Jeffrey Milyo,
David Primo and Timothy Groseclose
Popular opinion suggests that campaign contributions
can corrupt politicians. Many voters and researchers consider such contributions,
especially those from Political Action Committees (PACs), to be the
functional equivalent of bribes. It is generally believed that corporate
PAC contributions: 1) significantly determine vote shares and electoral
outcomes, 2) distort public policy and 3) are an essential component
of corporate business strategies. However, University of Chicago
Harris School Assistant Professor Jeffrey Milyo and two Stanford researchers
argue that the empirical evidence does not fully support these claims.
For example, during the 1998 election cycle PAC contributions and soft
money expenditures each totaled roughly $220 million, whereas spending
on lobbying and philanthropic efforts reached $2.3 billion and $17.4 billion,
respectively. The stark disparities in these figures challenge traditional
assumptions concerning the value of PAC contributions. The authors examine
the corporate giving activities, including lobbying and philanthropic
expenditures, of five major industries in order to assess the relative
influence of PAC contributions. According to the researchers, one-time
PAC donations could be considered "entrance fees" which provide
access to a legislator but at the same time require no contractual
obligation to support corresponding legislation.
Key Finding
Milyo and his colleagues argue that PAC contributions
are not the most likely means by which to influence policy makers given
the restrictions and regulations in place to safeguard against possible
corruption. PACs are allowed to contribute a maximum of $5,000 to a
candidate per election, a very small amount compared to the millions
of dollars often spent on a political campaign. In contrast, soft money
contributions (other activities not directly related to Federal campaigns)
are not limited. Specifically, the authors compared the political and
charitable activities of firms from the five industries thought to be
the most politically influential - tobacco, pharmaceutical & medical
products, telephone utilities, defense aerospace, and computer - for
the 1997-1998 period. A basic spending pattern emerged: lobbying expenses
far exceeded PAC contributions, and even more was allocated towards
corporate philanthropy across all industries. For instance, the pharmaceutical
firms as a group spent $148 million on lobbying, compared to less than
$5 million in either soft money or contributions from affiliated PACs.
Individual pharmaceutical firms spent at least 100 times more on corporate
philanthropy than soft money and affiliated PAC contributions combined
($100 million vs. $1 million.)
While Milyo and his colleagues find a positive relationship between roll-call
votes and the interest of their PAC contributors, they argue that there
is no proven relationship between PAC contributions and the actions of
the legislators who received the contributions.
The authors sustain that this correlation does not incorporate the preferences
of the legislators or their constituents (i.e. how the legislators would
vote in absence of campaign contributions). Studies that attempt to control
for these preferences find no evidence of influence in the roll-call votes
of members of Congress.
Furthermore, the authors point out that because
PAC contributions are one-time donations, they do not carry an enforceable
contract - no law prevents the legislator from reneging on the implied "understanding." Thus,
the authors content that the operation of a market for political
favors is hindered.
According to this study, the activities of PACs challenge the conventional
wisdom that PAC contributions are an attempt to bribe legislators. Firstly,
they find that few PACs donate the maximum contribution allowed by law.
On average, labor PACs donate $1,500, trade PACs donate $1,300, and corporate
PACs donate only $700. If the contributions were an attempt to sway legislators,
one might expect that the maximum amount of money possible would be donated.
Secondly, while it would seem logical that more money would be given to
those in powerful positions, such as the office of a president or senator,
the authors find that PAC activities are aimed at congressional representatives.
Moreover, they show that a disproportionate share of PAC contributions
are made to those who are running for election, compared to seated politicians.
Those senators up for election raise three times more PAC money than the
remaining 66 incumbents.
Background
There is a vast empirical literature on both the allocation of corporate
PAC contributions in congressional elections and the influence that these
contributions have on the policy making process. A opinion poll conducted
by the Center for Responsive Politics (www.crp.org) during the 1998 election
cycle revealed that most respondents support an outright ban on PAC contributions.
This attitude reflects the popular opinion that money plays a dominant
and influential role in American politics. The same poll revealed that
only 41% of respondents were aware that existing laws limit contributions
and only 4% knew that the current law prohibits corporate contributions.
While many studies have explored the statistical relationships between
corporate or industry PAC contributions and legislators' committee assignments
and roll call votes, relatively little scholarly attention has been devoted
to the substantive importance of PAC contributions either to candidates
or to donors.
Methodology
For this study, all statistical information on PACs and campaign contributions
was obtained from the Federal Election Commission. The researchers compiled
the data into seven tables: PACs and PAC Contributions by Type; Distribution
of PACs by Total Contributions in the 1998 Election Cycle; PAC Contributions
to Current Candidates; Distribution of PAC Contributions (to House and
Senate Incumbents); Distributions of PAC Contributions (to House and Senate
Democrats); Corporate PAC Campaign Contributions in Perspective, and Industry
Profiles. Those tables outlined the patterns of PAC contributions and
composed the researchers' core findings.
• Read
a related interview with Jeffrey Milyo
Policy Briefs are designed to highlight key
policy implications and to broaden the dissemination of policy-related
research. These Briefs are funded by the Irving B. Harris Graduate
School of Public Policy Studies at the University of Chicago.
For more information, contact Jamie Rosman at (773) 702-2287 or HarrisSchool@uchicago.edu.
