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Carolina Beat

The Political Welfare State

Mar. 27th, 2009
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There's a new kind of welfare. Instead of taxpayer dollars going to help those in need, your hard-earned money is going to politicians to pad their campaign coffers.

The current political welfare system began in 2002 when the North Carolina legislature created a public (i.e., taxpayer) financing system for appellate judicial campaigns. The system provides a large lump sum of taxpayer dollars to candidates who agree not to spend beyond the lump-sum payment. (These candidates will be referred to as "welfare candidates.")

If a candidate who doesn't take taxpayer dollars (a traditional candidate) spends beyond a certain threshold amount, he triggers what are called "matching funds" to the welfare candidate. For example, if a traditional candidate spends $5,000 above the threshold, the welfare candidate also receives $5,000 in matching funds. As a result, most candidates will take the political welfare because the penalty of helping to support the opposition through matching funds is too severe.

The 2002 bill expressly stated that no taxpayer dollars from the General Fund would be used. Instead, the program was supposed to be supported by taxpayers who voluntarily decided to divert $3 of their taxes to the program. In addition, voluntary contributions from attorneys were supposed to help fund the system.

The public completely rejected taxpayer financing and still does to this day. Only about 7 percent of taxpayers mark the $3 check-off. In other words, 93 percent of taxpayers make it perfectly clear that they oppose taxpayer financing of campaigns.

This hasn't stopped the legislature. In 2004, the judicial program was such a disaster that it couldn't even subsidize the welfare politicians. It got so bad that former Governors Jim Holshouser and Jim Hunt pleaded with members of the North Carolina Bar to make contributions; "Last year, the participation rate among attorneys was embarrassingly low -- less than 12 percent."

Ironically, for a program that was somehow supposed to increase faith in the political system, the legislature went back on its word. It simply ignored the 2002 bill's express statement that no General Fund money would be used for judicial taxpayer financing of campaigns -- taxpayers were forced to provide political welfare for judges.

Since then, taxpayer financing of campaigns has been expanded to three Council of State races: Auditor, Commissioner of Insurance, and Superintendent of Public Instruction. Some legislators want to continue expanding the political welfare system. The ultimate goal is for taxpayers to fund all politicians.

Because of the political welfare system, if you pay taxes, you also are supporting candidates and speech that you oppose. If, for example, you adamantly oppose abortion, your tax dollars still are going to help judges who strongly support abortion. You have no choice in the matter.

In tough economic times, your hard-earned dollars that could be used for the mortgage or for basic needs such as food, instead are helping to provide political welfare to politicians.

Also, the political welfare system almost certainly is unconstitutional. In June, 2008, the United States Supreme Court, in a case called Davis v. FEC, struck down a provision in the federal McCain-Feingold bill that penalized congressional candidates for spending beyond a threshold amount of their own money.

Once these "self-financed" candidates spent too much, the opposing candidates received special contribution advantages. The Court held that these penalties were unconstitutional because the law impermissibly burdened free speech by punishing the self-financed candidates. These candidates were being coerced into not spending money necessary for speech because spending money would help the opposition.

North Carolina's political welfare system punishes candidates who spend beyond a threshold amount as well. In addition, North Carolina's penalties are far more severe than those considered by the United States Supreme Court in Davis. Instead of contribution advantages, welfare candidates receive extra political welfare payments (i.e., matching funds).

The impact of Davis is already being felt. The New Jersey legislature was considering a pilot test for a taxpayer campaign financing system. The Legislative Counsel warned the legislature against passing the bill, explaining that "it appears that under Davis providing [matching funds] is likely unconstitutional." Acting responsibly and with respect for the United States Constitution, the New Jersey legislature dropped the bill.

There are some North Carolina legislators who don't want to act responsibly like the legislators in New Jersey. They want to expand political welfare and disregard their oaths to the United States Constitution. In fact, House Bill 120, which would expand political welfare to municipal officials, may be considered in the House within the next week. Unless North Carolinians make their voices heard, political welfare is going to continue expanding.

Daren Bakst is legal and regulatory policy analyst for the John Locke Foundation.

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