Editor’s Note: Mark Schmitt, director of the program on political reform at New America, has worked in the U.S. Senate and was editor of The American Prospect. This is the seventh in a series, “Big Ideas for a New America,” in which the think tank New America spotlights experts’ solutions to the nation’s greatest challenges. The opinions expressed in this commentary are solely those of the author.
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Study shows the top 0.01% of political donors -- just 24,000 people -- accounted for more than 40% of campaign contributions
Mark Schmitt: Instead of trying to limit money, and failing -- let's empower everyone to write a check to carry weight in political process
If you want to have influence in the American political process, Michelle Obama in 2014 advised an audience, there’s only one thing to do: “Write a big, fat check…Write the biggest, fattest check that you can possibly write.”
The only thing surprising about the first lady’s statement is that a leading political figure said out loud something we all know. What she didn’t say is that her advice doesn’t work for everyone, to put it mildly.
For the vast majority of us, the “biggest, fattest check” we can write to a political campaign is probably in the low two digits, and many people can’t even spare a few dollars. And that just isn’t enough to influence the political process, to help your favorite candidate run a competitive campaign, or to get an issue you care about onto the agenda.
Academic research confirms this intuition. A 2013 study found that the top 0.01% of political donors – just 24,000 people – accounted for more than 40% of campaign contributions, up from about 10% in the 1980s. It is perhaps not a coincidence that the wealthiest 0.01% tripled their share of national income in the same time period.
Other research, by political scientists Martin Gilens and Andrew Bartels, has shown that the policy preferences of the very wealthy consistently prevail over the preferences of middle-class and poor voters. Because of those “big, fat checks,” economic inequality crosses over into the political sphere, where the wealthy gain advantages that lock in their gains, threatening the vibrancy and growth of our economy.
The traditional approach to reducing the influence of economic inequality on democracy has been to limit those fat checks, by capping individual contributions, the total amount one person can give to campaigns, or outside spending intended to influence elections. It is those limits – enacted into law after Watergate, and after the “soft money” scandals of the late 1990s – that have been weakened by recent Supreme Court decisions such as Citizens United and McCutcheon.
But even without judicial intervention, the big checks and the people who can write them have always found ways to influence elections and policy. In a time of staggering inequality, the political influence of the very wealthy cannot easily be contained.
What if we consider an alternative approach? Instead of trying to limit money, and failing – let’s empower everyone. What if everyone could write a check, not necessarily a fat one, but enough that, together with others, it could make it possible for people to run who don’t have access to the very wealthy, or ensure that the concerns and preferences of ordinary voters carry at least some weight in the process?
This approach is the opposite of limits – it aims to open up the system, and to encourage broader participation by citizens, not only as voters, but as volunteers and even donors. If politicians have a broad base of support, they will be far less dependent on the 0.01%, even though the big spenders will be out there.
Politicians will have as much reason to spend time with ordinary voters – who might become donors – as with the very wealthy. And it will be easier for a candidate who doesn’t start with her own million-dollar bank account, or a cadre of rich friends or business allies to reach the point where she can be heard and potentially competitive.
There are several ways to use modest amounts of public funds to make this vision a reality, and all of them have been tested. One that seems to work well, in various states and cities, provides voluntary full public financing to candidates who show a broad base of support through small donations – in other words, several thousand small checks turn into one big one, and candidates can stop; others, such as New York City, successfully encourage candidates to reach out to small donors by supplementing contributions of $175 or less with public funds.
But many people can’t even consider donating $50 or $175 in the hope that their views will be reflected in government. (For someone who earns the minimum wage, $175 is more than three days’ pay.)
To make sure that everyone can have a voice in the dialogue of democracy, we should go further by establishing a system that gives everyone a small stake in the political marketplace. Legal scholars Bruce Ackerman and Lawrence Lessig have proposed to give everyone a voucher – “Patriot Dollars” in Ackerman’s term – of $50 to give to any candidate or a political party.
“Patriot Dollars” or a similar system of vouchers would require building a new system to distribute and redeem the vouchers, and avoid fraud, but we could achieve much the same effect with a tax credit: Allow every adult to reduce the taxes they owe, or increase their refund, by the amount they contributed to campaigns, parties, or even small political organizations, up to $50.
The tax credit should be refundable, like the Earned Income Credit that encourages work, in order to the extend the benefits of political participation to everyone, including people who don’t earn enough to pay federal income tax. Tax credits have traditionally had bipartisan support, including from conservatives who oppose most efforts to limit campaign money, and legislation to create a tax credit for political contributions was introduced by now-retired Republican Rep. Thomas Petri of Wisconsin.
While the federal tax code included a credit for political giving in the 1970s and 1980s, the idea seems to have been forgotten, except in a few states. The best model for the design of a tax credit is Minnesota’s Political Contribution Refund, which allows donors to collect their $50 immediately, simply by sending a receipt to the state revenue office.
The result is the exact reverse of the top 0.01% dominance that we see in federal elections: donations of $100 or less account for 45% of political funding in Minnesota, compared to less than 10% in 20 states, according to the Campaign Finance Institute.
Tax credits aren’t the only way to moderate the influence of the very wealthiest on democracy, and they won’t solve all the problems. With tax credits alone, a little-known candidate might have trouble raising enough money in very small donations to reach a competitive position.
But combining the tax credit with a system of matching funds, such as New York City’s, or full public financing, would make those first dollars go further. And we’ll still need limits on contributions to prevent the corruption that’s likely when a politician owes his power to a few large donors.
Call it the opportunity agenda for politics – in which everyone has the opportunity to exercise the same kind of influence Michelle Obama was talking about. For Washington policymakers, the next steps include:
– Study state tax credit systems, like Minnesota’s and Oregon’s, and figure out what works and why.
– Combine tax credits with public financing, on the model of Rep. John Sarbanes’ bipartisan Government By the People Act.
– Encourage private-sector technology innovations to help candidates, voters and organizations use the tax credit and make small donations easier.
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