The USC Price School of Public Policy’s Bedrosian Center on Governance hosted a research seminar on Feb. 1 discussing the policy implications of the Federal Election Commission audit program and how increased transparency can inform the electorate.
Christian Grose of the USC Dornsife College of Letters, Arts and Sciences and Abby Wood of the USC Gould School of Law set out to test the claims that greater transparency of campaign finances provides useful information to voters, and that incumbent legislators who are “dirty” with significant campaign finance violations will perform poorly at the polls.
“Conventional wisdom is that transparency of campaign finance helps voters identify policy positions and ideologies of candidates,” Wood said. “We think there is more going on. Voters glean non-policy information from campaign finance disclosures, as well. Legislative traits – honest or dishonest, corrupt or clean – are revealed through these audits. Candidates who fail to comply with campaign finance laws might be less preferred on non-political dimensions than those who manage to comply.”
Members of Congress who receive contributions must report the source of those contributions as well as the expenditures. The FEC still conducts audits on individual legislators if there are allegations of violations or a complaint made, but what interested the researchers was the one time the FEC held random audits.
Measuring the impact of random campaign audits
In 1976, the FEC conducted a random audit of the campaign finances for 10 percent of House members, which were released prior to the 1978 election. Of the representatives audited, 57 percent were clean and 43 percent had violations ranging from disclosure, hiding records, misstatements, and illegal or excessive contributions.
Analyzing this data, Grose and Wood noticed that incumbents found to have campaign finance violations in the audit saw a vote share decrease between 7.75 and 14.5 percent. Moreover, audited legislators with campaign finance violations were 10 percent more likely to retire. Also notable was that those with violations took more trips to their home districts during the 1978 campaign.
“What’s cool about this from a public policy standpoint is an executive agency, funded by the legislative branch, engaged in an audit that led to an increase of retirements in the legislature by 10 percent,” Grose said. “That’s pretty amazing, and then unsurprisingly Congress decided not to reauthorize. There was a lot of blowback from Congress, even from the legislators not audited.”
Grose asserted that the results provided some insight into campaign finance transparency. He indicated that when voters are able to get information about violations of their representatives, it might arguably lead to having better legislators in office.
The big takeaway is that the FEC should consider bringing back random audits. Grose and Wood also suggested that audits could be feasible at the state level, possibly even sponsored by nonprofits.
“Random audits would potentially put fear in those who might be engaging in campaign malfeasance or violations,” Grose said. “We think the policy implication is that these may be good programs to consider, especially for increasing transparency for voters and also in creating behavior for legislators that is good for government and citizens.”