MONEY-POLITICS SEPTEMBER 16, 2013
The second-day story from New York City’s primaries last week could have been the exceptional performance of the city’s unique system of small-donor public financing. By providing a six-dollar public match for every dollar raised in contributions of $175 or less, the system enabled the little-known Scott Stringer to compete with and defeat Eliot Spitzer’s family fortune in the race for Comptroller. On the Republican side, it helped mayoral nominee Joe Lhota, who received almost half his total spending in public money, to overcome another self-financed millionaire. The top three Democratic candidates for mayor finished in reverse order of the amount of private money they had raised, and as Alec MacGillis noted here, public financing allowed the eventual nominee, Bill de Blasio, to resist the policy preferences of big donors, such as opposition to paid sick leave. Dozens of city council and other races featured three or more candidates with enough money to compete.
But instead of celebrating a system that finally emerged from the shadows of Michael Bloomberg’s personal spending to show its value, we’ve had handwringing about the rise of “outside money,” or spending by groups other than the candidates and parties, in New York City politics. Jim Dwyer in The New York Times argued that outside spending was “reshaping” city politics, focusing on three independent committees: one that promoted “Anybody But [Christine] Quinn,” based on the City Council speaker’s refusal to block horse carriages from Central Park; a tiny committee formed to support Lhota, with contributions solely from David and Julia Koch; and Jobs for New York, the biggest outside spender, a front for the real estate industry.
The rise of outside money in New York campaigns is indeed a concern, and could ultimately undermine the public-financing system, which is finally gaining recognition as a model for reform at the state and federal level that puts a higher priority on encouraging small donors than restricting big ones, and that seems likely to withstand constitutional challenge.
But let’s put this new spending in perspective. Thanks to the city’s excellent disclosure requirements, we know that about $12.7 million was spent by independent groups in the primaries, with almost $5 million of that total coming from Jobs for New York, the real estate group. A total of $105 million, in public and private money combined, was spent by candidates themselves, the vast majority of whom were abiding by voluntary spending limits. That is, about one dollar in ten came through an outside group. By contrast, in the 2012 U.S. Senate races, outside groups spent about half as much as candidates, even though none of the candidates were subject to spending limits, and a study by the Campaign Finance Institute shortly after the election indicated that in contested House and Senate races – those decided by 55% or less -- outside groups spent about the same amount as candidates. In some state-level elections, such as in North Carolina, outside spending exceeds the amounts spent by candidates.
There’s also no indication in New York City that candidates or their operatives were using outside groups to boost or reinforce their own campaigns. That, too, is different from the federal level, where organizations such as Priorities USA, American Crossroads, or Restore Our Future were tacitly operating as agents of the Obama, Romney or Gingrich campaigns. Similar vehicles pulled many Senate and some House candidates. The New York spenders are actual outsiders, which means their advertisements and brochures were often messy and off-message. (You can watch any of the “Anybody But Quinn” ads on the site of the New York City Campaign Finance Board if you want to see what I mean.)
But then there’s Jobs For New York, by far the biggest spender and the most professional. It concentrated all its resources on city council races, which is savvy, and in some races its spending did exceed spending by candidates. The group also spent almost all its resources on mailings, and almost nothing on television. Although mail is not usually considered the most effective campaign strategy, and de Blasio swore it off entirely, Mijin Cha of Demos noted last week that Jobs for New York appeared to have a good election day, as 16 of the 20 candidates the group supported won.
But Cha overlooks that Jobs For New York’s strategy seemed to be not so much turning its own candidates into winners, but ingratiating itself with candidates who were already likely to win. WNYC reported in September that “ten of the candidates Jobs for New York is supporting also have the backing of the liberal Working Families Party, which is often on the other side of policy debates from big real estate,” and that its mailers showcased endorsements from Rev. Al Sharpton and the Service Employees International Union. “Instead of trying to beat us, they’re trying to purchase influence with their very large checkbook,” Bill Lipton of the Working Families Party told WNYC.
Whether the real estate group succeeds in purchasing that influence depends on whether the winning candidates see themselves as indebted to the organization or not – or more importantly, whether they fear that losing Jobs for New York’s support in their reelection, four years from now, will cost them. If the candidates had enough money to get their message across to their constituents, they may not believe that Jobs for New York’s brochures made all that much difference. But that remains to be seen. The solution might be as simple as an increase in the spending limits for city council races, currently $161,000. After all, a city council district in New York is almost half the size of a congressional district, and $322,000 would be a remarkably cheap congressional campaign.
The main reason to be concerned about outside spending in a voluntary public-financing system such as New York’s is that candidates will resist participating if they fear that they are tying their hands, by agreeing to a voluntary spending limit, and will be unable to respond to a massive attack from outside groups. But that hasn’t been a problem so far. Even though it was evident months ago that outside groups would play a bigger role in New York this year, almost all candidates except for those like Spitzer who financed their own campaigns, and marginal candidates who raised almost nothing, elected to participate in the system.
Now that outside money has entered the system, in a city awash in money, there are surely dangers ahead. Perhaps the pro-Lhota committee, to which Mr. and Mrs. Koch are currently the only contributors, will balloon with Wall Street contributors and crush de Blasio. Perhaps the real estate industry will hold even more clout over the city council. But for now, the big story about money in politics in New York is that small-donor public financing can make elections more competitive and offset big money.