aBicentennial Class of 1940 Term Chair Associate Professor of Legal Studies and Business Ethics, The Wharton School of the University of Pennsylvania. The author thanks Nien-hê Hsieh, Martin Asher, and especially Jim Sears for valuable criticism. Brian Garbow, Rahul Parikh, and Connie Sung provided research assistance for this article.
The Perverse Effect of Campaign Contribution Limits: Reducing the Allowable Amounts Increases the Likelihood of Corruption in the Federal Legislature
Version of Record online: 17 FEB 2011
© 2011 The Author. American Business Law Journal © 2011 Academy of Legal Studies in Business
American Business Law Journal
Volume 48, Issue 1, pages 77–118, Spring 2011
How to Cite
Nichols, P. M. (2011), The Perverse Effect of Campaign Contribution Limits: Reducing the Allowable Amounts Increases the Likelihood of Corruption in the Federal Legislature. American Business Law Journal, 48: 77–118. doi: 10.1111/j.1744-1714.2010.01112.x
- Issue online: 17 FEB 2011
- Version of Record online: 17 FEB 2011
- Top of page
- I. THE PROBLEM OF CORRUPTION
- II. FEDERAL CAMPAIGN FINANCE REGULATION
- III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
The regulation of campaign finance brings together vexing issues of democracy, corporate political speech, corruption, and the electoral system.1 Recent jurisprudence has engendered substantial commentary on those who perceive a “free corporate speech agenda” among the newer appointees to the United States Supreme Court,2 with particular attention paid to the distinction drawn between types of speech.3Citizens United v. Federal Election Commission,4 in which the Supreme Court struck down campaign finance provisions that regulated corporate speech differently than individual speech, has focused even more attention on the constitutional aspects of campaign finance.5
Constitutional questions, while of fundamental importance, do not constitute the totality of issues encompassed by the regulation of campaign finance. Many of these issues are critical to business and the business environment. Citizens United, for example, raises questions about the very nature and definition of a business organization.6 Less esoteric but just as important is the effectiveness of campaign finance regulation in producing a regulatory environment free of the influences of corruption. Scholarly review of campaign finance regulation gives virtually no attention to the actual mechanism used by such regulation: limits on the amount that each actor can contribute to a particular campaign.
A fundamental purpose of campaign finance regulation is to reduce corruption.7 Other goals and effects attach themselves to campaign finance reform, of course, such as correcting structural imbalances in representation, and these are important aspirations.8 Nonetheless, the Supreme Court has singled out the prevention of corruption as the only justifiable interest identified so far in the federal legislation intended to regulate campaign finance.9
It is therefore somewhat surprising that critical analysis of campaign finance regulation has eschewed analysis of contribution limits. Rigorous examination of the assumption that, because money corrupts, more money corrupts more seems to have been subsumed under consideration of finer constitutional points. The assumption, however, is not unassailable and must be examined. A pragmatic approach prevalent among practitioners and many scholars emphasizes weak institutions as a cause of corruption10 and therefore advocates the strengthening of institutions as a means of controlling corruption.11 This approach, however, provides scant rigor with which to analyze assumptions regarding campaign contributions. A purely institutional approach does not indicate how one is to choose among institutions nor does it provide a theory on which to base predictions about how changes to institutions will affect the behaviors of government actors.
This article does not anchor its analysis in institutions. Rather, it assumes a degree of rationality on the part of each legislator when confronting an opportunity to act corruptly.12 Gary Becker suggested more than forty years ago that persons do make decisions about whether to commit bad acts.13 Becker's insights contributed to substantial research on criminal behavior. Becker, with George Stigler, even provided guidance to the control of police corruption.14 This article applies Becker's useful insights to laws limiting campaign contributions. In doing so, the article draws a conclusion that does not comport with current regulation of campaign finance: decreasing the amount a single contributor may donate to a campaign actually increases the likelihood that any given legislator will choose to act corruptly.
The study of corruption has engendered a body of literature too large to fully describe in this article. Scholars at the intersections of law, ethics, and business have substantially contributed to this literature. Much of the scholarship treats corruption quite broadly. Proponents of Integrative Social Contract Theory, for example, ask whether or not corruption in general violates fundamental norms and how managers should find guidance when dealing with situations that might involve corruption.15 Much of the literature is explicitly transnational, particularly that literature discussing changes to the regulatory environment controlling transnational bribes paid by businesses.16 Scholars also recognize the harms imposed by corruption that occurs completely within the private sector17 and are beginning to attempt to sort out the responses of business organizations to those harms.18
This article differs from the general corruption literature in that it focuses on the relationship between a single control mechanism and a single type of corruption by a single group of people in a single country. This article scrutinizes the limitation of the amount of money that can be contributed to the political campaigns of federal legislators in the United States. Those limitations, in turn, are imposed to control a specific type of corruption—actions taken by federal legislators in exchange for campaign contributions.19
This specific type of corruption has a profound relationship with businesses and the business environment within the United States. Most visibly, the lobbyists and contribution bundlers who offer bribes to legislators often work for or against businesses or business organizations.20 More insidiously, corruption can dramatically affect the regulatory environment, either by causing distortions or by engendering visceral public reaction.21 Least visibly but perhaps most fundamentally, corruption and its consequences undermine the health and viability of markets and market institutions.22
The article begins in Part I with a discussion of the nature of corruption and how it harms the United States. Part II briefly reviews the development of campaign finance reform legislation. Part III then analyzes the decision to act corruptly and shows that the legislation does not reflect an understanding of that process. Instead, the model shows that limiting the amount that may be contributed to a campaign actually increases the likelihood of corruption.
The point of this article is to demonstrate that failure of current legislation. This article does not undertake to advocate a particular reform of the campaign finance system. However, the process of breaking down and analyzing the considerations of a legislator facing a corrupt offer casts insights into possible reforms, which are discussed in Part IV. This article concludes that serious efforts to control corruption must take into account the influence of campaign contribution limitations and that efforts to limit such contributions can actually have an exacerbating effect instead of an ameliorative effect on corruption in government.
I. THE PROBLEM OF CORRUPTION
- Top of page
- I. THE PROBLEM OF CORRUPTION
- II. FEDERAL CAMPAIGN FINANCE REGULATION
- III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
Discussions of corruption often begin with definitions of corruption. “No one has devised a universally satisfying ‘one-line’ definition of corruption.”23 Joseph Nye offers the most widely accepted general definition of corruption: the abuse or misuse of public office or trust for personal rather than public benefit.24 Nye's definition embraces aspects of the public interest and public office definitions, and also refers to incentives in a manner that echoes market-based definitions. This article uses Nye's definition as a starting point for analysis of one particular iteration of corruption: bribery or bribery-like transactions involving campaign contributions to candidates for the federal legislature within the United States.25
The laws of the United States criminalize the giving or offering of bribes to or the taking of bribes by federal legislators, including bribes offered in the form of campaign donations.26 Not all acts that fall within Nye's broad definition of corruption, however, are prosecuted. Bestowing the privilege of a face-to-face meeting with a legislator in exchange for campaign contributions, for example, may constitute misuse of office and certainly inures to the legislator's rather than public benefit.27 Nonetheless, the United States does not prosecute that particular exchange.28
Regardless of whether corruption is prosecuted or not, corruption harms the United States.29 Unfortunately, despite regulatory efforts aimed at controlling corruption,30 perceived levels of corruption within the United States seem to be increasing.
A. Perceived Levels of Corruption Within the Federal Legislature
Those who monitor or prosecute misbehavior within the federal legislature report escalating levels of corruption. When sentencing a congressional aide for corrupt acts, Judge Friedman of the Federal District Court spoke openly of the growing culture of corruption in the federal legislature, “an environment that has become, frankly, more and more corrupt … corrupted by money. You've literally got lobbyists sitting in Congressional offices writing legislation.”31 Nongovernmental groups that observe the legislature report both an increase in the general inclination toward corrupt acts and increases in specific and observable acts of corruption.32 Citizens of the United States report in growing numbers that they perceive the federal legislature to be corrupt and that their perception of corruption affects their relationship with their government. A review of surveys by Gail Russell Chaddock indicates that “[n]early half of Americans believe that most in Congress are corrupt and that corruption affects both parties equally.”33
Some reported and perceived corruption undoubtedly consists of bribes given directly to legislators in exchange for abuse or misuse of office. The actions underlying the indictments of Senators Ted Stevens and Randall Cunningham, for example, consisted of the provision of valuable goods and services in exchange for those legislators awarding millions of dollars worth of federal contracts to an oil pipeline service company and defense contractors.34
The bulk of reported corruption, however, consists of bribery involving campaign contributions.35 These bribes are given in the form of a contribution either directly to the fund managed by the legislator-candidate or to funds managed by others endeavoring to have that candidate elected. Former Representative Tom DeLay, for example, was indicted for distributing favors in exchange for money contributed to organizations that campaigned for his reelection.36 These bribes are the type at which campaign finance regulations are aimed.
B. Harmful Effects of Corruption
Corruption affects the business environment. Early scholarly treatments of corruption found corruption mildly beneficial or at worst neutral in its effects on an economy. In the 1960s scholars such as Nathaniel Leff and Samuel Huntington suggested that bribes act as “speed money,” increasing the speed with which moribund bureaucracies make economic decisions or as ad hoc salaries that induce underpaid bureaucrats to perform.37 A decade later Richard Posner suggested that political corruption represented nothing more than a pure transfer of wealth.38
These theories of corruption relied on a static analysis of a one-time benefit accrued through a single transaction. By the 1980s, economists such as Jagdish Bhagwati and T.N. Srinivasan,39 Stephen Magee,40 and Douglass North41 took issue with the failure to adequately address transaction costs. By 1997, the World Bank was able to point out the consensus among economists that a static analysis could not accurately describe the effects of corruption and that dynamic analysis of the cumulative effects of corrupt acts on subsequent transactions would produce a far more accurate depiction.42 More recently Johann Lambsdorff has offered an elegant model that vitiates the transfer of wealth theory.43
In its statement supporting the United Nations' program to eradicate corruption, the representative of the United States summed up the effects of corruption: “Corruption and democracy are incompatible; corruption and economic prosperity are incompatible; and corruption and equal opportunity are incompatible.”44 This statement has just as much relevance to corruption within the United States legislature as it does with respect to corruption anywhere else in the world. Corruption in the United States legislature risks at least three types of injury to the polity: damage to the connection between electors and representatives, distortion of the economy, and distrust of government by those whom government should serve.
1. Corruption Damages the Connection Between Electors and Representatives
Federal legislators in the United States inhabit a complex decision-making environment.45 Legislators represent constituencies and must attempt the difficult task of interpreting, synthesizing, and then taking into consideration the desires of those constituencies.46 Legislators also lead the nation as a whole and therefore must sometimes act according to their own evaluations of factors and circumstances.47 Legislators also act in concert with one another and therefore must take into account the political nature of the environment that they inhabit and the consequences of negotiating and trading support.48
Attempts to positively describe the manner in which legislators negotiate this complex environment engender much debate and criticism.49 One normative component of political representation, however, resists contestation: whether acting as a conduit for constituent preferences or as a leader of that constituency, or even when acting as a political operative, democracy requires a close link between the representative and the electoral constituency.50“Congress in our representational democracy is understood to respond maximally to its members' views. … [R]epresentational democracy requires legislators to be responsive to their constituency.”51
When a legislator has been bribed, that legislator no longer acts in response to the legislator's constituency; instead the legislator acts in response to a bribe.52 Bribery therefore destroys the connection between the representative and the constituency.53 Akhil Amar points out the special danger corruption poses in the United States: “Bribery—secretly bending laws to favor the rich and powerful – involves official corruption of a highly malignant sort, threatening the very soul of a democracy committed to equality under the law.”54
2. Corruption Causes Economic Distortion
The federal legislature approves the largest single budget in the world. It also enacts laws that govern the regulation of trillions of dollars worth of transactions. Individual legislators, through the process of earmarking, bestow billions of dollars worth of contracts each year.55 Clearly, malfeasance by the federal legislature can distort the economy and the regulatory environment of business.
Legislators, whether following the dictates of the electorate or leading, are intended to make decisions in the public interest. The decision-making process in many ways parallels that of a consumer in a market, balancing factors such as price, quality, and appropinquity to preferences. Bribery changes the dynamics of that decision-making process: the determining factor has nothing to do with price, quality, and appropinquity to preferences but instead consists of the quality of the bribe.56 Bad purchases and distortive regulation can easily survive such a decision-making process.
Empirical research supports the theoretical observation regarding economic distortion. While much of this research emphasizes the effects of corruption on emerging and developing countries, the effects are found in degrees that accompany levels of corruption.57 Numerous scholars have found a negative correlation between corruption and economic growth.58 Pak Hung Mo finds that a one-percent increase in levels of corruption decreases growth in gross domestic product by almost three quarters of a percent.59
In the context of governance, the distortions that accompany corruption manifest themselves in especially pernicious ways. Shankha Chakraborty and Era Dabla-Norris find that the misallocation of public investment due to corruption affects public services in ways that make private capital less effective.60 Fahim Al-Marhubi finds a positive relationship between corruption and inflation.61 Mohsen Bahmani-Oskooee and A.B.M. Nasir find that corruption depreciates national currency as measured by real exchange rates.62 Hrishikesh Vinod, elaborating upon a theoretical model offered by Andrei Schliefer and Robert Vishny, finds corruption significantly more distortive than taxes.63 Shang-Jin Wei reaches a similar conclusion using a different model.64 Dilip Mhookerjee and Ivan Png begin their analysis with an assumption of no social costs and ignore all transfer costs and yet still demonstrate that, “[f]or every outcome when bribery is profitable, there exists another in which bribery is not profitable, that yields higher welfare.”65 In other words, in the aggregate corruption always imposes economic costs.
3. Corruption Degrades Quality of Life and Undermines Political Legitimacy
Corruption imposes difficulties on persons whose legislators accept bribes. Numerous scholars have measured various means through which corruption degrades the quality of life. Sanjeev Gupta, Hamid Davoodi, and Erwin Tiongson, for example, find that corruption increases child mortality rates, lowers child birth weight, and increases the dropout rate of children from primary school.66 Similarly, Maureen Lewis finds strong negative relationships between corruption and the performance and viability of health care systems.67 Lorenzo Pelligrini and Reyer Gerlagh find that corruption negatively affects environmental policy and the quality of the environment.68
Corruption also degrades the business environment. As mentioned, some early scholars suggested that bribes could “speed up” government action.69 After an extensive empirical review of business interactions with government, Daniel Kaufman and Shang-Jin Wei not only find no support for the speed money argument but also find empirical evidence that businesses that pay more bribes end up with higher, not lower, time wasted and cost of capital.70
Not surprisingly, corruption erodes trust in the government and undermines the legitimacy of that government. Susan Rose-Ackerman summarizes research on the social effects of corruption: “Corruption undermines the legitimacy of governments, especially democracies. Citizens may come to believe that the government is simply for sale to the highest bidder. Corruption undermines claims that the government is substituting democratic values for decisions based on ability to pay.”71 As Amitai Etzioni and Susan Rose-Ackerman each point out, corruption poses a special threat to the functionality of the democratic system of the United States.72
In short, corruption destroys the connection between legislators and constituencies, distorts economies and the business environment, and undermines democratic legitimacy. An increasing number of bribes are given to federal legislators in the form of campaign contributions. This phenomenon merits a thoughtful response. The response by the federal legislature, however, has tended toward blunt, unsophisticated regulation.
II. FEDERAL CAMPAIGN FINANCE REGULATION
- Top of page
- I. THE PROBLEM OF CORRUPTION
- II. FEDERAL CAMPAIGN FINANCE REGULATION
- III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
Congress has attempted to control the influence of campaign contributions for many years. Although academia has generated different proposals, Congress has adhered to a fairly regular formula, which emphasizes limits on (or the elimination of) campaign contributions, as well as disclosure of the persons making contributions. A brief review of the genesis of campaign finance regulation demonstrates the consistency with which Congress has acted.
Regulation of federal campaign finance may have begun with the Pendleton Act of 1883.73 Although on its face the Pendleton Act simply creates a civil service, independent of political parties,74 that independence in part constitutes independence from a requirement to contribute to the campaign coffers of those parties. From the time of Andrew Jackson75 to that of James Garfield, public officeholders had been assessed a percentage of their wages as a kickback to the party that had given them their office; indeed, the funds generated through this scheme exceeded corporate donations.76 The assassination of James Garfield by a disappointed office seeker goaded Congress into changing this system.77 The Pendleton Act and successor legislation attempt to insulate officeholders from pressure to contribute to the campaign funds of the party or parties in power.78
The Pendleton Act closed off the major source of campaign finance for the major parties.79 Corporations happily filled the void. Elihu Root referred to corporate campaign contributions at the time as “a constantly growing evil which has done more to shake the confidence of the plain people of small means of this country in our political institutions than any other practice which has ever obtained since the foundation of our Government.”80 In 1905 an investigation into the misuse of corporate assets by officers of large insurance companies revealed that, among other things, officers had paid large amounts into the campaign coffers of political parties.81 These revelations shocked the public and posed a potential source of embarrassment to recently reelected President Theodore Roosevelt.82 Roosevelt, in response, called for legislation to prohibit corporations from making campaign contributions.83 Two years later, Congress enacted the Tillman Act of 1907, which prohibited contributions from federally chartered corporations.84
Corporations easily circumvented the Tillman Act, not least by making contributions in kind rather than as money. Failure by the government to enforce the Act made circumvention even easier. Melvin Urofsky summarizes the outcome of the law: “The first federal effort at campaign finance reform, in short, had little practical effect.”85 Pressure continued to build for meaningful campaign finance reform.
In 1910 Congress enacted the Publicity Act,86 which required postelection disclosure of donors to House candidates of more than one hundred dollars.87 One year later Congress amended the Publicity Act88 to require preelection as well as postelection disclosure and disclosure of contributions to Senate campaigns; the amendments also imposed spending limits on Senate and House campaigns.89
The U.S. Supreme Court gutted the Publicity Act in Newberry v. United States.90 The Court ruled that primaries do not constitute elections for the purpose of Article 1, Section 4 or Amendment Seventeen of the Constitution, and thus Congress had no authority to regulate primaries.91 The Court also ruled that, because at the time of the enactment of the Publicity Act senators were still chosen by the states rather than elected through direct elections, Congress had no authority over their elections.92 Following the Newberry decision, the Attorney General informed Congress that Newberry rendered the entirety of the Publicity Act unconstitutional.93
At around this time, another scandal focused public attention on the financing of political campaigns and concomitantly engendered pressure on the federal legislature to act. The progenitor activities of the Teapot Dome scandal involved straightforward bribery,94 but the ensuing investigation revealed—once again—large, hidden contributions to political parties. Congress reacted by enacting the Federal Corrupt Practices Act.95 The Federal Corrupt Practices Act required disclosure of donors to all multistate committees and to Senate and House candidates, including during nonelection years, and imposed spending limits on candidates. The Act did not, however, contain any enforcement provisions or penalties for failure to comply, nor did it require publication of or even public access to financial reports.96
In United States v. Classic,97 the Court reversed its position of twenty years prior and held that primaries do indeed constitute part of the election process and thus lend themselves to congressional authority. This holding itself did not lead to legislation by Congress; that impetus sprang from the fears of Franklin Roosevelt's opponents as he transformed his popularity into political action.98 Roosevelt's opponents worried about the loyalty to Roosevelt of hundreds of thousands of persons given work through federal programs but not covered under the civil service provisions of the Pendleton Act.99 The Hatch Act100 extended coverage to almost all federal employees and also increased strictures on the extent to which those employees could engage in political contests.101 Amendments enacted the following year102 imposed an outright ban on contributions from federal contractors and from employees of state agencies funded in part or in whole by federal monies.103 The amendments also revived two traditional techniques of campaign finance reform: campaign contribution limits—contributions to national committees could not exceed five thousand dollars—and spending limits—spending by national committees could not exceed three million dollars.104
The inclination to limit (or eliminate) contributions and the fear of Roosevelt's power extended to labor unions, which had become powerful and popular entities.105 Support for unions dipped, however, after a series of strikes during the Second World War, and Congress took advantage of union weakness to pass the Smith-Connally Act.106 The Smith-Connally Act prohibited direct contributions from labor unions to political parties or campaigns.107
Following the war, Congress continued its quest against unions. Some suggest that the impulse sprang from a desire to bring parity to the corporations and unions, while others suggest that it sprang from concerns over fairness to union members who disagreed with union leadership.108 The Taft-Hartley Act109 made the bans on contributions by unions permanent.110 It also “for the first time overtly tried to limit the political speech of a particular group”111 by prohibiting the use of union funds for any political activity, including the publication of newsletters that endorsed political candidates.112
Congress strayed from its general habit of limiting contributions or requiring disclosure in 1966, with the Presidential Election Campaign Fund Act.113 That statute creates a fund to which taxpayers can contribute by indicating a desire to do so on their tax forms; the donations can be used by presidential candidates and parties under specified circumstances.114 The Revenue Act of 1971115 made the fund permanent.116
Also in 1971, Congress enacted the Federal Election Campaign Act.117 The Act continues the tactics of limitation and disclosure, albeit in a more sophisticated manner. It differentiates between anything of value conferred directly to a candidate, party, or committee, which is considered a contribution, and anything of value conferred to a third party for the purpose of influencing an election, which is considered an expenditure.118 Contributions are subject to limits, whereas expenditures are subject to disclosure.
The Bipartisan Campaign Reform Act,119 Congress's most recent effort to control corrupt activities related to political campaigns, continues to impose limitations and require disclosures, but it also eliminates “gaping loopholes” in the preceding legislation.120 Further, the Act prohibits the use of general treasury money by businesses or unions for “electioneering communications.”121 In 2003, the Supreme Court upheld the constitutionality of the Act,122 which today remains the foundation of controls on campaign finance.123
This very brief recitation of campaign finance regulation is not offered as a definitive history. Dozens of scholars have undertaken that project. This explication, instead, underscores a point: Congress repeatedly and consistently turns to limits or prohibitions on campaign contributions for the purpose of controlling corruption. The Court has noted that “we are under no illusion that [the Bipartisan Campaign Reform Act] will be the last congressional statement on the matter. Money, like water, will always find an outlet. What problems will arise, and how Congress will respond, are concerns for another day.”124 There is no reason to believe that Congress will do anything other than continue its habit of limiting campaign contributions. Paradoxically, to do so will contribute to the very corruption that campaign finance laws are intended to combat.
III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- Top of page
- I. THE PROBLEM OF CORRUPTION
- II. FEDERAL CAMPAIGN FINANCE REGULATION
- III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
Literally dozens of theories attempt to explain why persons commit crimes.125 Many of these theories have little explanatory power with respect to corruption in the federal legislature. Strain theory, for example, asserts that individuals commit crime when they lack access to appropriate means of accruing material success—hardly the situation of legislators.126 Indeed, federal legislators are fairly homogenous and relatively privileged.127 This article does not look for background differences that may explain different propensities for crime among different types of individuals within the legislature.128 Instead, this article borrows Gary Becker's method of examining the decision to commit a crime.129 Becker suggests that individuals consciously or subconsciously weigh the costs and benefits of a crime and will refrain from committing that crime if the costs outweigh the benefits.130 While such rationality is probably not true of all criminals, enough persons act in this way to give the method significant predictive capability.131 This is especially true of white-collar crimes, such as bribery.132
Creating a model of the factors taken into account by a rational legislator faced with an offer of a bribe allows for prediction of the effect of changes to a single factor considered in that process. Becker suggested that the number of crimes a person would commit, Oj, is equal to Oj(pj,fj,uj), where “pj [is] his probability of conviction per offense, fj his punishment per offense, and uj a portmanteau variable representing all these other influences.”133 The model developed in this article discards the elegance of placing all of the factors on one side of the equation in order to clearly articulate the effect of changing a single factor. This model also unbundles “all these other influences” grouped together by Becker in his portmanteau variable. This model explicitly relies on current research regarding decisions to act corruptly.
A. The Cost Side of a Decision to Act Corruptly
A bribe is a transaction. On one side of the exchange the bribe-giver gives the bribe, on the other the bribe-taking official gives a favor.134 To state the obvious, all transactions involve costs.135 The costs involved in a corrupt relationship can be differentiated from one another in order to understand the decision made by a legislator presented with an opportunity to act corruptly. Those costs include psychic costs, social costs, and the cost of bestowing the requested favor.
1. Psychic Costs
The taking of a bribe imposes a psychic cost, Cpsy.136 Psychic costs differ from social costs in that psychic costs are imposed internally whereas social costs are imposed by others.137 Psychic costs consist of several emotional and psychological factors.138 One of the most pronounced of these costs occurs when overcoming social controls against acting corruptly.139 Social controls include “laws, norms, customs, mores, ethics, and etiquette,” all of the things by which members of a society internalize an understanding of what is right and what is wrong.140 Deviating from these controls takes substantial effort, which imposes a cost on the legislator who acts corruptly.141
The costs imposed by social controls can be manipulated. The “broken window” theory is based on the idea that the amount of crime and social disorder an individual observes affects that individual's internalization of social controls.142 Decreasing the frequency of indicators that people are allowed to violate the law, such as graffiti or broken windows, increases the strength of social controls.143 Conversely, when an individual observes others violating laws and norms, the psychic cost to that individual of committing crime is lowered.144 The perceived “culture of corruption” in the federal legislature almost certainly has reduced the psychic cost of entering into a corrupt transaction.145
Other psychic costs include guilt and shame for doing wrong.146 Shame, of course, is closely related to social controls, because social controls contribute to the creation of an internal standard whereby a person feels that he or she acted shamefully.147 Virtually all persons perceive corruption as morally wrong; presumably legislators have the same perception.148 Thus, accepting campaign contributions in exchange for abuse or misuse of office should impose some degree of psychic costs on legislators in the form of shame.
2. Penalty Costs
Another set of costs taken into consideration by the legislator considering whether or not to undertake a corrupt transaction consists of penalties imposed on such conduct.149 When considering the actual costs that will be borne, the person contemplating the crime will also take into account the perceived probability, p, that the conduct will be discovered and those sanctions imposed.150
Criminal sanctions, Ccrim, impose a cost on the potential criminal.151 Most obviously, a legislator convicted of corrupt acts could spend fifteen years in prison and pay a fine of $250,000.152 Associated costs include the anxiety of going through the criminal process, the cost of legal defense, time spent away from family and friends while incarcerated, and lost income and other opportunity costs created by the time spent in prison.153
These costs can be manipulated. Indeed, Becker and others suggest increasing penalties as a basic means of changing the costs considered by a potential criminal.154 Associated costs can also be manipulated. Unfortunately, for example, a legislator pays virtually nothing for criminal defense as those costs are usually paid out of campaign funds or through special funds created by supporters and lobbyists.155 Legislators removed from office often enjoy lucrative careers as lobbyists or consultants, hidden from public view within the federal governmental structures.156
Society also imposes costs, Csoc, through informal penalties applied through mechanisms less institutionalized than the criminal process.157 Whereas guilt is generated internally, shame and social approbation are generated by society in general.158 While not as malleable as criminal penalties, empirical research suggests that social sanctions exert a strong influence on decisions about the commission of a crime.159
3. Cost of Bestowing the Favor
The potentially corrupt bribe-taking legislator must also take into account the actual cost of the favor to be bestowed, Cfav.160 It is much less costly to bestow the favor of, for example, providing a bribe-giver with the opportunity to come to the legislator's office for a personal meeting than it is to bestow the favor of swinging a vote or quashing a federal investigation, even though both represent an undemocratic abuse of power. Unfortunately, the cost of awarding large contracts or otherwise granting a favor is relatively low, as individual legislators can direct substantial amounts of federal monies through the process of earmarking.
The word “earmarking” is used for a variety of practices.161 As earmarking relates to corruption, it refers to the insertion into general spending bills of measures directed at specific recipients or projects, done by a single legislator, with little or no oversight or debate.162 A current member of Congress designates earmarks as “the currency of corruption.”163 Indeed, several of the current investigations into congressional corruption involve earmarking.164
4. The Cost Side of the Corruption Decision
If Cpsy represents psychic costs, p represents the perceived probability of detection, Ccrim represents the criminal sanctions, Csoc represents social sanctions, and Cfav represents the cost of the favor, then the potential cost to the potential bribe-taking official can be represented as follows:
B. The Benefit Side of the Decision to Act Corruptly
The cost side is weighed against the benefit side. A bribe-giver could offer several different types of benefits to a legislator, such as cash bribes or business opportunities.165 The benefit at issue in this article, however, is campaign finance.
Election to the legislature requires a substantial amount of money. In 2006, the average cost of winning election to the House was $1.3 million; to the Senate, $9.6 million.166 Money is critical to successful campaigning: more than ninety percent of House candidates who outspend their opponents are elected to office.167
Contributions form the bulk of campaign funds. For the 2007–2008 election cycle, the National Party could give up to $5,000, the Local Parties168 could contribute up to $5,000, and the Campaign Committee could contribute up to $2,300, for a total of $12,300.169 This leaves the average House candidate with around $1.29 million to raise every two years in order to compete for a seat, and the average Senate candidate with around $9.59 million to raise every six years.170
This money is raised through contributions from individuals. Raising this money imposes, obviously, transaction costs. Although no data exist on the actual dollar amount of this cost, an average cost for each transaction can be represented as Ccon. The total cost to the candidate will be Ccon multiplied by the total number of transactions.
The total number of transactions is strongly influenced by limits on the amount an individual can contribute. For the 2007–2008 election cycle, individuals could contribute no more than $2,300 to a single candidate.171 Divided into the $1.29 million that the average House candidate needs to raise, the average candidate needs to secure donations from at least 561 individual contributors. In other words, at the current rates of expenditure and at the current limits on donation, the average candidate to the House could need to enter into at least 561 discrete fundraising transactions. The average Senate candidate would need to enter into at least 4,170 discrete fundraising transactions.
In general, the total amount of money needed by a candidate can be represented by A, a subset of that amount by a. The minimum number of transactions that a candidate will have to enter into to raise those amounts can be determined by dividing A or a by the limit on the amount of individual contributions, L. Thus, N=A/L and n=a/L. The number of transactions required to raise the necessary funds has an inverse relationship to the size of the limit: if the limit is made smaller, the minimum number of transactions becomes larger.
When making decisions about future fundraising, a candidate can think in terms of the average cost of each transaction multiplied by the minimum number of transactions required to raise a given amount of money. Thus, the minimum cost to a candidate to raise an amount, a, is nCcon.
This suggests the real value to a candidate of an offer of campaign funds in the amount of a. The value to the candidate is not a—the candidate cannot put a in her pocket. The value of a to the candidate is the amount the candidate saves by not having to raise a herself. That amount is nCcon.
1. The Bribe Offer
Campaign finance laws limit the amount that a person may donate to a particular candidate. The laws do not, however, prevent that person from asking others to donate to the same candidate.172 The practice of securing contributions from multiple donors and sending them en masse to a candidate, a practice called “bundling,” has flourished since the imposition of limits on contributions.173 A bundler is able to circumvent the contribution limit by offering a candidate large campaign contributions, made up of an aggregate of smaller contributions that fall within the limit.174
The bundler may be an individual, such as a corporation, seeking benefit for itself. More likely, the bundler will be a broker with skills in bundling, who receives a premium from clients for using bundled donations to induce legislators to bestow favors.175 These brokers often fall within the lobbying industry, although it is probable that not all lobbyists are dishonest.176 Interestingly, the paradigmatic post-contribution-limit case of bribery involved the Speaker of the House and a lobbyist-bundler.177 Anecdotal evidence suggests that bundlers exert a great deal of influence on legislators.178
A bundler, therefore, may offer a candidate a bribe. Put in its starkest terms, the offer is an exchange of a large campaign donation in exchange for a favor involving abuse or misuse of the legislative office.
2. The Decision
Campaign funds are absolutely necessary to obtain or keep a seat in the legislature. The candidate must obtain those funds, whether through the candidate's own efforts or by accepting the bundler's offer, or the candidate will not obtain or retain the seat. A rational candidate will weigh the benefits offered against the cost of acting corruptly.179 In this case the benefit offered is the amount of transaction costs the candidate will save by not having to undertake the process of raising that particular amount of money. If the amount saved is greater than the cost, then the legislator will accept the offer and act corruptly.
This formulation is not intended to excuse the conduct of a corrupt legislator. Such a legislator acts illegally and/or immorally, inflicts damage on society, and undermines the business environment. There is no excuse for such conduct. Rather, this formulation provides an insight into why legislators may act corruptly and into the effects that reform policies may have on corrupt acts. Unfortunately, this model also demonstrates that contribution limits will increase the likelihood of corruption.
IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
- Top of page
- I. THE PROBLEM OF CORRUPTION
- II. FEDERAL CAMPAIGN FINANCE REGULATION
- III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
Limits on the size of campaign contributions do not decrease the amount that a candidate must spend in order to campaign for office. Limits on the size of campaign contributions do, however, affect the transaction costs associated with raising the money necessary to campaign for office. A bundle of contributions represents a certain amount of money, a. Under regulatory conditions that limit the size of individual contributions it takes a certain number of transactions to raise a. Further reducing the amount that an individual contributor can give increases the number of transactions necessary to raise exactly the same amount of money.
Increasing the number of transactions necessary to obtain a particular amount of money increases the transaction costs imposed by raising that money.
Increasing the transaction costs imposed by raising a particular amount of money makes it more likely that the value of a bribe consisting of bundled campaign contributions, which is measured by the candidate in terms of the cost to the candidate of raising the same amount of money, will exceed the costs associated with the corrupt act.
Reducing the amount that an individual can contribute therefore has the perverse effect of increasing the value of bundled campaign contributions.180 Increasing the value of the bribe increases the likelihood that the rational legislator will accept the bribe. Campaign contribution limits increase the likelihood of corruption in the federal legislature.
It is difficult to determine whether Congress desires a serious approach to corruption in the legislature.181 If it does, it would benefit from a thoughtful understanding of the decision to act corruptly. A thoughtful approach would take into account the insights gained from analyzing the decision-making process in terms of transaction costs.
The decision to act corruptly weighs the benefit and costs as follows:
Imposing stricter limits on the size of donations increases the value of campaign donations, particularly bundled contributions, and thus increases the likelihood of corruption. An understanding of corruption, therefore, leads to a recommendation that Congress consider loosening or eliminating restrictions on the size of individual contributions.
This article is specifically concerned with campaign contribution limits. An understanding of the decision-making process, however, does cast some insights into the merits of other reform measures. These insights merit some attention.
A. Decreasing the Value of the Benefit of Corruption
The rational legislator acts corruptly if the benefit outweighs the cost. One approach to reducing corruption, therefore, is to reduce the value of the benefit conferred by the bundler. The first, and most facially obvious, means of doings so is to prohibit bundling. The bundled campaign contributions are valuable to the candidate because they provide a scarce resource at a reduced cost. Bundled contributions are more valuable than a contribution of the same size would be if there were no limitations on the size of contributions because those very limits make campaign money scarcer and more expensive to procure. Eliminating bundled contributions would significantly reduce the benefit that a bribe-giver can offer to a candidate and thus makes it more likely that the costs to the legislator of acting corruptly would outweigh that benefit.
Prohibition of bundling raises interesting constitutional questions. The Supreme Court has consistently found charitable fundraising to constitute a protected form of speech.182Political fundraising, however, might be considered commercial speech.183 As such, it would be entitled to less protection than would be charitable fundraising.
Even if it passed constitutional muster, however, a prohibition of bundling would be extremely difficult to enforce. The difference between bundling and other types of fundraising is slight.184 Even if the actual transfer of a handful of checks were prohibited, that act could be replaced with a promise to raise a specific amount of funding for a candidate, and the effective benefit to a candidate would be the same. Given the onerous demands of fundraising for political campaigns, it is difficult to imagine how fundraising could be prohibited.185 Thus, although the prohibition of bundling is facially obvious, it would probably have little effect on corruption in the legislature.
More creative suggestions might have more effect. Bruce Ackerman and Ian Ayres have suggested that all contributions be made anonymously.186 Contributions would be made to a trust fund rather than directly to the candidate; monies would be distributed by the fund in accordance with the directions of the various donors.187 Candidates themselves would not know who contributed to their campaign and information about who contributed to the trust fund would be held confidential.188 Thus, a potential bribe-giver could not credibly offer a benefit to a legislator in exchange for corrupt activity.189 Although this reform would clearly diminish the benefit offered by a corrupt actor, it has not been considered by the legislature.
The most commonly suggested campaign reform also goes directly to the offer of a benefit by a bribe-giver to the candidate. Many scholars and public advocates have called for public funding of campaigns, which would eliminate the need for campaign contributions.190 Advocates use a variety of arguments to support public financing of campaigns in the United States.191 An understanding of corruption, however, allows for an additional analysis of these proposals. Eliminating the need for campaign contributions significantly reduces the benefit side of the decision-making equation—to zero—which makes it far less likely that the legislator will decide to act corruptly. Thus, an understanding of the decision-making process lends support to both the creative proposal to make donations anonymous and the more common proposal to publicly finance campaigns.
B. Increasing the Costs
An understanding of the decision-making process also suggests that the cost side might be increased. The first cost examined in this particular iteration of the equation is the psychic cost, Cpsy. Many factors contribute to the psychic cost of a corrupt act; each is worthy of study in any given situation.192 As a general proposition, however, it is accepted that internal controls on corrupt acts can be manipulated so that persons are less likely to commit crimes or violate rules. In the field of business, for example, managers undergo programs that facilitate “buy-in” or internalization of a firm's code of ethics.193 There is no reason that similar programs could not be devised for Congress.194
The next set of costs examined, penalty costs, are conditioned by the probability of detection, p(Ccrim+Csoc). Corruption is as hard to detect as any other criminal or otherwise sanctioned activity.195 Detecting and prosecuting legislative corruption presents particular difficulties because of the separation-of-powers doctrine. The executive, in its role as enforcer of law, might be prevented from fully investigating congressional activities that could arguably fall within its legislative function.196 Nonetheless, programs to increase the probability of detection can be envisioned.197
With respect to the costs imposed through criminal sanctions, Ccrim, Becker himself suggests that the most cost-effective means of deterring crime is to increase criminal penalties.198 Many countries and legal systems impose more severe penalties on acts of official corruption than the United States.199 As Neal Katyal points out, however, in application to actual crime, the relationship between severity of penalty and deterrence is far more complicated than a straight correspondence.200 The sanction imposed on corruption, therefore, requires thoughtful consideration and study in terms of most effectively reducing the likelihood that a potentially corrupt legislator will find the benefit of accepting a corrupt offer of a bribe to outweigh the costs.
Sanctions, however, are not the only means by which criminal costs are imposed. The costs of defense, for example, are costs that should be contemplated by a potentially corrupt legislator.201 Under current rules, a legislator can use campaign funds to pay legal fees incurred when defending against accusations of accepting campaign contributions as a bribe, which substantially reduces or eliminates this cost.202 Eliminating these sources of defense funding and forcing legislators to pay for their defense out of their own pockets would increase the cost contemplated by a legislator facing a corrupt offer.
Social costs for antisocial activities exist in many forms. Arguably, at this time the social costs for legislative corruption are low. Two examples demonstrate this point. For a period of almost ten years, the political party that controlled the legislature actively—and successfully—encouraged lobbyists to only hire and contribute to members of their party, on the explicit grounds that these contributions would lead to direct access to lawmakers, while those who contributed to the opposition party would be denied access.203 Selling access to legislators, although legal in the United States, fits squarely within the definition of corruption.204 These activities, called by participants the “K Street Project,” were hardly secret: The New York Times reported them in 2002.205 They evoked no public outcry and little public condemnation; a year later an editorial about the K Street Project decried the “strange disconnect between most political commentary and the reality of [politics at that time].”206 Similarly, a sitting president could say “I think it's disingenuous for anybody in public life to say that it doesn't help you to be considered for [a trade mission] if you help the person who happens to win an election…. And it is a good thing to do. That's the way—that's the way the political system works.”207 Like the corrupt acts of the K Street Project, this endorsement of the sale of political access engendered virtually no public condemnation. Quite clearly, the social costs of legislative corruption could be increased.
Finally, the cost of bestowing the favor, Cfav, can be adjusted. As discussed earlier in this article, the current rules in Congress render preferential treatment virtually costless to a corrupt legislator.208 The practice of earmarking, through which legislators can insert specific spending directions into legislation with virtually no oversight or debate, allows a corrupt legislator to directly bestow favors or preferential treatment with very little effort. An obvious means of making the bestowal of favors more costly would be to eliminate or prohibit earmarking.209
Another technique could increase the cost of bestowing the benefit. Accurate records are kept regarding who contributes to which candidate, including bundled contributions or other forms of fundraising.210 John Nagle suggests that legislators who receive contributions or fundraising assistance from lobbyists or other interest advocates should be required by law to recuse themselves from voting on issues associated with those persons.211 The American Bar Association proposes similar recusal by any elected judge on issues involving litigants who contributed to that judge's campaign.212 Recusal would increase the cost of bestowing the favor by forcing the legislator to enter into the costly process of trading votes or otherwise procuring something of value to be traded for the campaign contribution.
- Top of page
- I. THE PROBLEM OF CORRUPTION
- II. FEDERAL CAMPAIGN FINANCE REGULATION
- III. UNDERSTANDING THE DECISION TO ACT CORRUPTLY
- IV. CAMPAIGN CONTRIBUTION LIMITS INCREASE THE LIKELIHOOD OF CORRUPTION
The possibility of corruption poses a special threat to the democratic institutions and integrity of the United States and undermines and distorts the environment in which business operates. Both the federal legislature and the federal courts recognize this fact. Congress has enacted a plethora of legislation aimed squarely at corruption engendered through campaign contributions, and the Supreme Court has recognized the reduction or elimination of corruption as a critical goal. Yet corruption has persisted and, by most accounts, flourished following that legislation.
Understanding the decision-making process behind a corrupt act explains why the mechanisms implemented by federal legislation to date have failed and have in fact exacerbated the problem. A legislator who is offered a bribe consisting of a bundled campaign contribution weighs the benefit of that contribution against the costs imposed by the corrupt act. The benefit is not the aggregate amount of the contribution. The benefit to the legislator is the cost saved by not having to raise that money herself. That cost, in turn, is directly related to limits on the size of individual contributions. The smaller that size is, the larger the number of discrete transactions she would have to enter into to raise the aggregate amount of money and the greater the transaction costs of doing so. Thus, when the rules mandate relatively small individual contributions, the value to a candidate of bundled contributions is greater than the value of exactly the same contribution in the absence of limits on the size of individual contributions.
Serious efforts to control corruption in the federal legislature must take consideration of this dynamic. Meaningful rules to reduce corruption will either eliminate or reduce the size of the benefit that can be offered by means of bundled campaign contributions, or they will increase the costs of accepting a bribe offer and acting corruptly.
A serious approach to corruption also entails an understanding of the perverse relationship between campaign contribution limits and corruption. Reducing the amount of money an individual can give to a campaign does not reduce the likelihood that a legislator will become corrupt. Instead, decreasing the amount of money that can be offered actually increases the likelihood of corruption in the federal legislature.
1SeeThe Law of Democracy: Foreword, 153 U. Pa. L. Rev. 1, 2 (2004) (noting that recent jurisprudence “represents what is perhaps the most sweeping treatment of the issues of political money, corporate political speech, and the rights of parties in the campaign finance system.”); , Federal Election Commission v. Colorado Republican Federal Campaign Committee: Implications for Parties, Corporate Political Dialogue, and Campaign Finance, 40 Am. Bus. L.J. 83, 84 (2002) (stating that campaign finance regulation “indirectly implicates several phenomena that allegedly threaten our democratic form of government: corporate participation in electoral politics; reliance on soft money to finance candidate elections; and the emergence of ‘covert speech’ in which the true purpose of political ads is disguised in order to avoid campaign laws.”).,
2See, e.g., Corporate Political Speech and the Balance of Powers: A New Framework for Campaign Finance Jurisprudence in Wisconsin Right to Life, 27 St. Louis U. Pub. L. Rev. 267, 267–69 (2008) Robert Kerr notes that the term “corporate speech” is a misnomer, as corporations cannot speak, and offers instead the term “corporate political media spending.” , Considering the Meaning of Wisconsin Right to Life for the Corporate Free-Speech Movement, 14 Comm. L. & Pol'y 105, 109 (2009).,
3Linda Berger summarizes the distinction: When a corporation participates in the public sphere, its participation often takes the form of money. Corporate money must be given to someone to bring corporate participation into being—money to spend on public relations, advertising, or lobbying, or money to spend in a political campaign. Though the form is the same, the Supreme Court has treated these modes of corporate participation very differently. On the one hand, corporate money is seen as speech when it is the means used for corporations to sell products or state positions on issues. On the other, a majority of the Rehnquist-O'Connor Court perceived corporate money spent in election campaigns as the root of evils threatening the political process. Of Metaphor, Metonymy, and Corporate Money: Rhetorical Choices in Supreme Court Decisions on Campaign Finance Regulation, 58 Mercer L. Rev. 949, 949 (2007).,
4558 U.S. 50 (2010).
5See Posting of Laurence H. Tribe to SCOTUSblog ( Jan. 24, 2010, 22:30 EST), http://www.scotusblog.com/2010/01/what-should-congress-do-about-citizens-united (stating that the decision “marks a major upheaval in First Amendment law ….”).
6See id. (opining that “[t]alking about a business corporation merely as another way that individuals might choose to organize their association with one another to pursue their common expressive aims is worse than unrealistic”).
7SeeNote, “Stopping Winks and Nods”: Limits on Coordinating as a Means of Regulating 527 Organizations, 81 N.Y.U. L. Rev. 1166, 1186 (2006) (stating that the purpose of current campaign finance reform is to prevent corruption); & , The Constitutional Imperative and Practical Superiority of Democratically Financed Elections, 94 Colum. L. Rev. 1160, 1162–63 (1994) (similar).,
8See Raskin & Bonifaz, supra note 7, at 1163 (discussing the remedial purposes of campaign finance reform with respect to structural bias).
9See Buckley v. Valeo, 424 U.S. 1, 26–27 (1976).
10SeeChanging Conceptions of Development in the 1990s, 9 Transnat'l L. & Contemp. Probs. 193, 199 (1999) (identifying “weak institutions” as a “key factor[ ] relating to corruption”); & , Institutional Reform in Transition: A Case Study of Russia, 10 S. Ct. Econ. Rev. 211, 232 (2002) (noting the phenomenon of “weak institutions contributing to corruption and corruption contributing to weak institutions.”); & , An Analysis of Corruption in the Judiciary, 30 Law & Pol'y Int'l Bus. 95, 95 (1999) (“It can be said that corruption is the result of weak institutions and human nature.”).,
11See Jeremy Pope, Confronting Corruption: The Elements of a National Integrity System (2000) (discussing methods for strengthening institutions to control corruption).
12The term “rationality” is not meant to excuse or justify the conduct of corrupt legislators but rather indicates that a decision to act corruptly is the product of a conscious and deliberate process.
13Crime and Punishment: An Economic Approach, 76 J. Pol. Econ. 169, 178 (1968).,
14Law Enforcement, Malfeasance, and Compensation of Enforcers, 3 J. Legal Stud. 1 (1974) (suggesting that increased monitoring and higher wages will curb police corruption). See also & , The Role of Wages and Auditing During a Crackdown on Corruption in the City of Buenos Aires, 46 J.L. & Econ. 269 (2003) (using the Becker-Stigler model to analyze efforts to reduce police corruption).& ,
15See, e.g., Thomas Donaldson & Thomas W. Dunfee, Ties That Bind: A Social Contracts Approach to Business Ethics 126–27, 225–30 (1999) (discussing “hypernorms” that prohibit local groups from agreeing that they will engage in bribery); , Multiple Communities and Controlling Corruption, 88 J. Bus. Ethics 805 (2010) (suggesting that locally negotiated agreements provide more effective assurances to control corruption).
16E.g., The 1998 OECD Convention: An Impetus for Worldwide Changes in Attitudes Toward Corruption in Business Transactions, 37 Am. Bus. L.J. 485 (2000); & , Fighting Corruption: A Principled Approach: The C2 Principles, 33 Cornell Int'l L.J. 593 (2000); & , Multilateral Cooperation to Combat Corrupt Normative Regimes Despite Mixed Motives and Diverse Values, 33 Cornell Int'l L.J. 731 (2000).Compare , Are Extraterritorial Restrictions on Bribery a Viable and Desirable International Policy Goal Under the Global Conditions of the Late Twentieth Century?, 24 Yale J. Int'l L. 223 (1999) (setting out reasons transnational control of corruption may not be viable), with , Regulating Transnational Bribery in Times of Globalization and Fragmentation, 24 Yale J. Int'l L. 257 (1999) (setting out reasons transnational control of corruption is viable).et al.,
17SeeRe-Viewing Organizational Corruption, 33 Acad. Mgmt. Rev. 670 (2008) (discussing harms of private sector corruption).et al.,
18E.g., A Multidimensional Conceptualization of Organizational Corruption, 33 Acad. Mgmt. Rev. 710 (2008) (attempting to create a four-box matrix of corruption control mechanisms).,
19Most but not all of these exchanges fall within criminal statutes pertaining to bribery. See infra notes 26–28 and accompanying text. A paradigmatic example of an exchange that is not prosecuted—and in fact has been institutionalized in recent years—is meeting time with a legislator given in exchange for campaign contributions. See infra note 28. This article is concerned with the corrupt exchange regardless of whether it might be prosecuted; the terms “corruption” and “bribery,” therefore, are used in their general rather than technical meanings. See George et al., supra note 16, at 516 (arguing for an expansive definition of bribery).
20See infra notes 170–72 and accompanying text (describing bundling of contributions).
21Joan Gabel, Nancy Mansfield, and Susan Houghton, for example, describe the slush funds used by business organizations to influence and distort regulations in the 1960s and 1970s and the visceral public reaction that led to passage of strict accounting and reporting provisions in the Foreign Corrupt Practices Act. Letter vs. Spirit: The Evolution of Compliance into Ethics, 46 Am. Bus. L.J. 453, 459–60 (2009).et al.,
22SeeCorporate Citizenship and Trustworthy Capitalism: Cocreating a More Peaceful Planet, 44 Am. Bus. L.J. 237, 271–72 (2007) (discussing the direct relationship between responsible behavior and a healthy market environment).,
23Corrupt Organizations or Organizations of Corrupt Individuals? Two Types of Organizational-Level Corruption, 33 Acad. Mgmt. Rev. 685, 686 (2008)See also , The Good Company: Rhetoric or Reality? Corporate Social Responsibility and Business Ethics Redux, 44 Am. Bus. L.J. 207, 215 (2007) (discussing difficulties in defining corruption).et al.,
24Corruption and Political Development: A Cost-Benefit Analysis, 61 Am. Pol. Sci. Rev. 417, 419 n.10 (1967).See also , Transnational Corruption: Regulation Across Borders, 47 Va. J. Int'l L. 413, 417 (2007) (referring to Nye's as the “classic definition”).,
25Corruption occurs in a variety of forms and each of those forms probably manifest within the federal legislature of the United States; this article focuses on bribery because the legislation at issue in this article does so. In general, scholars studying corruption often concentrate on bribery as a proxy for corruption in general. See, e.g., Susan Rose-Ackerman, Corruption: A Study in Political Economy 4 (1978) (“I shall always keep bribery in the analytical foreground.”).
26Public Corruption, 46 Am. Crim. L. Rev. 927 (2009).et al.,
27See McConnell v. Fed. Election Comm'n, 540 U.S. 93, 150–52 (2003) (describing this transaction as corrupt); see alsoShrink Missouri, Campaign Finance, and “The Thing That Wouldn't Leave,” 17 Const. Comment. 483, 493 (2000).,
28Not all forms of lobbying involve a quid pro quo exchange of money for time. SeeDo Campaign Contributions and Lobbying Corrupt? Evidence from Public Finance, 2 Geo. Mason J.L. Econ. & Pol'y 145 (2006) (differentiating types of lobbying but empirically finding large amounts of corrupt lobbying).,
29The means by which corruption harms the United States are discussed infra notes 31–72 and accompanying text.
30The regulatory history is discussed infra notes 73–123 and accompanying text.
31Philip Shenon, Man Linked to Abramoff is Sentenced to 18 Months, N.Y. Times, Oct. 28, 2006, at A9.
32Citizens for Responsibility and Ethics in Washington, Twenty Six Reasons for Ethics Reform: The Most Corrupt Members of Congress, http://www.crewsmostcorrupt.org/ (last visited Oct. 15, 2010); Common Cause, Campaign Finance Reform: A New Era (Jan. 2009), http://www.commoncause.org/atf/cf/%7Bfb3c17e2-cdd1-4df6-92be-bd4429893665%7D/COMMONCAUSECAMPAIGNFINANCEREFORMAGENDA2009.PDF; Congressional Accountability Project, Ethics Index, http://www.congressproject.org/ethics/index.html (last visited Oct. 15, 2010); Gary Ruskin, The Honest Government Agenda: How Congress Can Clean up Corruption ( Jan. 10, 2006), http://www.commercialalert.org/issues/government/corruption/the-honest-government-agenda-how-congress-can-clean-up-corruption.
33Gail Russell Chaddock, Search of Capitol Hill Office Creates Another Storm, Christian Sci. Mon., May 24, 2006, at 1, 1.
34See Mark Mazetti, Report Spells Out Favors by Former Congressman, N.Y. Times, Oct. 18, 2006, at A5 (describing Cunningham's conviction); Across State Lines, Campaigns & Elections, Sept. 2007, at 20, 20 (describing Stevens' indictment). The process through which a single senator can award a federal contract, called earmarking, is briefly explained infra notes 160–63 and accompanying text. Senator Stevens was not found guilty of a crime.
35Do Campaign Contributions and Lobbying Corrupt? Evidence from Public Finance, 2 J.L. Econ. & Pol'y 145 (2006).,
36See Anne E. Kornblut, The Abramoff Case: The Overview; Lobbyist Accepts Plea Deal and Becomes Star Witness in a Wider Corruption Case, N.Y. Times, Jan. 4, 2006, at A1.
37Samuel P. Huntington, Political Order in Changing Societies 59–71 (1968); , Economic Development through Bureaucratic Corruption, 8 Am. Behav. Scientist 8, 8–14 (1964).
38The Social Cost of Monopoly and Regulation, 83 J. Pol. Econ. 807, 812 (1975).,
39Revenue Seeking: A Generalization of the Theory of Tariffs, 88 J. Pol. Econ. 1069, 1086 (1980).& ,
40Stephen P. Magee, Endogenous Tariff Theory, in Neoclassical Political Theory: The Analysis of Rent-Seeking and DUP Activities 41, 51 (David C. Colander ed., 1984).
41Douglass C. North, Three Approaches to the Study of Institutions, in Neoclassical Political Economy: The Analysis of Rent-Seeking and DUP Activities, supra note 40, at 33, 34.
42World Bank, Helping Countries Combat Corruption: The Role of the World Bank 14–15 (1997).
43Johann Graf Lambsdorff, The Institutional Economics of Corruption and Reform: Theory, Evidence and Policy 131–35 (2007).
44UN Doc. A/58/PV.50, at 19 (Oct. 31, 2003), quoted inContemporary Practice of the United States Relating to International Law, 98 Am. J. Int'l L. 182, 184 (2004).,
45SeeDelegates or Trustees? A Theory of Political Accountability, 71 J. Pol. 1225, 1225–27 (2009) (discussing the complex expectations created by representation and referring to a “delegate trap” in which constituencies send contradictory signals to representatives); , Magnificent Failure Revisited: Modern Maryland Constitutional Law From 1967 to 1998, 58 Md. L. Rev. 528, 539–40 (1999) (“In representational democracy, elected representatives face a constant tension between their role as representatives of the people and their role as leaders…. When the elected leaders properly negotiate the tension between leadership and representation, they become able to shape public opinion.”).& ,
46SeeThe Delegate Theory of Representation, 23 Am. J. Pol. Sci. 278, 278, 278–99 (1979) (describing the “delegate” theory of representative government and stating in summary, “[t]he delegate theory of representation, in short, posits that the representative ought to reflect purposively the preferences of his constituents.”).& ,
47SeeRepresentation Rethought: On Trustees, Delegates, and Gyroscopes in the Study of Political Representation and Democracy, 103 Am. Pol. Sci. Rev. 214, 214–15 (2009) (stating that sometimes representatives must “act as they believe is best for the nation versus acting as their electoral constituents desire”).,
48SeeCongressional Ethics and Constituent Advocacy in an Age of Mistrust, 95 Mich. L. Rev. 1, 54 (1996) (stating that “vote-trading, exchanges of favors, and other sorts of ‘logrolling’ are an integral part of congressional culture.”).,
49The two positive theories most often used in legal scholarship are public interest theory and public choice theory. Beyond Public Choice and Public Interest: A Study of the Legislative Process as Illustrated by Tax Legislation in the 1980s, 139 U. Pa. L. Rev. 1, 6 (1990) Although each is considered useful, each has engendered substantial debate and criticism as positive theories. See id. at 36–50, 76–106 (criticizing public interest and public choice theories); Steven P. Croley, Regulation and Public Interests: The Possibility of Good Regulatory Government (2008). Reza Dibadj succinctly summarizes the criticisms: “Public choice theories are incomplete, and critiquing the so-called ‘public interest’ doctrine provides limited analytic insight. Emphasis on ‘public’ and ‘private’ polarities, to which the overwhelming majority of commentary is devoted, is unsatisfying.” , Regulatory Givings and the Anticommons, 64 Ohio St. L.J. 1041, 1123 (2003).,
50SeeIn Partial Praise of Dillon's Rule, or, Can Public Choice Theory Justify Local Government Law, 67 Chi.-Kent L. Rev. 959, 971 (1991) (suggesting that logrolling is appropriate when favors are traded in a way that benefits local constituencies); McCrone & Kuklinski, supra note 46, at 299 (“representation is a complex process of interaction between representatives and represented …”); Rehfeld, supra note 47, at 214 (“The presumption of democracy is that there be a close correlation between the laws of a nation and the preferences of citizens who are ruled by them.”).,
51For All Intents and Purposes: What Collective Intention Tells Us About Congress and Statutory Interpretation, 154 U. Pa. L. Rev. 983, 1014 (2006).See also , The Opacity of Transparency, 91 Iowa L. Rev. 885, 895–96 (2006) (reviewing Locke, Rousseau, Mill, Bentham, Rawls, and Kant and finding that all support the contention that “open government is an essential element of a functional liberal democracy”).,
52SeeStrengthening International Regulation Through Transnational New Governance: Overcoming the Orchestration Deficit, 42 Vand. J. Transnat'l L. 501, 532 (2009) (bribery turns a legislator away from acting in interest of public).& ,
53Political Corruption and Democracy, 14 Conn. J. Int'l L. 363, 378 (1999) (“Illegal campaign contributions and the bribery of politicians can undermine democratic systems.”).,
54On Impeaching Presidents, 28 Hofstra L. Rev. 291, 302 (1999); see , Combatting Corruption: Focus on Latin America, 3 Sw. J. L. & Trade Am. 179, 184 (1996) (“Perhaps the greatest casualty of … corruption has been the erosion of public trust in public institutions and leaders, the foundation of democracy.”).,
55Earmarking is described infra notes 160–63 and accompanying text.
56SeeAmendment of the Foreign Corrupt Practices Act, 15 N.Y.U. J. Int'l L. & Pol. 627, 627 (1983) (describing this distortion in market terms).& ,
57See, e.g., Transparency International, Corruption Perception Index, http://www.transparency.org/policy_research/surveys_indices/cpi/2009 (last visited Aug. 15, 2010). Empirical research often relies on Transparency International's Corruption Perception Index to determine levels of corruption in countries. The Corruption Perception Index uses a variety of sources of information to assign a score to a country; a score of ten would indicate a perception of no corruption within that country, whereas a score of zero would indicate a perception that every single action by the government is corrupt. Id. The United States usually receives a score near 7.5, which places the United States in the tier below the most honest countries in the world. Id.
58E.g., George Abed & Hamid Davoodi, Corruption, Structural Reforms and Economic Performance in the Transition Economies (Int'l Monetary Fund, Working Paper No. 132, 2000); Carlos Leite & Jens Weidmann, Does Mother Nature Corrupt—Natural Resources, Corruption, and Economic Growth (Int'l Monetary Fund, Working Paper No. 85, 1999); Paulo Mauro, The Effects of Corruption on Investment, Growth and Government Expenditure (Int'l Monetary Fund, Working Paper No. 98, 1996); Vito Tanzi & Hamid Davoodi, Corruption, Public Investment, and Growth (Int'l Monetary Fund, Working Paper No. 139, 1997); Corruption, Democracy and Economic Growth, 27 Int'l Pol. Sci. Rev. 121 (2006).et al.,
59Corruption and Economic Growth, 29 J. Comp. Econ. 66, 76 (2001).,
60Shankha Chakraborty & Era Dabla-Norris, The Quality of Public Investment 19–20 (Int'l Monetary Fund, Working Paper No. 09/154, 2009).
61Corruption and Inflation, 66 Econ. Letters 199 (2000).,
62Corruption, Law and Order, Bureaucracy, and Real Exchange Rates, 50 Econ. Dev. & Cultural Change 1021 (2002).& ,
63Statistical Analysis of Corruption Data and Using the Internet to Reduce Corruption, 10 J. Asian Econ. 591 (1999); see & , Corruption, 108 Q.J. Econ. 599 (1993).,
64How Taxing is Corruption on International Investors?, 82 Rev. Econ. & Statistics 1 (2000).,
65Corruptible Law Enforcers: How Should They Be Compensated?, 105 Econ. J. 145, 155 (1995).& ,
66Sanjeev Gupta et al., Corruption and the Provision of Health Care and Education Services (Int'l Monetary Fund, Working Paper No. 116, 2000).
67Maureen Lewis, Governance and Corruption in Public Health Care Systems 44–45 (Center for Global Development, Working Paper No. 78, 2006).
68Corruption, Democracy, and Environmental Policy: An Empirical Contribution to the Debate, 15 J. Env't & Dev. 332, 333 (2006); see et al., The Ill Effects of Public Sector Corruption in the Water and Sanitation Sector, 85 Land Econ. 363, 375 (2009) (finding that corruption significantly decreases access to clean water).& ,
69Supra note 37 and accompanying text.
70Daniel Kaufmann & Shang-Jin Wei, Does “Grease Money” Speed Up the Wheels of Commerce? 19 (Int'l Monetary Fund, Working Paper No. 00/64, 2000).
71Susan Rose-Ackerman, The Political Economy of Corruption, in Corruption and the Global Economy 31, 45 (Kimberly Ann Eliot ed., 1997).
72Amitai Etzioni, Capital Corruption: The New Attack on American Democracy (Transaction, Inc. 1988) (1984); Rose-Ackerman, supra note 53, at 378.
73Civil Service (Pendleton) Act, ch. 27, 22 Stat. 403 (1883).
74SeeInternal Separation of Powers: Checking Today's Most Dangerous Branch from Within, 115 Yale L.J. 2314, 2331–36 (2006) (discussing the Pendleton Act).,
75William Learned Macy, governor of New York, summarized the ethos of the Jackson administration with his famous observation, “To the victor belong the spoils of the enemy.” Martin Tolchin & Susan Tolchin, To The Victor 323 (1971). The Jackson administration's blatant use of patronage and kickbacks elicited criticism even though administrations before and after relied on the same. Id. at 323–28.
76Smith, supra note 27, at 20.
77The Unitary Executive During the Second Half-Century, 26 Harv. J.L. & Pub. Pol'y 667, 784 (2003).& ,
78SeeCorruption and Accountability of the Civil Service in the United States, 54 Am. J. Comp. L. 553, 561–63 (2006) (discussing enactment of the Pendleton Act and its aftermath).,
79Melvin I. Urofsky, Money and Free Speech: Campaign Finance Reform and the Courts 8 (2005).
80Elihu Root, Addresses on Government and Citizenship 143 (1916), quoted in United States v. United Auto Workers, 352 U.S. 567, 571 (1957).
81See“Other People's Money”: Corporations, Agency Costs, and Campaign Finance Law, 92 Geo. L.J. 871, 891 (2004).,
82Winkler notes that “[t]he discoveries of the Armstrong Committee that drew the most public attention were those uncovering the large campaign contributions made by insurance company executives with company funds.”Id. See also Robert E. Mutch, Campaigns, Congresses, and Courts: The Making of Federal Campaign Finance Law 2–3 (1988) (stating that the discoveries of the Armstrong Committee caused campaign finance reform); Urofsky, supra note 79, at 12–15 (describing the political consequences of the investigation).
83Urofsky, supra note 79, at 14; Winkler, supra note 81, at 919–20. Robert Sitkoff persuasively argues that corporations instigated or at least supported the legislation as a means of ending extortive contribution demands from political parties. , Corporate Political Speech, Political Extortion, and the Competition for Corporate Charters, 69 U. Chi. L. Rev. 1103 (2002).
84Tillman Act of 1907, ch. 420, 34 Stat. 864 (1907), codified at 2 U.S.C. § 441(b)(2).
85Urofsky, supra note 79, at 15.
86Campaign Expenses Publicity Act of 1910, Pub. L. No. 274, 36 Stat. 822, repealed by Federal Corrupt Practices Act of 1925, ch. 368, § 318, 43 Stat. 1070, 1074.
87SeeNote, The Supply and Demand of Campaign Finance Reform, 100 Colum. L. Rev. 524, 534 (2000) (describing provisions of the Publicity Act).,
88Publicity Act Amendments of 1911, Pub. L. No. 32, 37 Stat. 25, 28, repealed by Federal Corrupt Practices Act of 1925, ch. 368, § 318, 43 Stat. 1070, 1074.
89See Nelson, supra note 87, at 534 (describing provisions of amendments).
90256 U.S. 232 (1921), overruled by United States v. Classic, 313 U.S. 299 (1941).
91Newberry, 256 U.S. at 247.
92Id. at 247–49.
93Urofsky, supra note 79, at 16.
94SeeGivings, 111 Yale L.J. 547, 577 (2001) (describing the Teapot Dome scandal).& ,
95Federal Corrupt Practices Act of 1925, ch. 368, 43 Stat. 1070 (codified at 2 U.S.C. §§ 241–256), repealed by Federal Election Campaign Act of 1971, Pub. L. No. 92-225, 86 Stat. 3, 20 (codified as amended at 2 U.S.C. §§ 431–455 (1994)).
96See Anthony Corrado, Introduction to Money and Politics: A History of Federal Campaign Finance Law, in Campaign Finance Reform: A Sourcebook 29 (Anthony Corrado et al. eds., 1997) (describing flaws in the Federal Corrupt Practices Act).
97313 U.S. 299 (1941).
98See Mutch, supra note 82, at 33 (stating that the Hatch Act specifically targeted Roosevelt's power).
99See Urofsky, supra note 79, at 21 (“The various government employment projects such as the Public Works Administration, the Civilian Conservation Corps, the Tennessee Valley Administration, and the Works Progress Administration had put millions of men and women to work on the government payroll, but outside of the civil service restrictions of the Pendleton Act.”).
100An Act to Prevent Pernicious Political Activities, 2 Aug. 1939, 53 Stat. 1147 (codified at 5 U.S.C. §§ 1501–1508, 7321–7326).
101SeeThe Judgment of History: Faction, Political Machines, and the Hatch Act, 7 U. Pa. J. Lab. & Emp. L. 225, 230–34 (2005) (describing the provisions of the Hatch Act); Developments in the Law—Public Employment (Part 1 of 2), 97 Harv. L. Rev. 1611, 1651–60 (1984) (describing the provisions of the Hatch Act). In a comprehensive reform enacted in 1993, Congress eased many of these restrictions and allowed federal employees to engage in political activities during time when such persons were not on the federal clock. Act of Oct. 6, 1993, Pub. L. No. 103-94, 107 Stat. 1001 (codified as amended in scattered sections of 5 U.S.C., 18 U.S.C., 39 U.S.C. & 42 U.S.C.); see also Bloch, supra note 101, at 235 (discussing the reforms).,
1021940 Amendments to Hatch Act, ch. 640, 2, 54 Stat. 767 (1940) (current version at 5 U.S.C 7324–7327).
103See Bloch, supra note 101, at 233–34 (describing provisions of the 1940 amendments).
104Urofsky, supra note 79, at 21.
105When “The Pols Make the Calls”: McConnell's Theory of Judicial Deference in the Twilight of Society, 153 U. Pa. L. Rev. 5, 23 (2004) (stating that Smith-Connally Act was part of effort to counter Roosevelt's power).,
106Smith-Connally Anti Strike (War Labor Disputes) Act, ch. 144, 57 Stat. 163 (1943) (codified at 50 U.S.C. app. 1501–1511 (1997), repealed by Act of June 25, 1948, ch. 645, 21, 62 Stat. 862, Act of Sept. 6, 1966, Pub. L. No. 89-554, 8(a), 80 Stat. 651); seeLabor Unions: A Corporatist Institution in a Competitive World, 155 U. Pa. L. Rev. 581, 612 (2007) (discussing factors that lead to passage of the Smith-Connally Act).,
107Outside Groups in the New Campaign Finance Environment: The Meaning of BCRA and the McConnell Decision, 22 Yale L. & Pol'y Rev. 235, 237 n.2 (2004) (discussing the provisions of the Smith-Connally Act); see , Representative Democracy versus Corporate Democracy: How Soft Money Erodes the Principle of “One Person, One Vote,” 35 Harv. J. on Legis. 377, 379 n.5 (1998) (comparing the Smith-Connally Act to the Tillman Act).& ,
108Compare“No Balance in the Equities”: Union Power in the Making and Unmaking of the Campaign Finance Regime, 13 Stud. Am. Pol. Dev. 374, 376 (1999) (stating that the Smith-Connally Act and the Taft-Hartley Act tried to balance the power of unions and corporations), with Mutch, supra note 82, at 157 (stating that concerns for union members constituted the most significant arguments in the debate over the Taft-Hartley Act); Winkler, supra note 81, at 928 (suggesting that concerns for dissident union members inspired the Taft-Hartley Act).,
109Labor-Management Relations (Taft-Hartley) Act, Pub. L. No. 80-101, 61 Stat. 136 (1947) (codified as amended at 29 U.S.C. §§ 141–197).
110Mutch, supra note 82, at 158. Bradley Smith notes that unions generally circumvented these rules by creating the first Political Action Committees and contributing money to them. , The Siren's Song: Campaign Finance Regulation and the First Amendment, 6 J.L. & Pol'y 1, 23 (1997).
111Urofsky, supra note 79, at 22.
112SeeThe Taft-Hartley Act and Union Political Contributions and Expenditures, 33 Minn. L. Rev. 1 (1948) (describing provisions of the Taft-Hartley Act).,
113Presidential Election Campaign Fund Act of 1966, Title III § 302(a), Pub L No 89-809, 80 Stat 1587 (codified at 26 U.S.C. § 6096).
114SeeTaxes as Ballots, 65 U. Chi. L. Rev. 387, 389–90 (1998) (describing the administration of the fund).,
115Revenue Act of 1971, Pub. L. No. 92-178, 85 Stat. 497 (codified as amended in 26 U.S.C. §§ 991–997).
116SeeA Proposal for Democratically Financed Congressional Elections, 11 Yale L. & Pol'y Rev. 333, 334 (1993) (discussing provisions of the Act).et al.,
117Pub. L. No. 92-225, 86 Stat. 3 (1972) (codified as amended at 2 U.S.C. §§ 431–455).
118Getting Around Circumvention: A Proposal for Taking FECA Online, 58 Stan. L. Rev. 1499, 1507 (2006).,
119Pub. L. No. 107-155, 116 Stat. 81 (2002) (codified in scattered sections of 2 U.S.C., 18 U.S.C., 28 U.S.C., 36 U.S.C., and 47 U.S.C.).
120Holman & Claybrook, supra note 107, at 237.
121The Constituionalization of Democratic Politics, 118 Harv. L. Rev. 28, 147 (2004).See also , Fragile Democracies, 120 Harv. L. Rev. 1405, 1458 (2007) (stating that the term “electioneering communication” is novel).,
122McConnell v. Fed. Election Comm'n, 540 U.S. 93 (2003).
123SeeBetween Political Speech and Cold, Hard Cash: Evaluating the FEC's New Regulations for 527 Groups, 100 Nw. U. L. Rev. 925, 938–40 (2006) (discussing the impact of McConnell).,
124McConnell, 540 U.S. at 224.
125These theories are explained in Freda Adler et al., Criminology 81–234 (6th ed. 2007).
126See Sandra Walklate, Understanding Criminology: Current Theoretical Debates 22–24 (1998).
127SeeThe Effect of Race and Ethnicity on Bill Sponsorship and Cosponsorship in Congress, 36 Am. Pol. Res. 130, 131 (2008) (discussing characteristics of members of Congress).& ,
128Such an explanation might be suggested by personality theories or biological theories of criminality. See Adler, supra note 125, at 96–98, 111–12.
129SeeCrime and Punishment: An Economic Approach, 76 J. Pol. Econ. 169, 169–70 (1968) (setting forth his method for examining the decision to commit a crime); see also , Blakely's Silver Lining: Sentencing Guidelines, Judicial Discretion, and Crime, 58 Hastings L.J. 533, 544 (2007) (describing Becker's method as “one of the primary models for analyzing criminal behavior”).,
130Becker, supra note 128, at 207–08.
131SeeThe Economics of Crime Deterrence: A Survey of Theory and Evidence, 41 Kyklos 301, 302 (1988) (discussing Becker's argument that the probability of punishment affects the decision to commit a crime); Shepherd, supra note 130, at 545.,
132Sanction Threats and Appeals to Morality: Testing a Rational Choice Model of Corporate Crime, 30 Law & Soc'y Rev. 549, 550–51 (1996).& ,
133Becker, supra note 129, at 177.
134SeeHonor Among Thieves: A Transaction-Cost Interpretation of Corruption in Third World Countries, 4 Bus. Ethics Q. 17, 18–19 (1994) (describing corruption in transaction terms).,
135SeeUnpacking the Household: Informal Property Rights Around the Hearth, 116 Yale L.J. 226, 276 (2006) (stating that transaction costs are inevitable but stressing the profound importance of considering those costs).,
136To Serve and Collect: Measuring Police Corruption, 93 J. Crim. L. & Criminology 593, 599 (2003) (arguing that the motivation to report one's own crimes is not enough once the decision to commit the crime has been made).,
137A person stranded alone on a deserted island would still shoulder psychic costs, while in the absence of other people social costs would be zero. See infra notes 154–56 and accompanying text (discussing social costs). Nathaniel Hawthorne's The Scarlet Letter starkly illustrates the difference between psychic costs and social costs. Society punished Hester Prynne's violation of the social norms, made obvious by her pregnancy, with severe social approbation and the infamous red “A” emblazoned on her clothing. Nathaniel Hawthorne, The Scarlet Letter 57 (Bantam Books 1986) (1850). On the other hand, society knew nothing of Arthur Dimmesdale's violation of exactly the same social norms, yet Dimmesdale suffered mightily under the pressure of guilt imposed on himself by himself. Id. at 197. Indeed, at the end of the novel Prynne manages to achieve some degree of peace, whereas psychic costs have taken Dimmesdale's life. Id. at 273. See also , Sunlight, Secrets, and Scarlett Letters: The Tension Between Privacy and Disclosure in Constitutional Law, 140 U. Pa. L. Rev. 1, 7 n.12 (1991) (discussing differences between Prynne's and Dimmesdale's burdens).
138SeeCrime and Society, 29 Int'l J. Soc. Econ. 781, 781 (2002) (“[E]conomists argue that the gains and costs of criminal behavior include psychic elements”). The authors further elaborate that “[t]hese psychic costs and benefits become a net for all kinds of psychological, sociological, and political phenomena.”Id. at 784.& ,
139SeeSocial Control, Deterrence, and Perspectives on Social Order, 56 Social Forces 408, 408–09 (1977) (discussing the importance and variety of social controls in personal decisions about crime).,
140Adler et al., supra note 125, at 168.
141The author of this article investigated the relative absence of corruption in Singapore and interviewed, among others, public officials and employees. In the author's opinion, those bureaucrats' internal revulsion towards corruption contributes far more than any other factor, such as laws or policies, toward maintaining a clean government in Singapore.
142See George L. Kelling & Catherine M. Coles, Fixing Broken Windows: Restoring Order and Reducing Crime in Our Communities 12–14 (1996) (describing broken window theory); , Role-Based Policing: Restraining Police Conduct “Outside the Legitimate Investigative Sphere,” 94 Cal. L. Rev. 617, 619 (2006) (describing broken window theory).
143SeeCommunity Courts and the Process of Accountability: Consensus and Conflict at the Red Hook Community Justice Center, 40 Am. Crim. L. Rev. 1573, 1574 (2006) (“The so-called ‘broken windows’ theory links disorder and crime prevention by arguing that signs of social disorder encourage crime and should be managed through coercive social control (policing and the law).”). But see & , Broken Windows: New Evidence from New York City and a Five-City Social Experiment, 73 U. Chi. L. Rev. 271, 277 (2006) (arguing that empirical evidence does not support the claim).,
144Social Influence, Social Meaning, and Deterrence, 83 Va. L. Rev. 349, 366, 369–70 (1997) (stating that observing other crimes lowers the price to an individual of committing a crime).,
145See supra note 31; see alsoPower Couples: Lawmakers, Lobbyists, and the State of Their Unions, 24 Wash. U. J.L. & Pol'y 207, 223–24 (2007) (describing a “culture of corruption” in Washington); , The Impact of the Abramoff Scandal on Public Corruption Cases, 52 Wayne L. Rev. 1363, 1363 (2006) (describing the perception of a “culture of corruption that has insidiously enveloped politicians in ways that range from questionable, imprudent, ill-advised, unethical conduct to rule-breaking and outright crime”).& ,
146Conscience, Significant Others, and Rational Choice: Extending the Deterrence Model, 24 Law & Soc'y Rev. 837, 840 (1990).& ,
147SeeThe Costs of the Consensual Myth: Antitrust Enforcement and Institutional Barriers to Litigation in Japan, 94 Yale L.J. 604, 644 (1985) (“An individual's culture provides him or her with psychic rewards for conforming his or her behavior to cultural norms and with psychic costs for doing otherwise, and this psychic calculus takes on a social dimension through communal action: acceptance and praise for appropriate behavior, rejection and scorn for any deviation.”).,
148SeeOutlawing Transnational Bribery Through the World Trade Organization, 28 Law & Pol'y Int'l Bus. 305, 321–22 (1997) (citing primary sources from Buddhism, Christianity, Confucianism, Hinduism, Islam, Judaism, Sikhism, and Taoism and philosophers that condemn bribery).,
149SeeCivil and Criminal Sanctions in the Constitution and Courts, 94 Geo. L.J. 1, 55 (2005).,
150See Kenneth G. Dau-Schmidt, An Economic Analysis of the Criminal Law as a Preference-Shaping Policy, 1990 Duke L.J. 1, 10 n.48 (“a rational person would discount the costs of the criminal sanction by the probability he will actually suffer that sanction in deciding whether to commit the crime”); see also , Social Osmosis and Patterns of Crime, 99 J. Pol. Econ. 1272, 1274–75 (1991) (discussing the means by which potential criminals accrue perceptions of probabilities).
151Shepherd, supra note 129, at 545.
15218 U.S.C. § 201(b) (2009); 18 U.S.C. § 3571(b)(3) (2009). See also supra note 26 and accompanying text (discussing prosecution and sentencing).
153SeeContingent Fees and Criminal Cases, 93 Colum. L. Rev. 595, 605 n.47 (1993) (discussing the costs associated with the criminal process); Shepherd, supra note 129, at 544–46 (discussing many costs, including some imposed by the criminal process).,
154Becker, supra note 129, at 177–78; When Fraud Pays: Executive Self-Dealing and the Failure of Self-Restraint, 44 Am. Bus. L.J. 571, 585 (2007).,
155Paying the Price for Heightened Ethics Scrutiny: Legal Defense Funds and Other Ways That Government Officials Pay Their Lawyers, 50 Stan. L. Rev. 65, 88–106 (1997). Significant amounts of campaign funding can be used for defenses: Two dozen current and former members of Congress caught up in criminal investigations or ethics inquiries spent more than $5 million in campaign funds on legal fees during the last 27 months covered by campaign-finance records…. While campaign donations may not be spent for personal use, the Federal Election Commission (FEC) has ruled that fighting to stay out of jail is a legitimate political activity as long as the allegations of wrongdoing relate to conduct in office. Ken Dilanian, Campaign Funds Going to Legal Fees, USA Today, May 18, 2007, at A1.,
156SeeThe Evolution of Federal Lobbying Regulation: Where We Are Now and Where We Should Be Going, 41 McGeorge L. Rev. 85, 85–86 (2009) (reporting the money earned by lobbying firms during 2008).,
157The New Deterrence: Crime and Policy in the Age of Globalization, 91 Iowa L. Rev. 505, 536 (2006).,
158The Rationality of Sexual Offending: Testing a Deterrence/Rational Choice Conception of Sexual Assault, 26 Law & Soc'y Rev. 343, 355 (1992).et al.,
159Grasmick & Bursik, supra note 146, at 853–54.
160See Shepherd, supra note 129, at 544–45 (discussing the “direct costs” of a crime).
161Sandy Streeter, Congressional Research Service, Earmarks and Limitations in Appropriations Bills 1–2 (Dec. 7, 2004), http://www.rules.house.gov/archives/98-518.pdf.
162SeeSpending on an Empty Wallet: A Critique of Tax Expenditures and the Current Fiscal Policy, 7 Hous. Bus. & Tax L.J. 201, 226 (2006) (defining earmarks). Woellner concludes that “[t]o put it lightly, earmarks are a way for Congressmen and women to secure money for pet projects…. Earmarks are also loved by lobbyists.”Id. at 226–27.,
163Jeff Flake, Earmarked Men, N.Y. Times, Feb. 9, 2006, at A27. Representative Flake elaborates: Earmarking—in which members of Congress secure federal dollars for pork-barrel projects by covertly attaching them to huge spending bills—has become the currency of corruption in Congress. It is not just the rising number of earmarks (more than 15,000 last year—up from around 1,200 a decade ago), or the dollar amount ($27 billion) that is troubling. More disturbing is that earmarks are used as inducements to get members to sign on to large spending measures. (The disgraced lobbyist Jack Abramoff was astute when he referred to the House Appropriations Committee as an “earmark favor factory.”) … In Congress these days, you establish your priorities by getting money for them. When the carefully designed process of authorization, appropriation and oversight is adhered to, these policies and priorities are given a thorough vetting. But earmarking circumvents that cycle: the Appropriations Committee ensures that earmarks escape scrutiny by inserting them into conference reports, largely written behind closed doors. By the time appropriation bills reach the House or Senate floor, passage by a lopsided margin is virtually assured because every member who got earmarks is obligated to vote for the entire bill. Further, the scope of debate is substantially narrowed, with even partisan arguments that would otherwise occur hushed as Republicans and Democrats find common cause: protecting their pork. Id.
164See Woellner, supra note 161, at 226–27 (discussing the link between earmarking and corruption); Match Point for Doctor No, Economist, Jan. 21, 2006, at 30 (discussing the relationship between lobbying, corruption investigations, and earmarking).
165See supra note 34 and accompanying text.
166Brennan Ctr. for Justice et al., Breaking Free With Fair Elections: A New Declaration of Independence for Congress 2 (Mar. 2007), http://brennan.3cdn.net/473259ffe3c6abbbcb_77m6bz65y.pdf.
168Local Parties includes the combined contributions of State, District, and Local Party Committees. 11 C.F.R. § 110.5 (2007).
16911 C.F.R. § 110.6 (2007).
170In different terms, a member of the House must raise each year the equivalent of the average household income of thirteen families in the United States; a senator seeking reelection must raise each year funds equal to the income of thirty-three families. To describe this as a burden on candidates is a profound understatement.
17111 C.F.R. § 110.1 (2007).
172Campaign Finance Reform: A Key to Restoring the Health of Our Democracy, 94 Colum. L. Rev. 1126, 1140–41 (1994).& ,
173Paying for Politics, 78 S. Cal. L. Rev. 591, 616 (2005).& ,
174Clipping Coupons for Democracy: An Egalitarian/Public Choice Defense of Campaign Finance Vouchers, 84 Cal. L. Rev. 1, 19 (1996) (“By aggregating the donations of individual contributors, [PACs] arguably have become ‘the new fat cats of American campaign finance.’” (quoting Frank J. Sorauf, Inside Campaign Finance: Myths and Realities 126 (1992))).,
175SeeFree Speech and the Widening Gyre of Fund-Raising: Why Campaign Spending Limits May Not Violate the First Amendment After All, 94 Colum. L. Rev. 1281, 1321 (1994) (describing bundlers as brokers).,
176SeeRegulating Lobbyists: Law, Ethics, and Public Policy, 16 Cornell J. L. & Pub. Pol'y 1, 29–30 (2006) (describing extensive and often blatant practices by persons called lobbyists).,
177SeeThe “Bad Man” Goes to Washington: The Effect of Political Influence on Corporate Duty, 75 Fordham L. Rev. 1593, 1606 (2006) (describing the Jack Abramoff scandal as highlighting corporate lobbying); & , Lobbying Disclosure: A Recipe for Reform, 33 J. Legis. 32, 32 (2006) (describing the increased intensity surrounding lobbying reform debate after Jack Abramoff's guilty pleas). The lobbyist in question, Jack Abramoff, “bragged that appropriations committees were ‘earmark favour factories.’” Woellner, supra note 161, at 227.,
178See Blasi, supra note 175, at 1321 (“Currently much of the time of candidates is spent courting not the donors themselves but brokers who arrange events at which individual and PAC contributions are made, or who actually collect ‘bundles’ of such contributions and transmit them to candidates.”); The Last Best Chance for Campaign Finance Reform, 94 Nw. U. L. Rev. 335, 344 (2000) (“This practice allows the bundler to earn the candidate's undying gratitude even more than a contributor who gave the same amount of money to the campaign in pre-limit days.”); Wertheimer & Manes, supra note 172, at 1140–41 (describing influence of bundlers).,
179“Rational” only in the sense that the candidate goes through a coherent thought process, not rational in the sense that acting corruptly is a good choice. A corrupt legislator has made an immoral and often illegal choice and has betrayed a sacred trust. “Political leaders hold greater power and, therefore, bear far greater moral responsibility than ordinary citizens.”Patrimonicide: The International Economic Crime of Indigenous Spoliation, 28 Vand. J. Transnat'l L. 45, 97 (1995). Nor does “rational” imply that the corrupt legislator consciously go through the steps described herein. Robert Cooter and Thomas Ulen point out that “criminals may not actually reason as in the economic model, but they may act as if they had. By saying that criminals act ‘as if’ they had deliberated, we mean that, when presented with the opportunity to commit crimes, they respond immediately to benefits and risks as if they had weighed them.” Robert Cooter & Thomas Ulen, Law & Economics 463 (2004).,
180SeeThe Donation Booth: Mandating Donor Anonymity to Disrupt the Market for Political Influence, 50 Stan. L. Rev. 837, 869 (1998) (suggesting that bundling increases the likelihood of political corruption); , The Return of Spending Limits: Campaign Finance after Landell v. Sorrell, 32 Fordham Urb. L.J. 399, 426–28 (2005) (noting that contribution limits give contribution intermediaries more influence in Congress); Marshall, supra note 178, at 343–44 (noting that bundled contributions are worth more than before contribution limits were imposed).& ,
181Ethics Breakthrough or Ethics Breakdown? Kenneth Starr's Dual Roles as Private Practitioner and Public Prosecutor, 15 Geo. J. Legal Ethics 231, 312 (2002) (“many Americans [view] the Beltway culture [as] mired in cynicism, greed, and corruption”).,
182E.g., Riley v. Nat'l Fed'n of the Blind of N.C., 487 U.S. 781, 787–88 (1989) (striking down regulation of fees charged by professional fundraisers as well as disclosure requirements); Maryland v. Munson, 467 U.S. 947, 959–60 (1984) (protecting charitable fundraising as expressive speech); Village of Schaumburg v. Citizens For A Better Env't, 444 U.S. 620, 633 (1980) (finding unconstitutional an ordinance prohibiting charitable solicitation by organizations who did not use at least seventy-five percent of their receipts for charitable purposes).
183SeeThe Supreme Court and Commercial Speech: New Words with an Old Message, 72 Minn. L. Rev. 289, 307 (1987) (suggesting that political fundraising constitutes commercial speech, entitled to less protection).,
184SeePolitical Contributions and Conduits after Charles Keating and EMILY's List: An Incremental Approach to Reforming Federal Campaign Finance, 46 Case W. Res. L. Rev. 531, 549–58 (1996) (extensively discussing bundlers and other third-party fundraisers).,
185See Blasi, supra note 175, at 1287–89 (discussing the rigors of fundraising on candidates).
186Bruce Ackerman & Ian Ayres, Voting with Dollars: A New Paradigm for Campaign Finance 6 (2002).
187Id. This article does not attempt a fulsome explication of Ackerman and Ayre's proposal; they do a far better job in their book-length treatment. Their proposal was also the subject of a scholarly symposium. Reforming Campaign Finance Reform: A Review of Voting with Dollars, 91 Cal. L. Rev. 643 (2003); , Elections and Change Under Voting with Dollars, 91 Cal. L. Rev. 705 (2003); , What's the Problem? Ackerman and Ayres on Campaign Finance Reform, 91 Cal. L. Rev. 723 (2003).See also & , The New Paradigm Revisited, 91 Cal. L. Rev. 743 (2003) (responding to criticisms and observations).,
188Ackerman & Ayres, supra note 186, at 6.
189Ayres and Bulow compare anonymous donations to the fact that voting is done in private and is not disclosed. Ayres & Bulow, supra note 180, at 841.
190E.g., Public Funding and Democratic Elections, 148 U. Pa. L. Rev. 563, 585–86 (1999); , Campaign Finance Reform and the Social Inequality Paradox, 37 U. Mich. J.L. Reform 955, 101–14 (2004); , Money and Politics, 97 Colum. L. Rev. 2470, 2481 (1997); , Philosophy, the Constitution, and Campaign Finance, 10 Stan. L. & Pol'y Rev. 23, 29–30 (1998); et al., A Proposal for Democratically Financed Congressional Elections, 11 Yale L. & Pol'y Rev. 333, 345 (1993); , The Maine Clean Election Act: Cleansing Public Institutions of Private Money, 34 Colum. J.L. & Soc. Probs. 79, 81 (2000); Raskin & Bonifaz, supra note 7, at 1203.,
191See, e.g., Fiss, supra note 190, at 2481 (advocating public financing on equalitarian principles); Foley, supra note 195, at 29–30 (claiming public financing furthers egalitarian principles); Lazarus, supra note 190, at 83 (stating that public financing promotes equality and mitigates the influence of money); Raskin & Bonifaz, supra note 7, at 1161 (suggesting that public financing would enhance participation in democracy by encouraging candidacies of disadvantaged persons).
192SeeFactors Influencing the Incidence of Bribery Payouts by Firms: A Cross-Country Analysis, 77 J. Bus. Ethics 231, 232 (2008) (discussing factors that cause a businessperson to choose to act corruptly); , Corporate Social Responsibility and Crony Capitalism in Taiwan, 79 J. Bus. Ethics 167, 171–72 (2008) (discussing the relationship between corruption and the Taiwanese business ethos, including internationalization of Confucian rules regarding family); et al., Deciding to Bribe: A Cross-Level Analysis of Firm and Home Country Influences on Bribery Activity, 50 Acad. Mgmt. J. 1401, 1405 (2007) (discussing factors in a decision to act corruptly).et al.,
193SeeThe Power of Ethical Work Climates, 36 Org. Dynamics 171, 174–75 (2007) (discussing the creation of “ethical work climates”).et al.,
194Although this article is intended to demonstrate how an understanding of the decision to act corruptly suggests areas of reform rather than proposing a discrete reform and defending that reform, continued analogy to corporate codes of conduct might prove fruitful. Indeed, Richard Coughlan suggests that codes of conduct, when created and implemented correctly, can play a significant role in shaping individual values involved in making decisions. Codes, Values and Justifications in the Ethical Decision-Making Process, 59 J. Bus. Ethics 45, 52 (2005). See also & , Codes of Ethics: What Are They Really and What Should They Be, 16 Int'l J. Value-Based Mgmt. 181, 190 (2003) (“a code must state norms and beliefs of the organisation—and so influence the beliefs of individuals who make up the organisation”). The creation and, more importantly, implementation of an internalizable code of conduct, however, is a very complicated process highly dependent on a number of characteristics particular to an organization. Mark Schwartz describes a number of these, including the stated justification for the code, the use of appropriate examples to elucidate the code, the tone of the code, the length of the code, the perceived relevance of the code, whether guidelines in the code are realistically achievable, the level of member involvement in the creation of the code, the extent to which senior members of the organization support the code, the manner in which the code is launched, training in awareness of the code, and reinforcement of the primacy of the code over periods of time. , Effective Corporate Codes of Ethics: Perceptions of Code Users, 55 J. Bus. Ethics 338 (2004). Again, the point of this article is not to undertake a detailed examination of how a code of conduct might affect the psychic costs associated with corruption but instead to suggest that such an investigation might be more productive than continued reliance on limitations to campaign contributions.,
195This is because, of course, the wrongdoer seeks to hide the sanctioned behavior. SeeCorruption as an Assurance Problem, 19 Am. U. Int'l L. Rev. 1307, 1331–32 (2004) (discussing problems in detecting and prosecuting corruption).,
196See Linda Greenhouse, Administration Rebuffed On House Office Search, N.Y. Times, Apr. 1, 2008, at A17 (reporting that the Supreme Court let stand an appellate court ruling that the Justice Department could not search a congressional office in the course of a corruption investigation on grounds of separation of powers).
197Kenneth Dye and Rick Stapenhurst suggest, for example, the creation and use of independent audit institutions as a “cost-effective means of promoting transparency and openness in government operations” that provide “public information about violations of accepted standards of ethics and deviations from principles of legality.” Kenneth M. Dye & Rick Stapenhurst, Pillars of Integrity: The Importance of Supreme Audit Institutions in Curbing Corruption 4 (World Bank, Economic Development Institute Working Paper No.18877, 1998), available athttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1999/04/13/000094946_99032505562421/Rendered/PDF/multi_page.pdf.
198See Keenan, supra note 157, at 520 (discussing Becker's suggestion). Becker argues that imposing harsh sanctions is cheaper than improving the probability of detection and thus constitutes a more efficient use of society's resources. Id.
199SeeReconciling Extradition with Human Rights, 92 Am. J. Int'l L. 187, 194 n.58 (1998) (discussing imposition of the death penalty for corruption); , The Trial of Terrorists Under Classical Islamic Law, 43 Harv. Int'l L.J. 53, 60–61 (2002) (discussing the application of the death penalty to corrupt acts under Islamic law).& ,
200Deterrence's Difficulty, 95 Mich. L. Rev. 2385, 2390–92 (1997). Katyal refers to marginal deterrence effects—the prospect of severe penalties may actually cause a potential criminal to commit the crime on a larger scale and to substitution—the prospect of severe penalties for one crime may simply cause a potential criminal to commit a different crime. Id. Katyal also points out that juries may be less likely to impose harsh penalties, thus perversely reducing the actual penalty imposed on a crime. Id.,
201See Karlan, supra note 153, at 605.
202See Clark, supra note 155, at 88.
203SeeMrs. McIntyre's Checkbook: Privacy Costs of Political Contribution Disclosure, 6 U. Pa. J. Const. L. 1, 16–17 n.81 (2003) (describing these activities).,
204See supra note 27 and accompanying text.
205See Republicans Track Politics of Lobbyists, N.Y. Times, June 10, 2002, at A18 (describing the K Street Project).
206Paul Krugman, Toward One-Party Rule, N.Y. Times, June 27, 2003, at A27.
207THE SECOND TERM; Clinton's Opening Statement and Responses at His News Conference, N.Y. Times, Mar. 8, 1997, at A9, quoted in Ayres & Bulow, supra note 180, at 838.
208See supra notes 161–64 and accompanying text.
209See Woellner, supra note 162, at 226–27 (advocating the elimination of earmarking); An Overview of the Military Aspect of Security Assistance, 128 Mil. L. Rev. 71, 111–12 (1990) (suggesting that eliminating earmarks is critical to rationalizing military spending).,
210Lobbying Disclosure Act of 1995, 2 U.S.C. §§ 1601–1612 (1995). SeeRegulating Lobbyists: Law, Ethics, and Public Policy, 16 Cornell J. L. & Pub. Pol'y 1, 49–50 (2006) (discussing disclosure requirements).,
211The Recusal Alternative to Campaign Finance Legislation, 37 Harv. J. on Legis. 69, 71 (2000).,
212Model Code of Judicial Conduct Canon 3E(1)(e) (2004). Discussing this canon, John Nagle notes that, “[i]ndeed, the scholarly opinion is just as unanimous that a campaign contribution should require a judge to recuse as the courts are agreed that recusal is unnecessary.” Nagle, supra note 211, at 88.