Campaign-finance reform: A public choice perspective

The Federal Election Campaign Act as passed in 1971 and amended in 1974 represented landmark federal legislation. It imposed new restrictions on campaign contributions and contained path-breaking provisions for the use of public funds to partially finance the campaigns of qualifying presidential candidates. The nominal intent of the legislation was to restrain the skyrocketing campaign costs and the feared abuses that growing dependencies on such money engendered. Three decades later, with the campaign spending "arms race" still raging, Congress sought to impose further constraints on campaign spending with enactment of the Bipartisan Campaign Reform Act of 2002 (BCRA). Competing theories of government regulation are reviewed to better understand the intent and likely consequences of the 2002 legislation in particular and campaign finance regulation in general. A simple model of the campaign spending process highlights the likely causes of the rapid growth in campaign spending. Data and evidence are presented to test hypotheses concerning the timing of and underlying motivations for BCRA.