Funding Clean Elections
2007-03-28
Executive Summary
The
spiraling cost of campaigns, high-profile scandals and voter distrust
of Congress have fueled an effort for fundamental reform of the way we
fund congressional campaigns. As a result, many federal decision-makers
have been working on proposals to create a Clean Elections model for
publicly financing congressional campaigns. As a part of the effort to
build support both within the Democratic caucus and across party lines,
it is important to know how much the program will cost and options to
pay for that cost. This briefing paper looks at options to pay for a
federal Clean Elections program.
The goal of public financing
is to reduce the power wealthy donors exert in campaigns and elections.
It may or may not reduce the cost of running for office in the United
States. Candidates in the 2006 election raised and spent approximately
$1.4 billion over the two-year election cycle. For the purposes of this
paper, we will start with the cost of the 2006 election as a benchmark
for the cost of the public financing program. To be conservative in our
cost estimate, we will assume a cost of $1 billion per year ($2 billion
per election cycle) to account for any potential differences in the
cost of Senate races from cycle to cycle.
In states and now
at the federal level, policy-makers have asked how we pay for such a
program. To answer this question, U.S. PIRG Education Fund reviewed
public financing programs at the state and local level to identify
successful funding mechanisms that we could adapt at the federal level.
We looked for opportunities to generate new federal revenue and/or
offset the estimated $1 billion per year cost. We chose the new
revenues and offsets listed in this paper because they would limit or
reverse tax subsidies or other spending on programs benefiting the
entities that aggressively participate in the current pay-to-play
system. A variety of government and private nonprofit watchdog
organizations, including Taxpayers for Common Sense, Citizens for Tax
Justice, The Heritage Foundation, and the Government Accountability
Office, have raised concerns about the fiscal responsibility of the
programs listed here.
Our review of funding sources used by
various state and municipal programs, potential federal offsets, and
possibilities for dedicated sources found the following:
1.
Successful programs at the state level have dedicated funding sources
that bypass the annual appropriations process. This is important to
avoid both the real and perceived ability of incumbents to game the
system. Dedicated funding streams also remove any possibility of
partisanship from the funding equation.
2. The cost of publicly
funding campaigns is just a few hundredths of a percent of this year’s
federal budget and relatively small when contrasted with the $52
billion in earmarked funds in last year’s budget. 3. Dedicated
revenue sources provide the opportunity for consistent and unbiased
funding for the reasons listed above. We could generate this revenue by
levying small surcharges on those who benefit from our current
pay-to-play system. We could generate new revenue for public financing
by: - Placing a 0.5% surcharge on the booktax difference in corporate profit reports;
-
Placing a 0.33% surcharge on taxes paid by both U.S. controlled
corporations and foreign corporations operating in the United States;
- Establish a spectrum use fee based on all broadcast advertising revenues; or
- Placing a 0.25% surcharge on government contracts.
4.
Although a dedicated source of funding is ideal, we can pay for a Clean
Elections system by eliminating some of the tax breaks and giveaways to
the powerful interests that have benefited from the pay-to-play system.
In Maine, the Governor made $2 million in administrative cuts to
provide the initial money for the state’s Clean Elections program. For
the federal program, we could offset the annual cost of the public
financing program by:
- Capping earmarks as a percentage of discretionary spending;
- Repealing the tax giveaways in the FSC/ETI corporate tax bill;
- Eliminating the Commerce Department’s Advanced Technology Program; or
- Eliminating some of the giveaways in the 2005 Highway Bill.
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