The Influence of Campaign Contributions on Legislative · PDF fileBio: Lynda W. Powell is...

The Influence of Campaign Contributions on

Legislative Policy

Lynda W. Powell

University of Rochester

[email protected]

Final draft of paper to be published in

The Forum: A Journal of Applied Research in Contemporary Politics

Volume 11, Issue No. 3 (October 2013), p. 339-355

Please note that this is a final draft submitted to The Forum, subject to slight last

minute editing by The Forum. Consult the published version for exact quotations.

This paper is one of a series commissioned as part the Campaign Finance Institute/Bipartisan Policy Center

Working Group on Money in Politics Research Agenda.

For more on the working group and to see other papers, visit:

http://www.cfinst.org/moneyandpolitics_scholarsAgenda.aspx

CFI/BPC Working Group on Money-in-Politics Research Agenda 1

The Influence of Campaign Contributions on Legislative Policy

Lynda W. Powell

University of Rochester [email protected]

Abstract: Although many think campaign donations buy influence from legislators, scholars have difficulty determining whether and how much influence contributions have in the legislative process. Many studies seek to identify the influence of donors on roll call votes. After considerable debate most scholars have concluded that donors have little influence on these votes. What voting studies cannot detect are the important, but less observable, opportunities to shape legislation that occur earlier in the legislative process. Although it is easy to identify the inadequacies of voting studies, it is difficult to find better approaches to study donors influence. I describe and critique the various methods that have been used to discern donor influence in the legislative process. I argue donor influence can be measured by combining several of these approaches. I illustrate this technique using my own work which studied the influence of contributions in the 99 state legislative chambers. I found little influence in some chambers and considerable in others. Features of institutional design and politics determine the amount of time legislators devote to fundraising and explain much of the variation in influence among the chambers. Rather than asking whether contributions have influence, we should ask when and where they have influence. I also discuss the extent to which contributions work in tandem with lobbying to influence the legislative process. Is the “access” or the “informational” model of lobbying correct? Finally, I examine whether campaign finance laws can lessen the influence of contributions, and discuss an agenda for future research. Key Words: campaign finance, influence of campaign contributions, state legislatures, legislative lobbying Bio: Lynda W. Powell is Professor of Political Science at the University of Rochester. Her most recent book is The Influence of Campaign Contributions in State Legislatures:

The Effects of Institutions and Politics (University of Michigan Press, 2012) which won the 2013 Fenno Prize for the best book on legislative studies.


The Influence of Campaign Contributions on Legislative Policy

Although many believe that campaign donations buy influence from elected

legislators, scholars have had great difficulty determining whether and how much

influence contributions have in the legislative process. Many studies have found little to

no evidence of influence while others identify significant influence. More recent studies

are beginning to parse out the influence of contributions in the legislative process by

identifying the circumstances where donations do and do not matter.

Early studies focused on the linkage between PAC donations and roll call votes in

Congress. Some of these studies found contributions influenced votes, but many others

did not. While methodologically it is difficult to estimate the causal influence of

donations, the larger problem is that much of the influence of donations is likely to occur

earlier in the legislative process, when decisions are made about earmarks and other

details of legislation that matter greatly to donors.

It is easy to criticize roll call votes as inadequate to measure the results of

influence, but it has proven harder to identify better alternative measures. Studies have

utilized five research strategies to more fully capture the varied paths of the influence of

contributions. First, some studies examine donor motives—is the pattern of donor giving

consistent with an investment view of contributions? The disadvantage to this approach

is that while providing insight into the beliefs of donors about the influence of their

contributions, it does not examine policy consequences. Did the donors actually benefit?

A second approach is to examine the benefits to donors from legislative actions.

A number of studies look at the financial consequences, such as share value, for firms

that benefit from tax or other favorable legislation. An issue with these studies is that

they cannot separate the gains that result from donating to influence election outcomes

from those that occur through influence in the legislative process. That is, did

contributions change who won the elections, and thus the ideology of members? Or did

they buy the legislative effort, and perhaps policy commitments, of legislators in office?

It is the latter, influence in the legislative process, that is the topic of this essay.

Third, other studies focus on process variables—for example, do contributions

buy the time and legislative effort of members? But, can we be sure that measures of


legislative participation do indeed reflect efforts that favor donors? Further, do these

legislative efforts translate into policy gains for donors?

A fourth approach involves using perceptual surveys to measure influence. Such

surveys have commonly been used in many fields. Perhaps most similar, and very widely

used, are the international surveys of corruption, most notably those conduced by

Transparency International. But can surveys measure influence, or do they just measure

biased and faulty perceptions of influence?

Fifth, hybrid approaches can offer better evidence about whether and when

contributions buy influence in the legislative process. I'll discuss an example of my own

research which uses an investment model of contributions to make predictions about

process—the time that members spend fundraising—and influence, using a survey-based

perceptual measure. Consistent findings derived from two quite different measures

provide greater confidence in the results which detail the circumstances in which

donations buy influence.

Further, individuals and organizations who wish to shape policy can choose to

allocate their resources to lobbying as well as to contributing. There is considerable

debate about whether these are independent and unrelated activities or if contributions

buy "access" to lobby. If these are related activities, as recent studies find they are, we

need to broaden our research focus to understanding the joint effects of lobby

expenditures as well as contributions.

Finally, if money does buy influence, is there any redress? Reforms have thus far

focused on regulations to ban or limit donations from various types of contributors, to

provide public funds to reduce the influence of large donors or to encourage the

collection of small donations. Is there evidence that such campaign finance regulations

can diminish the influence of contributions?

Do campaign contributions buy floor votes?

Much of the literature on the effects of contributions has sought to measure the

influence of Political Action Committee (PAC) donations on the floor votes of members

of Congress. PAC contributions are used because in many issue areas the preferences of

interested PACS on specific votes can be readily determined along with their donations.


These studies examine the relationship between contributions to members from PACs

that favor or oppose specific bills and the members’ subsequent votes on those bills.

Despite a large volume of studies using this approach, there is no consensus about the

effects of contributions on floor votes. Indeed, two meta-analyses of this literature, each

examining the same 36 studies, came to opposite conclusions about whether contributions

influence votes (Ansolabehere, de Figueiredo and Snyder, 2003 and Stratmann, 2005).

Critiques of roll call studies have generally focused on methodological issues.

The relationship between contributions and votes is reciprocal. That is, donors tend to

give to members who are sympathetic to their policy position. At the same time, these

donations can make legislators yet more sympathetic to the policy interests of their

contributors. Disentangling this relationship to isolate the effect of contributions on votes

is a difficult and perhaps intractable statistical problem. Some studies find no effect of

contributions on votes. Others that do identify an effect are often accused of not fully

isolating, and thus overestimating, the influence of contributions.

There are, I would argue, more fundamental problems with this literature.

Legislative scholarship stresses the importance of constituency and party as major

determinants of floor voting. Members think about how they would explain a vote to

their constituents. If they can’t “devise an acceptable explanation” and don’t have strong

personal feelings on the bill, they aren't likely to vote against their constituency, or their

electoral base (Kingdon, 1981, p. 47). The potential to sway a vote is greatest in the

subset of votes that are unimportant to a member’s constituency or party. Gordon (2005)

further argues the likelihood of influencing a vote is concentrated in a much smaller

number of critical votes—those in which an abstention or a switch of one vote would

alter the outcome. These low salience critical votes present the most likely circumstances

for members to repay groups for their financial support. Thus, relatively few floor votes

may be altered by contributions and a link between contributions and donations will be

small and hard to find.

Roll call studies ignore much more likely pathways for the influence of

contributions on legislation. A minor provision or even the wording of a single sentence

in a bill may be of critical importance to a contributor. The Abramoff scandal in

Congress focused attention on earmarks, but members have many other opportunities to


structure the details of legislation to favor donors. Much of this activity occurs in

committees and subcommittees when bills are written and revised.

Equally important, looking at roll calls completely ignores the opportunities

legislators have to block bills from coming to a vote in the first place. While donations

can be used to aid the passage of legislation, they are more often given to kill a bill

quietly. As Tom Loftus, former Speaker of the Wisconsin Assembly has stated, "The

truest thing I can say about special interest money is that it is mainly given to buy the

status quo" (1994, 37).

Further, voting studies assume the financial link is between the legislator and her

contributors and the votes she casts. In Congress and in some state legislatures, party

leaders, committee chairs, and legislators who aspire to these positions fundraise not just

for their own reelection campaigns, but also for their caucus. One former state legislative

leader I interviewed emphasized the relationship between party fundraising and the

requests leaders make of members to vote for or against legislation. These relationships

will be missed in standard voting studies as well.

Using contributions to infer donor motives: To what extent do donors act as if they

believe that their contributions influence legislative policy in their favor?

Individuals and organizations donate for a variety of reasons. Some of them are

motivated by broad policy concerns and frequently give to elect candidates who share

their beliefs. They seek no personal economic gain, and many of them donate to

challengers as well as incumbents, particularly in competitive elections. For others,

economic self-interest is a paramount consideration, and many of them donate primarily

to current legislators.

Much of the money fundraised by legislators is from individuals and interest

groups who stand to gain or lose financially from their legislative actions. One case

study found 97% of the funds raised by a committee chair in the Texas Senate were tied

to lobbyists, interest groups or their PACs (Marshall, 1997). Donors who wish to

influence legislative policy, in particular, target members who serve on the committees

with jurisdiction covering their financial interests. Many current members of Congress


and state legislatures raise much of their funds from businesses whose activities are

overseen by their committees.

Gupta and Swenson (2003) studied the contributions made by the executives and

PACs of 473 companies who stood to profit from a change in tax legislation related to

export profits. They found that the amount a firm’s PAC and executives contributed to

the tax-writing members of Congress was positively related to the anticipated financial

gains to the firm. Further, when the bonuses that these executives stood to gain were

based on their firm’s stock value and after-tax profits, their individual contributions, and

the firm’s PAC contributions increased proportionately. Gordon, Hafer and Landa

(2007) similarly found that executives whose compensation is a function of corporate

profits are more likely to make political contributions than executives who earn fixed

salaries.

Thus while contributors have varied motives, politically “material” motives are

likely to be common enough among donors to incumbent legislators, to raise concerns

about whether these contributions do influence legislative decisions. Would rational

donors who give for “material” reasons continue to donate if there was insufficient return

on their investment?

Studying financial gains to donors from policy outcomes to identify influence.

These studies, which are often authored by economists, generally identify a dollar

metric—typically stock returns—to capture a firm's gain from contributing. (See, for

example, Jayachandran, 2006; Cooper, Gulen and Ovtchinnikov, 2010; and Huber and

Kirchler, 2011.) Jayachandran, for example, uses the change in party majority control in

the Senate that resulted from Senator Jeffords unexpected party switch to evaluate the

market effect on firms related to their soft money donations to the two parties. He found

that for every $250,000 a firm gave to the Republicans in the last election cycle, the firm

lost 0.8 percent of market capitalization the week after the Democrats unexpectedly

gained majority control.

A disadvantage of these studies, as Jayachandran points out, is that they cannot

parse out how much of such an effect is electoral and how much is through influence on

the choices of elected officials. If firms give to the party whose policy positions are most


closely aligned with their own interests, they may simply gain from electing more like-

minded legislators whose policies will favor their interests. If firm donations alter a

legislator's behavior in their favor, their gain is through legislative influence. The design

of these studies allows them to estimate total effect—electoral and legislative influence—

but rarely allows them to isolate and measure legislative influence separately.

Using Process Measures to Study Influence

The process approach is exemplified by Hall and Wayman’s classic work,

“Buying Time: Moneyed Interests and the Mobilization of Bias in Congressional

Committees” (1990). They studied House members’ committee activities, focusing on

the participation of members, not on their votes. This has been, as they point out, a

neglected topic despite an extensive Congressional literature emphasizing the importance

of legislative effort in shaping legislative policy. They argue that contributions are

“allocated in order to mobilize legislative support and demobilize opposition” (1990,

800). It is in the formative committee stage where the content of bills are negotiated

absent public scrutiny that clientele relationships flourish and contributions should be

most effective. Determining the existence and content of bills requires member time,

effort and energy. Hall and Wayman determined that PAC money “did buy the marginal

time, energy, and legislative resources that committee participation requires” and if

“pluralism requires something more than a competition among moneyed interests—the

results of this study can only be disturbing” (1990, 814-5).

Hall and Wayman’s path-breaking study analyzed the committee process for three

bills—each considered by a different House committee. They measured how much a

legislator participated (although not specifically whether that participation favored a

donor). The link between committee participation and actions to favor a donor is

reasonable but assumed. Further, we do not know how much campaign contributions

influenced committee decisions or the policy choices that ultimately do or do not become

law. That is, to what extent did donations translate into policy gains for donors?


Survey perceptual measures of influence.

The myriad ways that donations can influence policy seldom leave an observable

data trail. Parties to influence buying in legislatures, if it exists, would naturally wish to

keep such activities hidden from the public. Increasingly scholars in some fields facing

similar problems have turned to perceptual survey measures. For example, the most

commonly used measure of corruption at the country level is Transparency

International’s Corruption Perceptions Index. “Most economists rely upon it when they

examine the impact of corruption on growth and investment, and it is no doubt the best

overall indicator of national levels of corruption worldwide” (Seligson, 2002, 415). It has

enabled scholars to test a variety of hypothesized relationships regarding the causes as

well as the consequences of corruption.

I wrote a similar survey-based perception item to estimate the influence of

contributions in each of the 99 state legislative chambers (Powell, 2012). The question

was sent to all state legislators and yielded a sample of 2982 respondents. (For details on

the survey which was part of the Joint Project on Term Limits, see Carey, Niemi, Powell

and Moncrief, 2006). Each legislator was asked the extent to which campaign

contributions to legislative candidates and to parties determine the content and passage of

bills in their chamber. Respondents were provided a 7-point scale with one end point

labeled ‘Not at all Influenced” and the other ‘Completely Determined’.

While these answers may be more honest than if legislators were asked about

their own behavior, their answers could certainly be biased. They all might, for example,

underestimate the influence of donors. If each legislator is equally biased, my analysis

will be unaffected since the magnitude of difference in comparing one chamber to the

others will be unchanged. Only biased responses that differ from one chamber to another

pose problems, but these, if identifiable, are correctable. I control for five types of bias.

Each is intuitively plausible, supported by other research, and controlled for in my

analysis.

In terms of validity, the legislative influence measure has a reassuring number of

advantages over Transparency International's corruption measure—it is asked in one

language, with the same wording, of equivalent respondents and it is corrected for a

variety of types of respondent bias. Using this measure, the state legislative chambers


differ considerably in the estimated influence of contributions. Campaign contributions

have relatively little influence in some chambers while having considerable influence in

others.

Nonetheless, it is a perceptual measure and questions can still be asked about the

extent to which perceptions measure the reality of influence.

A hybrid approach to studying influence.

There is a substantial literature that incorporates campaign contributions into

models of elections. (See for example, Denzau and Munger, 1986; and the reviews of the

literature provided by Stratmann 2005; and Ashworth 2008.) Many of these are

investment models in which candidates raise money to advertise to increase their chances

of election while donors give to gain policy favors from successful candidates.

Typically these investment models are tested using a single measure from the

types described above. Grier and Munger, for example, test a model on "how a legislator

allocates time between serving specific interest groups outside his district and serving his

constituency" (1991, 24). They show that PACs make larger donations to members of

Congress who have jurisdiction over the policy areas they care about, a finding that is

consistent with rent seeking donors.

With a few notable exceptions (for example, Moncrief and Thompson 1998)

existing research has concentrated on the U. S. Congress or on a single state legislature.

Investment models, in particular, have been designed to examine how internal features of

a single legislature, such as committee membership, seniority or leadership affect the

value of contributing. These studies can suggest differences in the value of contributing

to individual legislators. But they are not comparative in nature and are not designed to

study how factors that vary among legislatures (such as term limits, professionalization,

and campaign finance laws) affect investment-oriented contributing and determine the

overall level of influence of contributions in the chamber. Studies of a single legislature

cannot identify the institutional features and political characteristics that cause donations

to be more influential in some legislatures than in others.

I used a comparative approach to develop an investment model to make

predictions about an individual member level process variable—the time a legislator


devotes to fundraising—and the chamber level perceptual measure of the influence of

campaign contributions described above. If a common set of institutional and political

factors, are predicted to (and do) explain both fundraising time and chamber level

differences in influence, both the investment model and the measure of influence gain

substantial credibility.

The first step in identifying the effects of institutions and politics is to generate a

set of hypotheses to test. Because influence depends on the actions of individual

legislators, I began with a model in which legislators choose how much time to allocate to

fundraising (Powell, 2012, Chapter 3). My model, as many others, assumes that

legislators solicit contributions to enhance their electoral prospects. In return the

legislators provide their donors with policy influence—the more time a legislator devotes

to fundraising for his reelection, the greater the influence of donors on his legislative

activities. I add the possibility that legislators may also fundraise for their caucus to

advance their career in the chamber. (In some chambers committee chairmanships and

party leadership positions require substantial fundraising.) The model yields predictions

about how features of legislatures such as legislative compensation and term limits affect

the time members spend fundraising (for themselves and for their caucus) and determine

chamber level influence.

I use the survey data cited above to examine the accuracy of these predictions. In

addition to the influence question, each legislator was asked how much time he spends

fundraising for himself and also how much time he spends fundraising for his caucus (5-

point scales). About half of the hypotheses predict that some legislators in a chamber

will spend more time fundraising than others in the chamber. For example, compared to

legislators running for reelection in a safe seat, legislators running for reelection in a

competitive constituency will spend more time fundraising for their own campaign, less

time fundraising for their caucus and, in net, more total time fundraising. Other

hypotheses relate to chamber-level features, such as term limits, or political context, such

as the size of the majority party’s margin of control in a chamber.

Individual-level characteristics, such as constituency marginality explain variation

in fundraising time among members within a chamber, while chamber-level

characteristics, such as term limits, explain differences in average fundraising time


among the 99 state legislative chambers. Factors that explain chamber-level differences

in fundraising time should, if the model is correct, also explain differences in the

member’s estimates of the influence of contributions in their chamber. And indeed they

do. Thus the consistency of results for factors that predict both time and influence

supports the validity of the survey influence measure as well as the premise of the model-

-the trade-off between fundraising time and influence. A small number of institutional

and political factors explain a substantial amount of the variation among the 99 chambers

in influence.

Members in the professionalized legislatures generally found in populous states

spend substantial time fundraising. It is in these states with large constituencies, highly

paid members and professionalized leaders that donations are especially influential.

Legislators with ambitions for higher office also spend considerable time fundraising.

Chambers differ enormously in the percentage of these ambitious members; the more

ambitious members, the greater the influence of contributors. Chamber size also

matters—the more members there are to fundraise, the greater the influence of

contributions. I also found that contributions are less influential in states with more

highly educated constituents, who may be more aware and less tolerant of legislators who

spend much of their time fundraising.

Term limits reduce the value of holding office and should consequently reduce

fundraising and hence lessen the influence of contributions. However, legislators in term-

limited chambers are no less eager than other members to sustain political careers.

Because they cannot do so in their own chamber, many of them plan to seek higher

office. I found that ambition, which itself fosters fundraising, negated much of the

beneficial effect of term limits in lessening the influence of donors.

These core results show the importance, complexity and nuance of features of

institutional design and political context that together determine the influence of

campaign contributions in the legislative process. Rather than asking whether

contributions have influence, we should ask when and where they have influence.

Contributions have little influence in some circumstances and considerable influence in

others.


Do campaign contributions work in tandem with lobbying to influence the legislative

process?

Those who wish to influence the legislative process have choices about how to

spend their money. They may contribute, lobby or both. There are two alternative views

of lobbying. A longstanding view among scholars is that lobbying works largely in

tandem with donations in a pay-to-play relationship: the opportunity to lobby is largely

contingent on campaign contributions and advances donors' interests. More recently

others have argued that legislators can be informed about policy issues by lobbyists

without being significantly influenced (Calvert, 1985; Austen-Smith, 1993 and de

Figueiredo, 2002).

There is no existing agreement in the literature on which approach best

characterizes the relationship between lobbying and contributions. Initial research

identified a modest link between lobbying and contributing by determining the fraction of

interest groups in Washington who lobbied the federal government that had a PAC. In

Wright’s study 34% of groups with lobbyists had PACs (1989) while Schlozman and

Tierney found 58% in their sample (1986, 226). Nownes and Freeman (1998) replicated

Schlozman and Tierney at the state level finding a slightly lower percentage—45%.

The Lobbying Disclosure Act of 1995 made public the amounts spent to lobby the

federal government and these data made it possible to examine the magnitude of the

financial link between lobbying and contributing. Ansolebehere, Snyder and Tripathi

found, “Although groups that have both a lobbyist and a PAC account for only one-fifth

of all groups in our sample, these groups account for fully 70 percent of all interest group

expenditures and 86 percent of all PAC contributions. Groups that do not have PACs

also tend to spend little on lobbying, or are legally prohibited from contributing”

(Ansolabehere, Snyder and Tripathi 2002, 133). Similarly Lowery, Gray, Benz, Deason,

Kirkland and Sykes (2008) examine state level PAC and lobby groups in the health field.

While they find only 14% of organizations both lobby and have a PAC, these groups

donate 76% of the money given by PACs. By looking at the amounts of money spent by

groups that lobby and contribute, rather than the number of such groups, both studies find

a much stronger relationship between lobbying and contributing than earlier scholars.

These findings suggest the possibility that the access or “pay to play” model of lobbying


may have some credence.

I tested the ‘access’ model of lobbying against the ‘informational’ model using

the survey of state legislators described earlier (Powell, 2012, Chapter 8). Each legislator

was asked the importance of lobbyists as a source of information (on a 5-point scale).

The investment models described above, assume that the more campaign contributions a

candidate collects, the greater the expected value of policy favors provided to donors. A

legislator’s total contributions are a product of the time he spends fundraising and his rate

of return on his fundraising time—the dollar amount he can fundraise for one unit of

fundraising time. Within a chamber, members who have greater influence over policy,

such as leaders and committee chairs, have higher rates of return than other members. If

the ‘access’ model is correct, the more time a member spends fundraising and the greater

his rate of return relative to his chamber average the more he will rely on lobbyists for

information.

The informational model yields a quite different set of expectations about which

members should rely more on lobbyists. In that model, legislators who are less informed

than other legislators about the consequences of their legislative actions, such as newer

members of the chamber, should place a greater value on new information and rely more

on lobbyists to obtain it. In larger chambers and in those with high member turnover

greater uncertainly will exist about the preferences and actions of other members. Thus

members in these chambers should be expected to rely more on lobbyists for information

than members in other chambers. Similarly, legislators who are interested in many policy

areas should need more information than those active in fewer areas and, again, should

rely more on lobbyists for information.

When the models are tested against each other, the analysis strongly support the

‘access’ model. The more time members spend fundraising for themselves and for their

caucus and the greater their relative rate of return on their fundraising time, the more they

rely on lobbyists. There is no support for the informational model—none of the

coefficients that test the hypotheses derived from the ‘informational’ model are

statistically significant and two of the four have the wrong direction of effect.


Parker (2008) has also argued that the prospect of a future lobbying career can

affect how members behave while they serve as legislators. Specifically, donations

legislators accept from interest groups create relationships with lobbyists in which

legislators can come to share the policy viewpoints of special interest groups. Donors

and lobbyists focus much of their activity on committee members who oversee their area

of interest, and it is committee work that provides the opportunity to develop the

knowledge and relationships with donors and lobbyists that provide entrée to a future

lobbying career. For members of Congress, especially those that develop close ties with

special interest groups, Parker notes that lobbying is an obvious future career option.

Parker argues provocatively that, “legislators invest human capital in rent-seeking

activities as a way of dazzling future employers with their adeptness and effectiveness in

these activities” (Parker 2008, 43).

Parker’s analysis reflects an ‘access’ view of legislatures, and it suggests that

future career prospects may be relevant in state legislatures as well. I found that the state

legislators who rely most heavily on lobbyists for information are the most likely to think

they may become a lobbyist after leaving the legislature. As would be expected from

Parker, committee chairs are especially attracted to this possibility as are members who

fundraise extensively. Interestingly it is caucus fundraising rather than personal

fundraising that is strongly related to relying on lobbyists.

Do campaign finance laws mitigate the influence of contributions in the legislative

process?

While there is a large literature on the effects of campaign finance laws on

elections, very few studies examine whether laws can lessen the influence of campaign

contributions on public policy. Ansolebehere, Snyder and Ueda (2004a, 2004b) examine

the effect of campaign finance regulatory decisions on the stock prices of firms that stood

to gain or lose from these decisions. They examined the key regulatory decisions

beginning with the Federal Election Campaign Act of 1971 through the 1976

amendments to it. They found no effect of laws that restricted or loosened corporate

giving on the share values of corporate donors. Investors did not apparently believe that

these laws would affect firm profits.


More recently, La Raja and Schaffner (2012) and Werner and Coleman (2012)

examine whether bans on corporate giving at the state level influenced state policies. In

the time period examined by La Raja and Schaffner, 20 states implemented a ban on

corporate spending. Assuming that corporate donors would prefer lower corporate taxes,

they examine whether adopting the ban increases the fraction of state revenue derived

from corporate taxes. They find the bans to have little if any effect on corporate tax rates.

Similarly Werner and Coleman find bans to have no effect on the state minimum wage

and the degree of pre-transfer income inequality.

Why might such bans have little effect? In general laws adopted to limit or ban

campaign contributions alter how money flows into politics much more than they reduce

the total inflow. For example, when California and Washington adopted low limits on

hard money contributions, independent expenditures increased dramatically. Low PAC

contribution limits can also be circumvented by creating forms of bundling individual

contributions (Malbin and Gais, 1998, 87). And, in Florida, legislators have formed 527

committees that allow large donations to circumvent low individual and PAC

contribution limits.

Further, an identical campaign finance regulation may have different effects in

different legislatures. Clean election laws, for example, illustrate this possibility. Public

funding laws seek to reduce candidates' dependence on private funding. Qualifying

candidates in states that have adopted "clean election" laws voluntarily agree to raise very

limited private funds for their own campaigns in exchange for public funding. My

investment model of contributions described earlier yields an expectation that legislative

candidates who accept public funds in these clean election states will use some of the

time freed up by not fundraising for themselves to fundraising instead for their caucus.

At the time of my survey, two states had implemented clean election laws, and, as

predicted, legislators who accepted public funds spent more time fundraising for their

caucus substantially reducing the anticipated impact of the clean election laws.

Whether or not legislators who accept public funds divert much of the time they

no longer can spend on personal fundraising for themselves to fundraising for their

caucus should depend on the benefits members gain by fundraising for others. My study

found caucus fundraising to be most strongly incentivized when the majority party had a


slim margin of control, in highly professionalized chambers (those in which legislators

devote full time to the job and are highly compensated) and where a large fraction of

members were ambitious for higher office (Powell, 2012, Chapter 7). In these

circumstances, clean election laws that only limit fundraising for one's own campaign,

not for others, should be least likely to be effective in reducing the influence of

contributions. Conversely, in part-time chambers with lopsided majorities where few

members anticipate running for other office clean election laws could be quite effective—

little of the time freed up by accepting public funds may be diverted to caucus

fundraising.

We need to identify the circumstances that determine the extent to which

campaign finance laws "bite". That is, when do particular campaign finance rules

actually reduce legislative fundraising? We need to develop theories about how

institutional structures, laws and political context shape the incentives for legislators and

donors to determine when, if at all, various types of campaign finance laws can reduce

the influence of donations. The same law may have quite different magnitudes of effects

in different legislatures—for example, none in one, a small effect in another and a

significant effect in a third state.

Directions for Future Research.

The answer to the question, "Do campaign contributions influence legislative

policy?" is complicated—contributions have considerable influence in some

circumstances and very little in others. For example, in the 1960s reformers sought to

improve state legislatures by increasing their professionalization. In particular, higher

legislative salaries were advocated to make the office more attractive. Scholars found

that higher legislative salaries heightened legislators’ motivations to retain office (Gamm

and Kousser, 2010) and, by increasing the value of fundraising, made legislators more

aggressive in fundraising (Hogan and Hamm, 1998). Higher levels of member

compensation increase the time members spend fundraising and, consequently, increase

the influence of campaign contributions in their legislative actions (Powell, 2012).

We are just beginning to explore how features of institutional design and political

context condition donors' influence in the legislative process. Three lines of inquiry seem


particularly fruitful for future research. Much of the anecdotal and scholarly literature

emphasizes the importance of members' committee assignments in fundraising. Donors

give to members and, especially, chairs of committees whose jurisdiction encompasses

their policy interests because these individuals have the greatest influence in determining

policy agendas and shaping the content of legislation. Chambers vary substantially in

the power committees have in the policy process, in the number of committees and thus

the size of committee jurisdictions, in the seniority, and hence knowledge and experience,

of committee chairs and members and in many other ways. We need to identify how

these features of committee systems affect the influence of donors.

Second, members' caucus fundraising activity is increasingly important in

Congress and in many state legislatures. Many legislators are elected by lopsidedly

favorable partisan constituencies and spend little time fundraising for their own reelection

campaigns. Now some of these legislators are increasing the time they spend

fundraising, and thus increasing their indebtedness to donors, in order to raise funds to

elect others. It is the highly professionalized leadership structures that exist in some

chambers that most effectively incentivize and increase caucus fundraising when it is

needed electorally--that is, when the majority party holds a slim margin of control in the

chamber that may be lost altogether in the next election (Powell, 2012). We need to

understand precisely how parties incentivize caucus fundraising to determine whether

there are ways to reduce the growth in caucus fundraising.

Third, campaign finance reformers have focused on laws to limit the inflow of

money into politics and to reduce candidate dependence on large donors. While there is

considerable research on the effects of these reforms on elections, there is little on their

effects on the influence of contributions in the legislative process. Many argue, for

example, that candidates who are more reliant on small donors for their fundraising are

less influenced by campaign contributions. Is this empirically correct? It would be

possible, for example, to determine if a legislator relies less on lobbyists for information

as the fraction of her campaign funds provided by small donors increases. Independent

expenditures, which were relatively rare when my survey was done a decade ago, are

becoming increasing common in state legislative elections. Do donors who make


independent expenditures gain the same influence in the legislative process as donors

who make direct campaign contributions?

There are also broader questions that involve the linkages between elections,

fundraising and legislative actions which can and should be studied as well. First,

scholars who study representational inequality have identified donating money in politics

as the most unequal form of political participation (Schlozman, Verba and Brady, 2012)

and studies have shown that elected officials are disproportionately responsive to the

views of the wealthy (Bartels, 2008; Gilens, 2012). Bartels and Gilens have singled out

campaign contributions as a key suspect to explain this responsiveness. We need studies

to determine whether and, if so, how donations do explain the representational distortion

they identify.

Additionally, there are questions about the role that money plays in issue

polarization and gridlock in legislatures. Do purposive donations, as some suspect, foster

polarization? Do material donations reduce polarization? If contributions affect issue

polarization, do they work solely through the electoral process, or do they also have post

election influence on legislative behavior?


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