Raising the Limits: A Bad Bet for Campaign Finance Reform

Executive Summary

In 2002, Congress passed the Bipartisan Campaign Reform Act (BCRA), which offered some significant reforms such as banning unlimited ‘soft money’ contributions to political parties and clamping down on electioneering spending by outside interests. Unfortunately, BCRA also doubled the amount of money that an individual may give to a federal candidate from $2,000 to $4,000 per election cycle. Proponents of the bill downplayed the impact of higher contribution limits or even suggested that they would make congressional elections more competitive. As the 2006 elections near, we decided to analyze the impact of raising individual contribution limits on the 2004 congressional and presidential elections.

Using Federal Election Commission data on federal candidate fundraising from individuals, parties, and political action committees, we found that BCRA’s doubling of contribution limits did not deliver the promised benefit of more competitive elections and may be, in part, responsible for several harmful emerging trends. Races did not become more competitive; in fact, incumbents continued to out-raise challengers and win re-election at high rates. The data show not only a continued electoral dominance of the largest fundraisers, but also an increase in the disparity between winners and losers—between candidates with access to wealthy donors and those without.

Key findings include the following:

• The biggest fundraisers continued to dominate federal elections. Congressional candidates who raised the most money won their elections 97% of the time—up slightly from 2002. General election winners in 2004 out-raised losers by a margin of 3 to 1.

• The funding gap between winners and losers in congressional contests widened. In 2004, winners in congressional elections out-raised losers by $281 million in individual contributions, an increase of $65 million over 2002. In contributions of $1,000+, the winners had a $177 million advantage over their less well-heeled opponents, an increase of $35 million over 2002.

• Higher contribution limits failed to help challengers. In 2004, congressional incumbents out-raised challengers $239 million to $61 million in $1,000+ contributions. The incumbent fundraising advantages fueled a re-election rate of 96% for Senators (up from just under 89% in 2002) and 98% for members of the House (up slightly from 97% in 2002).

• BCRA’s hard money increases negated the effect of a promising surge in small donor participation. Individuals contributing $200 or less gave $146 million more to congressional and presidential candidates in 2004 than in 2000. But, the overall clout of small donors did not increase between these two election cycles. Due to $446 million in additional contributions by large donors, including $345 million in contributions of at least $1,000, small donors still accounted for just 28% of federal candidates’ individual funds.

• The average itemized contribution to congressional and presidential candidates jumped 29% over last cycle, after remaining stable for 15 years. Itemized contributions to federal candidates averaged $770 this cycle, up from $599 in 2002 and $598 in 2000. The average increase over the previous 15 years was just 2% per cycle.

• No evidence suggests that doubling individual contribution limits reduced fundraising time. Proponents of increasing the individual contribution limits often argued that it would reduce the amount of time candidates would have to spend fundraising. The data from the 2004 election do not support this assertion. If higher limits reduced fundraising time, we would expect candidates to raise the “necessary” sum by accepting fewer contributions in larger amounts. The number of donors who gave itemized contributions ($200 or more) to congressional candidates continued to increase this cycle to approximately 517,000, up from approximately 465,000 in 2002.

Higher contribution limits to candidates and political committees do not help grassroots candidates or challengers. They do not improve fairness or competition and are detrimental to achieving the goals of real reform. The myth that such a change is relatively harmless and, therefore, an easy or acceptable tradeoff for other reforms threatens the ultimate impact of campaign finance reform and may well undermine the public’s support and belief that real reform will ever reduce the influence of money in American politics.