McCutcheon was a victory for gazillionaires, right? Yet what do we make of the headline of a striking article in Politico: Big donors fear shakedown after decision? (The article is dated April 2, not April 1.) And here are some choice quotations:
“I’m horrified, planning to de-list my phone number and destroy my email address,” said Ken Kies, who, along with his wife, has bumped up against the federal political contribution limits. “What I was really hoping for is a ban on lobbyists making contributions entirely.”
Podesta said for those donors, the new rule “eliminates an excuse that people have to say I’m done for the cycle and I can’t do anymore, which means that people who do max out will end up giving more money than they used to to candidates.”
“We were already getting drained before, now it’s another means to suck out more cash without any actual return on value,” said one GOP lobbyist.
“For the lobbying community, it increases the cost of doing business,” said David Rehr, a former association executive.
While Democrats publicly bashed the decision, they were far more positive in private. One top Hill Democrat suggested Democrats had larger number of donors, and they can now go back and ask these supporters for even more money.
Consider two models of campaign donation. In model 1, the donor gives a donation in return for a favor. McCutcheon improves the well-being of the donor in model 1 because the donor can give more donations and receive more favors in return. In model 2, the politician threatens the donor with a bad outcome (for example, delay in regulatory approval) unless the donor coughs up a donation. McCutcheon hurts the donor by giving politicians the power to make more threats and receive more donations in return. The difference between model 1 and model 2 is the difference between a bargain and extortion.
Which model is correct? Probably both describe some of the reality. Caro’s biography of LBJ provides a clear example of model 2 where LBJ threatened to delay a bank merger unless (if I recall correctly) the owner of the bank held off criticism of LBJ in a newspaper he also owned. The Politico quotes also support model 2 (though I suspect some of those quotes were tongue-in-cheek). But if model 2 were correct, it is hard to understand why Congress agreed to campaign finance limits in the first place. And it is hard to understand why the billionaires oppose donation limits, though it would not surprise me if people like McCutcheon himself, who espouse a crude libertarianism, never take the second step and ask how they fare if others are freed from the limits that frustrate them. Indeed, even under the more benign model 1, the lifting of donation limits can just lead to auctions in which the politician, who has quasi-monopoly power, can demand higher payments from those who seek favors. So while the donor still gets something of value for his money, he must pay more than in the past. Think of McCutcheon as a decision that imposes a tax on millionaires.