Did McCain-Feingold Have A Pervese Effect?

--by Sebastian

Apparently I will be continuing my recent trend of riffing on Kevin Drum's posts.  He points to this fascinating chart:

Kevin notes the surprisingly stable Presidential campaign costs from 1964-2000.  I was especially surprised by 1992.  I would have thought that a three way race with the closest thing this country has had to a third party in almost a century would certainly have skyrocketing costs.  But it turns out they didn't.  He goes on to note that the costs skyrocketed for 2004 and 2008.  The thing that immediately struck me about that time period is that those were the only elections which were 'restricted' by the McCain-Feingold Bipartisan Campaign Reform Act. 

Why did campaign expenditures skyrocket in the only elections where outside spending was supposed to be sharply regulated?  I don't know, but I'll throw out some factors that come to my mind, and what I think about them.

1.    The parties thought that with a lack of outside spending they could get much more bang for their buck.  I'm not sure this would explain why they didn't spend much more in previous years but it might be a factor.

2.    The parties were able to raise more money because other political spending outlets were closed (or were perceived to be closed).  I might buy this one.

3.    The parties felt they had to raise more money because the loopholes in McCain-Feingold were so big that they didn't actually rein in any spending by groups outside the campaign.  This one is interesting.  The history of spending through 527 organizations suggests that it wasn't ridiculously difficult to get around McCain-Feingold if you wanted to (though both Swift Boat Veterans for Truth and MoveOn.org got hit with fines for failing to register).  But this raises an interesting question, what about 2000 (or 1996)?  Was McCain-Feingold somehow worse *even by its own standards* than the regulations that came before it? 

4.    Those two elections were hotly contested with a very fired up base, so more fund raising/spending was possible. This is a very plausible candidate.  Bush was already a well hated president by 2004, and by 2008 the Republican party was looking like a complete mess in the aftermath of the Bush years.  But this would suggest that spending should go down soon, which doesn't initially seem to be the case (ask again after the election).

It is possible that McCain-Feingold is unrelated to this chart.  But it seems very odd the skyrocketing costs took place in the only two elections where the law was in force. 

Comments

[Jonathan Dresner]

I think Drum's basic premise is flawed: this is not "surprisingly stable" but constantly rising curves, interrupted in the 70s by the first wave of reform. It's a scale problem: if you look at the lines only up to 2000, the rising curves to the 60s, drop, then rising again to the 90s are quite visible.

What's weird is the last 3 elections, where the curve has gone asymptotic....

[Sebastian]

But even if that is the case, is it doubly weird that in the last 3 elections, the speed of the growth has been largest during the elections governed by the second wave of reform. That suggests to me that something went really really wrong with McCain-Feingold, perhaps to the point of actively making things worse.

[Ugh]

Other possible explanations (in no particular order and of course these aren't mutually exclusive):

1. Rising prices in the TV advertising space.
2. Rising prices in the political consultant space.
3. More avenues for spending (the Intarwebz, for example, as the kids call it).
4. More avenues for fundraising (e.g., small donors).
5. Increased awareness that Congress is for sale and thus having a POTUS "on your side" is thus at a premium given the veto (not sure I believe this one).

As usual, it's probably a combination of things.

[Rob in CT]

I don't know... looking at 1960-1964-1968 you see what looks to me like an almost identical progression, but then a big drop in 1972 (to a level much higher than 1960, though).

M-F is clearly a failure. I don't know that it's driving the costs up, but it's obviously not doing any good.

[Sebastian]

"Rising prices in the TV advertising space."

At least for this one, I thought inflation adjusted advertising was down or level, but I can't seem to find anything definitive on it.

[Ugh]

At least for this one, I thought inflation adjusted advertising was down or level, but I can't seem to find anything definitive on it.

That's probably right, especially in 2008. OTOH, since the broadcast/cable networks seem to think they have a pretty good handle on who watches what show, and given the fragmentation of the entertainment market especially with the internet, it could be that the campaigns felt they had to spend more on TV adverts because at least they could be (fairly) confident that "if we buy advertising on show X we'll reach Y demographic, but now the demographics are spread across many more shows", whereas on the internet who fricking knows.

We'd still need to account for the fundraising side, of course.

[Carleton Wu]

It is possible that McCain-Feingold is unrelated to this chart. But it seems very odd the skyrocketing costs took place in the only two elections where the law was in force.

Or that the bill was designed to meet this very problem & has either had little effect or has had an effect but this has been swamped by the magnitude of the problem. In fact, given the passage of the bill implies some considerable institutional concern with campaign finance, it's not surprising that there was a subsequent problem (if we assume that that concern was well-founded).

That suggests to me that something went really really wrong with McCain-Feingold, perhaps to the point of actively making things worse.

This logic would lead you to conclude that there is something very wrong with hospitals- patients are sent there to be made healthy, but in fact the death rates there versus elsewhere are much higher...

Which isn't to say that you're wrong, just that this sort of thing cannot be resolved via speculation. The bill could've been a moderate success or a phenomenal flop, just looking at the post-facto numbers won't tell us anything.

I do think it's interesting that you assume the bill is to blame, and that your original list of possible causes doesn't locate any sort of systemic problems- the sort of systemic problems that the bill claimed to be addressing. To use the hospital analogy, it becomes much easier to conclude that hospitals are nefarious if you assume that the patients are no sicker than the average population.

Ugh- yeah, I dont think there's much to be gained by examining the cost-benefit of spending money by campaigns. At least, my gut says that campaigns bring in as much money as they can raise (as opposed to 'enough to get elected' or 'enough to buy the TV spots we think we really need'). The fundraising side seems to me the entirety of the question. There *might* be some political calculus by donors as to how effective their donation is, but even there most of the political analyses Ive seen compare money between candidates, not against some absolute scale.

[KCinDC]

Is there any data on how the proportion of the public that pays close attention to politics has changed over time? It certainly seems to me that politics is a much bigger and more constant topic of conversation now than it was in 1992. Similarly, a greater amount of TV time seems to be devoted to politics than 20 years ago.

[cleek]

take KCinDC's observation.

add the possibility that fundraising has undoubtedly become smarter and more sophisticated in recent years as data analysis and targeted marketing has improved.

add the unique urgency of the 2004 election: the GOP basically turned it (and everything they could put words to) into an existential issue for the country.

now assume most of the people running the 2008 campaigns were probably involved in 2004. so they went with what worked in 2004, but dialed everything up a notch or two.

so we have media saturation, sophisticated data analytics, and the people running the campaigns already know how to raise big dollars. and, while the existential urgency over 9/11 has mostly run dry, the GOP has probably refilled that well with highly divisive culture war issues. so, that money-generating energy is still there.

[wj]

I wonder if the constrain wasn't fund-raising. Since 2000 it has become increasingly possible to find out exactly who might be willing to donate, and send them pleas for funds which carefully target their individual concerns. Of course, politicians have always used this approach with large donors. But now they can do the same on a mass-production basis. And the money from those small donors can (not always does, but can) add up to something that competes with the big donors.

Then, the campaign spends the money that it has. After all, why save it? Presto, because the campaigns have more money in hand, spending goes up.

In this sense, it isn't so much that McCain-Feingold is a failure (although it clearly isn't a success) as that it has become an irrelevance.

[Doctor Science]

digby posted about this, asking where is the money going? Interesting info in comments:

You Norker:

The consultants get paid a percentage of the cost of their ad placements, so the two costs rise in direct proportion. Most consultants will tell a campaign that they should buy off-air rather than the cheaper and better-targeted cable, even when the time slots are adjacent. I don't think this is coincidence. The in-house consultants, the ones that the DCCC and the NRCC send you to tend to be the most expensive both for production and ad placements. The favored time slots toward the end of the campaign get more expensive the more desireable they become. The committees get money pumped into your committee, but like to have the campaigns dump it right back into the favored consultants. Inferences might be drawn from this.

Zifnab25:

Turnout is becoming an increasingly big issue in elections. And Obama proved the value of a strong ground game in '08. If the state and local political branches aren't pulling their weight, its possible that the money is going into pumping up the base. Putting campaign offices and boots on the ground is a lot more expensive than throwing up a few "Vote for Me" bill-boards, and driving your bus through town.

I wonder how much the Presidential politicians are footing the bill for their local chapters now, compared to 40 years ago.

[Doctor Science]

Also:

Thank y'all, oh Front Pagers -- I am up to my jawline in work, and I have to go in to The City tomorrow, so I can't post again for another couple of days.

[DaveC]

2008
Obama: $740.6M , McCain: $227.7M

[cleek]

Obama: $740.6M , McCain: $227.7M

why, it's almost as if people were completely fed up with the GOP and really wanted them out of power!

[Brett Bellmore]

More like as if McCain wasn't really enthusiastic about running for President, and gave up partway through the campaign. As he actually did, you may recall, shutting down his campaign for a while, and never really getting it fully running again.

I would say there's a relationship between the vast increase in political spending and McCain/Feingold, but it's not causal, rather, they're both the same sort of thing.

Remember, McCain/Feingold passed on a practically party line vote; All but three Senate Democrats voted for it, and only a handful of Republicans. The House vote was similarly lopsided.

This is because, while it was sold as "reform", it was actually meant as a kind of strategic first strike against the Republican party's ability to engage in independent expenditures, to counter the Democratic party's superiority in MSM support.

Similarly, around the same time there was increasing talk about reenacting the "Fairness" doctrine, in order to kill off conservative talk radio.

So this is kind of like asking, "The blockbuster bomb was followed by a dramatic increase in small arms fire, was it actually counter-productive in it's goal of reducing hostilities?" It completely misconceives what was going on.

Now, it is an interesting question why long period of sniping suddenly broke into open warfare, with both sides deploying every munition they had available; I personally think it's because people are starting to suspect we're in the end game for American democracy and constitutional government, and whoever is on top when the game ends will have a relatively permanent victory.

[Slartibartfast]

Is it ok for me to spelling-flame Sebastian over "Pervese", yet?

[liberal japonicus]

Prevese is a kind of italian pasta dish, I think...

[hairshirthedonist]

It's "Pervese Effect." In the late 19th Century, Italian economist, Mario Pervese, theorized on the inverse, exponential relationship between individual financial restrictions and aggregate activity, now known as the Pervese Effect.

The classic example of a Pervese Effect is that of prostitutes in Paris in the early 20th Century being limited to charging clients no more than 1.5 Francs per trick, the result of which was an explosion in prostitution activity as eager clients lined up for cheap sex.

Look it up.

[Countme-In]

Lower the price and they will come.

[Ugh]

Brett: Remember, McCain/Feingold passed on a practically party line vote; All but three Senate Democrats voted for it, and only a handful of Republicans. The House vote was similarly lopsided.

And signed into law in 2002 by Democratic Party sleeper agent POTUS George W. Bush, who was rewarded for signing the bill with re-election due to his stealth party affiliation.

This is because, while it was sold as "reform", it was actually meant as a kind of strategic first strike against the Republican party's ability to engage in independent expenditures, to counter the Democratic party's superiority in MSM support.

Right. The bill that passed was introduced in the House by well known hard-left MSM lover, Chris Shays, R-CT.

Similarly, around the same time there was increasing talk about reenacting the "Fairness" doctrine, in order to kill off conservative talk radio.

I agree with you here in that if, e.g., Rush were required to devote an uninterrupted 5 minutes during every hour to a contrasting view his show would end in short order.

[russell]

I wonder if anyone who is freaked out by the Fairness Doctrine ever saw an opinion rebuttal on TV, or heard one on the radio.

Seriously, it was not the stuff of jackboots and the fell hand of the oppressive state.

Birkenstocks, maybe, and bad haircuts. Nervous people, often unused to public speaking, making their earnest points in not-always-ready-for-broadcast voices.

I miss all that, I thought it was freaking great. A beautiful, beautiful thing. Any oddball with an ax to grind could get their five minutes if they had the gumption and perseverance to insist on it.

The only thing sort of like that now is probably town meeting, and there are damned few of those anymore, either.

All part of an America that's gone now. If you never knew it, that's a shame. If you did and you simply don't miss it, or are quite happy it's gone, more's the pity.

Nowadays if you want to get your point of view out there, you need to buy your own network. Or, candidate.

[russell]

In the late 19th Century, Italian economist, Mario Pervese, theorized on the inverse, exponential relationship between individual financial restrictions and aggregate activity

My friend, that was a thing of beauty. Well played.

[Phil]

I feel like I need to go find links for all the stories from 2008 about the big barbecues at the McCain joint featuring the whole Washington press corps, but what's the point? Brett's got a narrative and nothing can penetrate it.

Any oddball with an ax to grind could get their five minutes if they had the gumption and perseverance to insist on it.

Yeah, people seem to forget that Emily Litella was a parody of exactly this stuff.

[russell]

Via digby, maybe this kind of thing is a factor.

Don't know if 527's are susceptible to this kind of gaming, or if it's unique to the new Super Pacs.

But if you get to put a lot of the money you raise and spend into your own pocket, there is certainly an incentive to make that number as big as you can.

When speech is money, people are gonna want to talk a lot.

[Brett Bellmore]

Ugh, McCain/Feingold was aimed at conservative interest group spending. For Democrats it was a way of attacking Republicans, but a minority of Republicans saw it as a way of weakening conservatives within the party.

It was none the less unpopular enough among Republicans, that Bush's signing of the law was in violation of a campaign promise. Voting for it was, on the part of a few Republican members, part of the internal fight for who controlled the GOP.

[Sebastian]

"Nowadays if you want to get your point of view out there, you need to buy your own network. Or, candidate."

If only there was an internet.... ;)

[Victor]

IN a way you can say that these two have a pervese effect and this is the reason that is pushing them behind!

[Modified because sometimes we DO want spam, only with not so much spam in it - Ed]

[russell]

If only there was an internet.

Yeah, the internet is great.

How many people do you suppose read ObWi?

Huffington Post is the only politically oriented blog that has a readership remotely at the scale of broadcast media.

By which I mean, HuffPo in its entirety -- all of the posts, all of the comments -- has a readership volume comparable to *one* of the top level broadcast programs. Limbaugh, All Things Considered, Daily Show.

So yeah, you could go comment like mad at HuffPo, and hope that whatever sliver of their readership happens to read the thread you're commenting on stumbles across your offering.

Below the level of HuffPo, there's no comparison between online readership and broadcast media audience.

And, frankly, it's academic. The Fairness Doctrine *and the entire understanding of social relationships and norms that gave rise to it and supported it* are dead and gone. And they're not coming back, ever.

Aisles had the correct insight. Want to get your ideas out there, buy a network.

[wkwillis]

I think that the reason we got more political donations is that we got more corporate money from government.
When the government spent money on getting bigger, the government workers got the money, gave some to unions, which gave campaign donations according to what they could pry out of their members.
When the government began their massive outsourcing to corporations, the corporations began making contributions to politicians and found it much easier to pry money out of their stockholders.