10/30/2014 10:57 am ET Updated Dec 30, 2014

What's the Cost of Letting Billionaires Fund Campaigns?


If you live in a competitive congressional district (and most of us don't), you've been receiving lots of "free" information lately about the candidates who would like to represent you in the next Congress. Mailers, ads, robocalls - all free. Aren't you lucky?

By free, I mean that you don't have to pay for those political ads - somebody else does. Our esteemed Supreme Court has another meaning for these ads - "free" speech, meaning that there are no rules as to how much speech somebody can buy.

Nobel-prize winning economist Milton Friedman was fond of telling us there's no such thing as a free lunch. Likewise, there is no such thing as a free political campaign ad.

So, we have a choice. Should we let billionaires and special interests pay for campaign ads (like we do now), or should we pay for them ourselves?

More money is being spent on congressional campaigns in 2014 than ever before, but fewer people are actually giving. It's just that the big donors are writing even bigger checks, while small donors are losing interest in a game where they matter less and less. One recent look at a representative sampling of nine California congressional incumbents found that none of them raised more than 20% of their funds from donors giving less than $200.

When we let other people pay for our campaigns, legislators become accountable to those people. The finance, insurance, and real estate sector gave more money to congressional campaigns than any other industry group. Is it any wonder that when Congress considered a bill that literally was written by Citigroup lobbyists to weaken banking rules, the co-sponsors of the bill received 16 times as much money from the bank than House members that did not sign on as co-sponsors? When Wall Street greed crashed our housing market and then our whole economy in 2008, Americans saw our home values plummet by $1.2 billion and 500,000 fewer jobs were created. That's a steep price to pay for letting Wall Street fund our political ads.

Off-shore tax havens cost the average American taxpayer $1200 a year and small businesses nearly $4000 a year. A nonpartisan congressional research panel estimates taxpayers could lose $19.46 billion over the next decade unless Congress acts to stop so-called "inversions" where corporations move their headquarters to foreign countries. The U.S. Chamber of Commerce, which has opposed efforts to curb inversions, has spent more than $33 million in outside campaign ads for the 2014 election cycle, ranking seventh of 152 SuperPACs and first in lobbying.

Are we in fact paying for all the campaign ads through higher taxes, higher prices, a weaker economy, and a lower quality of life? After all, there's no such thing as a free lunch.

There are proposals in Congress, like the Government by the People Act, to increase the role of small donors in funding congressional campaigns. Through a tax credit for small donations, and federal matching funds for candidates who agree to forgo the biggest checks, we could start paying for campaigns ourselves again and candidates playing under the new rules could remain competitive with those backed by fat cats and SuperPACs.

Recent academic research has found that the United States government is looking more like an oligarchy than a democracy as Congress is increasingly more responsive to wealthy donors and special interests than to average citizens. Perhaps that's because in the 2012 elections, candidates for the House of Representatives received the majority of funds they raised from individuals from big money donors comprising just 0.06 percent of the U.S. population.

Remember, he who pays the piper calls the tune. The price of democracy is steep, but oligarchy is even more expensive.