Don't Ask, Don't Tell Campaign-Finance Reform

How the dismal science applies to your life.
May 25 2001 3:00 AM

Don't Ask, Don't Tell Campaign-Finance Reform

Would it make politics cleaner? I dunno.

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What do you get when you cross a law professor with an economist? An idea that's both expensive and impractical? Maybe, or maybe you get just the opposite—an idea that's both practical and efficient. Or maybe you just can't be sure.

The law professor is Ian Ayres of Yale Law School, the economist is Stanford's Jeremy Bulow, and their idea is to reform campaign finance by turning conventional wisdom on its head. While traditional reformers demand full public disclosure of campaign contributions, Ayres and Bulow want to make all contributions anonymous. If you want to give $100,000 to George Bush, go right ahead. You just can't let him know you did it. And therefore, your cash can't buy his favors.

Here, in brief outline, is how the plan would work: A trusted financial institution—say Vanguard—sets up accounts in the names of all recognized candidates. If you want to contribute to Bush, you write a check to Vanguard with instructions to deposit it in the Bush account. Once a month, Bush can see his total—and make withdrawals to fund campaign expenses—but he never sees the deposit slips. If you want to prove you're a big giver by waving your canceled check in Bush's face, there's nothing stopping you—but all he'll see is a check to Vanguard, which for all he knows went directly into your personal account.

For an extra layer of anonymity, Ayres and Bulow propose a 10-day cooling-off period to ask for your contribution back. That way, your canceled check proves only that you deposited money, not that you actually left it there.

Ayres and Bulow have written a 55-page paper to argue that their plan is workable, constitutional, and politically feasible. On the other hand, the Cato Institute's Tom Palmer predicts with confidence that "politicians will find more ways around this restriction than two professors can think of." But arguing about whether the plan will work seems premature until we address a more fundamental question: Is this plan a good idea?

My answer to that one is: I dunno. I dunno because I can only guess at how contributors and politicians would respond to such a radical change in the rules of the game.

My first guess follows from the observation that there are two broad classes of political contributors: influence buyers and ideologues (of both the broad-spectrum and single-issue varieties). The Ayres-Bulow plan is designed to drive out the former, which leaves the field to the latter. To appeal to the ideologues, candidates will become more ideological. Is that good or bad? I dunno.

Next, I observe that candidates who know where their money is coming from have a big leg up on candidates who don't know where their money is coming from, because they can reward their supporters. Under the Ayres-Bulow plan, the only candidates who know where their money is coming from would be single-issue candidates. (If the only thing you ever talk about is banning abortion, you can be pretty sure that most of your contributions come from right-to-lifers.) So I suspect we'd see a lot more single-issue candidacies. Is that good or bad? I dunno.

In fact, I expect Ayres and Bulow's idea could spawn a whole new political phenomenon: the serial single-issue candidate, who spends January talking only about abortion, February talking only about gun control, and March talking only about inheritance taxes. Such a politician would be able to figure out where the money's coming from by looking at the totals on his monthly Vanguard statements. If the take is highest in February, our politician can safely conclude that the gun-control folks are his most loyal supporters and reward them by moving gun control to the top of his legislative agenda. The implicit threat to donors would be: Give lavishly in the appropriate month, or after I'm elected your issue will be forgotten.

Here's another thought: If the Ayres-Bulow plan makes it harder for politicians to raise cash, then it makes it easier for third, fourth, and fifth parties to mount credible campaigns. That means more elections with lots of candidates. Is that a good thing? I dunno. Or maybe we'd see the opposite effect: By making it harder for challengers to raise funds, we'd augment the already substantial advantages of incumbency, leaving more elections essentially uncontested. That seems like a bad thing, but maybe not: It would at least reduce the cost of campaigning. I dunno.

I'm pretty sure the Ayres-Bulow plan would trigger a big increase in expenditures on lobbying. Here's why: If a bill threatens to cost, say, the tobacco industry $100 billion, the tobacco industry will spend up to $100 billion to defeat that bill. And if they can't spend it on supporting sympathetic candidates, they'll spend it another way. So as campaign contributions go down, lobbying expenditures go up. Is one form of influence-buying more destructive than the other? I dunno.

What's lacking here is what economists call a model—a logically tight story about a fictional world that is simple enough to understand in every detail but still complicated enough to mirror important truths about the world we actually live in. Given a model, we could trace out all the effects of the Ayres-Bulow plan in the fictional world and use those lessons as a starting point for an enlightened discussion. I tried writing down a good model for this problem, but it turned out to be really hard. I think it would make a great project for a Ph.D thesis. But until someone actually does the hard work of thinking this thing through, I have no idea what to make of it.

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