The Simplest Explanation for Why Presidential Campaigns Now Cost More

Over at Mother Jones Dave Gilson has a couple of great charts on presidential campaign spending:

Kevin Drum looked at the first chart and said he would have thought “campaign costs had been rising inexorably for decades. But apparently not. They’ve only been rising inexorably for the past eight years.” He probably hadn’t seen the second chart; if he had, he might have made the same good point made by Jonathan Bernstein, that the post-Watergate campaigns were spending less compared to actual costs and that 2004 and 2008 were cases of “catching up.” Bernstein also makes another good point, that you have to look not only at inflation-adjusted dollars, but population-growth influenced cost-per-voter.

But in none of these three post does anyone offer an explanation for why spending jumped so much in 2004 and again in 2008. There are certainly many reasons why spending went up, but the obvious explanation, which probably is by far the greatest factor, is that due to the passage of the Bipartisan Campaign Reform Act, more commonly known as McCain-Feingold, campaigns suddenly had more money to spend.

The Federal Election Campaign Act of 1974 created the Federal Election Commission. It also set limits on the maximum donation to a candidate for federal office: $1,000 for a primary, and another $1,000 for a general election. $1,000 was a generous amount of money in 1974, but with the tremendous inflation of the late 1970’s the value of that $1,000 diminished rapidly, and then consistently from election to election.

In 2000, the limit was still $1,000 primary/$1,000 general. One of the provisions of the BCRA was to increase the maximum contribution and index future contribution limits to inflation (something Congress has refused to do for the minimum wage, but that’s another story).  In 2004, the limits jumped to $2,000/$2,000. And whaddya know, that’s the first big jump in the chart of presidential campaign spending. By 2008, the limits had gone up to $2,300/$2,300, and we see a further jump.

It’s unclear if Mother Jones is including primary spending in their calculations; if so, competitive primaries on both sides, with a tightly contested Democratic primary that went to June also boosted the totals for 2008. Online giving has also increased the contributions, especially of small donations. Whereas up through about 2000 it was much harder to identify and solicit prospective donors by direct mail and phone, now most of the targeting, solicitations and processing of contributions have shifted online.

Nevertheless, it’s hard to not conclude that increasing the maximum donations dramatically increased, probably more than any other factor, the overall contributions to presidential candidates. It makes bundling a more crucial component to a campaign. In 2000, one rich person getting max primary and general election checks from ten of her similarly rich friends would have raised only $20,000. In 2008, she could have gone to the same ten friends and raised $46,000. Even a campaign like Obama’s, which took in unprecedented small contributions, both in number and total raised, still takes in a greater share from large donors. Increasing what you can get from that comparatively small universe has a huge effect on a campaign’s total revenues.

I agree with Bernstein and Drum that more campaign money is, in the case of the candidates and their campaigns, a good thing. Citizens United has created a massive problem of transparency and accountability, by taking the money out of the hands of the official party committees and allowing free agents to put it to (often pernicious) use. But it’s expensive to communicate a campaign message to 315 million Americans, and until and unless communications are heavily subsidized or provided at reduced or no cost, cutting the amount of money available to candidates and the official party committees results in less political communication. If not for paid communications, many Americans would learn little that’s relevant to them in making a decision between candidates for federal offices. Let’s not pursue the futile goal of taking money out of politics, but look at the charts above to understand that we’re just now catching up after decades of decreasing funds for presidential campaigning.

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4 Responses to The Simplest Explanation for Why Presidential Campaigns Now Cost More

  1. Kevin Drum says:

    Actually, there’s something wrong with the second chart. You can’t compare real dollars (gold and campaigns) to the CPI. In nominal dollars, campaign costs increased at about the same rate as the CPI from 1964 through 2000, and that’s the right comparison.

    As JB says, it makes sense to adjust this for population. But the “post-Watergate” era is 1972-2000, and population only increased about 50% during that span, as did campaign costs. So there really is something new going on after 2004. It’s not just catchup. I agree that BCRA is almost certainly one of the culprits here.

    • Dana Houle says:

      Oy. I assumed the dollars on the second chart were nominal, so you’re right that the second chart is flawed.

      Maybe what’s happening is the BCRA increased the maximum amount at the same time another significant factor appeared, online fundraising. Raising the limits probably had little effect on the increase in low-donor contributions, but it’s not as obvious a change because the higher limits didn’t as significantly alter the ratio of donors below $200 and thus aren’t required to be itemized with the FEC. If so, we would have still seen a significant increase of overall spending in 2004 and 2008 clearly driven by more small donations.

      Also, in looking at this stuff over a century, there should be a bit of an asterisk for the period 1956-1968, when television advertising became a huge (and extremely expensive) priority for campaigns.

  2. Pingback: Comparing Election Spending | HAPGOOD

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