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Analysis

The Reform Law Needed to Counter Citizens United: H.R. 1

The flood of big money in politics unleashed by the Supreme Court keeps growing. Public campaign financing offers candidates a way to run without chasing megadonors.

money puzzle
Credit: Getty

Ten years ago in Citizens United, the Supreme Court slashed common­sense limits on campaign cash and set Amer­ica’s campaign finance system on a path to over­whelm­ing domin­ance by the ultra-wealthy few. But a bill passed by the House and pending in the Senate has the most prom­ising answer: a public finan­cing program that would amplify the voices of small donors, so the flood of megadonor money can be balanced by super­charged fund­ing from regu­lar people. Our new analysis shows that it would funda­ment­ally trans­form campaign finan­cing for the better.

Since Citizens United, the share of elec­tion fund­ing from megadonors has mush­roomed: in 2016, a few donors of more than $100,000 accoun­ted for more than half of all elec­tion spend­ing, dwarf­ing the money given by millions of small donors. Even with the boom in grass­roots engage­ment and small dona­tions in 2018, small donors were over­shad­owed by megadonors. Without reform, the gap is only going to widen.

The imbal­ance in campaign finance has made many Amer­ic­ans frus­trated and cynical. But while it may be easy to see the current state of money in polit­ics as inev­it­able, the truth is power­ful fixes are avail­able to restore balance and empower every­day people.

Public campaign finan­cing has succeeded in chan­ging the way politi­cians raise money in states and cities across the coun­try, from Maine to Arizona and New York City to Los Angeles. It reduces candid­ates’ need to chase big donors and makes typical Amer­ic­ans the most import­ant source of funds. The boost that public finan­cing gives small donors is needed now more than ever because non-million­aires simply can’t keep up with the gains at the top.

In March 2019, the House passed H.R. 1, the For the People Act, a compre­hens­ive demo­cracy reform pack­age. The bill includes a system of public finan­cing for House elec­tions that would multiply small contri­bu­tions by match­ing dona­tions of $200 or less at a rate of six to one. A $200 dona­tion would get a $1,200 match, making it worth $1,400 to the campaign. Candid­ates can choose to opt in if they show they have substan­tial public support. Those parti­cip­at­ing may not accept more than $1,000 in private funds from each donor — signi­fic­antly lower than the contri­bu­tion limit of $5,600 for the 2020 elec­tion cycle. And the amount of public funds each candid­ate can earn in an elec­tion cycle is capped.

Our analysis uses Federal Elec­tion Commis­sion data from past elec­tions to model how this system would likely affect fundrais­ing in House elec­tions. The data shows that there would be profound changes, most import­antly that almost all candid­ates would be able raise as much or more money while rely­ing almost entirely on small dona­tions.

Turn­ing the current land­scape on its head, public match­ing makes small dona­tions the most valu­able source of funds to every candid­ate who opts in. Small dona­tions and match­ing funds together would have accoun­ted for well over half of elec­tion fund­ing across recent cycles. In 2018, had the great major­ity of candid­ates run under this system, the share of money coming from small donors would jump from 13 percent to 56 percent with the match.

These results are consist­ent with real-world exper­i­ences with a small-donor match­ing programs. For instance, in New York City, which has used this type of system for decades, matched small dona­tions are the source for more than 60 percent of campaign funds.

Our analysis makes two key assump­tions. First, we assume the candid­ates would not have changed the way they raised money. That is, we assume candid­ates would have gone to the same donors they went to in those past years; the only change would have been asking those donors for just $200, even if the donors had the capa­city to give more. A $200 dona­tion combined with the $1,200 public match would be the most valu­able contri­bu­tion, since the maximum dona­tion to parti­cip­at­ing candid­ates is $1,000. Of course, in real­ity, match­ing funds bring new donors into the system. Candid­ates would have a big incent­ive to look for new small donors, and people are encour­aged to give when they know their money gets matched, poten­tially making the effects even more profound.

Second, we assume every candid­ate who would have raised as much or more money parti­cip­at­ing in the program joined it. In 2018, that amoun­ted to 94 percent of House candid­ates. To put that rate in perspect­ive, success­ful public finan­cing programs across the coun­try have enjoyed high parti­cip­a­tion rates — some above 90 percent — by candid­ates from both parties.

But even with a much lower parti­cip­a­tion rate, H.R. 1’s public finan­cing program would be trans­form­at­ive. If only half of candid­ates opted in, the relat­ive giving power of small donors and those giving the maximum contri­bu­tion would still be reversed from the status quo. Small donors would have accoun­ted for more than a third of candid­ate fund­ing over recent cycles. In 2018, small dona­tions would have been boos­ted from 13 percent to 37 percent when combined with match­ing funds.

Public finan­cing has the power to funda­ment­ally change the way members of Congress fund their campaigns. Candid­a­cies powered by small dona­tions spur people running for office to connect with their constitu­ents rather than rich donors on a call list. Candid­ates who lack wealthy connec­tions but have broad public support will be able to run compet­it­ive campaigns.

In Citizens United and other decisions, the Supreme Court has blocked lawmakers from putting reas­on­able limits on the amounts of money the super­rich can give to get politi­cians elec­ted, so Congress can’t stop wealthy interests from offer­ing mind-boggling amounts. But public campaign finan­cing can reduce candid­ates’ demand for those big dona­tions by ampli­fy­ing support from regu­lar people.

Notes on meth­od­o­logy

Since the program in H.R. 1 limits private contri­bu­tions to $1,000, the largest private contri­bu­tions are worth less than a matched small dona­tion. So parti­cip­at­ing candid­ates would only ask for and accept dona­tions of $200 or less. However, candid­ates who earn the maximum amount of public funds would no longer have small dona­tions matched and could switch to soli­cit­ing $1,000 dona­tions. H.R. 1 also includes an “enhanced match” avail­able to certain candid­ates in the last two months of the elec­tion, which we did not model for the sake of simpli­city.

Because of this incent­ive struc­ture, our analysis converts dona­tions of $200 or more into matched $200 dona­tions. Dona­tions of less than $200 remain the same and are matched. For those candid­ates who hit the public funds cap, we conver­ted their largest dona­tions greater than $1,000 into unmatched $1,000 dona­tions.

We assumed parti­cip­a­tion by all candid­ates who would raise as much or more money under public finan­cing, except when other­wise noted. We made no changes to fundrais­ing by nonpar­ti­cipants, who dispro­por­tion­ately relied on donors giving large amounts, up to the contri­bu­tion limit, which for all cycles we analyzed was $5,000 or greater.