BLOOMY'S BILLIONS: 'REFORMS' BOOST HIS '08 EDGE

CAMPAIGN-finance regulations keep on wrecking havoc with America's elec tions, entrenching incumbents and reducing voter turnout. Now they could help make Mayor Bloomberg our next President or at least give him great influence over who wins.

Bloomberg is reportedly talking of devoting $1 billion of his own money to win the White House as an independent - vastly outspending any conceivable combined outlays by the Republican and Democratic nominees, even if they forego public financing.

The mayor's willingness to spend his wealth on his campaign is hardly unique. New Jersey's Jon Corzine spent $60 million of his own savings to win a Senate seat in 2002. In 2004, 23 candidates spent more than $1 million of their cash in congressional races; in 2006, the number rose to 28.

The law limits each American to donating a maximum of $2,300 to someone else's campaign - but the Supreme Court has ruled that the Constitution prevents such limits on spending for your own bid for office. Thus, Steve Forbes in 2000 would have preferred to give millions to Jack Kemp's presidential campaign, but since the law prevented that, he launched his own self-financed bid to promote the ideas he shared with Kemp.

Wealth hardly guarantees election - the voters still decide. But the campaign-finance laws tilt the playing field in favor of the wealth - and also in favor of incumbents and other political insiders.

Under these so-called reforms, Congress holds more millionaires than ever. Fewer than two-tenths of 1 percent of Americans earn over $1 million dollars a year, but at least 123 out of 435 members of Congress earn that much. Pre-"reform," politicians who were in this "economic stratosphere" were extremely rare.

To compete, a non-rich candidate must raise a large amount of money from many small donations - a daunting task. But incumbents have already compiled a long list of donors - giving them another advantage over any challenger. With their contacts and familiarity with the complex rules, insiders share this benefit.

It can take years to build a worthwhile mailing list and make similar contacts. While Internet fund-raising may be changing that fact, the long start required for fund-raising still makes it near impossible for anyone to enter a race late, even if front-runners falter.

Self-financing candidates don't have to spend time asking already loyal supporters for small amounts of money. They can avoid the massive cost of mailings to raise money from the already converted and concentrate on mailings to those who haven't made up their minds yet. These wealthy candidates can spend their time talking to undecided voters.

For all these reasons, both parties now actively recruit wealthy candidates. Sen. Chuck Schumer did very well at it as chairman of the Democratic Senatorial Campaign Committee in '05-06; the National Republican Congressional Committee has enlisted at least a dozen wealthy candidates to run in competitive House districts this year.

If the Democratic and Republican nominees also avail themselves of public financing, the campaign-finance laws will put them at even more of a disadvantage. They'll likely lock up the nomination in the next month or two but will be near the spending ceiling for those in the public-finance program and unable to spend new funds until the party conventions in the fall. Bloomberg, if he runs, would be free to advertise for half the year with the party nominees unable to fight back.

Yet this wouldn't be the first time this has happened. Because incumbents rarely face serious primary challenges, we've seen this same effect in 1984, 1996 and 2004 when incumbent presidents sought re-election.

The magnitude of what Bloomberg is talking about spending will be huge. In 2004, the last presidential election, total campaign spending for all House, Senate and presidential candidates in all the primaries and general elections totaled $2.17 billion - only slightly more than twice what Bloomberg is talking about spending on just his campaign.

There is nothing wrong with Bloomberg's spending this money; what's wrong is the way our "reform" laws give him added advantages.

The ultimate irony is that in trying to get money out of politics, reformers have made it easier for those with money to get in. The limit on individual giving of $2,300 is supposed to help the common man. Instead, it gives a massive advantage to multibillionaires like Bloomberg, allowing them to swamp anything non-wealthy competitors can possibly raise.

*John Lott is the author of the book, Freedomnomics upon which this piece is based and is a Senior Research Scientist at the University of Maryland.