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Unlimited party fundraising and spending gives you less polarized legislatures? Discuss.

- July 8, 2015

Lee Drutman’s recent Monkey Cage piece challenges a finding from our forthcoming book, Campaign Finance and Political Polarization:When Purists Prevail. That is, that states that allow parties to raise and spend unlimited amounts of money tend to have less polarized legislatures. This finding has important implications for how we regulate money in politics. Thus, it is not surprising that the finding is attracting challenges from reform circles.
In this post, we will briefly identify problems with Drutman’s analysis. We will then describe in greater detail why we think we are on solid empirical footing in concluding that removing campaign finance limits on parties may help to reduce how polarized our politics currently appear.
In his Monkey Cage post, Drutman writes, “Looked at another way, the same data suggest the very opposite result: that states that limit contributions to parties are actually less polarized than states without limits.” This claim, and the conclusions Drutman draws, are problematic for several reasons.
The first key inconsistency with Drutman’s challenge is that he compares states based on whether parties can raise unlimited amounts from contributors. However, in our analysis, we compare states based on whether parties can both raise and give unlimited amounts of money. Thus, these are not the “same data,” as Drutman claims.
Second, Drutman notes that he uses a list of states with and without contribution limits on parties, drawn from this link. But that link takes you to a list of campaign finance laws that says it was updated on Feb. 5, 2008.
Here’s the issue: states change their laws. In fact, possibly the most painstaking work we did on this book was compiling and verifying what laws states had on the books for elections running from the mid-1990s through 2012. Ultimately, 11 states changed their laws on party limits during the period of our study (1993-2012).
Although tracking these changes was difficult, it was actually useful empirically. What we present in the book is a panel time series analysis where we examine the effects of party limits, while also controlling for other laws (limits on individuals and groups), and also any other differences across chambers (using chamber fixed effects). Drutman implies that we do not examine differences in medians by chamber, but that is precisely what we do in this analysis.
Because we take an over-time approach and because 11 states changed their laws on party limits during this time period, we are able to gain leverage on understanding whether limits on parties matter. In constructing this analysis, we used several different estimation strategies. But the finding that party limits matter is robust to different approaches. (Note that Drutman conducts a simple bivariate comparison, which gives him much less leverage on understanding whether and how these laws matter).
Using the estimates from our model, we calculate the predicted level of polarization over time in a state that limited party fundraising (orange) and spending to on where those limits were removed (green). These predictions are shown in the figure below. The bottom line: removing restrictions on parties helps to stem the tide of polarization over time.
DRUTMAN predicted_professional_polarization
Why would enabling parties to raise and spend more money help to reduce polarization? Well, counter to Drutman’s claim that the parties “are not independent actors trying to move to the middle,” we find clear evidence that parties do tend to privilege moderate incumbents over those at the extremes. For example, the figure below uses contribution data and ideology data from Shor and McCarty to show how parties distribute their funds based on candidate ideology, comparing them to other contributors like individuals and issue groups. This pattern is even more pronounced when parties can give unlimited amounts to candidates.
DRUTMAN fig_3_3 copy
We agree with Drutman that partisan politics is characterized by policy struggles among organized groups. It is precisely this dynamic – the party “pragmatists” pushing toward the median voter versus the “purist” groups in the coalition pushing for policies – that helps drive the direction of partisan politics. We conclude that giving pragmatists in party committees greater financial clout through campaign finance laws would likely dampen—but not solve—the shrillness and power of the purists in the party who give money to candidates or sponsor “dark money” ads.
Drutman, on the other hand, urges us to turn to small donors as a solution to the problems of corruption and polarization. We are no lovers of big donors, but the endless romanticizing of small donors as being emblematic of American voters has no empirical grounding. See the figure below, which shows the ideological distribution of small versus large donors according to their policy preferences expressed in the 2012 Cooperative Congressional Election Study. The two groups are nearly identical. Putting more emphasis on ideological small donors may even make our politics worse as politicians streamline their messages to cater to this minority of individuals with more extreme views.
DRUTMAN smallvslarge2012
Despite Drutman’s vastly overstated claim that we believe that “polarization can be reduced by a single, institutional change,” we think there is no magic bullet for fixing the campaign finance system. But the current approach of trying to keep money out of politics with unrealistically low contribution limits is distorting politics in fundamental ways. Even if financially well-off party committees fail to reduce polarization in Congress, having money flow through them would make the system more transparent and accountable compared to the surreal campaign environment now dominated by Super PACs and other shadow groups.
The debate over how to improve our political system is important, which is why we produced a detailed theoretical and empirical analysis in our forthcoming book. But we don’t presume to know for sure that we are right. Thus, we will be posting all the data necessary to replicate (and challenge) our results upon publication of our book this fall, and we look forward to seeing what others find when they dig into the data.
Ray La Raja is Associate Professor of Political Science at the University of Massachusetts/Amherst. Brian Schaffner is Professor of Political Science at the University of Massachusetts/Amherst.