Opinion: Daily Journal

Why Politics Costs So Little

American politicians, parties, and interest groups spend relatively little on their electoral campaigns. The side that spends the most money doesn’t always win. And if we really want to improve our political system, we’ll know we’re succeeding if total spending on campaigns goes way up.

If these propositions strike you as strange, I’m not surprised. They clash with years of relentless media spin and political agitation by those who want to socialize the financing of political campaigns (much as they want to further socialize the financing of health care and education).

The Center for Responsive Politics, which is far from a conservative outfit, does excellent work reporting on campaign finance. Since 1998, it has produced estimates of total spending on federal campaigns by candidates, political parties, and independent expenditures by trade associations, labor unions, and other nonprofits.

These estimates cover seven federal campaign cycles: The presidential elections of 2000, 2004, and 2008 and the midterm elections of 1998, 2002, 2006, and 2010. Over this period, spending on federal politics has certainly increased. In 2008, when Barack Obama won his historic presidential bid and Democrats improved their congressional majorities, total spending was $5.3 billion, up more than 70 percent from the $3 billion spent in 2000. As for midterm elections, the Republican sweep of 2010 was accompanied by $3.6 billion in total campaign spending, vs. only $1.6 billion spent during the 1998 congressional elections, which went well for the Democrats.

But just like any other financial trend, we are best served by looking not just at raw data but also at the numbers in context. If population, prices, and overall economic activity are going up, you should expect spending to go up, be it on political campaigns or natural fertilizers (but I repeat myself). When I compared the growth in political spending to the growth of the national economy, the trend line wasn’t as steep. As a share of gross domestic product, political spending in presidential years went up by 19 percent from 2000 to 2008, for example.

The share is tiny, by the way. In 2008, total spending on federal campaigns made up .037 percent of the country’s GDP. It was about .025 percent of GDP in 2010. Another way to think about it is that of all the money spent every year marketing all sorts of goods, services, and ideas to the American public, the amount spent marketing political candidates and ideas is a small fraction. If we look at formal advertising expenditures alone, American firms spent about $131 billion in 2010 on print, broadcast, billboard, and Internet ads. Automakers spent $13 billion advertising their cars and trucks. Food and restaurant companies spent $12 billion advertising their wares. Remember that these are just the ad costs. Companies also spent billions of dollars on other forms of marketing. By comparison, the $3.6 billion spent on federal campaigns in 2010 is hardly a shocking number, particularly when you consider the fact that politics is a means of bestowing the coercive power of government on individuals free to use it for good or ill.

Here’s another fact to consider. The political “side” that spends the most money is not guaranteed to win. Indeed, over the past seven election cycles, the bigger-spending side lost the national popular vote five times and won only two times – in 2008, when Democratic candidates or causes accounted for 57 percent of total spending, and in 2002, when Republican candidates or causes accounted for 54 percent of total spending and did well in the congressional midterms.

George Bush and the GOP beat John Kerry and the Democrats in 2004 despite being outspent. The Democratic sweep in 2006 and the Republican sweep in 2010 both happened even though the victors were outspent. (The 2000 election is a special case: The Republicans spent more, but Democrat Al Gore actually outpolled Bush in the popular vote. He lost the Electoral College because of his narrow loss in Florida.)

If you look at individual races, it is certainly true that the candidate who raises the most (or benefits the most from independent expenditures) tends to be the winner. But that doesn’t mean the money advantage inherently causes the outcome. In a distressing number of cases, gerrymandering virtually assures that either the Democratic or Republican nominee in a particular district will win on November. In those cases, donors rarely give to the doomed opponents. Money flows to the victors, but has not caused their victories.

I think there are too many safe seats. I have long favored a neutral, rules-based redistricting process that would significantly increase the number of swing seats for Congress or the legislature. If that happened, of course, the number of candidates raising big money to win big races would go up, as would total spending on politics.

Which would be fine with me. The reason politics costs so little, comparatively, is that it offers too few competitive races. Let’s make some more.

Hood is president of the John Locke Foundation and author of Our Best Foot Forward: An Investment Plan for North Carolina’s Economic Recovery.