Tuesday, August 29, 2006

When do you turn the money down? 

Here's another problem I've been thinking about. Suppose you're an incumbent running for re-election. Your state has matching funds to give to candidates who agree to spending limits on their campaigns and the amount is somewhat substantial. You have just about reached the spending limit on your own fundraising with about 70 days to go to the election. Your opponents are well behind you in fundraising and will undoubtedly take the matching funds and agree to the limit. Your decision to make: Do you take the money and limit yourself?

Two complications: First, if you don't take the money and abide by the limits, your money goes in equal shares to your opponents, relieving them of some of their money trouble. Second, your opponents and you both receive assistance from third-party interests who are not subject to any limits; your opponents have access to substantial amounts of those funds.

Now if I'm writing down this problem, it looks like this. I am going to try to maximize the number of votes I receive, which is a function of the amount of money I spend (E), the place on an assumed (heroically) political scale I occupy (P), and the money and place on the scale the opponents occupy.

max Vself(E-self, P-self, E-opp1, P-opp1, ...)

subject to the constraint that E is less than or equal to the amount of contributions I get for each of the candidates self, opponent 1, opponent 2, etc. Because I'm an incumbent, my wiggle-room on casting myself differently on the scale is limited -- I have a record.

This is the problem Tim Pawlenty is facing this week. Can he afford to give Mike Hatch and Peter Hutchinson each about $240,000 so that he doesn't have to abide by the limit of $2.4 million, which he seems to be ready to eclipse? In particular, can he if...
Two Democratic-leaning campaign committees, the Alliance for a Better Minnesota and Minnesotans for Change, reported raising more than $1.5 million between them so far this year.
It may be that he could abide by the limit and still win, but his winning margin will be pulled down. It strikes me, looking at what he's done lately, that Pawlenty has decided not just to win but to maximize his vote total, thus his looking like a pro-life Democrat. (DFL please note: You have a few of these around that still call themselves Democrats. See Pennsylvania FMI. You might want to run one yourself some day.) I believe he is doing that to burnish his credentials for any national aspirations he might have. He will say no, of course, as he should -- but there's little to gain from hewing so close to the center when the other major candidate seems to have a series of small implosions each week except to run up the score. (Again my economist bias -- nobody's stupid, we just have to figure out the objectives of the actors.)

The Hatch campaign is commenting that "If they don't abide, they know they would face criticism and public disapproval." But I doubt it makes much difference, particularly two years from now. If he wants to run up the score, and if he believes he's well ahead, Pawlenty should turn down the state money.