Campaign Finance 2.0: Is the Small Donor 'Revolution' Hype or Reality?

I'm spending the day at a conference on "Money in Politics 2009: New Horizons for Reform" at the National Press Club, convened by the Brennan Center for Justice. Mid-day, I'll be moderating a conversation about the role of the internet in changing the political landscape with Lawrence Lessig and Adam Bonin. I'm also tweeting occasional observations from the event using the hashtag #bccfr, in case you're really hungry for this stuff.

Michael Malbin just kicked off the first session with a very interesting talk based on his work and research at the Campaign Finance Institute on whether the so-called "small donor revolution" of the Obama campaign is a reality. Here are my notes on his talk, which I found quite refreshing both because it gives us clear metrics on just how far we still have to go to encourage more small donor participation, and also because he challenges the reform community to spend more time thinking expansively about the internet's role in expanding participation rather than worrying so much about constraining big bad money. These are themes that I'm hoping to bring up during our mid-day conversation, too. You can find a much longer and more detailed paper from Malbin on this topic here.

Malbin: Were the Obama campaign’s successes with small donors the sign of a new era? Yes, there’s no doubt in my mind. I’ve been writing professionally about this subject for 30 years. The main subject of that conversation has been corruption and how to reduce it. It’s becoming painfully clear that there are limits to what you can do with limits. The real problem with this approach is the tunnel vision this has brought to the debate, a focus on what you’re trying to prevent (corruption and the appearance of corruption). What kinds of positive goals are we trying to foster? What kind of democracy? [Hear! Hear! I couldn't agree more.]

Enhanced participation requires more than squeezing down the top. That doesn’t mobilize the rest to be active. How do we build up the bottom? Does the success of candidates like Obama and Howard Dean mean the issue will take of itself?

What does the data show? 49% of the contributions received by Obama in the primary were $200 or less. That was his entire advantage over Clinton in the primary, both in terms of money and volunteers. But when you aggregate the contributions from individual donors, just 26% of Obama’s money came from donors who gave $200 or less. 27% gave between $200 and $1000. (Compared to Kerry in 2004, who got 20% and 24%, respectively, in those brackets; and Bush who got 25% and 13%).

Money from congressional donors is different, predominantly from the $1000 and up group and PACs. The “access donors,” he calls them. Raising significant amounts of money from small donors requires visibility. He also notes that most presidential candidates start out more dependent on large donors and then, as they gain visibility, small donors play a larger role.

Therefore, the Obama small donor phenomenon is not automatically replicable. Is there are role for public policy then? Is it appropriate to use public money to extend public participation in the process? I don’t see a reason why not, as long as its done in a politically neutral. If liberty and self government are the ends, then policies that promote public participation are good means. But public financing is not the only means. Communications policy matters too. This is about structuring the law to encourage behavior we like, and not just discouraging behavior we dislike.