“Dark Money”

“Money On My Mind” is a monthly column by Jay Mandle. The views expressed here are those of the author (not necessarily those of Democracy Matters) and are meant to stimulate discussion.

September, 2013
By Jay Mandle

The years after 2008 were terrible for the United States economy. But they were even worse for democracy. Greed in the financial system caused unemployment to reach double digit levels, and only government action was able to prevent a total economic collapse. However, no similar offsetting mechanism has been at work to counter the growth in the political inequality that is eroding democracy.

The triggering mechanism for that growth was the Citizens’ United decision. That 2010 Supreme Court ruling allowed corporations to use their wealth without restraint. But since corporate managers with conservative politics do not want to risk alienating consumers, it is reasonable to surmise that they sought a way of funding pro-corporate policies in secret. New political nonprofit organizations provided them with the answer. Since such organizations are not required to reveal their donors, a flood of “dark money” has poured in to them. According to the Center for Responsive Politics, conservative political spending by nonprofits increased by more than four-fold between 2008 and 2012, jumping from $63 million to $269 million. At the same time, liberal nonprofit spending actually declined from $85 million to $59 million. (1)

There are two aspects of this development that makes it so damaging to democracy. First, the fact of non-disclosure means that the people who influence our politics and policies cannot be held accountable. Second, because this form of political expression is so disproportionately conservative, that viewpoint acquires much more influence than does others. Political outcomes become biased to the interests of those anonymous donors.

This process, if unchecked, will increase the extent to which democracy is a mask for the rule of money.

One remedy that immediately suggests itself is a reversal of Citizens’ United. Corporations are not people. They have no standing politically. But corporate managers and stockholders – along with everyone else – of course would still have the right to use their money to articulate their viewpoints. Thus even without Citizens’ United, the Michael Bloombergs and the Koch Brothers of the world could use their fortunes to advance their political agendas. And with that emerges the problem of political inequality. Because of America’s great and growing economic inequality, wealth would still be able to buy the airtime that remains the principle form by which people learn about candidates and form their political preferences and opinions.

A second response of advocates of political reform is to call for limits either on campaign contributions (allowed by the Supreme Court but only to avoid corruption or its appearance) or campaign spending (an approach struck down by the Court in Valeo v. the FEC). But banning and limiting raise serious free speech problems. Money is not speech, but money is required in contemporary society to disseminate political viewpoints widely and effectively. Contribution and spending limits do therefore impair speech, even if undertaken with the benign intent of achieving greater political equality.

And short of draconian limits, such constraints would almost certainly leave the essential problem unresolved. Wealthy people still would be able to influence politics more extensively than the rest of us. Furthermore, that same wealth can and has been used to finesse and evade rules and regulations. Even before Citizens’ United, wealth dominated politics in the United States despite the limits imposed by the Federal Election Campaign Act of 1974 and the Bipartisan Campaign Reform Act (BCRA) of 2002.  

The fact is that the only effective counter to the power of private wealth is a third reform: the use of public wealth. And this would help to achieve two objectives that are usually seen as antagonistic: freedom and equality. The former can be sustained by refraining from limits and bans on speech. The latter can be achieved by making public funds available to candidates who choose not to depend on private donors.

With a system of public campaign financing (already present in Maine, Arizona and Connecticut), the greater the amount of money available to publicly funded candidates, the greater both the degree of political equality and the offset to private wealth. Political equality is not costless and comes with a higher tax liability.

The economic crisis from which we are now only slowly emerging was rooted in a political process dominated by wealth. Even as the economic recovery is proceeding, we are continuing to move to a political system ever more dominated by money. History never repeats itself; but lessons can be learned. And one that is as clear as it can be is that if the political system is rigged in favor of a wealthy minority, the rest of the society will be given short-shrift.

We will reverse course only when the American people are convinced that there is a better way of financing campaigns than dependence on private donors. That process of political persuasion has to be the order of the day.

(1) Center for Responsive Politics, “Political Nonprofits,” https://www.opensecrets.org/