More Money, More Problems: The Impact and Implications of Campaign Finance Deregulation in the United States

Abstract

This thesis considers how the deregulation of campaign finance—with the rulings in Citizens United v. Federal Election Commission (2010) and SpeechNow.org v. Federal Election Commission (2010)—impacts House of Representative elections in the United States. Given the Supreme Court’s updated interpretation of the First Amendment, outside interest groups can now accept unlimited political contributions from corporations, unions, and individual donors. In turn, the groups can use the funds to support or oppose their preferred candidates and ideologies in federal elections—so long as they do not collude with candidates. This change has given rise to Super PACs, and has allowed for the increased electoral participation of social welfare groups with minimal disclosure requirements. One concern is that deregulation allows outside interest groups to control election outcomes. A second concern is that funneling money through outside interest groups leads to the election of more ideologically extreme candidates. To address these concerns, I use House of Representatives data from the 2006, 2008, 2012, and 2014 election cycles. I employ the difference-in-differences statistical technique to analyze the change in probability of winning an election as a result of outspending one’s district opponent before and after deregulation. I consider outspending in terms of total spending, candidate spending, and outside spending. Using the same technique, I analyze the change in the probability of winning as a result of being more ideologically extreme than one’s opponent, before and after deregulation. Similarly, I analyze the change in probability of outspending one’s opponent as a result of being more ideologically extreme than one’s opponent, before and after deregulation. For the models involving outspending, I use only open seat races to address the endogeneity problem with incumbency and spending. After estimating a series of logistic regressions that hold the district constant, I find that outside spending had a more significant impact on open seat election outcomes after deregulation, ideologically extreme candidates were more likely to be elected after deregulation, and extreme candidates in open seat races were more likely to receive outside spending after deregulation. The results suggest that the deregulation of campaign finance both preferences the interests of the wealthy and contributes to increased polarization in Congress. In light of these trends, I ask what—if anything—policymakers should do to address the problems associated with current campaign finance law. I discuss potential policy implications derived from the results, as well as the constitutionality of limiting free speech.