| Written By:
Michael E. McGrath
Founder, electionreform.org
Imagine an industry where two companies divide a market
between themselves with the help of the federal government. To
ensure an equally divided monopoly, the government gave each
company $67 million in 2000 for their promotion and
advertising, but restricted them from spending any more in
order to equally divide the market. It also threw in an
additional $13 million each to pay for their sales
conventions. The government justifies spending so much by
claiming that it equalizes competition, but what it really
does is eliminate the threat of any new competition in the
market.
The two companies also participated in television
specials where they compare their products. The airtime is
provided free by all major networks, but any new competitors
are excluded from participating. This works well to restrict
competition and effectively eliminates any creative new
products.
Just in case any competitor tries to penetrate this
equally divided monopoly, the two companies have been able to
establish legal restrictions to create additional hurdles
before a competitor can even offer a new product. A new
competitor must get approximately 1% of potential customers to
sign a petition before it can sell its product, and to make it
even more difficult the new competitor needs to do this in
every state.
It is no wonder these two companies dominate the market
with 95%-99% market share. After all they have a legal
monopoly - actually it’s called a duopoly because it’s an
equally divided monopoly. After decades of competing with each
other, these two companies have been able to strategically
determine how to split the market evenly. By taking market
surveys, they can adjust their products to capture targeted
segments of the market. Last year they each captured identical
market shares.
Yet customers are increasingly disenchanted with the
products that these two companies offer. This shouldn’t be
surprising since there is no effective competition. There is
little opportunity for creativity. Customers complain that
they can only choose from two mediocre products. Because of
the monopoly, they don’t have other choices and have
increasingly lost interest in the two products altogether.
One would expect that the government would take forceful
actions to break up this monopoly. It is the type of unfair
competition in American society that politicians love to take
on. Except that in this case, it is the politicians’
“companies” - the Democratic and Republican parties - that are
the benefactors of this monopoly. So it is all right. Or is
it?
America currently has a two party political system, and
if the Republican and Democratic parties have their way, it
will always be restricted to two parties -- the same two
parties, whether the American citizens want it that way or
not. The Democrats and Republicans locked out competition by
passing legislation requiring the federal government to give
them a lot of money to fund their presidential campaigns,
while making it virtually impossible for their competitors to
get any. In 2000, the Democratic Party received $109.5 million
in government funding for its presidential campaign: $66.6
million for the presidential election, $13.5 million for the
party’s convention, and $29.4 million for primary candidates.
The Republican Party received a similar amount for its
presidential campaign - $107.1 million: $67.6 million for the
presidential election, $13.5 million for its convention, and
$26 million for primary candidates. Candidates from other
parties received relatively little.
The two dominant parties passed legislation funding
their own presidential campaigns and strengthening their
monopoly back in 1974, under the guise of “campaign reform”.
In effect they were saying, “if the government just gives us a
lot of money and almost nothing to other candidates, then we
won’t need to raise money from citizens and have any
obligation to them.” Under the Internal Revenue Code,
qualified presidential candidates receive money from the
Presidential Election Campaign Fund, which is an account on
the books of the U.S. Treasury. Eligible candidates in the
Democratic and Republican presidential primaries may receive
public funds to match the private contributions they raise.
The Republican and Democratic candidates who win their
parties' nominations for President are each eligible to
receive a grant to cover all the expenses of their general
election campaigns. The basic $20 million grant is adjusted
for inflation each presidential election year. A third party
presidential candidate may qualify for some public funds after
the general election if he or she receives at least five
percent of the popular vote. Each major political party may
receive public funds to pay for its national presidential
nominating convention. The statute sets the base amount of the
grant at $4 million for each party, and that amount is
adjusted for inflation each presidential election year. Other
parties may also be eligible for partial public financing of
their nominating conventions, provided that their nominees
received at least five percent of the vote in the previous
presidential election.
This legislation establishes an insurmountable barrier
to any competition to the Democratic and Republican parties.
An independent or third party presidential candidate would
need to raise more than $100 million to be a viable
competitor, while the two major parties wouldn’t have to raise
anything. This barrier to entry effectively keeps out any
creative new ideas and excludes potentially more qualified,
non-party members from becoming president.
This political monopoly encourages mediocrity just as a
monopoly does in industry. There is little incentive for
innovation and bold leadership since the two dominant
political parties solely determine who will be president, and
they have little incentive to take risks. Having their
candidate in office is the overriding political objective.
When this happens in industry, two companies with
indistinguishable products typically divide the market based
on how much they spent on advertising and promotion. In 2000
The Republican Party received 47.5% of the presidential
election campaign fund and got 47.9% of the popular vote. The
Democratic Party received 48.98% of the funding and got 48.4%
of the vote.
How do the two dominant parties use these millions?
Since the funds are co-mingled with other funds they can use
it for any campaign expense. They use it to pay for private
jets to travel to campaign events. They use it for political
advertisements, no matter how self-serving or negative. They
use it to pay for their campaign staff and polls. Those fancy
dinners held by presidential primary candidates where donors
contribute $1,000 to dine with a candidate, guess who pays the
catering costs? That’s right, the taxpayers. Federal funds are
also used to pay for each party’s presidential convention,
even though the candidate is largely, if not fully, determined
prior to the convention. It becomes more like a sales
convention, an opportunity to have a big party with fancy
dinners, entertainment, cocktail parties, and a televised
celebration. And the taxpayers pay the some of the bill for
these parties.
Federal funding of more than $200 million ($100 million
to each party) is a reason why presidential elections cost so
much. This funding is incremental to the money raided in the
presidential primaries and money raised by the two parties.
This leaves most political contributors free to give up to
their legal or practical limits to the primary campaigns.
Without federal funding, most of these contributions would
need to be spread over both the primary and final elections,
effectively reducing spending on presidential campaigns. In
addition, it could even reduce the amount of money
contributed. Primary candidates see this $100 million prize
awaiting the winner of their party and this encourages their
supporters to contribute even more in the primary.
Many Americans outside of the inner circle of the two
major parties who recognize this political monopoly object to
this funding process on two grounds. Some object to any
taxpayer money being spent at all. Wouldn’t it be better to
spend the money on education or the homeless instead of
private jets and fancy dinners? Others believe in minimizing
private contributions to presidential candidates to eliminate
the influence of special interests, but they object to the
amount of funding and the way it is manipulated to create a
monopoly. Using taxpayer money to create a political monopoly
is probably illegal, certainly unethical, and will eventually
harm the country.
The Democratic and Republican political parties also
keep out competition through ballot access barriers. Third
party and independent candidates are required to get a minimum
number of signatures before they are placed on the ballot. In
most states the Republican and Democratic parties don’t need
to go through this process since they automatically qualify.
Additionally, ballot access requirements are set differently
by state, making it nearly impossible to do 50 times.
Generally, it requires signatures from approximately 1% of the
voters. For example, in California it requires more than
175,000 signatures. No other democracy in the world uses
restrictive ballot access techniques like this to exclude
other competitive candidates and beliefs.
Closed presidential debates are yet another way the
Democratic and Republican parties exclude other candidates
from a fair election process. Debates are typically limited to
the two dominant parties so it doesn’t dilute their impact by
allowing challengers to share their free prime-time
television. Who determines which candidates qualify for the
debates? Designated representatives of the Republican and
Democratic parties of course.
Finally the Electoral College further suppresses the
chances of any independent and third party candidates. The
winner-take-all voting that is used in all but two states
impedes independent or third party candidates from amassing
sufficient votes in a state to get any electoral votes.
This political monopoly creates a closed democracy,
which America would severely criticize as a farce if it took
place in another country calling itself a democracy. It is
revolting to many Americans who consider it contrary to the
fundamental principles of a democracy. It restricts new ideas
and creative debate, and it prevents strong leaders from
rising to the top. This closed democracy at the highest level
of American leadership can eventually cripple the country in
this fast-changing world and will, at a minimum, keep America
from being all that it could be.
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