Senate Hearing on Campaign Contribution Limits

Free Speech & Election Law Practice Group Newsletter - Volume 3, Issue 1, Spring 1999

July 1, 1999

Andrew Siff

With the Supreme Court set to hear arguments this fall concerning the constitutionality of Missouri's campaign contribution limits in Nixon v. Shrink Missouri Government PAC, there is increasing unanimity among Congressmen that the federal contribution limits established in 1974 must be raised. On March 24, 1999, The United States Senate Rules and Administration Committee held a hearing regarding the need to raise the federal contribution limits. The hearing was unusual because instead of both the majority and minority calling witnesses, Democrats and Republicans unanimously agreed upon the same four panelistsformer Indiana Senator Dan Coates; Professor John Lott of the University of Chicago; Karen Sheridan, Executive Vice President of SMY Media, Inc.; and Dr. Demaris Miller, an unsuccessful candidate for the House of Representatives.

The hearing began with Chairman Mitch McConnell (R-KY.) noting the growing chorus of voices on both sides of the aisle in favor of increasing the $1,000 limit on individual contributions and the $5,000 limit on PAC contributions to federal candidates established in 1974. McConnell explained that today it is much more difficult for federal candidates, especially challengers who do not have the name recognition and ability to get free media exposure enjoyed by incumbents, to get their message out than it was in 1974. He attributed this growing difficulty to the increase in the voting age population, the increasing cost of advertising and the incredible fragmentation of television markets brought about by cable television.

The Chairman's remarks were followed by Senator Chris Dodd (D-CT), the Committee's Ranking Member, complaining about the "money chase"the time and effort expended by candidates to raise the funds required for an effective campaign, which take away from the time they can spend legislating. Dodd also expressed concern about the growing cost of federal elections and stated his hesitancy about any changes to federal election laws that were not directed at reducing the amount of money spent to run for office.

After Dodd finished, Senator Rick Santorum (R-PA) politely highlighted the inconsistency between Senator Dodd's desire to end the "money chase" and his hesitancy about raising the contribution limits. Santorum explained:

"I have a very good basis for comparison, looking at [my state's] Governor and how he raises money versus how I raise money. Pennsylvania doesn't have 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 . . . ." Campaign Contribution Limits, S. HRG. COMM. ON RULES & ADMIN. 106-19, at 4 (March 24, 1999).

The first witness to testify was Senator Coates. Coates urged the Committee to raise the federal limits on contributions to candidates so that legislators would not have to use such a "substantial portion of [their] time" amassing the resources needed for an effective campaign. Id. at 8. He vehemently rejected the idea that raising contribution limits as high as $10,000 would foster corruption among elected representatives. Afterall, as Coates observed, even a $10,000 contribution would be so small a part of the typical $4 million to $6 million Senate campaign that it is "ridiculous . . . to claim it has a corrupting influence" and that members would risk prosecution and other sanctions for such a nominal percentage of their entire campaign fund. Ibid. In conclusion, Coates opined:

"I think elected representatives spend too much time raising money for political campaigns, and the remedy for that problem . . . 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." Id. at 9.

Building on Senator Coates remarks, the next witness, Doctor Demaris Miller of McClean, Virginia testified:

"Despite the popular belief that campaign financing limits make elections more fair and democratic, the opposite is true. Contribution limits increase the advantages of incumbents at the expense of challengers." Id. at 28.

Miller recounted how the low contribution limits severely hindered her ability to get her message out during her campaign for Virginia's 8th Congressional District against Democratic incumbent Jim Moran. Like all incumbents, Moran had a free website, free phones, free Internet access and the ability to send mail to constituents for free via the Congressional franking privilege. As an incumbent, Miller's opponent was also able to do public appearances and get media exposure at no cost. As a challenger Miller had to pay for all of these things. And because of the contribution limits, as the campaign progressed, her ability to develop name recognition crested at an unacceptably low level because she did not have the funds to operate the kind of ad campaign that was necessary. People who already knew Miller and supported her were unable to help her because they had already given their $1,000. Miller recalled how she he had to repeatedly turn down additional contributions offered by her supporters.

The greatest burden on Miller's campaign finances was media advertising. She explained that in 1974, when the contribution limits were enacted, her district was covered by three broadcast stations. Today there are four networks, three cable systems and satellite systems within her district. Miller observed:

"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."Id. at 29.

Doctor Miller's observations regarding the high cost and other problems associated with television advertising were confirmed by the testimony of Karen Sheriden of SMY Media, Inc., which does media buying for both commercial and political clients. Sheriden explained that there has been a "70 percent growth in commercial stations in this country between 1975 and today." Id. at 46. This increased choice for viewers has resulted in "a decline in viewer loyalty to stations" including the major networks (ABC, NBC and CBS), which garnered 91% of prime-time viewers in 1975 and today get only 50% of that market. Sheridan stated that this fragmentation "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 [advertising] have increased 300% from 1975 to today." Id. at 47.

Sheridan went on to explain the absolute necessity of TV advertising for political candidates. She noted that television reaches "90% of viewing adults each week." She also proffered studies indicating that "as of March 1997, 69% of all adults in this country utilize television as the primary place to get information on what is happening . . . . Forty Seven percent get this information only from TV and 53% of all adults say that TV is the most credible source for information." Id. at 47.

Moreover, while the data demonstrates that television is the best medium a candidate can use to develop name recognition quickly with a large percentage of the voting age population, candidates must pay out the nose for this advertising. This is because candidates are required to do the majority of their advertising in the 60 days before a general election in November. Sheridan testified that this means candidates buy during the fourth quarter, which is when new season programs debut. Thus, the fourth quarter is the most expensive time to buy ads. In fact, ads run during the fourth quarter can cost as much as 46% more than ads run during other times of the year.

In addition to having to buy expensive time during the fourth quarter, candidates must also compete for prime advertising time with other federal and state candidates seeking election that November. And much of their money is wasted. Sheridan explained that Dr. Miller's 8th District, for example, is covered by the Washington, D.C. media market which also covers another 16 congressional districts and four states in addition to Virginia. Sheridan's data indicated that only 11% of the viewers watching ads purchased in this media market reside in Virginia's 8th District. The other 89% could not vote for Miller. All of these factors resulted in a 300% increase in the cost of reaching by television the same number of voters within a given district that a candidate could reach through TV ads in 1975.

The final witness, Professor John Lott of the University of Chicago, told the committee about the research he had done on the connection between contribution limits, corruption and the cost of campaigns. Lott explained that contribution limits, like price controls, did not reduce competition for campaign money, but merely altered the form that competition took. He recounted how gasoline price controls in the 1970's caused consumers to pay less at the pump, but forced them to spend more time waiting in line. Likewise, candidates raising funds under the 1974 limits must spend more time finding more donors to fill their campaign accounts. And Lott testified that just as competition for rent controlled apartments is carried out through illicit "key money," political competition encourages citizens with an interest in an election that they value at more than $1,000 to evade limits through illicit "straw donors." Lott's research revealed that contribution limits had absolutely no effect on the cost of campaigns, but merely altered "the composition of those expenditures." Id. at 60.

According to Professor Lott's research the increasing cost of campaigns is attributable "to one factor, and that is the increasing size of government. As more is at stake, people are willing to spend more" to elect candidates that agree with their views of how government should operate. Id. In view of this, one wonders why members of Congress, such as Senator Dodd, interested in decreasing the cost of federal elections do not seek to reduce the size of the federal government. This seems a much better approach than infringing on the free speech rights of citizens who naturally want to express their views on what an increasingly ubiquitous federal bureaucracy is doing to them.

No rationale observer of the Senate's hearing on campaign contribution limits could have left not thinking that it would be good policy to raise the contribution limits established in 1974 (unless they were only interested in maintaining the advantages this system creates for incumbents). The hearing also made clear that the existing limits really are beginning to impact the ability of challengers who are not already well known or very rich to run effective campaigns against incumbents. If similarly compelling evidence is presented to the Supreme Court this fall when it hears Nixon v. Shrink Missouri Government PAC, perhaps the Court will realize that the 1974 contribution limits approved in Buckley v. Valeo are beginning to "undermine to . . .[a] material degree the potential for robust and effective discussion of candidates and campaign issues." 424 U.S. 1, 29 (1976).

* Andrew Siff is Vice Chairman of Publications for the Free Speech & Election Law Practice Group of the Federalist Society.