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U.S. Department of State

Diplomacy in Action

101 On Campaign Finance - The Role of Money in U.S. Politics

Professor Michael Malbin, co-founder and executive director of the Campaign Finance Institute
New York, NY
July 11, 2018




Date: 07/11/2018 Location: NY FPC Description: J. Malbin of the Campaign Finance Institute, briefing journalists at FPC NY - State Dept Image
Michael Malbin of the Campaign Finance Institute, briefing journalists.

MODERATOR: Hello, everyone. Thank you so much for joining us today. We are pleased to welcome Professor Michael Malbin, co-founder and executive director of the Campaign Finance Institute, a nonpartisan think tank. He’s also a professor of political science at the University of Albany, State University of New York. One of the country’s leading scholars in this field, he’s been writing extensively about money and politics for more than three decades.

Before SUNY, Dr. Malbin had been a reporter for National Journal, a resident fellow at the American Enterprise Institute, and held positions in the House of Representatives and Defense Department. Concurrent with SUNY, he has been a member of the National Humanities Council, a visiting professor at Yale University, and a guest scholar at the Brookings Institution.

Just a few reminders: Today’s briefing is on the record. When they’re done and we open up the floor for questions, please state your name and your media affiliation. And Mr. Malbin is speaking in a personal capacity and does not represent the official policy views of the U.S. Government. Thank you.

MR MALBIN: Thank you. Thank you for inviting me. Can we just go around the table and see which countries are represented here?

QUESTION: Yes, Mainichi newspapers in Japan.

QUESTION: I’m from the – Korea, Korean Economic Daily.

QUESTION: I’m from Folha de Sao Paolo, Brazil.

QUESTION: I’m from the De Volksrant, The Netherlands.

QUESTION: Algemeen Dagblad also of The Netherlands.

MR MALBIN: Will you come over here? Yes.

QUESTION: Hi, I’m the New York correspondent for the Polish Press Agency.

MR MALBIN: Polish, yes.

QUESTION: Hi, I’m with the Asahi Shimbun.

MR MALBIN: Thank you. And you are from?

QUESTION: I am – I’m with Nikkei newspaper (inaudible).

MR MALBIN: Nikkei, thank you. Good. Well, it’s a good mix and thank you for coming.

I’m going to start at a point that assumes that everything is new to you. Some of this may be repetitious for some of you, but I’m not going to talk for long, and we will then be guided by your interests and your questions. But coming from elsewhere, I don’t know how long you’ve been posted here or how much U.S. politics you’ve covered, but I’m sure you’ve all covered many – covered other elections. But why don’t we start with a – I have a slide that’s sort of your basic fundamentals about – certain basic fundamentals about U.S. politics that may not match what you’ve covered.

So what magic words do I have to say to have this slide advanced? Thank you. So I should say, what, “Change slide,” something like that? No, go back. Thank you.

All right. So your basic fact, if you’ve – is because we’re dealing with single-member district elections in which a plurality – the one who gets the most votes wins even if that person does not get a half, and because you’re dealing in a separation of powers system in which the representative to Congress has his or her independent constituency, and for all sorts of other reasons, that make this country different from others, that also have single-member districts such as the UK or Canada, we have what is fundamentally a candidate-centered politics.

And that’s sort of your basic rock-bottom fact that you have to keep in mind as you’re used to covering – you may be used to covering other places where the vote is determined either by proportional representation or the funding goes to the parties – let’s go to the next slide, please.

Parties are much more important here than they were, let’s say, 50 years ago. They are very important to most voters’ vote. It’s the single best predictor of a person’s vote, but it’s not automatically the best predictor of a winner, right? And it’s much less – they’re – even though they’re much more important than they have been in most of U.S. history, they’re still much less so than in a parliamentary system or that – a system that’s not a separation of powers system. And this – as I say, this is one of your background facts that we often lose sight of that I want to surface at the beginning here. And that’s especially true when we talk about money, which is what I’m supposed to talk about.

Parties do help supplement, raise the money, they help the candidates to find donors, they help candidates sometimes clear the field in primary elections, but fundamentally candidates are raising their own money. And that’s your – and we’ll get to more of that, the sources of candidates’ funds in a few minutes. So that’s – but that’s where you have to start. So if you have a person who is running for Congress – and the analog to that might be a member of parliament in another system.

In another system, a member of parliament can get elected, let’s say, in Britain typically with the spending of 30,000 pounds, 30,000 – the equivalent of 40,000 euros, let’s say. But that’s because the person running for parliament in the UK is basically running as the representative of the – whichever party it is. That’s not the way it works here. So the candidate is getting elected on his or her own and yes, the voters are thinking about who will be speaker, but that does not determine who will be president. That’s a separate vote.

So we start by asking, okay, so how much do they need? So a basic statistic – go to the next slide – is that your typical member of Congress, the one who – let’s say the winner of a congressional race is spending about $1.6 million. And these are nominal dollars that is adjusted for inflation on this graph. By the way, all of the slides except for one are from the Campaign Finance Institute, one or another publication, and I can get them – get you the publications, and the one will be a – one from the Federal Election Commission. Remind me at the end and I’ll give you some other good sources to go to. But let’s go to the next slide. This will give you numbers and I guess these slides will be available with --

MODERATOR: Yes, (inaudible).

MR MALBIN: -- with all of these data. This gives you House and Senate. The Senate, the numbers are not directly comparable for election to election because not the same seats are up every year. Only one-third of the seats are up each year, so if you want to look at how much has the cost of running inflated for the Senate, you’d want to compare it to six years earlier, then you have the same seats. And you want to look at the constant dollars, the 2016 dollars, the – not the nominal dollars. And they’re going to – they’ve gone up, obviously. But they’ve – the rate of increase has flattened out a bit over the last decade. It flattened out a lot over the last decade.

So this tells you how much the candidates have to run and have to raise, and it’s not easy especially if you’re a less well-known challenger raising $1.5 or 2 million to run in a 700,000-person constituency. You – even if you were an experienced fundraiser of other sorts, that’s a lot of money. And you can’t just go to your favorite rich friend and say, “How about floating me a million-dollar loan?” That’s not legal in this country. There are limits on fundraising which makes it that much harder. So it’s the – if you’re talking about $250,000, raising that much and the fundraising limits – these are not exact numbers, I’ll give you the exact numbers soon – and the limit were $2,500 per person, that’s saying you need to find 100 people to give you $2,500 each, a million – if it’s $1.5 million, you better find 600 people. Most people do not know 600 people who can write them $2,500 checks and they’re certainly not going to write it until the person has shown that he or she is a viable candidate. I’m not doing this out of mere friendship. I’m doing this – even if I think you’re a wonderful person, I’ll give it to you if I think you have a chance in an election. I’m not – I have other charities to give it to if I have disposable income like that.

So the actual contribution limit is the next slide – well, slide after that. This is from the Federal Election Commission and if you ever need to use the contribution limits, you can go to the Federal Election Commission’s website, fec.gov, and put in the search engine “contribution limits” and this is what’ll come up. And it will show you that individuals may give candidates $2,700 per election. That means 2,700 for primary, and then another 2,700 for the general election, or 5,400 over a two-year cycle. And if you have a special election, that’s another 2,700. If you have a runoff, that’s another 27-. But that’s the limit per election.

Political action committees, interest groups, they give to multiple candidates – can give 5,000 per election. And then there are columns showing what the parties – and what the parties can give. And there are rows – I’m sorry, showing – the columns show what the parties can receive. The rows show who can give what.

There are different rules – next slide – different rules for state elections, if any of you are going to cover gubernatorial elections. You’re based in New York; if you are looking at Andrew Cuomo’s reelection or any other governor’s reelection, these are governed by state law, not by federal law. They vary quite a bit state by state. We’re looking at 50 different jurisdictions. If you were covering local elections, 30,000-some-odd county governments – each can have its own rules.

These are hard to follow, or hard to track. A good source is our own – a good source for a basic snapshot – if you go to the next one, you’ll see it. That’s hard to look at. Is there any way to blow it up? Okay. So I’ll tell you what it is. There’s a dropdown menu. And this is at – you can get to it by going to the website www.cfinst.org – Campaign Finance Institute .org. And you can choose – do I want to know what the laws are? And this’ll give you the laws each two years from 1996 through 2016. And we’re updating it for 2018 now, but there’s very little change between ’16 and ’18. There are tabs for contribution limits, disclosure rules, other regulations, and public financing.

The particular homepage that’s shown is what can an individual give to a candidate for the lower chamber of the legislature. And the bars up at the top let you choose which donor do you want to see, which recipient do you want to see. And then the map shows you for whatever year you choose what’s the contribution limit in this case for individuals, too, in that state. You hover over it, it’ll give you the exact limit. What the little square thingies are below is it shows you for each state, it shows you each year. So if the limit changes, you can see that per year. That probably gets beyond what you’re going to use. But if you were interested in historical change, that’s how’d you see. You can rearrange the page; the visualization is actually quite wonderful. I paid for it; I didn’t do it, so I don’t mind saying that these visualizations are amazing. So the way it rearranges is quite impressive.

So you can do contribution limits to lower chamber, upper chamber. You can click on governor. What you’ll see if you’re covering the Cuomo race is that the contribution limit for governor in New York state is very high; it’s one of the highest in the country. It’s about $50,000. The average contribution limit is about 2,000 for a two-year cycle. Federal is 5,400 for a two-year cycle. So this is very, very high. For the state legislature, it’s more toward the average in New York state. Again, only if you’re covering New York state elections.

Mostly I’m going to guess that most of you will cover federal election, and I’m going to guess that a lot of the interests this year will be on the midterm congressional and what that says for the future or about the past.

But one more thing about the map that I want to tell you is that in a few jurisdictions, there – a few jurisdictions do supplement private financing with some public financing. And so the map – the next map – if you click on another one of the tabs, another map will come up. And it looks like – keep going forward; it’ll be a brown map. There you go. This shows states that offer some form of public financing to some candidates – governor, legislature. In federal elections, public financing used to be important for presidential candidates. They didn’t update it; they didn’t take into account new spending patterns, so the spending limits became out of date. Candidates cannot be forced into public financing under U.S. constitutional law; it has to be voluntary. And since recent elections, they voluntarily said no thank you, and they raise their money privately. But in some states they still use it. In localities; they use it in New York City, they use public financing, a very innovative form of public financing where a small – if you give smaller contributions, it’s matched $6 to every 1 for the first 175 you give.

So this map will show you the states. There are publications online that’ll tell you something about the localities that use it.

Well, let’s go back to the federal system, and – which is purely private. In a private fundraising system, it – because it depends upon both your name recognition and people’s commitment to your election – to your election, not just to an election, not just to the Democratic or Republican Party; because they’re giving to you, they have to believe in you in some way. And among other things, that means believe that you might have a chance to get elected.

Most races are pretty safe. So in most races, it’s extremely hard for challengers to raise money. Go to the next slide. Well, we’ll – I’ll give you the conclusions after you see the slide. Go to the next slide. On the left-hand chart, this shows you about the races where incumbents won by 60 percent or more. These are races where challengers had very little chance. It’s like in most districts in New York City, Republicans don’t have a prayer of getting elected. In most congressional districts except for one in the state of Utah, Democrat doesn’t have a prayer of getting elected. So it’s hard for challengers – the red bar – to raise money. And they raise less than one-tenth as much as the incumbents, and the incumbents typically raise $1.4 or so million.

If a race is competitive, reasonably competitive, it’s partly – it’s competitive for all sorts of external reasons, so that some districts are competitive for Democrats, Democratic challengers this year because there’s a perception that the President is less popular than let’s say – than he might have been. Let’s just leave it at that.

So challengers are able to get their name known, they’re able to raise money, and in races that end up being 60/40 or closer, as you see, probably the single most important indicator of that is that the challengers are raising the money that’s needed to become known. Now, whenever you’re looking at money, you have to think about the fact or be aware about the fact that money never buys votes. It doesn’t dictate who wins. Money buys the ability to communicate. If you can manage to communicate without the money, which is what Donald Trump managed to do during the primaries – presidential primaries, the key is that you get your message out. He was able to drive the news cycle. Others have estimated that the value of his free coverage during the primaries was about $2 billion. But it didn’t come from his spending money. He spent less than the candidates he beat – most of the candidates.

But the key is, do you have the money or in some other way the wherewithal to get your message out? If you do, then it can be – can be a competitive race.

Now, again, let’s – to be clear about this, you can have all the money in the world, and it’s – and if you’re advertising a buggy whip in the age of automobiles, no one’s going to buy it. And in political terms, that means the example for that would be Jeb Bush. Jeb Bush had much more money early than his opponents. He was an incredibly strong 20th century candidate. But he was not what the voters were looking for. Nobody had any – there was not a problem with understanding what Jeb Bush was saying, just the primary voters were not buying it. So you need – you need to have the ability to get your message out and then the voters will judge it. But if you cannot get your message out, you do not stand a chance. So the money – money or some other means to communicate becomes the necessary but not sufficient condition.

You do not need to outspend the other person. If you look at the last bar on the right-hand side of that chart, as I face it, these are the races in which incumbents lost. Almost invariably, the incumbent who loses does not spend as much as the challenger who beats them. Because by the time the election has centered on being a competitive race, by that time the voters are already saying – they’re asking the question about whether they like the incumbent or not. And the question of the election has changed. In most safe elections, it is – the question for most voters is: Is my incumbent okay? Do I sort of like the person? And most people in politics, both parties, if you meet them, they’re pretty friendly. I mean, there are plenty of examples on the other side, but most people who go into politics are reasonably gregarious. I mean, I – having covered politics, I’ve managed to develop a pretty healthy respect for people who are willing to put themselves and their names out for public judgment. And people who are like me, which is to say I actually like being alone in my room with a screen and a keyboard, people who are like that tend not to run for public office. They may staff them, but they tend not to run for it.

So in most elections, if you’re basically looking at one candidate, you say, “Yeah, candidate’s okay.” You – as the country has become more partisan you might say, “Yeah, the candidate’s okay but it’s the wrong party. But do I have an alternative?” More people are voting for the “Whoever it is, I’ve never heard of the person because that person wears the other party label.” But we still have a large number of people who are not so committed to one party or the other. So there has to be some ability to get your name out, and once the name is out, then the – in a way, the incumbent’s spending is a little less effective than the challenger’s. The incumbent is doubling down on “You already know me, I’m good. I’m good for you.” And the challenger is raising questions about the incumbent, which is why in recent elections incumbents have more – much more than in the past, they’ve been willing to become negative. Because they too are trying to change the question that the voters are asking, or they’re saying – or they’re saying, “If you vote for this other person, then some other thing will happen,” such as a Supreme Court justice will get confirmed or will not get confirmed. They will try to raise – change the issue away from one about themselves. And that’s something that works particularly with voters for whom party is most important. So this gets to the point of – that money is necessary, money is not sufficient.

Let’s look at – let’s say if you have to raise a million and a half, but seriously, if we’re talking about a competitive race, we’re talking about two and a half million for a challenger. How do you raise that kind of money? Frankly, I don’t know. I’ve tried to raise two and a half million – I run a nonprofit. This is not easy to raise this kind of money. Well, let’s look at where they get their money from. Next slide.

For most House and Senate candidates, the money’s coming from donors who give large amounts – large contributions, donors who can afford to give $1,000 or more. Now, I don’t – some of you, I don’t want to say, but almost everybody I know who’s a salaried journalist, including when I was, including all of my colleagues, if we were willing to engage in politics, we’re still not writing $1,000 checks. We’re writing – maybe writing $100 checks, maybe writing some kind of checks, if you were writing checks. But $1,000 means you have serious disposable income as your after-tax dollars.

So they’re getting – but the bulk of the money is coming from people that write $1,000 checks or interest groups, political action committees.

QUESTION: These are percentages, right?

MR MALBIN: Percentages of total receipts. Blue bars are House, red bars are Senate. Senate is raising more money from individuals than House, but it’s individuals giving thousand or more. House candidates are raising more from political action committees or interest groups. But look to the left side of that. People who are giving what most people can give, 200 or less, or most people can give a lot less than 200, you’re looking at 5 to 7 percent of the money for the House, 10 percent of the money for the Senate. The bulk of the money is coming from a rather small sliver of people. In congressional elections – this is more in presidential, but in congressional elections it’s a couple of percentage points of the voting age, the adult public, giving the bulk of the money – the 200 and up. Many more are giving 200 or less, but you see the percentage of receipts; that’s lower.

Now, this is not true for all candidates. Situation has changed in a very interesting way in the last 10 years with the profusion of internet fundraising capabilities, so that for – some candidates are now looking to alternative ways to raise their money, and doing so through small contributions. I also – well, at some point you want to ask – may want to ask me about the recent primary race in which --

QUESTION: (Off-mike.)

MR MALBIN: What?

QUESTION: Alexandria Ocasio-Cortez…

MR MALBIN: Yeah.

QUESTION: (Off-mike.)

MR MALBIN: Which she won with very little money against Crowley, who had a lot more. And I’ll be happy to talk about that, but let me – because that’s a very – that’s – actually, that’s an example. Maybe I’ll talk about it now. That’s an – she raised very little money compared to Crowley. It was a couple hundred thousand. He was well over a million. But – so how did she win? The answer is two.

One, primary is very low turnout, even in that particular primary which is higher than most primary – extremely low turnout compared to the general. She was able to communicate and stir the interest of voters who she persuaded to turn out to vote. She was able to reach them without spending money, through neighborhood groups, through direct communication, visiting people and so forth and so on, and Crowley took the race for granted. Buying a TV ad won’t help you in a typical congressional race. It doesn’t – you can’t buy TV in New York City with 30-some-odd districts covered by the airwaves. So the fact that he had 10-to-1 advantage didn’t mean that much.

So the key – and the key is do you have the means to communicate with the potential voters? And she did. And she had a better message. His message was, “Stick with me, I might be speaker.” Her message is, “I’m one of you,” and his district had changed and she was much more plugged into the new district. Let’s go to the next slide, because I was talking about small donors.

She didn’t actually rely on small donors, although most of her donors were small. She actually didn’t have a large amount of money. She actually relied on direct interaction, neighborhood organization. A --

QUESTION: (Inaudible) couldn’t say that was the deciding factor because it was other means that she used to get the message across?

MR MALBIN: Again, money is a means to an end. The end is communicate and persuade. If you have low turnout, there are fewer people have to be persuaded. If you have other ways to communicate, then the money is not as crucial to leveraging. Now, the smaller the district, the easier it is, normally, to rely on other methods. If you were running for New York Senate, you cannot reach 20 million people on foot. In a neighborhood of apartment houses, you can do it, and she did.

It’s a – this is what’s so surprising and interesting about the Trump campaign. His alternative means of communication was electronic, it was television, but he didn’t have to buy his time. Reporters played along with the game of letting him dictate the storyline for every day’s news. So every day, all the candidates were reacting to him and not getting their own message across. I don’t know that that’s going to work in the future, because I don’t know that reporters will let that happen, but that was the key to his success.

The next table will give you a few examples of candidates who had large amounts of small donor money – and I’m sure you’ve all heard of Barack Obama, the second – and he’s the chart on the – the two on the right, no – I can’t even read anymore – he’s both of the ones on the right, yes? Obama ’08 and Obama ’12, that was by far the largest amount of money from small donors, meaning 200 or less, people who accumulated 200 or less over the course of an election, the two-year cycle. It was about a quarter of his total money.

And then suddenly, somebody came along and broke the record, and that somebody was Donald Trump, who raised more money from small donors than any candidate ever has. And it was a very high percentage of his total, because he did not raise a lot of large donor money. To the extent he had large donor money, it went to outside super PAC committees. Trump had more small donor money than Bernie Sanders and Hillary Clinton combined. It’s – there are some congressional races in which you will see candidates relying on small donors and raising a lot of it. Senator Warren from Massachusetts, certainly, and there are others.

And the point is that the internet has enabled this – used to be if you needed to raise a large amount of money, you had to shake hands with people personally, or else your friends of friends had to do it. Who’s going to write a $1000 check to you based on a letter? Most people won’t do that. They say, “Well, I want to know something more about you.” So the people who would respond to mail would usually be people who would give $25 or so. And it costs a lot to do that kind of fundraising. For each piece of mail that you sent out, it would – in today’s terms, it would cost you a couple of dollars. So it would only be worth doing with repeat donors.

With the – basically since the 2004 election – and the technology hasn’t changed a lot since then. The databases have changed, the way of massaging the lists have changed, but the basic – the big change that happened was that when you can start sending the equivalent of mail to people, and the incremental cost of adding more pieces is essentially zero – you have a cost of building your technology, but it doesn’t cost you any more to send 10,000 e-mails or 100,000. Then the possibility for getting large amounts in $10 checks opens up. Now that only will help a candidate after he or she is known, which is why it has worked best for a few presidential campaigns. But you will see it more in congressional campaigns. You’re seeing it more in some local campaigns. So this is available as an alternative source of fundraising that is more important now than it used to be.

QUESTION: Could I ask a question? Has the messaging in those e-mails changed because I get a lot of dramatic appeals --

MR MALBIN: Sure.

QUESTION: -- for – we are in a very dire position now, give money now, every week

MR MALBIN: Sure, if you don’t go – if you don’t – right. If you don’t give $10 now --

QUESTION: We’re going to lose.

MR MALBIN: -- the world will end.

QUESTION: They will win, yeah. Has it always been – because at first, I was fully surprised it was --

MR MALBIN: Direct – direct fundraising to small donors often has come with an emotional and negative pitch. That’s not the way Obama’s fundraising was done. It has to be with a strong – there has to be a strong pitch. It is rarely done on the basis of this person is competent and will be able to see – to steer the ship of state well. That usually requires a donor to get to know you a little better, and that kind of appeal works better with people who can give a little more or with interest groups. It just takes a while to – and you don’t usually have a while.

So in fact they do a lot of experimenting with alternative messages to see what message will get a person to linger on the site a little longer. Politics has been learning over the last decade from other forms of commercial marketing about how to get you to be sticky, to stay on the site. They also will ask you to get involved, and that has other important and valuable spillover effects. Getting involved means in some way volunteering. So getting you to give a $3 contribution, which is what Obama used to ask for – or $5 – means that the campaign gets your e-mail and the campaign gets to ask you to go and make phone calls. It gets you to – and staying involved means you’re likely to come back. So the message is: Yes, they can have a kind of hysterical pitch, but honestly, if you’re watching most TV ads lately, so do they.

The – yeah, they – it’s worth looking at what we used to call a negative ad 20 years ago. They typically seem rather tame by today’s standards, and I’m not – this is not just U.S. Look at any of the campaigns that have – I mean, any one where candidates have hired consultants across the world in the last few years. They’re pretty – they are pretty intense. They’re – I don’t want to oversell the role of small donors. I do want to say that they – we might – do – spend a lot of time with them, we’re doing more research on them the last couple of decades than anybody else, but we certainly want to acknowledge that there is another end, and important end of the political spectrum – next slide – and that is what I call or what we call mega-donors to the super PACs, because there is this other phenomenon I’ll explain in a minute called the super PACs. And they tend to be fueled by people who can give much, much, much bigger contributions.

If you look at the next slide, you’ll see the presidential – the super PACs that were associated with presidential candidates in the 2016 election, and the blue part of the bar shows you how much of a super PAC’s money came from donors who gave $1 million or more. And in – underneath the dollar figure is the number of donors they represent. And I don’t need to go over all the numbers, just take my word for it, you’re looking at a lot of money and very, very few donors. You’re looking at a couple hundred donors providing a lot of money to the super PACs.

Now the good news is, to go back to the stuff I said earlier, having a very rich super PAC does not mean a candidate will win. Super PACs typically are buying TV ads in flooded markets where the vote is – the markets were already saturated. But in terms of the skew, the – who’s giving and who’s not giving, or whose money is getting involved in an election, this is an important – a very important piece not to be missed. Next slide.

It’s a phenomenon that has exploded since 2010, the Supreme Court decision I’m sure you’ve all heard of, Citizens United – and there are other related decisions that held that there’s a constitutional right for individuals, corporations, labor unions, to spend unlimited amounts advocating the election or defeat of a candidate, or to accept unlimited contributions to make the – to advocate election or defeat, as long as the expenditure is done independently of the candidate. And that independent bit is not very well enforced, but it is part of the law. And since that has happened, there’s been an explosion in independent expenditures in federal elections, to the point where if you look at the next slide, this is – my organization put this out toward the end of the last election. The closest Senate and House races, independent spending was outstripping money by the candidates or parties. In the Pennsylvania Senate election alone, there was over $100 million in independent spending. Again, I put that in there. You can find the press release for the details. It’s dated November 16th. But just to give you an idea over time of – next slide – give you the idea over time, this will show you in Senate races non-party organizational independent spending. The slope turns up right after Citizens United, and you just look at the direction of that line. I don’t have to give you the details. They’re going up a lot and they’re going up fast.

So to end this and let you get to questions, my predictions for 2018, particularly with respect to independent expenditures and to candidate expenditures. With candidate expenditures, my basic prediction is if a candidate has a prayer, has a chance of winning, the candidate will raise the money even if he or she hasn’t done it now. This is a year when donors care a lot about who controls the majority in both – each chamber. Internet aggregators have – now are able to let potential donors, including small donors, know which races are competitive and which races may tip a majority. So it would surprise me if there are many potentially competitive races where the candidates are starving for funds. Now, as it gets closer and closer, people will zero in on the most competitive races, and they’ll zero in on the chamber – why don’t we go to the next slide – they’ll zero in on the chamber where they think the majority is actually at – in play.

If you look at the seats – I’m sure you’ve been reading about this – if you look at the seats in the House and the Senate, almost automatically you would say Democrats will win seats in the House. That – it’s a midterm election. You look at the vulnerable candidates, almost automatically you’ll say that. Will they win enough to be a majority? Well, it’s reasonably close, but it’s definitely not certain. To get up in the high teens, probable. To get up into the mid-20s and the high 20s, which is what it takes to flip the chamber, odds are not bad but by no means assured.

In the Senate, it would – the Democrats have to pick up a net gain of two seats, but there are a lot more Democrats at risk than Republicans – no, not at risk, lot more Democrats running. And half a dozen Democrats are running in states that the President won by good margins, and there are a couple of vulnerable Republicans – Nevada, Arizona, and I know there’s a third, if you give me a minute. Nevada, Arizona, and another. It’ll come.

So for the Democrats to win a majority in the Senate, it has to be a stronger Democratic year than it is for them to win a majority in the House. So I – my basic – one of the predictions I have is that one or the other house will be in play and the other one will be pretty safe. If the House is a close race, it’s because the Senate is pretty – the Senate simultaneously will be pretty safe – the Republicans. If the Senate’s in play, it’s because it’s a really good Democratic year and the House is going to go Democratic. People with discretionary money who care about the majority will hang back and will put it towards whichever chamber is closer to the tipping point, and they’ll do it on both sides.

So July is too early to say whether super PAC money, donor money, discretionary donor money, money raised by the organization ActBlue, which advertises which are the close races – it’s too early to say whether it will flow primarily to the House or the Senate and so forth and so on. Last time it was the Senate, almost none to the House. This time I don’t know, but I do feel comfortable saying whichever chamber it is, it will flow toward the battle for the majority, and in the dozen or so closest House races or the half-dozen or so closest Senate races, that money will be more than what the candidates are able to raise on their own.

So having offered you a prediction, I now will stop, because I went longer than the 15 minutes by a lot. So go ahead and ask me questions. But then again, you asked a few questions in the middle, so other people should have a chance to ask questions. Yes, please.

QUESTION: You mentioned that (inaudible) this donation money has been flattened out in the past decade?

MR MALBIN: Money to candidates has flattened out.

QUESTION: Money to candidates, yes. Is that because this Facebook-endorsed social media is more helping for candidates to get him or her known to the public rather than spending money?

MR MALBIN: Yes. Facebook – social media is a good alternative message platform, but it’s still hard to get people to pay attention to you. I don’t know your personal experience with Facebook and Twitter. Mine is that I’m flooded. I don’t have time. I want to have a life. So if I don’t have some other reason to pay attention, it doesn’t necessarily reach me. It’s a great way to build up alliances of cadres of volunteers.

I don’t think it can explain the flattening out of money. It does help explain why there’s – why there can be an increase in small contributions, because it’s easier to network with friends and to tell them look at so and so, it’s a close race, that person needs your help. And that is going on.

QUESTION: Are individual donations tax deductible?

MR MALBIN: No. Political contributions are not tax-deductible and there’s no tax credit. There is in some states; there used to be a federal tax credit. No, contributions to nonprofit educational organizations are tax-deductible. Contributions to political campaigns or to advocacy groups – issue advocacy groups are not tax-deductible.

QUESTION: (Inaudible) Asia or Africa or Latin America, then we find there the campaign finance is not transparent. Who gives the money --

MR MALBIN: It’s not – it’s --

QUESTION: The campaign finance, that is not transparent.

MR MALBIN: Yes.

QUESTION: That is not transparent, so we do not know who is giving the money, where the money is coming from. Yeah, so that enters into kind of corruption.

MR MALBIN: Yes.

QUESTION: The people who give, they want something back when somebody is in power, and that leads to corruption. So what is the case here in the U.S.?

MR MALBIN: So in U.S. federal elections, contributions to candidates, political parties, and political action committees are – or certainly to parties and candidates – is thoroughly transparent, and the information is available very quickly and electronically. Contributions to super PACs are transparent, but they may come from organizations that are not themselves transparent, such as issue advocacy groups. Issue advocacy groups or corporations are allowed to make independent expenditures and their contributions are not transparent. The money they receive is not transparent. So you can see money spent by the committee that – Committee Standing For Good Things, some stupid name like that, and it receives money from the Committee That Stands For Even Better things, and you haven’t a clue where that came – where that came from. And that’s not a result of constitutional law. It’s a result of interpretations of law and enforcement actions that have sprung up since 2010. A number of people are upset about it; a number of other people are perfectly happy about it.

I said that I was going to say – tell you something about other sources to – if you’re interested in transparency, in legal questions, one kind of pro-transparency reform organization sort of in general – campaign finance regulation organization that I can recommend to you is the Campaign Legal Center in Washington, D.C. My organization has no lawyers. We’re all political scientists, so they are – deal with that information.

For a website that’ll give you much more than our website in real time information, fpc.gov is a beginning place, but be sure to look at opensecrets.org, opensecrets.org. It’s run by the Center for Responsive Politics, very, very fine. And they will tell you in any race how much of the independent spending came from groups that disclosed or did not. But we were way ahead of most other countries in transparency. Since the development of the spending by nonprofits, it’s less so.

Third organization I want to mention to you, and it’s the last one, is – the website is called followthemoney – all one word – followthemoney.org. That one is for state information. But transparency is a big issue here, and Transparency International rates every country, and we used to be up there toward the top. I still think we’re in the top sector, but it’s not as good as it used to be.

QUESTION: (Off-mike.)

MODERATOR: Actually, can we take one from Washington, and then we’ll come back to you.

QUESTION: Okay.

QUESTION: Hi.

MR MALBIN: Yes.

QUESTION: This is Scott Stewart, Japanese newspaper Sankei Shimbun. Thank you for doing this briefing and including us in Washington. My question is about Citizens United. Democratic Party is fairly consistently opposed to that decision, but I wonder if, since 2010, has the – have the Democrats been particularly disadvantaged by that – by the new system?

MR MALBIN: Yes, in a word. The – contributions to non-disclosing independent expenditure groups that support conservatives have been higher, more than ones that are on the left. I also think they have other concerns that affect the party balance, and they go to the questions of transparency that were just asked.

QUESTION: So the – so the money to super PACs tends to be more on the right side than on the left?

MR MALBIN: So far, but you have to – you do have to parse out the money raised by presidential candidates, but yes, it’s more on the – has been more on the right than the left. Well-organized groups on the left tend to have – are more likely to have mass membership bases. The Democrats are certainly organizing well-heeled donors to give to super PACs. Hillary Clinton’s super PAC had most of its money from million-dollar donors, but if you’re asking in the bulk is more of the money on one side than the other, the answer is yes. I think the Democrats also are saying that they feel they will do better in races that – in which independent spenders do not spend a lot on either side, where the parties and the candidates are the main focus of attention.

QUESTION: I see. Thank you very much.

QUESTION: You mentioned, sir, that the money is not the most important in American politics. How do you explain the fact that, for example, in the Senate, most candidates are millionaires, and (inaudible) that it is so difficult to reform the system with such a strong opposition to do that?

MR MALBIN: First of all, money is a necessary but not sufficient condition, okay? So from the perspective of any candidate, he or she will feel that they do need to have enough money. The question of why are people who are personally wealthy willing to run for office and run for the Senate is a little different from how do campaigns get financed. I think there are many reasons why people of – with wealth are more likely to stand for office than others. But it is true that if you run in circles of wealthy people, you’re more likely to have friends who are willing to write you $1,000 checks. If you tend to run in circles where people call you up to give money to the art museum, that means you run in circles of people who are used to responding to these kinds of appeals for funds. There are plenty of networks of such people on both sides.

One of my favorite – not necessarily favorite of all of my friends and family, but my personal favorite landmarks in the city of New York. So go to Lincoln Center, where you can see the David Geffen Hall facing off across the pool from the David Koch hall. It’s the New York City – the New York State theater is the David Koch Theater and the philharmonic – and basically you have a big Democratic mega-donor and a big Republican mega-donor face to face across Lincoln Center. And yes, these people are – when you’re used to giving, you’re more likely to give. Does that answer – that doesn’t fully answer your question. Go ahead.

QUESTION: (Inaudible) the reforms. The reform.

MR MALBIN: What about them?

QUESTION: How it is so difficult to reform (inaudible)

MR MALBIN: Yeah, because most candidates are – whether they’re – even if they’re abstractly for reform, most candidates are well aware that they managed to get elected in the current system, and they’re not willing to change it unless they feel comfortable that what’s coming after it is – fits what they define as being better.

Now, let me – see somebody else wants to ask in Washington, we’ll go there soon. Let me answer that in one – in one way. A majority of both chambers of Congress is controlled by a political party that believes – in its heart believes in unlimited expenditures and unlimited contributions, or if they like contribution limits, they like them to be high. And they actually believe that as a matter of principle and not merely as a matter of self-interest. Most Democrats believe in limits and regulations, so that’s the simple answer to the question of why is it so hard. But why was it hard even when Democrats were in control? The answer to that is that they – most people got to office by cultivating their donor base and they’re – they’re not going to sign on to a bill that doesn’t have literally everything they like.

There is a growing realization among members of both political parties, including a large number of former Republican members who are outspoken about it – not sitting members, former Republican members – that the current system takes up too much of their time and they’d rather be legislating and they would rather change the system. They would like to see some sort of public support, they would – for candidates – they would like to see tax credits or something like that. But it’s a – it is always hard. In any government in any country, it is always hard to change the system that forms part of the basis that got the people who are in office into office. (Inaudible.) We got somebody out there who needs to --

MODERATOR: We’ll go to Washington for the next question, then we’ll come back here.

QUESTION: Thank you, it’s Xesco from TV3 from Barcelona. I like to know your personal opinion about the system itself. Do you think it is totally corrupt, comparing with other – from Europe, it still looks (inaudible) corrupt, and I don’t know if it’s fair. Is it getting worse? I mean, do you trust the system? Do you think that it’s – or it’s –your personal opinion, that – the Congress depends on millionaires that have to give money and all that. I don’t know if we – if the system has become corrupted or not. Your personal opinion.

MR MALBIN: What’s my personal opinion worth? (Laughter.) Seriously, I’m not sure what it’s --

QUESTION: (Inaudible.) You know the system, you know other systems, you can compare, and I’d like to know – I mean, I think from the European perspective, it is really shocking how the system works here, because we are getting (inaudible) that – we have public funding for parties and, more or less, big donors doesn’t have the power that they have here. And I don’t know if this – probably the big donors here – long ago, they have power, but not the amount of power that they have nowadays, and I don’t know if this is perverting the system or not.

MR MALBIN: Yeah, I do think it’s unfortunate that the system has opened up in a way that lets candidates cultivate million-dollar donors, and it would be a lot more comfortable if – even if you support the Supreme Court’s definition of what is – what ought to be protected under the First Amendment of the Constitution, be a lot more comfortable if there were firewalls between candidates and these kinds of supporters. These firewalls are not enforced by existing agencies. I think that the idea of the system being fundamentally corrupt is just off base. I think you could – you have good reason for cynicism in most political systems, and you have many people who come into office with honorable motives in most.

I do think the system here has devolved into one in which people spend far too much of their time trying to raise money from people who write checks of $1,000 or more, and those people tend not to have the same perspective on the world as the average citizen. As one senator put it, “I spent all of my time raising money and I have heard a great deal about carryback interest provisions and not a word about daycare centers.” And that’s clearly a problem. The – most candidates’ votes are not up for sale, but the agenda is often very heavily influenced by the interests and concerns of people who can underwrite the major political parties. And by the way, that’s certainly also true in many systems where the party is the main receiver of the money outside this country.

Do I think the system was better or, in a sense – can I imagine a series of changes that would make me much more comfortable with the system? Yes, certainly – one in which small donors were stimulated through matching funds, one in which the barriers between independent spenders and candidates was much more clearly enforced, one in which the workday in the legislature were not structured so heavily by the need to go out and raise funds, one in which committee leadership was not handed out on the basis of how much can you give your party after you’ve raised the money from your donors. So I would say all of that.

I would say as the first step to all of that – all of it – I want to know where every nickel is coming from, or at least every – not every nickel. That goes way too far – below a certain de minimis level to protect the scared small donor. I want to know where the money’s coming from, then I’ll have a better – much better ability to connect the dots. And I have no question, I have no doubt that favors are given for interest groups that do various things – not just money, not just – but all sorts of things in all sorts of systems. And I do want to be able as a citizen to trace those out. Those are my personal opinions. They’re pretty close to 100 percent transparency and that it’s – that politics is a public good and should be supported by public resources.

MODERATOR: Thank you.

QUESTION: I have actually one thing – one question about this: How do you make a public finance – because, for example, in Brazil it is a discussion that we’re having, and it didn’t go ahead. So how is public financing here?

And the second thing I’d like to know: Companies can make contributions to the campaigns, for candidates?

MR MALBIN: Yes, second question first: corporations are not allowed to contribute to candidates in federal elections, nor labor unions. Corporations are allowed to set up what are called political action committees, and these are committees to which their employees or other individuals give their personal money.

QUESTION: Does it make any difference --

MR MALBIN: Yes.

QUESTION: -- if they contribute money through PACs?

MR MALBIN: Yes.

QUESTION: What is the difference?

MR MALBIN: The difference is it’s the individual money, it’s not the corporate money.

QUESTION: I know, I understand.

MR MALBIN: So you disagree. Let me go on with the answer. The other part of your question is how do you get to public financing. Some state legislatures have adopted forms of public financing for themselves, for their own elections. In other places it’s been adopted by referendum and initiative. In the U.S. Congress, there’s very little support for it now. Most Democrats in the House support a bill that would import a system that’s like New York City’s, which has multiple matching funds – multiple by which I mean six to one, eight to one, nine to one – for low-dollar contribution, but there’s no support from the other side of the aisle.

So how you get it is you have to get a legislature to pass it or you have to pass a state initiative or you have to wait long enough for these state examples to send people up to Congress who actually like living under the systems that exist. On the whole, where the systems exist, members of both parties like them. They use them. Arizona, Maine, Connecticut – it’s not just the Democrats or the Republicans that like them, but they’re in a minority of places now.

Kathy, you looked like you wanted to say something.

MODERATOR: No, I was going to say we probably have time for maybe one last question. Anyone around the table have a burning question?

QUESTION: Can you predict, sir, if any candidate who doesn’t belong to the major political party can win the presidency of the United States?

MR MALBIN: No, not in the foreseeable future. The barriers for third party – given that it’s a single-member system, single-member district, plurality winner, and you have to get a plurality across enough states to get you a majority of the Electoral College votes – 270 electoral votes – it’s not feasible in this country. It’s feasible for a third-party candidate to influence the major parties, it’s feasible to win in a smaller constituency, such as the senator from Maine is an independent. Mayor of New York before this one was an independent.

It’s conceivable, if we reform the electoral system – not the money system – if we reform the electoral system, that this could have profound impact. And the reform that is most interestingly being discussed in that regard is one that would move toward what they call instant runoff voting or ranked choice voting. In an instant runoff system, you can – you vote for – you can vote for all the people on the ballot and you put them in order – top five or the top three. And then if your preference – this exists in some other countries and it exists in many private – if you belong to a private club, a PTA – parent teachers association – they will often use this. The candidate with the least vote drops off and then you count up – I vote for all the first choices. This one had the fewest first choices. Okay, for this one’s candidates, let’s take all of the second choice votes, second preferences, and reallocate them, and you keep reallocating until somebody has a majority.

This has the effect – it’s predicted to have the effect; we don’t – that the candidate who will be elected, instead of being the one who was best liked by a plurality faction, it’s the one who was least disliked. And this would create all sorts of openings for middle ground candidates who are not – it will either change the parties or it will create openings for third factions or third parties, because you will not need to have a plurality on the first ballot. That makes – that would make a huge difference. Multi-candidate districts could make a difference, and those are perfectly constitutional, but very few places have them.

So if I were going to look for a system that – to make it more likely that people other than the nominees of the major party processes now could govern, I would be looking more at the general system for casting ballots and counting ballots than I would at the money system or at just hoping that some outsider could do it without institutional support. That’s extremely hard given the rules we have for ballot access and for counting now. So, sorry, if Michael Bloomberg wanted to run – wants to run next time or his equivalent next time, he really doesn’t have a chance.

MODERATOR: Well, thank you so much, Mr. Malbin, for coming today. Thank you all for joining us. This event was on the record. We’ll send you a transcript of this once it’s been completed, and thank you very much.

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