Pay-to-Play

Pay-to-play describes situations where government decisions appear to be influenced by financial relationships between private interests and public officials. While outright quid pro quo corruption is illegal under federal bribery statutes (18 U.S.C. 201), pay-to-play concerns extend to the broader patterns of campaign contributions, lobbying spending, and government actions that may create the appearance -- even without proof of an explicit agreement -- that money is buying policy outcomes. Research has examined correlations between lobbying expenditures and favorable regulatory or legislative outcomes.

Studies have found that firms that lobby receive favorable tax provisions, beneficial regulatory treatment, and government contracts at rates that exceed what non-lobbying firms receive. However, establishing causation is difficult, as firms may lobby because they are already affected by government policy rather than to obtain new benefits. Several states and municipalities have enacted pay-to-play laws that restrict campaign contributions from entities that have or are seeking government contracts. At the federal level, the SEC has adopted pay-to-play rules for investment advisers seeking to manage government pension funds.

Federal contractors are prohibited from making campaign contributions (though this restriction is widely circumvented through individual employee contributions and PACs). The perception of pay-to-play dynamics remains a significant source of public distrust in government and is frequently cited by advocates of lobbying and campaign finance reform.