How Much Can the U.S. Congress Resist Political Money? A Quantitative Assessment

59 Pages Posted: 15 May 2020 Last revised: 19 May 2020

See all articles by Thomas Ferguson

Thomas Ferguson

University of Massachusetts Boston - Department of Political Science

Paul Jorgensen

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American)

Jie Chen

University of Massachusetts Boston

Date Written: January 20, 2020

Abstract

The extent to which governments can resist pressures from organized interest groups, and especially from finance, is a perennial source of controversy. This paper tackles this classic question by analyzing votes in the U.S. House of Representatives on measures to weaken the Dodd-Frank financial reform bill in the years following its passage. To control as many factors as possible that could influence floor voting by individual legislators, the analysis focuses on representatives who originally cast votes in favor of the bill but then subsequently voted to dismantle key provisions of it. This design rules out from the start most factors normally advanced by skeptics to explain vote shifts, since these are the same representatives, belonging to the same political party, representing substantially the same districts. Our panel analysis, which also controls for spatial influences, highlights the importance of time-varying factors, especially political money, in moving representatives to shift their positions on amendments such as the “swaps push out” provision. Our results suggest that the links between campaign contributions from the financial sector and switches to a pro-bank vote were direct and substantial: For every $100,000 that Democratic representatives received from finance, the odds they would break with their party’s majority support for the Dodd-Frank legislation increased by 13.9 percent. Democratic representatives who voted in favor of finance often received $200,000–$300,000 from that sector, which raised the odds of switching by 25–40 percent.

Keywords: banking and financial regulation, political economy, financial crisis, political parties, political money

JEL Classification: G20, L5, N22, D72, G38, P16, K22

Suggested Citation

Ferguson, Thomas and Jorgensen, Paul and Chen, Jie, How Much Can the U.S. Congress Resist Political Money? A Quantitative Assessment (January 20, 2020). Institute for New Economic Thinking Working Paper Series No. 109, Available at SSRN: https://ssrn.com/abstract=3593916

Thomas Ferguson (Contact Author)

University of Massachusetts Boston - Department of Political Science ( email )

Boston, MA 02125
United States
617-265-7173 (Fax)

Paul Jorgensen

University of Texas Rio Grande Valley (UTRGV) (Formerly University of Texas-Pan American) ( email )

201 West University Drive
Edinburg, TX 78539
United States

Jie Chen

University of Massachusetts Boston ( email )

100 William T Morrissey Blvd
Boston, MA 02125
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
44
Abstract Views
337
PlumX Metrics