the threshold of credibility
and to convey an argument for change?
Senator Coats. Mr. Chairman, if I could on that point, just
to reinforce you there. I think we have all witnessed, and I
will not mention any names, several celebrated statewide
campaigns in recent years, where there was a backlash against
the incumbent for excess spending of personal money. There is a
minimum-threshold, however, argument that I think Dr. Miller
that is irrefutable, and that is, you have got to get in the
game first before you have a chance to win. And to get in the
game, there is a minimum threshold level that, in today's
multifaceted way in which we communicate messages to the
American people, it is an expensive proposition. And if you do
not meet that minimum threshold and have the funds to address
that, you are defeated before you ever start.
Senator Dodd. Let me just finish, if I can, Mr. Chairman.
The Chairman. Sure.
Senator Dodd. What we ought to be looking at, though, is
how we increase participation of all people in this country.
And by raising dollar limits, there is clearly one crowd that
is going to have a larger voice and a bigger voice box in all
of this, and that is the people who can write a check, not just
for $1,000 or $2,000, but for $4,000 or $5,000 or $10,000. That
is very few, small percentage, of the American public that can
do that. I think that is discouraging to a lot of other people
out there who cannot even come close to playing in that game,
who want to contribute and want to support, who are going to be
disregarded because it takes too much of our time to solicit
their support. I think that is terribly unhealthy.
We have got to look at this thing in a far broader, more
sophisticated way if we are going to reverse the trends of
people not participating, getting cynical, watching all of the
negative adds on television, people getting so turned off by
politics in this country that they do think we are corrupt, and
properly so, in my view, but it does not seem to be abating at
all. And so we have got to look at this, in my view, in a far
broader way.
If we are going to ultimately achieve, I think, the desired
goals of increasing participating and making the political
process accessible not just to candidates, but to the general
public, if the general public feels they cannot access this, it
is only about us; how much time we spend, how much money we
raise, how much they can contribute, it seems to me we end up
in a very deep hole in this country. So I am deeply worried
about that.
Again, I am deeply grateful to both of you for sharing your
views and thoughts here today. I am grateful to the Chairman,
and he and I are going to work on this, and I respect him
immensely for his care and conviction, and his courage. He has
taken a lot of heat for positions he has taken, over the years,
on this issue, but he has deep convictions about it, which I
respect, and I am hopeful that we can find some common ground
that Dan and I, and this gentleman and I have been able to find
over the years, despite our political differences.
But I wanted to express that general concern I have about
the crowd that feels left out in this country when it comes to
politics, and we have got to be very careful they do not feel
further disenfranchised.
Senator Coats. Senator Dodd, if I could just briefly
respond to that.
Mr. Chairman, the Senator raises a legitimate question
about the public's level of participation and about their
perception of the political process. But I would suggest there
are reasons well beyond the contribution limits that are
responsible for that, and those need to be addressed.
But in terms of contribution limits, let us not forget that
establishing a limit based on 1974 prices is no longer
realistic in 1999. And there has to be a way of addressing
that. I mean, that would be the same as me saying, ``Well, I
used to get my haircuts for $4. I am not going to pay $20, and
so I will no longer get a haircut.'' [Laughter.]
I mean, that is just the realistic aspect of the way prices
have increased over that 25-year period of time. And I think
that, as a minimum, we ought to find common ground on that
question because the statistics are there to support a common-
ground solution. We all know that the cost of living and all of
the aspects of providing and purchasing services has risen
dramatically since 1974.
Senator Dodd. Would you forgive me, by the way--you will
appreciate this--and, Dr. Miller. The Banking Committee is
calling, so I apologize. We have the chairman of the Securities
and Exchange Commission before the committee today, so I have
got to get over there, but I apologize to you, and I apologize
to our other witnesses. But I have read your testimony and
appreciate your presence very much.
Thank you.
The Chairman. One final observation, as Senator Dodd has to
depart for another committee, Senator Dodd made several
observations about the overall amount of money in politics. But
the reform effort the last couple years really has not dealt
with that issue at all. There have been no spending limits
suggested for congressional campaigns. And one of the reasons I
wanted to start off on this subject is we really are not
talking about spending limits on campaigns any more. And so the
question is how do we make it possible for people to get enough
resources to compete? And it seems to me, listening to these
witnesses, that the contribution limit stuck in the seventies,
when a Mustang cost $2,700, is a major impediment.
With regard to turnout, it is quite interesting to note
that turnout goes up when you have competitive races, and it
goes down when you have sleepy races that nobody is hearing
about. And so, clearly, there is no evidence of a correlation
between vigorous campaigns and low turnout. There is plenty of
evidence that in a sleepy race, in which you have an incumbent
sailing to victory and a challenger with no chance that nobody
has ever heard of, turnout goes down.
And the other thing that clearly has an impact on turnout
is just how angry the voters are. We saw in 1992 the voters
were mad as hell. Ross Perot tapped into that. Overall turnout
in the presidential race went up 5 percent over 1988. By 1996,
it was a content electorate out there. People were in a happier
mood, and turnout went down somewhat.
So this whole issue of turnout is a quite interesting and
complex subject. I want to thank my friend, Senator Dodd, for
being here for the first part of the hearing. Thank you, Dan
Coats, for coming back and joining with us and sharing your
views on this issue, and, Dr. Miller, thank you so much for
being here as well. We appreciate it.
Senator Coats. Mr. Chairman, thank you.
Ms. Miller. Thank you.
The Chairman. Now, we would like to call our two witnesses
for Panel 2. Karen Sheridan, who is a professional media buyer
with SMY Media in Chicago, who has bought time for
corporations, and for labor unions, and for party committees,
and for candidates, and John Lott, who is an economics
professor at the University of Chicago, who has testified in a
number of instances on the subject of interest to us today.
Ms. Sheridan, why don't you lead off. We will make your
full statement a part of the record and look forward to hearing
from you.
STATEMENTS OF KAREN SHERIDAN, EXECUTIVE VICE PRESIDENT, SMY
MEDIA, INC., CHICAGO, ILLINOIS; AND JOHN R. LOTT, JR., JOHN M.
OLIN LAW AND ECONOMICS FELLOW, UNIVERSITY OF CHICAGO SCHOOL OF
LAW, CHICAGO, ILLINOIS
Ms. Sheridan. Thank you, Mr. Chairman. Thank you for this
opportunity to be able to participate on this very important
issue and in this very important process today.
As you stated, our company has experience in both corporate
or traditional commercial advertising, as well as associations,
labor unions and political parties and committees, and I think
that is important to note today, as I have been asked to give
my opinion on the rising costs of television media, the
changing face of that media environment, and I think what is
very important is to point out some of the differences between
the traditional commercial advertiser and the political
advertiser, an area that we understand completely.
I am going to try and keep this as brief as I can and as
unencumbered as I can. But, unfortunately, there are a lot of
numbers that go into media.
The Chairman. Yes, I understand that. You go ahead. You
cover the subject.
Ms. Sheridan. So bear with me on this.
Senator Coats already talked about how the population has
increased over 40 percent since 1975 to today. But along with
that, so has television viewership. In 1974, your average
household viewed approximately 44 hours of television a week.
Today, we are viewing over 50 hours of television each week.
But what has happened in that environment is that it has been
fragmented. We have seen a 70 percent growth in commercial
stations in this country between 1975 and today, growing from
775 to almost 1,200 stations today.
We constantly see increased variety of cable networks being
made available. We have seen brand new networks being born: the
Fox Network, Warner, UPN, PAX Net. All of these have led to a
decline in viewer loyalty to stations. Where in the mid-
seventies the average household was viewing only 4.5 stations,
an average of nine hours each per week, today, we are viewing
12 stations only four hours each per week. And that is even
more dramatically shown when you take a look at what has
happened with the three major networks in this country. ABC,
CBS and NBC, in 1975, garnered 91 percent of all prime-time
viewing. Last year, that dropped to less than 50 percent.
What this means for advertisers out there is that you have
not just increases in the cost of living, but you have this
fragmentation which makes it much more difficult and expensive
to reach the viewing population. In your top 100 media markets
in this country, your costs for prime time have increased over
300 percent from 1975 to today. And in late news, one of the
key day parts that is utilized by campaigns, the costs have
gone up over 400 percent.
On top of that, even though we, personally, do not get
involved in all the ancillary services that campaigns require
as polling and commercial production, we worked closely with
these people, and we found that the cost of conducting polls
has doubled in that period of time, and the cost of producing a
30-second spot has gone up over fivefold.
All of that aside, though, advertisers continue to
recognize television as an important means of reaching the
public, to get their messages out there and get them across. In
1998, it is estimated that over $46 billion will have been
spent in television advertising. That is over 60 percent of all
of the advertising dollars spent in the five major media. Back
in 1975, that was only $5.2 billion spent in television.
Television has certain characteristics, intrinsic
characteristics about it. There is sight, there is sound, there
is motion, there is color. This makes for a very impactful
medium in which to put out your message. Television continues
to reach approximately 80/85 percent of the viewing public
every day and almost 90 percent of viewing adults each week.
That is very important, especially for the political advertiser
who needs to reach his marketplace, to reach his constituency,
in a very short period of time.
What I found very interesting was there was a Roper-Starch
survey conducted recently that showed, as of March 1997, 69
percent of all adults in this country utilized television as
the primary place to get information on what is happening in
the world today. Forty-seven percent get this information only
from TV, and 53 percent of all adults say that television is
the most credible source for information.
There is also a study by the Center for Media Public
Affairs that found that the major news properties out there
carried 73 percent fewer election stories during the mid-term
elections of 1998 than they did four years earlier. So while
the public is looking to TV for this information, news is
carrying less of it. This means it is all the more important
for the political advertiser, the candidate, to continue
utilizing television as a means of reaching their constituency.
The Chairman. Could I interject on that point?
Ms. Sheridan. You certainly may.
The Chairman. Admittedly anecdotal. But in my campaign in
1996, as compared to 1990, just in terms of earned media
coverage, setting aside advertising, there was a dramatically
less interest on the part of the local television stations
around Kentucky in covering anything, either myself or my
opponent, had to say at any point in the campaign prior to the
last seven days. So we were almost totally dependent on having
to advertise because there was little or no interest, in terms
of the News Departments of the various local stations, in
covering the campaign, putting even more pressure on us to
advertise as the only way to break through to our voters.
Ms. Sheridan. Not only is it important for you to utilize
television to break through to your voters, but it is even more
important to recognize the other challenges that are out there
with utilizing it.
You can no longer just buy a thousand rating points of
time. A rating point is not just a rating point. Candidates no
longer look to target just the mass voting-age population.
There are specific issues which require you to address specific
segments of the marketplace out there. If women are a key
element or a key portion of your target market, you can no
longer reach them by utilizing just daytime television, as 57
percent of all women are now working outside the house during
the day.
Likewise, if your polls indicate that the persons most
likely to vote are found in news vehicles or in news
information programming, then it is important that you place
your spot, your ad, in that environment. But what happens is
that your news and your news information programming, as your
60 Minutes and prime time, are two of the most expensive day
parts to utilize for television advertising.
Prime time alone, in the top 100 markets, and late news
range from 44 percent to 198 percent higher than any other day
part out there you could be using, whether it is daytime or
early fringe or late night programming.
But along with these costs and how expensive it is to
utilize television, there are other differences between your
traditional advertiser, television advertiser, and your
political advertiser. Your traditional advertiser has the
luxury of planning, doing long-range strategic plans. They have
the opportunity to place their media well in advance of when
they need to be on the air. That gives them the opportunity to
take advantage of negotiated rates, to take advantage of long-
term media relationships, to run in the programs they want to
run in when they need to be there.
Your political advertiser, on the other hand, is entering
the market only every two, four or six years. You have a very
small window of time in which you must tell your story to the
public, when you must reacquaint them with you and with the
issues or, in some cases, to introduce yourself for the very
first time to them.
Political advertising has a tendency to be very, very
volatile. It is much more reactive rather than proactive. It is
constantly changing based upon what your competition is doing,
what the current events are and what other third-party
advertising might be doing often leaving you to have to place
advertising time within 24 to 48 hours, which then forces you
to oftentimes buy in more expensive programming on more
expensive stations.
And that is all complicated further by the fact that the
majority of your advertising, especially your committee
advertising, takes place in the 60 days prior to the general
election in November. That, unfortunately, is some of the most
expensive media time to buy. From mid-September through
December--we call this fourth quarter in the advertising
industry--this is when your new season programs debut, this is
when people are settling back in after the summer and
viewership is going up, consequently raising prices on
inventory, and when your traditional advertisers are out there
building their sales during the key retail period for them.
Fourth quarter 1998 was 46 percent higher than ads that
were placed in first quarter, which is January through March,
and 10 to 11 percent higher than second and third quarters.
In addition to that, you also have a wealth of candidates
all vying for the same time during that same 60-day window
further making it difficult to purchase time and making it much
more difficult to distinguish yourself with the public from
everyone else.
Corporate advertisers have another very distinct advantage.
They are not opponents, they are competitors. Taco Bell,
McDonald's, Burger King, Kentucky Fried Chicken, can all exist
in the same market. They can all share a piece of the fast-food
industry. At the end of each advertising cycle for them, they
do not go out of business because they do not own a 51-percent
market share. Political candidates, on the other hand, are
opponents. Only one of them is in business the day after
election, and it is whoever gained more than a 50-percent
market share.
There are also a number of geographic problems that are
faced with running campaigns. Dr. Miller talked about the
problems she had and the inability to utilize television. In
the 8th Congressional District of Virginia in which Dr. Miller
ran, that district is covered by your Washington, D.C.,
television stations. Those same stations also cover another 16
districts in 4 States. This means that of the 3.9 million
adults that are reached by television out of Washington, D.C.,
only 11 percent of them reside in the 8th District. So 89
percent of all of Dr. Miller's advertising would have been
wasted.
Kentucky is another prime example when you get into your
State races. Media markets do not conform to congressional
districts. They don't conform to State boundaries. In Kentucky,
you need to utilize eight different media markets in six States
to ensure 100 percent coverage of the State.
What happens with all this overlap in these markets means
that the person, as Dr. Miller, who needs to buy time in news
or on ``60 Minutes'' or whatever it is going to be paying the
same price for that ad as someone else in that district.
Let's take the case of New Jersey. In New Jersey, you need
to utilize New York television. You are running in New Jersey.
If you want to buy a spot on ``60 Minutes,'' it is going to
cost you $25,000--the same price someone in New York City will
be paying who can utilize a much larger portion of that target
audience.
Finally, corporate advertisers are not bound by artificial,
mandated limits. Yes, they have stockholders and boards of
directors to report to, but they also have the luxury of doing
investment advertising. When they are looking to build their
brand, they can do what is known as investment spending. And as
their revenues come in, as their profits rise, they are able to
reinvest more of that money into advertising to continue
building their product, to continue building their service.
They are not limited by this $1,000 limit as your candidate
advertisers have been.
Media costs have risen over 300 percent in the last 25
years, and I find that political campaigns are in jeopardy of
not being able to utilize television, a vehicle that so many
people in this country tune to every day to learn what is
happening, that your candidates will not be able to afford it
or to afford it at any significant level of presence.
In conclusion, I would like to state that I fully believe
that the campaign limits need to be increased to be
commensurate with the rising costs of television advertising if
all candidates are going to have the opportunity to utilize
this very effective medium.
I thank you for this opportunity today and welcome your
questions.
[The prepared statement of Ms. Sheridan follows:]
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The Chairman. Thank you, Ms. Sheridan.
We will hear from Mr. Lott, and then we will have some
questions for both of you. Thank you.
STATEMENT OF JOHN R. LOTT, JR.
Mr. Lott. Thank you very much for the opportunity to
address the issue of campaign finance reform. My concern is
that despite the best of intentions, many campaign finance
regulations have actually accomplished the opposite of what was
originally intended. In particular, limits on contributions
have entrenched incumbents, given wealthy candidates an
advantage, increased corruption in the political process, and
led to more negative campaigns. Limits on contributions have
also not been successful in limiting the total amount of
resources devoted towards political campaigns.
Let me briefly go through the issues here.
First, the restrictions on the size of campaign
contributions have had little effect on the total amount spent
in campaigns. They result in higher levels of independent
expenditures that balance off any declines in a candidate's
resources. The rules attempt to treat the symptoms--the larger
contributions and higher campaign expenditures--without
addressing why those contributions or expenditures have been
increasing. The closest analogy that I can give you with regard
to policy is the implementation of price controls.
Gasoline price controls during the 1970s did not reduce
consumer competition to obtain gasoline, for example, but
merely changed the form that it took. Consumers may have paid
less in terms of the dollar price at the pump, but they spent
more in terms of waiting in line to get gasoline. Likewise,
limits on campaign contributions may reduce the amount directly
given to candidates, but if the benefits are there, potential
beneficiaries and victims of Government actions will find other
ways of trying to elect candidates who support their positions.
We have seen price controls producing many undesirable
forms of competition. For example, anybody who has lived in
areas with rent control know how you have under-the-table type
payments to go and get apartments. We even have phrases that
have entered into our language in terms of ``key money'' for
getting apartments. And, similarly, for campaign finance rules,
there are numerous examples in recent years of contributions
made through ``straw donors,'' for example, people who merely
served as intermediaries to illegally funnel money to
candidates.
As alternative forms of competition for elective office are
foreclosed, our political system risks forcing more competition
underground and producing the unintentional result of creating
more corruption, not less. One problem with these
circumventions is that voters will find it increasingly more
difficult to determine who is really providing candidates with
money.
The different forms that these contributions can take is
essentially unlimited. For example, in the extreme case,
someone could buy a television or radio station in order to try
to produce news media coverage that is going to be more
sympathetic to particular candidates. It is difficult to see
how these types of in-kind contributions could be effectively
regulated given that it would be infringing on issues involved
free speech.
My research indicates that most of the increase in campaign
contributions that we have observed over the last couple
decades is simply due to one factor, and that is the increasing
size of government. As more is at stake, people are willing to
spend more in order to try to influence the political process.
I think it also deals with an issue that Senator Dodd was
bringing up, and that is whether or not we can effectively
reduce the level of contributions or expenditures by limiting
things like the amount that can be spent on a race. And I have
looked at data for State House and State Senate races across
the United States as well as gubernatorial races, and
restrictions on campaign contributions have absolutely no
impact on the total amount that is spent on races. What the
restrictions do is change the composition of those
expenditures.
Because of donation limits, campaign expenditures also risk
taking less desirable forms. Candidates will have even less
responsibility over how expenditures will be spent as more
money is spent by independent organizations. To the extent that
these are truly independent organizations, the information that
voters receive will not be as well coordinated as it would have
previously. Even if the same amount of money is spent on
campaigns after these reforms take place, voters will learn
less about the candidates and their positions. We also risk
even nastier campaigns, more negative campaigns as candidates
can plausibly deny the accountability for the attacks conducted
by surrogates.
A second major issue involves the frequently mentioned
concern that campaign expenditures involve fears that campaign
contributions will alter how a politician votes. In part, this
is also related to a concern that Senator Dodd raised about the
general public's views on whether politicians will be
accountable to their interests, also, and not just those of the
donors.
Academics regularly find that candidates who receive the
most money tend to vote most in accordance with the interests
of those donating the money. Yet the academics who have worked
on this issue realize that there is an important problem, and
that is one of causation. Is money being given to candidates
who essentially value the same things that the donors believe?
Is that the reason why we see this positive correlation? Or is
the positive correlation due to the fact that the contributions
are actually altering how the politicians are voting? This has
been a very difficult question that economists and political
scientists have looked at over many decades now.
My research, I think, provides a very simple method of
disentangling those two different types of causation there. I
have a paper that recently appeared in the Journal of Law and
Economics, and what it looks at is how politicians vote in
their last term when they no longer risk losing campaign
contributions that they might be receiving.
If contributions are causing politicians to vote
differently than they otherwise would have voted, then when
they are in their last term and no longer risk losing those
contributions, if those contributions were really causing them
to vote in accordance with those donors' interests, then you
should have seen systematic movements in terms of how
politicians vote during their last term.
I looked at congressional voting from 1975 to 1990, and I
am happy to talk about all the different factors that I
controlled for. But there were two striking findings.
The first one is that politicians tend to vote extremely
consistently over their entire political lives and that you can
explain how they vote in terms of their constituents'
interests.
The second is that there was essentially no relationship
between how a politician voted in their last term when they no
longer risk losing these campaign contributions and how they
voted in the second to the last term. And you can measure
exactly how much different politicians' campaign contributions
fell between those two terms and try to see whether that is
correlated, whether those who were getting the most money might
have changed the most between those two terms. And, again, you
essentially find no relationship there between the level of
contributions, between the change in contributions between
those periods, and how Congressmen voted.
Let me give you an example. The average Congressman who is
receiving labor PAC contributions experienced a reduction in
labor union contributions of $33,000 between his last two terms
in office, and yet this did not result in fewer pro-union
legislative votes.
You can look at politicians who received labor
contributions and look at the distribution of that. Even those
who were in the top 10 percent of the tail--whose labor
contributions fell by over $100,000 between their second to the
last term and their last term--did not change in terms of how
they voted on union issues during that period of time.
A third area of concern is how limiting the size of
contributions has differential effects on incumbents and
challengers.
How well a candidate does in an election depends not only
upon his current campaign expenditures, but also on the
reputation that he has developed over time. This reputation is
developed due to past expenditures on previous races, as well
as news coverage, as well as franking and other ways that he
can communicate with his voters.
Reducing the effectiveness of current campaign expenditures
as I have talked about, for example, the rise of independent,
uncoordinated expenditures, reduces the amount of information
that both incumbent and challenger can produce. But the
incumbent already has an advantage because he is much better
known with the voters. Since each additional dollar spent by a
challenger is much more valuable in informing voters of what
his positions are on the issues and how strongly he holds those
positions, reducing the overall effectiveness of campaign
contributions has a greater detrimental effect on challengers
than it has on incumbents.
There is an additional reason why these types of rules have
a bigger detrimental effect on challenges than they have on
incumbents, and that is, it is very costly, very difficult for
candidates to raise money from many different small
contributors. It takes a lot of time and effort to find out and
identify all those small contributions that can be raised. An
incumbent who has run for office in the past--and, in
particular, for this office--has already spent many years
trying to put together a list. He has a much larger list to
start with in terms of potential contributions than challengers
do. Anybody who has run initial campaigns can attest to the
fact that many of the initial mailings that one makes out may
have extremely low success rates that are going to be
associated with that in terms of actually locating people who
are willing to make contributions.
Contribution limits also increase the influence of those
who make in-kind contributions. For example, favorable news
coverage by television and radio stations or newspapers become
more important. Candidates who are favored by the media will
benefit from campaign restrictions. It is also impossible to
regulate these in-kind contributions. In addition, in-kind
contributions can take many other forms. For example, rock
stars or other celebrities could attract an audience to either
listen to or contribute to a candidate. It is not obvious why
we should differentiate between an appearance that a rock star
could make in terms of attracting 1,000 possible small donors
and a rock star who may be able to go and make a large
contribution themselves directly.
One consequence of campaign contributions has been to
increase the number of wealthy candidates running for public
office. The reason is obvious. They can use their own money,
and they don't have to rely on trying to get money from a large
number of small contributors.
The fourth reason that I would like to talk about--and it
has been talked about by all the witnesses today, and I am sure
all the Senators would understand--is that we have had
inflation over time and that the types of effects that I am
talking about and have listed out have all been magnified as
the real value of those contributions has been reduced. Using
the Consumer Price Index, the Federal Government's $2,000
contribution limit for individuals and $10,000 for PACs during
an election cycle are now equivalent to over $6,600, or $33,000
in 1998 dollars. I won't go into that issue more because
obviously the other people have spoken on that quite eloquently
today.
Finally, I would like to address the issue of whether in
some sense we are spending too much on campaigns, and I think
there are several points that can be raised with regard to this
issue.
The first issue is simply to note how much money is being
spent on campaigns relative to the amount that is at stake. The
last election cycle, for all candidates running for all offices
in this country, we have over $2 billion being spent. Just
looking at the money that is being spent by the Federal
Government, you are talking about approximately $2 trillion. So
you are talking about one-tenth of 1 percent of the amount
there.
Given what is at stake, it is not obvious that by that too
much is being spent. But I think another measure can also be
brought up. For example, if you look at Apple Computer when
they were launching the iMAC, they spent $120 million just
launching that. Ford Motor Company, when they launched the
Taurus automobile, the last model introduction they had, they
spent $800 million advertising that. So, you know, just on one
car model being introduced, we had approximately a third of
what was spent on all elective offices in 1998.
In terms of the relative importance of the issues that are
going to be affected, surely one would think that all the
decisions that the Federal Government and State and local
governments are going to be making over the 2 years after the
election are probably at least three times greater in
importance than the introduction of one single automobile by
one automobile company over that period of time.
There are other issues I would be happy to get into in the
question period about that. But, in conclusion, the point that
I would like to raise is that economists have studied price
controls for over many decades, and price controls have been
attempted to be imposed over thousands of years. And this
common desire is to try to deal with the symptoms of a
problem--you observe the price going up, whether it is price
controls involving health care, the types of issues we talked
about 4 or 5 years ago in this country, or other products--
rather than trying to get at what is causing the demand for a
product and the prices to go up.
My concern is that trying to oversimplify it and trying to
put this band-aid on the symptoms rather than exactly look at
what is causing the prices or the expenditures to go up doesn't
solve the problem. It merely changes the form of expenditures,
the form of donations. It doesn't change the total amount of
resources that are going to be spent on campaigns, and has
other undesirable consequences in terms of how well voters are
going to be informed.
Thank you.
[The prepared statement of Mr. Lott follows:]
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The Chairman. Thank you, Professor Lott.
Are States that don't have contribution limits mired in
corruption?
Mr. Lott. No, I don't think there is any evidence of that.
I primarily looked at data at the Federal level that I am happy
to talk about, but I have done work looking at State
legislators, in particular California, and trying to see
whether the types of points I was making with regard to how
Congressmen vote and the level of changes in contributions that
they had received, whether you could explain State legislators'
votes over time, and the same type of relationship applies
exactly there.
In the case of California, when State representatives or
Senators are in their last term, you don't see any changes in
how they vote and their change in contributions that they
receive between their second to last term and their last term
also seem to have no impact.
The Chairman. I was fascinated by your observations about
your study comparing the voting behavior of retiring members to
their earlier voting behavior when they were not in a
retirement mode. It certainly confirms my sort of observations.
Having served in the Senate for 15 years, I don't recall any
retiring members dramatically changing their philosophies or--
you know, just anecdotally, I didn't observe that. It is nice
to hear that you have actually studied this and found that
there is, I gather, no change in voting behavior in the last 2
years simply because one is in a retirement mode as opposed to
an active candidate mode.
Mr. Lott. Right. I have written eight different papers on
this topic, and other academics have looked at this issue, too,
and it is remarkable how consistent politicians vote over time.
A politician who tends to be the most conservative in his first
term tends to be the most conservative in his last term when he
leaves office.
There are basically two issues here: Do politicians vote
the way they do solely about the concern of reelection that
they have? Or are voters putting into office politicians who
intrinsically value the same things that they do?
I think the evidence is very strong that voters care about
having in office politicians who value the same solutions, the
same views that they do. And one of the reasons why they care
about that is, for example, when the politician is in his last
term and he no longer faces the threats of reelection there,
can we still trust him? And if it is somebody who has
demonstrated to them over a long period of time that he really
cares about the same policy concerns that they have, that is
the type of politician which they can trust and will--if he
were to vote differently, he would be making himself worse off
in a sense because he wouldn't be accomplishing the goals that
drove him to go into office to begin with.
The Chairman. Since you have found no evidence that
contributions--that there is a correlation between
contributions and corruption, I am wondering what your
observations might be with regard to whether or not it might
actually be possible that the contribution limit itself creates
some problems in the corruption area?
Mr. Lott. Well, I think it does. I think as with all types
of price controls, since you are not really dealing with the
underlying reason why people want to spend a certain amount on
a product, that people will find alternative ways to try to
obtain whatever good that they value there--in this case,
trying to help out getting somebody elected who intrinsically
value voters' positions on the issues.
And so, you know, people may try independent expenditures,
they may try expenditures on issue ads, but surely one of the
other--as you restrict more and more the types of legitimate
needs that people can go and make expenditures, they are going
to find, just like with rent controls and other types of price
controls that you have there, ways around it in order to try to
influence the election. We see over time an increasing number
of corruption cases involving straw donors where people will
funnel money through friends or other people to a candidate.
And I think it is only a natural consequence of the fact that
we are dealing with the symptoms again and not the underlying
reasons which are generating the pressure for these
expenditures and contributions.
The Chairman. Ms. Sheridan, given the need of candidates
for office to reach an electorate, it is not likely, is it,
that they are going to need to rely on television or new forms
of communication like the Internet any less with a growing
population and increasing costs, is there?
Ms. Sheridan. Oh, no, definitely not. As much as we see
television viewing being fragmented, I mean, we see media in
general being fragmented. I am not certain just what role the
Internet will play in the next election cycle. I mean, right
now we are only seeing approximately one-third of all adults
who have access to online services and the Internet, and only
about 23 percent of all adults actually say they have used
those services in the last month. Certainly not as compelling a
way to reach your constituency as television is, but very
definitely there is still going to be the--you are going to
have to rely on television to reach the mass market.
The Chairman. Even though we are not talking about spending
limits here today, we are talking about contribution limits, I
am still curious. Could a commercial advertiser succeed if a
Federal rule limited the amount they could spend?
Ms. Sheridan. My opinion would be no, he could not; but in
addition to that, we would see far fewer competitors enter the
marketplace. If you were the very first person to be in the
market with a fast-food chain and we enacted some regulation in
terms of spending limits, that in itself prohibits other
competitors from coming in and competing against or competing
with that person. So we would see far fewer competitors out
there to begin with, and more than likely we would see a lot
more businesses that are failing.
Mr. Lott. In fact, if I may add something, we have seen
experience with this during the 1960s when certain types of
advertising was forbidden to tobacco companies. One of the
things that has been looked at is what has happened to the
stock price of those companies. And at the time when those
restrictions were put into place, the market value for those
companies increased. That is because essentially they had
already made these past investments and reputation for creating
certain brand names for products that they had there and they
no longer had to worry about the threat of new products
entering in to the same extent because it was much more costly
for people to enter in with new products.
You have seen that in other areas, but tobacco is--the
companies benefited a lot from the types of restrictions that
were imposed there.
The Chairman. Just hypothetically here, as we wrap up,
could it be argued that a contribution limit established 25
years ago, as I said earlier, at a time when a Mustang cost
$2,700, is effectively a spending limit?
Mr. Lott. Well, I don't think it is in the sense that there
seems to be other reasons that are driving why there is a
certain amount of money spent on campaigns. What it does is it
changes the composition of how the money is spent. It makes it
so that people now turn to independent--
The Chairman. I mean a spending limit on the candidate. As
a practical matter, a contribution limit, what you can give to
a candidate stuck in 1974 dollars.
Mr. Lott. Right.
The Chairman. Could it be argued that that, in effect, has
become a spending limit on the candidate himself.
Mr. Lott. Oh, right, on the individual candidate, that is
right. I think it reduces the amount--
The Chairman. Because there are only so many people out
there you could get that kind of money from.
Mr. Lott. Right. I think everything else equal, it reduces
the amount that a candidate is going to spend. But what it does
is it causes more to be spent on issue ads or other
independent--
The Chairman. Turning the playing field over to others.
Mr. Lott. That is right. It makes it harder--
The Chairman. To fill the vacuum.
Mr. Lott. That is right. It makes it harder to coordinate
the message, and, you know, for a given amount of money that is
spent, it makes it so that voters are less informed than they
would have been otherwise.
The Chairman. And if I heard you correctly, it is not
unreasonable to assume that a Government that spends $2
trillion a year is a Government that people are going to want
to have some influence with by participating in the political
process.
Mr. Lott. Right. Not only influence, but we would also want
people to be informed about the process. And surely just like
advertising for any other type of product, advertising in
political campaigns is one way to inform the voters. And as I
have said, if you compare the amount of advertising that is in
political markets to any other type of product that is there,
it is a very trivial amount.
In fact, my basic concern is that too little probably is
being spent on campaigns, and I think there is a very simple
theoretical reason for that and it is something that economists
call free-riding.
If you take charity, for example, you and I and everybody
in this room may value a particular charitable group that would
be doing good things. But my little amount that I am going to
be giving to them is relatively trivial in terms of the total
amount that they would be receiving. I would hope that
everybody else in the room in some sense would make a donation.
And I really wouldn't have to make the donation in that case. I
could benefit from the expenditures that you are making,
because if you make the expenditures and the charity goes out
and does good work, I feel better knowing that they are out
there doing their good cause.
But if everybody else is waiting for other people to go and
make the donations to that charity, in some sense hoping to
free-ride off the altruism of others there, the total amount
that is going to be given to the charity is going to be less
than what we would all really like to have the charity receive.
Well, you have the same type of problem that exists for
campaigns. You have a large group of voters who would like to
see a particular candidate win an election, but, you know, the
other 99 of the 100 people who would like to see the person win
give their share or the amount that they would like to give to
the candidate, I mean, you could sit back and still have the
candidate win the election and get the benefits from him
winning. If all the potential donors or at least some share of
the donors feel that way, we are not going to be giving the
candidate as much money as each person, if they were honestly
to turn over, tender the amount to the candidate he would
receive then. And so the candidates will have less to send than
what each of the voters would privately like to see him get to
inform other people. It is just that we would like to have
other people make the donations rather than ourselves.
The Chairman. As I recall the landmark case of Buckley v.
Valeo, the Court's rationale in upholding the $1,000
contribution limit was corruption or the appearance of
corruption. And I gather, Professor Lott, in your studies you
found neither appearance not actual corruption.
Mr. Lott. At least for the range of contributions that I
have been able to look at, that is the case. And, you know,
whether you can get past much larger levels, I can't say. But I
can look at labor union contributions or corporate
contributions or ideological group contributions for
conservative or liberal PACs that can go up well over $100,000
in an election cycle, the change that can occur between a
politician's second to the last term and his last term, and
even those large amounts you don't observe being associated
with changes with how the politician is voting in his last
term.
So the types of limits in real terms that we are talking
about in 1974 come nowhere even close to the amounts that we
can study here and not see an impact on how politicians vote.
And in States that you can look at like California during the
periods of time when they don't have campaign contribution
limits for State officers, for State House or State Senate,
where there are some very large individual contributions that
are made in those cases, you also don't observe changes in how
politicians vote there, either.
The Chairman. Well, I thank you both very much. This has
been a quite enlightening hearing, and I would like to here at
the close ask that a statement from Senator Feinstein being
included in the record.
[The prepared statement of Senator Feinstein follows:]
APPENDIX 1
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The Chairman. I thank you both for your participation.
This hearing is concluded.
Mr. Lott. Thank you very much.
Ms. Sheridan. Thank you.
[Whereupon, at 11:32 a.m., the committee was adjourned.]
APPENDIX 2
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