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Too Much Money in Campaigns?

- December 3, 2007

The NY Times ran an editorial on Sunday lamenting the amount of money in political campaigns. They note that the price for presidential and congressional elections is “rocketing toward $5 billion, shocking even political professionals.” They go onto say that the two presidential nominees are expected to break the $1 billion mark in combined spending – a 50% increase over the “outrageously” high cost of the 2004 campaign.

Ansolabehere, de Figueiredo, and Snyder flip the question on its head and ask, Why is There So Little Money in Politics? Here are some facts from their paper. Candidate and party committees raised nearly $3 billion during the 1999-2000 election cycle. The majority of the money came from individuals in small amounts. They estimate that individuals contributed $2.4 billion, public treasury $235 million and corporations, unions and other associations $380 million. The average contribution from an individual was $115.

Approximately 4,500 PACs are registered with the FEC. In 2000, 3000 PACs gave to federal candidates or parties or engaged in some form of independent expenditure; the remaining 1500 were inactive. The number of active PACs declined by 12% after 1988. Only 60 percent of the Fortune 500 companies even havdPACs. Only 4% of all PAC contributions to House and Senate candidates were at or near the $10,000 limit. The average PAC contribution was $1,700.

Candidates, parties and organizations may have raised and spent $3 billion; however, total federal government spending in 2000 equaled $2 trillion (yes, with a “t”); consumption and gross investment was $590 billion; and the cost of compliance with regulations probably ran into the hundreds of billions of dollars.

As Ansolabehere, de Figueiredo, and Snyder note, “If extraordinary rates of return can be earned through political investments, then we would expect firms, individuals, and associations to flock to campaign finance. But most firms and people do not give.” So is there too little or too much money in campaigns?