by Rod D. Martin
November 14, 1997

Initiated Act One, Arkansas’ latest attempt at campaign finance reform, recently lost its first battle against the Constitution in federal district court. This is as it should be: it is patently unconstitutional, and will no doubt share the fate of the almost identical Missouri campaign finance law struck down by the Eighth Circuit Court of Appeals two years ago. It is by no means too soon, therefore, to examine where two-thirds of Arkansas voters went wrong, and what better options they might now have.

Though you will never hear it from so-called reformers, it is a long established principle of constitutional law that campaign expenditures are protected political speech under the First Amendment. This just stands to reason. To require spending and contribution limits is really no different from saying that the New York Times may only spend — or that its investors may only contribute — a set amount for publication of their newspaper. Surely no one would support such a measure; yet Arkansans voted for Initiated Act One in droves.

They are right to want reform. They know there are problems in the system. They know there is corruption swirling around them, and they want to do something about it. This is why they voted for term limits, and this is why they elected a Republican Congress and a Republican Governor. Yet this honest desire to clean up the system is not by itself sound policy: just because something is labeled a reform doesn’t make it one. And when people begin supporting reform for reform’s sake, they quickly unleash all sorts of unintended, unwanted consequences.

Initiated Act One is the perfect example of this. The act’s most immediate effect is to completely undermine the recent term limits law. How is this so? By setting impossibly low contribution limits, it ensures that candidates with large, entrenched special interests behind them will always win, because only such candidates will be able to raise enough money to take their case to the voters. If you are a Democrat, or you are backed by the AEA or the AFL-CIO, you’ll win; if you are a Republican, with 80,000 voters in your primary in a great year, good luck. Perot supporters can just forget it. And for that matter, Arkansas has many different flavors of Democrats, and not all of them are equally well connected to organizations with lots of people. In short, the act will keep incumbents and their designated heirs in power, because they alone can raise the bucks. The common man need not apply.

Even were this not so, the act suffers from the same problem as all other complicated legislative schemes: it can’t cover all contingencies. Take the small-donor PAC provision as an example. This allows PACs that accept only contributions of $25 or less to give as much as $2500 per candidate. But what happens if the same group of wealthy donors wants to set up several hundred of these PACs and write $25 checks to each of them? PACs are cheap and easy to create, and there’s nothing to stop people from using them to donate all the money they want. In fact, elements in both parties already have this in the works.

The fact is, campaign finance bills like Arkansas’ are unworkable and self-defeating, and create a lot of additional opportunities for desperate fundraisers to break the law. We simply must find a better way. And here it is.

Political campaigns are nothing more or less than competing products in the marketplace of ideas, and socialism in this market will work no better than in any other. Therefore, I propose an abolition of all contribution and spending limits entirely, combined with a mandatory publication of all donors on the internet within forty-eight hours of receipt of the contribution. This system will mean that more candidates, representing greater diversity of ideas, will have a chance to run credible races. It will also give voters a chance to see exactly which candidates are beholden to whom (if anyone), and to reward or punish them accordingly.

This is scary to many readers: it seems counterintuitive. But the truth is, we don’t need government limits to make democracy work. We just need to trust the people. With full information, they’ll make the right choices; and believing in that principle would be the greatest reform of all.