Is Public Funding the Antidote to Campaign Dark Money? How H.R. 1 Could Curb the Influence of Corporate Donations in U.S. Elections

By: Amy Rhoades

In March 2021, the House passed the H.R. 1 For the People Act,[1] a sweeping voting rights bill designed to increase access to voting, amend campaign finance laws, and reform ethic rules.[2] Within the bill is a series of public spending provisions intended to counter the rise of corporate and special interest funding after Citizens United.[3] Drawing from successful programs at the state and local levels, the House is betting that a public funding system can address the vast disparity in campaign funds from small donors versus large corporate entities.[4]

The bill proposes implementing three public spending measures: piloting a voter voucher program, public fund matching for Congressional elections, and updating the public financing system for Presidential elections.[5] The Congressional public funding provision would strengthen small-donor contributions by matching public funds 6:1 for every dollar contributed to a campaign within a $200 limit.[6] Under the bill, to qualify for public fund matching, candidates must accept conditions that further increase the value of public-funded dollars.[7] For example, one condition is that candidates would have a maximum threshold for individual donations of $1,000 instead of $2,800.[8] By lowering the maximum threshold, a small-donor contribution of $200 is increased to $1,400 after public fund matching, and could add more value than an individual maximum contribution to the candidate.[9]

Proponents of the bill argue that government subsidies will level the playing field between individual donors and large corporations by amplifying small-donor contributions.[10] Studies of state programs that implemented public fund matching have shown the system to increase participation and drastically shift the proportion of campaign financing to small donors.[11] The public funding program may encourage more individuals to contribute small donations knowing the program will increase the value of their funds and create a means for candidates to rely less on special interest contributions.[12]

On the other hand, critics question whether the system is a waste of government funds or if it will curb large donor spending. As currently written, the bill is funded through a surcharge on penalties and fines associated with corporations’ federal criminal and civil violations.[13] The Congressional Budget Office (“CBO”) estimates the public funding provisions will cost the government $3.2 billion for election cycles through 2031, a cost the CBO projects will be covered by the $3.4 billion in revenue from the additional assessment on penalties.[14] However, the growing campaign spending will likely far outpace the CBO’s projected costs for the bill.[15] Further, H.R. 1 does not place limits on the total spending of candidates.[16] Therefore, candidates who accept public fund matching from the program can still court corporate and special interest contributions to their campaign.[17] If enacted, the public funding provisions of H.R. 1 will devalue corporate political speech by buoying up campaigns with matched small-donor contributions.

[1] For the People Act of 2021, H.R. 1, 117th Cong. (2021).

[2] See Peter W. Stevenson, Here’s What H.R. 1, the House Voting Rights Bill, Would Do, The Wash. Post (Mar. 5, 2021, 6:00 AM), https://www.washingtonpost.com/politics/2021/03/05/hr1-bill-what-is-it/ (summarizing the provisions of H.R. 1).

[3] See Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010) (finding spending limits for corporations unconstitutional); see also H.R. 1 § 5001(4) (proposing the ruling in Citizens United led to unlimited campaign funding from large donors).

[4] See 2020 Super PACs: How Many Donors Give, Ctr. for Responsive Politics, https://www.opensecrets.org/outside-spending/donor-stats?cycle=2020&type=B (last visited Apr. 1, 2021) (stating that the top 1 percent of donors contributed 96 percent of all campaign funds in the 2020 election).

[5] See H.R. 1 §§ 5100-200.

[6] See H.R. 1 § 501(b).

[7] See id.

[8] Compare H.R. 1 § 5201(c)(1)(A) (modifying the proposed matching payments to individuals with an aggregate contribution that does not exceed $1,000), with Press Release, Fed. Election Comm’n, FEC Announces 2019–2020 Campaign Cycle Contribution Limits (Feb. 7, 2019), https://www.fec.gov/updates/fec-announces-20192020-campaign-cycle-contribution-limits/ (announcing that the individual contribution limit to candidates was $2,800 for the 2020 federal election cycle).

[9] See Glenn Kessler, Would ‘Every Small Dollar Donated’ Be Matched 6 to 1 Under the House Democratic Plan?, The Wash. Post (Mar. 8, 2019, 3:00 AM), https://www.washingtonpost.com/politics/2019/03/08/would-every-small-dollar-donated-be-matched-under-house-democratic-plan/.

[10] Id.

[11] See Michael J. Malbin, Peter W. Brusoe & Brendan Glavin, Small Donors, Big Democracy: New York City’s Matching Funds as a Model for the Nation and States, 11 Election L. J. 12 (Nov. 1, 2012), http://www.cfinst.org/pdf/state/NYC-as-a-Model_ELJ_As-Published_March2012.pdf (finding that after implementing a 6:1 public fund matching program, New York City saw an increase of 55 percent in small donor contributors to candidates).

[12] See id. at 10.

[13] H.R. 1 § 541(b)(1); see also Gareth Fowler & Daniel I. Weiner, Understanding H.R. 1’s Public Financing Provisions, Brennan Ctr. for Just. 2 (Sept. 20, 2019), https://www.brennancenter.org/sites/default/files/analysis/Understanding%20HR1%20Public%20Financing.pdf.

[14] Notes on Estimated Effects on Direct Spending and Revenues H.R. 1, For the People Act of 2021, Cong. Budget Off., https://www.cbo.gov/system/files/2021-03/hr1.pdf (last visited Apr. 7, 2021).

[15] See Karl Evers-Hillstrom, Most Expensive Ever; 2020 Election Cost $14.4 Billion, Ctr. for Responsive Pol. Center for Responsive Politics (Feb. 11, 2021, 1:14 PM), https://www.opensecrets.org/news/2021/02/2020-cycle-cost-14p4-billion-doubling-16/ (describing how political spending doubled between the 2016 and 2020 election cycles, surpassing $14.4 billion in spending).

[16] See Public Funding of Presidential Elections, Fed. Election Comm’n, https://www.fec.gov/introduction-campaign-finance/understanding-ways-support-federal-candidates/presidential-elections/public-funding-presidential-elections/ (last visited Apr. 2, 2021) (explaining the required spending limits a presidential candidate is required to abide by if accepting support from the presidential public funding program).

[17] See Lawrence Lessig, Third Parties Fear the Democrats’ Big Voter Bill. It’ll Actually Help Them, The Wash. Post (Mar. 16, 2021, 10:49 AM), https://www.washingtonpost.com/outlook/2021/03/16/hr1-public-funding-third-parties/ (discussing how H.R. 1 could encourage major party candidates to participate in public fund matching because there is no limit to overall campaign spending).