Campaign finance reform not enough: More public research funding also needed

Even when one takes the most optimistic view of interest groups and lobbying, their participation in the policy making process can lead to worse policy. This doesn’t mean that campaign finance reform is not worthwhile. Just that it may not go far enough to eliminate the biases in favor of interest groups. We shouldn’t fool ourselves. Although removing private money from elections will help, it isn’t enough to fully eliminate the disproportionate influence of rich and powerful special interests on policy making. 

By Christopher Cotton, Queen’s University

U.S. Presidential candidate Bernie Sanders has made campaign finance reform a central focus of his campaign. During the New Hampshire Democratic Party debate, he said:

The reality is that we have a corrupt campaign finance system which separates the American people’s needs and desires from what Congress is doing… [Y]ou’re not going to accomplish what has to be done for working families and the middle class unless there is campaign finance reform.

He is not the only candidate who has taken a position in favor of reform. Notably, Larry Lessig, who dropped out of the campaign in November, ran on a platform of reforming the way campaigns are funded. Even Donald Trump has taken a stance against PACs and super-PACs, saying “I think PACs are very bad. I think they’re very dangerous.” Hillary Clinton now says that she too favors reform.

Political candidates typically rely on private contributions to finance their campaigns. This means that they spend too much time fundraising instead of policy making. It also promotes an image of corruption, with politicians implementing policies favorable to major donors in the implicit or explicit exchange for their financial support. Making matters even worse was the 2010 Supreme Court ruling in Citizens United. It essentially allowed unlimited private (e.g. corporate, union) spending in support of political campaigns through Super PACs. It basically provided a way for deep pocketed donors to get around existing campaign contribution limits.

It is widely believed that eliminating private money from politics is necessary to make sure that politicians work on behalf of their constituents rather than on behalf of monied special interests. Campaign finance reformers, including many of the presidential candidates, speak out against Citizens United. Many of them support a constitutional amendment to overturns the ruling. Others, such as Sanders and Lessig, call for a system of public financing to further reduce the role of private money in political campaigns. Such reforms would go a long way towards eliminating private money from politics.

We shouldn’t fool ourselves. Although removing private money from elections will help, it isn’t enough to fully eliminate the disproportionate influence of rich and powerful special interests on policy making. More general reforms are needed in order to close the revolving door between government and the private sector, and to prevent inflated payments to politicians or their family members for consulting or speaking fees.

Ideal role of special interests in politics

In an ideal world, policy makers wouldn’t be influenced at all by the effect that their policy choices will have on their contributions of wealthy donors, or their ability to line up lucrative speaking gigs or jobs after leaving office. They would care only about doing what they think is best for their constituents.

In an ideal world, interest groups could still play a role in the policy making process. But their role would be limited to more favorable means of influence. Interest groups could still advise policymakers, and produce information about the impact of legislation. They could still advance the public debate. They could still help politicians better understand the preferences of their constituents. But, they couldn’t pay for policy.

Politicians make complicated policy decisions while facing severe time and resource constraints. Without help, it is impossible for a politician to fully understand each issue on which she must vote. Consider what then U.S. House Judiciary Committee ChairmanJohn Conyers said about health care reform: “What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you read the bill?” This is the Chairman of the House Judiciary Committee saying that he didn’t have enough lawyers to understand a major piece of legislation.

Special interests and their lobbyists can help politicians learn about issues on which politicians may otherwise remain uninformed given time and resource constraints. They commission studies, hire experts, or otherwise provide information to policy makers. Such information provision and advocacy by interest groups are generally viewed as beneficial for policy outcomes. The thought is that if a politician can always ignore information provided by interest groups, then it shouldn’t ever lead to worse policy.

This favorable view of informational lobbying led John F. Kennedy to argue:

Lobbyists are in many cases expert technicians capable of examining complex and difficult subjects in clear, understandable fashion… The lobbyists who speak for the various economic, commercial and other functional interests of the country serve a useful purpose and have assumed an important role in the legislative process.

Even the good type of lobbying can be bad

New research shows how even this seemingly-good type of influence can bias policy in favor of special interest groups. In aresearch paper to be published at the Journal of Law, Economics and Organization, coauthor Arnaud Dellis and I develop a game theoretic model of lobbying and policymaking in a hypothetical world in which money has been successfully eliminated from politics.

The model takes a very optimistic view of the role that interest groups play in politics. In our model, interest groups only produce information to help a politician better understand the costs and benefits of alternative policies. That’s it. They can’t lie or hide unfavorable evidence. There are no political contributions or elections or future career concerns. The traditional channels through which interest groups distort policy have been eliminated.

This may be seen as a best case scenario for the role interest groups play in policymaking. But even with the deck stacked in favor of interest groups being beneficial, we show how their influence can still lead to worse policy.

The problem is not that information provision is itself bad. Interest groups produce helpful evidence and lobby politicians on their issues. As expected, this enables politicians make better decisions on issues with active lobbies.

Rather, the problem comes from a shift in policymaker attention away from more important issues and to issues with active lobbies.  It leads to a shift in the policy making agenda to more wealthy or better organized special interests, which can on average hurt voters.

When there is no lobbying, a politician directs her limited resources towards learning about and addressing the most promising issues. These may be the most important issues from the perspective of her constituents, or issues on which reform is most likely beneficial. Because of this, interest groups involved with less promising issues have greater incentive to lobby, as they try to shift attention away from higher priority issues and towards their own issues which may otherwise be ignored.

Informational lobbying tends to move politician focus away from the most pressing interests of constituents and towards the interests of the organized special interests.

Imagine a simple setting where a politician must decide whether to implement educational reform, or to reform bankruptcy laws. The politician knows that education is the most important issue for her constituents, and she prioritizes learning about and implementing education when there is no lobbying.

The interest groups recognize this. Those in support of bankruptcy reform anticipate that their issue will be sidelined in favor of education reform if they don’t lobby. And, so they organize. They commission research and produce evidence. They actively lobby for their issue.

Active lobbying in support of bankruptcy reform could have one of two effects on education lobbying.

One possibility is that it encourages the special interest groups involved with education to themselves produce information and lobby, in order to offset the bankruptcy lobbying and maintain the priority that education has on the politician’s agenda. This is known as counteractive lobbying in political science. If it happens, then the politician will learn about both issues before choosing on which to act. In this case, informational lobbying never leads to worse policy outcomes.

A second possibility is that the special interests involved with the education reform choose not to mobilize, and instead sit back and wait, hoping that the bankruptcy lobby to fail to convince the politician to shift focus away from education. This is the preferred strategy if the costs of mobilizing are large or there is a small enough chance that the bankruptcy lobby succeeds in shifting the agend.

In this case, informational lobbying can lead to worse policy, on average, than if there was no lobbying. When the bankruptcy lobby succeeds in shifting the agenda, the politician ends up acting on the less important issue without even learning about the more important issue. She no longer prioritizes the more promising education reform, and as a result, her constituents may be worse off.

This insight stands in contrast to the popular view that information provision by interest groups and their lobbyists typically improves policymaking.

We show that in order to get a complete picture of the effects of interest group information provision, one must account for the incentives that different interests have to lobby, and how lobbying can change the policy making agenda. By incorporating these features, we gain insights that previous models have not been rich enough to capture.

Implications for public research funding

Even when one takes the most optimistic view of interest groups and lobbying, their participation in the policy making process can lead to worse policy. This doesn’t mean that campaign finance reform is not worthwhile. Just that it may not go far enough to eliminate the biases in favor of interest groups.

It also doesn’t mean that we should ban lobbying. In many cases information provision by interest groups will lead to better informed policy making. What it does do is provide insight into when informational lobbying is most likely harmful.

Our analysis shows that special interests will be most likely to distort the agenda when politicians find it costly to learn about issues without their help. This means giving politicians better access to information from other sources will improve policy outcomes. It also makes it more likely that informational lobbying, when it does occur, improves rather than harms policy making.

This is an argument against recent trends to reduce congressional staff, or limit the capacity of internal research offices such as the Congressional Research Services or the Government Accountability Office. It is also a reason to support federal funding of independent research through the National Institute of Health or the National Science Foundation.

Improving politician ability to learn about issues without relying on interest groups and lobbyists will complement current campaign finance reform efforts and will lead to better policy.

This article originally appeared on the author’s personal blog.