NYC’s Contribution Limits Benefit Challengers

George McDonald, a Republican mayoral candidate, is in court challenging New York City’s campaign contribution limits. Without accepting donations larger than $4,950, he does not believe he can run a competitive campaign. Instead, McDonald wants to run under New York State’s loophole-ridden and astronomically high contribution limits — the highest of any state that bothers to regulate contributions at all. But, the fact is McDonald’s quest to blow up New York City’s contribution limits is bad policy — and bad for our democracy.

Experience and research show that lower contribution limits help challengers, undermining McDonald’s claim. A statistical analysis of states’ contribution limits by the Brennan Center for Justice and George Mason University Professor Thomas Stratmann found that incumbents in states with contribution limits of $500 or less achieve margins of victory 14.5 percentage points lower than those with limits over $2,000. A contribution limit between $501 and $1,000 lowers incumbent victory margins by 9.5 percent.

Other research by Stratmann predicts that each doubling of a state’s contribution limit is associated with a 7.3 percent increase in margins of victory for incumbents. And imposing the state’s campaign finance laws on New York City would go far beyond doubling the current limit. Donors can contribute up to $60,800 throughout the election cycle in New York statewide elections. Letting city candidates take these astronomical sums would dramatically insulate incumbents — one of the reasons the city adopted lower limits in the first place.

That high limits protect incumbents and hurt challengers isn’t particularly surprising. Incumbents have a number of built-in advantages that allow them to exploit high contribution limits to scare-off potentially formidable challengers. Having already secured office, they have established powerful networks of donors they can tap again to quickly fill their war chests. Special interests are also exceedingly willing to fund their campaigns in hopes of bolstering their lobbying efforts. Challengers lack these advantages, and the strongest opponents are likely to wait for favorable conditions (e.g. a retirement, a scandal, a partisan wave) to mount a candidacy.

Of course, there’s more than one way to scare a challenger. The elephant in the room when discussing New York City’s campaign finance laws is Mayor Michael Bloomberg, who spent $102 million of his personal fortune on his 2009 re-election campaign, a sum that undoubtedly persuaded several potential challengers to stay on the sidelines.

But structuring a campaign finance system based on the potential for a candidacy by the 13th richest man in the world is a little like designing a building to withstand meteor showers. It’s a remote possibility, and it shouldn’t be the architect’s foremost concern. A candidate that can spend nine-figure sums to seek election will always have an advantage, but such a candidate will not run in the vast majority of races. New York City needs a campaign finance system that guarantees potential candidates don’t have to rely on huge donations from favor-seeking special interests to have a decent chance of mounting a competitive campaign.

And challengers need not match incumbent spending dollar for dollar in order to wage effective campaigns. Research shows that campaign spending is subject to diminishing marginal returns. At some point, more spending does not yield more votes. It’s difficult to determine when spending crosses that threshold, but it certainly falls somewhere short of $102 million in a local election, as the 2009 election proved. Even though Bloomberg outspent former City Comptroller Bill Thompson by more than 10–1, he won by a mere five points. Across the border in neighboring Connecticut, former WWE president and CEO Linda McMahon spent a total of $97 million in 2010 and 2012 on two failed Senate candidacies. Connecticut Gov. Dannel Malloy was outspent by self-funded millionaires in both the primary and general election — and he won them both.

Candidates need enough resources to get their message out. And that’s exactly what New York City’s formidable combination of modest contribution limits and a state-of-the-art public financing program allows. McDonald doesn’t need New York State’s broken campaign financing system. He’s already running under a system that is fine-tuned to give non-traditional candidates a chance to run competitive elections.

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