Bruce Ackerman defends "Democracy Dollars" — the proposal to empower everyone to donate $50 to political campaigns.

Remember this post of mine about a WSJ op-ed by Bruce Ackerman and Congressman David Wu proposing a $50 tax credit for people to donate to presidential candidates? It was presented as a kind of antidote to the Citizens United case, which recognized a First Amendment freedom for corporations to engage in political speech.

I had some questions about the proposal because, for one thing, it's about enabling people to channel money to candidates, which is different from doing your own speaking. I worried about those immediate electronic refunds:

Ah! How the cash could flow! Just push buttons on line. Is that too easy? Do you worry about corruption? Does it unduly favor the kind of people who use computers and credit cards... or is that really everybody now?

Professor Ackerman emailed me to say that he had answers to my questions in his book  "Democracy Dollars" (co-written with Ian Ayres and not with Wu), and I asked for some electronic text, which he sent. From pages 69-70:

In our brave new world, Americans simply go to their neighborhood ATM and vote their Patriot dollars under three ground rules.  

Vote. Presumably in the lingo of the book, the $50 donation is equated to a vote. You get a donation to channel to someone, which is sort of like voting.

The first gives each voter five days to change her mind. This not only encourages sober second thought but makes a black market tough to organize. To see why, suppose that a fraudster offers Citizen X $20 in private money if she allows him to accompany her to the ATM and watch her transfer 50 Patriots to his favorite candidate. X accepts the offer, executes the transaction, takes the $20 — and then returns the next day to countermand the order!

That assumes Citizen X cares about politics... and isn't afraid of the fraudster. I think a lot of people would gladly pocket the $20 and not give a damn about where the $30 went. It's not like they have a way to get their hands on the $30. They have to give away the $50, so there will be endless schemes to get hold of those millions of $50s.

Not a good deal for the fraudster, especially if we add two rules. Patriotic contributions should be anonymous — making it impossible for the fraudster to contact his favored beneficiary to see whether the transaction sticks.  

Citizen X would need to believe that anonymity is secure.

And the ATM will accept only Patriot accounts linked to standard electronic cards. This prevents the fraudster from demanding possession of X's ATM card for the five-day cooling off period, thereby making it impossible for her to change her mind. While X might give away a free-floating Patriot card, she will refuse to surrender a standard credit card to somebody who is not, by definition, very trustworthy. If she ever gets her American Express back, she may find not only that her Patriot account is empty but that the fraudster has used it to finance his trip to Las Vegas!

Does everyone have a credit card? Do we really want a government program bound up in the operations of private credit card companies? Will the credit card company get a cut of all these transactions? Or are we going to end up with a government credit card company?

As a final anticorruption safeguard, all Patriot accounts will expire after six years. Renewal will be easy — a citizen must simply vote once during the period, and swipe his card once again through the electronic reader available at his polling place. Regular renewal prunes the files of dead and incapacitated cardholders-cutting out another source of fraud. To be sure, it also eliminates people who fail to vote once in six years. But this seems entirely acceptable. Nonvoters can regain their patriotic status simply by reregistering.

I also asked whether "incumbents [would] snap up the money and make it even harder for newcomers to get started." And Professor Ackerman pointed to this, at pages 78-79:

Fundamental fairness may be compromised if one candidate conducts an expensive primary battle while the other doesn't. The problem is at its maximum when a sitting president is running for reelection. The man (or woman!) in the White House comes to the table with such great advantages that he may avoid a significant challenge in the primary. This will allow him to stockpile the pool of Patriots from members of his own party while challengers raise and spend large sums for the privilege of running against him in November. By the time the out-party selects its candidate, the successful nominee may confront a serious problem raising patriotic donations from the party faithful. Many will have spent their wad during the primaries, leaving the challenger to face an incumbent sitting on a large patriotic stockpile. It is tough enough ousting a sitting president without giving him this further advantage.

The problem is of constitutional dimension. After Franklin Roosevelt's four-term presidency, the American people said "never again," and enacted a constitutional amendment checking the power of incumbent presidents by limiting them to two terms in office. Our approach to Patriot is guided by this decision. In the case of incumbents running for reelection, we divide the 25 Patriot dollars allocated to each presidential account into two subaccounts-allocating $10, say, to the primaries and $15 to the general election. This will permit the out-party to wage a fierce struggle over the nomination without compromising its capacity to run an effective race in the fall.

The system is infinitely tweakable. I note that it will be tweaked by incumbents and the party in power. Why would they "permit the out-party" to do anything they don't want? Once the system is in place and all that money is at stake, the game will be played by ambitious politicians, not by neutral wise men (and wise women!) trying to perfect democracy.

I also asked about what was going on in the states that had programs like this. Here, Professor Ackerman quoted a law review article by Thomas Cmar, "Toward a Small Donor Democracy: The Past and Future of Incentive Programs for Small Political Contributions," 32 Fordham Urban Law Journal. 443, 462-75 (2005):

Oregon has the highest participation rate in the country for a political contribution incentive program, and in large measure this is due to the state providing the credit for contributions to PACs as well as candidates and parties. Many PACs solicit credit-eligible contributions aggressively, promoting the credit as a central aspect of their fundraising appeal. The result is that in recent electoral cycles, a substantial portion of contributions on which a tax credit was claimed went to PACs rather than to parties or candidates. ... Data from Oregon suggests, however, that Oregon's higher participation rate is driven by the mobilization efforts of contribution recipients."

PACmania. Comments? Personally, I'm terrified of all that money flowing around.