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“The only way to fundamentally change the dysfunctional dynamic of our elections is to restore ‘purchasing power’ to the American people through a voluntary public funding system.”

- Bill Hudnut
Former Congressman from Indiana
ACR Advisory Board Member

Election Analysis: In Spite Of Record Spending In 2010, Money Did Not ‘Buy’ House Elections

As losers outspend winners in competitive House races, bipartisan reform group argues amount of spending not the problem, source of money is.

CONCORD, NH – Americans for Campaign Reform (ACR) today released an analysis of candidate, party and independent spending in 2010 House races which challenges conventional wisdom that money is the determining factor in candidate success. The bipartisan reform group, which is chaired by former U.S. Senators Bill Bradley (D-NJ), Bob Kerrey (D-NE), Warren Rudman (R-NH), and Alan Simpson (R-WY), argued that changing the source of money is necessary to restoring confidence in government, not changing the amount. ACR advocates for a broad-based system of citizen-funded congressional and presidential elections.

The 2010 midterm elections – the first since the Supreme Court handed down its landmark Citizens United v. FEC ruling permitting unlimited corporate- and union-funded electioneering ads – showed a considerable, if predictable, rise in overall campaign spending. The increase was most conspicuous in the independent spending category, where outside groups invested at least $280 million through Election Day, 130% more than in 2008; one-third of that spending came from a trio of independent groups: American Crossroads/GPS, the U.S. Chamber of Commerce, and American Action Network. Party spending fell slightly to $182 million, a 20% decline over 2008. And measured against the last midterm election, overall spending rose sharply from $2.85 billion in 2006 to an estimated $4 billion in 2010.

In spite of rising spending, candidates who sought to ‘buy’ the election by outspending their opponents or receiving party or independent group support were often thwarted – so long as their opponents had sufficient funding to get their message out. This finding is consistent with longstanding trends that show the diminishing marginal returns to campaign spending once a competitive threshold is reached. The data also show that underfunded challengers stood little chance of success.

“The lesson here is simple: money matters, but only to a point,” said Daniel Weeks, president of Americans for Campaign Reform. “While candidates who lack sufficient funding may as well stay home, those who cross a competitive threshold of around $1.5 million to run for House will do just fine even when they are outspent by their opponent or independent groups. The goal for those concerned about competition and accountability in Congress should not be to limit the amount of funding in campaigns, but rather to change its source from private, often undisclosed, special interest money to small constituent donations and matching public funds.”

Key findings from the ACR analysis of the 119 com-petitive House races in which each candidate spent at least $50,000 as of October 13, 2010 include:

• Higher across-the-board spending did not dictate end results: Candidates in the competitive subset raised an average $1.69 million to run for House through October 13, and benefited from $0.46 mil-lion in party spending and $0.50 million in inde-pendent group spending, on average. Nevertheless spending beyond $1.5 million produced negligible returns and even had a slightly negative correlation with the share of general election vote a candidate received, as losers outspent winners by 17%.

• Rise in well-funded challengers boosted overall competitiveness while showing diminishing marginal returns: House incumbents faced an unusually well-funded field of challengers in 2010, thanks in part to the nearly $500 million in combined party and independent group electioneering spending. Spending was targeted primarily at the 119 competitive House races, with the average challenger in the subset raising $1.4 million and receiving an additional $1 million in party and independent group support, compared with $2 million in incumbent fundraising and $0.85 million in outside support. In spite of the outside support, challengers with $3 million were not more likely to succeed than those raising half that amount. Meanwhile, challenger fundraising overall was far below the competitive threshold at $231,690 versus $1.4 million for incumbents (see Figure 1, below).

• Republican and Democratic candidates enjoyed roughly equal spending in competitive races, despite Republican wave: While Democratic candidates outraised their Republican opponents in competitive races by 25% and received 27% more in party support, their advantage was mitigated by the Republicans’ nearly 2:1 advantage in independent group support. Overall spending averaged $2.75 million for the Democrats and $2.55 for the Republicans in the subset of competitive House races, both comfortably above the sufficient funding threshold. A Republican wave is therefore taken to account for Democratic losses and the decline in incumbent reelection to 87% (compared with 94-99% in 1998-2008), the lowest level in forty years.

Summing up the analysis and its implications for campaign finance reform, Weeks observed, “2010 was the most competitive race in years, thanks in part to the unprecedented level of independent spending post-Citizens United. While competition is a good, having candidates rely on a small number of special interest players to run outside ads on their behalf breeds corruption and conflict of interest. Instead of seeking to cap private spending as the Supreme Court has denied, voters should demand greater accountability through a citizen-funded election system that expands speech and is wholly owned by the American people.”

The ACR-backed Fair Elections Now Act, referred out of House committee this fall and backed by more than 200 Members of Congress, would create a voluntary system of citizen-funded House and Senate elections.