On the Political Participation of the Firm in the Electoral Process

Federal regulation of business is grounded in the Commerce Clause of the United States Constitution which directs Congress to regulate Commerce among the several States. . Within the limits of judicial review, regulation can take various forms. For example, Congress can impose industry-specific taxes, subsidies and other regulatory measures. Regulatory agencies within the bounds of their authorities can introduce new control measures or change existing regulations. In general, regulatory measures have distributive effects. For instance, agricultural price supports benefit the industry at the cost to other taxpayers. Similarly, import quotas favor import competing industries against export industries and consumers. And, because government regulation can redistribute wealth it may attract business efforts to influence regulation. Lobbying, for example, is one method to influence regulatory measures. Contributions to political campaigns is another. The purpose of this paper is to examine the political investment made by firms to influence business related governmental actions in the United States. Business attempts to influence government are as old as the Republic. For instance, New England merchants generously supported the federalist in the first elections under the Constitution 1, 34. Unfortunately, however, an accurate tracing of the extent of the political investment by business is difficult, if not impossible. The extent of business involvement in political activities remained unrecorded until the introduction of strict disclosure rules in 1971.1 The Federal Election Commission (FEC) Act of 1971 required business to fully disclose its involvement in the electoral process. This legal requirement makes it possible to compile some relatively accurate information on campaign contributions by business. The extent of other business activities such as lobbying efforts, promise of future employment offered to politicians or other public officials and bribes remain, for the most part, unknown. Because of the paucity of data on these activities, the present paper uses business campaign contributions as the proxy for the extent of business efforts