Money and Markets: Essays in Honor of Leland B. Yeager

56 James C. Miller IIIGerald Ford would have won the 1976 presidential election. 34 As another example,Bender found that even in the bill-forming stage, when various spending limitswere considered, Members’ votes were highly correlated with forecasts of theeffects such limits would have had on their chances for reelection. 35 And in Buckley,the Supreme Court recognized that:Since an incumbent is subject to these limitations to the same degree as hisopponent, the Act, on its face, appears to be evenhanded. The appearance offairness, however, may not reflect political reality. Although some incumbentsare defeated in every congressional election, it is axiomatic that an incumbentusually begins the race with significant advantages. 36To see how the 1974 Act and subsequent restraints on contributions help incumbents,recall that a common theme in these reforms is that it makes raising moneymore difficult and spending it less effective. Research has shown that constrainingboth incumbent and challenger fundraising/spending harms challengers muchmore than incumbents. A slew of research has shown that the marginal gain invotes per dollar of spending is substantially greater for challengers. 37 That is, adollar spent by a challenger will increase his or her vote (or vote margin) more thana dollar spent by an incumbent will increase his or her vote (or vote margin). Theprincipal reason is that challengers (and their platforms) are typically not as wellknown as the incumbents they are challenging. Also, since they typically spend farless on their campaigns than do incumbents, their expenditures are especiallyproductive in getting name recognition and in communicating information aboutthemselves and their platforms. On the other hand, incumbents usually have extensivename recognition already, and their positions on issues are fairly well known.In addition, they will have taken advantage of free press coverage and the manyother perks of office discussed above. As Jeff Milyo observed:The evidence . . . strongly suggests that marginal spending by incumbents haslittle impact on their electoral success. Even shocks to spending of $100,000 ormore produce no discernible impact on incumbent vote shares. 38In sum, an incumbent knows that additional spending on his or her owncampaign will be of marginal value in increasing votes (or vote margin), but thatspending by an opponent will have a dramatic, threatening effect. Money forchallengers is therefore absolutely essential if a race is to be competitive, and if theinterests of citizens are to be served. Challengers tend to be relatively unknown, andwithout significant resources it is nearly impossible for them to have any chance atsuccess. Thus, it is in the interest of the incumbent to limit fundraising overall andto encumber the effectiveness of spending.One indication of the effectiveness of limits on a challenger’s ability to accumulatethe resources necessary to wage a competitive campaign can be foundin discussions around various proposals to reform the campaign finance laws.