Campaign finance regulations have wrecked havoc on the American election system, entrenching incumbents and reducing voter turnout. But the worst may be yet to come in 2008. If news reports last week are correct, New York Mayor Mike Bloomberg is planning on spending $1 billion to win the presidency. He would vastly outspend Republican and Democratic nominees, even if they forego public financing.

Campaign finance laws have resulted in lots of millionaires getting elected to office. Wealthy individuals, who can only give $2,000 to someone else who is running for office, face no donation limits to their own campaign.

For example, Steve Forbes wanted to donate to Jack Kemp's presidential campaign and if Forbes could have donated what he wanted, Kemp may have run for president. But he couldn’t, so he ran himself.

However that is hardly unique. Jon Corzine spent $60 million of his own money running for the Senate in 2002. And for House and Senate races generally, 29 candidates in 2002 and 23 candidates in 2004 spent more than a million dollars of their own money on their campaigns.

While fewer than one percent of Americans earned more than a million dollars a year, at least 123 out of 435 members of congress earned that much.

There is no problem per se with wealthy people running for office if that is what the voters want, and it hardly guarantees election. The problem is that the rules tilt the playing field and make it very difficult for others to run against them.

Raising a large number of small donations is difficult. Wealthy candidates as well as incumbents are at an advantage here. Wealthy candidates, who are financing their own campaigns, can avoid these costs completely. Incumbents have years to put together long mailing lists and make contacts. The long start required for fundraising means that even if a candidate falters, unless it completely collapses, it is virtually impossible for other candidates to enter in at the last moment.

Wealthy candidates avoid spending 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. The candidates themselves can spend their time talking to undecided voters.

But what about the frequent argument that money buys votes? There is little support for it. Politicians are not voting the way they do because donors are giving them money, but donors are giving to candidates who value the same things that they do.

Fortunately, there is a simple test to disentangle these two possibilities. If donors are bribing politicians to vote differently than they otherwise would have voted, politicians should shift at least somewhat away from the voting interests of their donors when they retire and no longer have to worry about losing these donations. On the other hand, if donors support politicians based upon the politicians’ genuine beliefs, retiring politicians have no reason to change how they vote. In fact, retiring politicians do not change how they vote. Politicians vote the same way over they careers, even before they start getting donations from particular interest groups.

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. For someone like Bloomberg with a billion dollars to spend, that regulatory advantage could be massive, swamping anything that it is possible for competitors to raise.

* Lott is the author of the forthcoming book Freedomnomics and will soon be a Senior Research Scientist at the University of Maryland.