Money in Politics 101
HOW BIG POLITICAL MONEY UNDERMINES OUR DEMOCRACY
“There are two things that are important in politics. The first is money, and I can’t remember what the second one is.” Senator Mark Hanna
“We now know that government by organized money is as dangerous as government by organized mob.” President Franklin Roosevelt
“We’ve become an oligarchy now, instead of a democracy.” President Jimmy Carter
Democracy means that every citizen has an equal opportunity to influence the laws and policies affecting their lives. The guarantee of “one person, one vote” embodies the equality that is at the heart of the democracy’s promise.
Not only does voter suppression undermine that promise. So does our campaign financing system because of its dependence on the private wealth of rich campaign donors who spend millions to fund political campaigns, and who spend additional millions, outside of direct campaign.contributions, to influence the outcomes of our elections.
The need to raise enormous amount of money to mount political campaigns means that people who are not wealthy themselves, have no contacts with rich donors nor access to wealth are effectively precluded from obtaining elective office. The result is that the individuals who succeed in winning elections are significantly richer than the rest of the population. Furthermore, the people they know, interact with, are influenced by, and depend on for their political success are also members of a small wealthy elite.
Wealthy donors and corporate money dominate who runs for political office, who wins those elections, and the laws and policies they support and vote for if elected. It is the case that the rich differ from average Americans because of their greater wealth. But it is also the case that these elites are significantly more politically conservative than the average American. The result is a yawning gap between what the majority of Americans support and what politicians actually legislate. The power of private money in politics gives the rich the ability not only to dominate political decision-making but at the same time to deprive us of our right to an equal say in shaping the laws and policies that affect our lives.
So the question remains: Why do corporations and the super-rich pour money into campaigns and lobbying? The biggest political spenders are investing in policy outcomes that benefit themselves financially. Money doesn’t just give big spenders the chance to express a view or support a candidate; it gives them leverage to shape American politics and the political system itself in their favor.
With rising economic inequality, as the richest have pulled away from the rest of America, the policies they want—extremely low tax rates on the wealthy at a time of record deficits, underinvestment in our future, special treatment for corporations that are imposing major environmental costs and financial risks on our society—are increasingly at odds with the policies the country desperately needs and that most Americans want.
The floodwalls between the market and democracy have been destroyed as wealthy individuals pour billions into campaigns and SuperPacs. It’s not just the sheer volume of dollars that’s driving the change. It’s also the growing gulf between those at the commanding heights of our economy and the rest of Americans. The share of pretax national income going to the richest 0.1 percent has roughly quadrupled since the 1970s. And they have used their wealth to our hijack our political system and in that way deny us the ability to equally influence our laws and policies.
The effect of funding elections with big private money is easy to see: an economy in which the wealthy write the rules, adding to their advantages and undermining the voices of other citizens. All of this destroys public trust in government, breeds public political cynicism, and has created a broken democracy. The power of big money in politics has killed the promise of a government of by and for all the people.
“Senators and representatives, indeed all politicians, faced incessantly with the need to raise money to fuel their campaigns, can scarcely avoid asking themselves when it comes time for them to vote, ‘How will my vote affect my fundraising and my chance to win the next election?’ They don’t ask, ‘How will my vote affect my constituents, my country, and my democracy?’” Senator Barry Goldwater
FACTS ABOUT MONEY IN POLITICS (2020 election unless otherwise noted)
COST OF ELECTIONS (The amount of money raised and spent increases significantly in each election cycle.)
- 2004 $4.2 Billion
- 2016 $ 7.3 Billion
- 2020 $14.4 Billion
INCUMBENT ADVANTAGES (Members of Congress running to retain their seats have many advantages.)
Average Amount of Money Raised (Incumbents have huge fundraising advantages over their challengers.)
- Senate Incumbent $28,749,000
- Senate Challenger $ 5,364,000
- House Incumbent $ 2,725,000
- House Challenger $ 417,000
Incumbent Re-Election Rate (Challengers rarely have a realistic chance to unseat Congressional incumbents, re-elected at an astonishing rate each year.
- 2004 Senate 96% House 98%
- 2016 Senate 93% House 97%
- 2020 Senate 96% House 95%
CAMPAIGN MONEY – INDIVIDUAL DONORS
All donors
- 17 % of Americans donated $200 or more (these small donations totaled 24% of all contributions)
- 4% of Americans gave $2, 900 or more (these large donations totaled 76% of all contributions)
Top Political Donors
- Sheldon & Miriam Adelson $218 million
- Michael Bloomberg $152 million
- Tom & Taylor Steyer $ 72 million
Donors by Gender
- Women Donors 35% of total campaign donations
- Male Donors 65% of total campaign donations
Where Donors Work (Total Contributions from Business vs. Labor)
- Business $6.2 Billion
- Labor $244 million
Where Donors Live (Total contributions from top Urban Areas)
- Washington DC $1.2 Billion
- New York $930 million
- San Francisco $499 million
CAMPAIGN MONEY – PACS & SUPERPACS
PACS (Political committees that raise and spend money to elect or defeat a candidate. Each PAC is limited to giving a total of $5,000 directly to each candidate it supports during an election.)
- Total $486.7 Million
- PAC donations totaled 5% of all donations
SuperPACS (Often referred to as “outside money” or “independent expenditures,” they may raise and spend unlimited sums of money to influence elections; but legally they may NOT coordinate with nor donate money directly to political candidates thus the label “outside/independent spending.)
- 2016 $1.7 million
- 2020 $3.4 million
*************************************
A BIG MONEY GAME
Some people play this game with their own DM members or do it with other groups. Put a whole bunch of campaign finance reform terms in hat. On the back of each term, along with the definition, is a P (politician) or IP (influence peddler) or R (Reformer). Divide the group into three teams (depending on the letter on the back) and play a trivia game with the terms (describe the term and others have to guess. what it is).
Terms:
Hard Money – Basically, all of the legal, regulated stuff that goes to candidates, parties, and PACs. Regulated just means it’s gotta be reported and it can’t exceed $2,000/contribution (for individuals). It may seem innocent since it’s all coming from individuals (to begin with), but this is where the vast majority of money enters the system and a lot of influence gets bought (see “Bundling”).
Bundling – The best way to buy direct influence. Basically, you (corporate CEO) write candidate X your $2,000 check, you get your wife and kids and board members and executives to do the same, and then you hand your candidate a bundle—literally—of big fat checks. Bush’s “Rangers” ($200,000 fundraisers) are big-time bundlers. And the biggest catch is: all the money is legal, regulated hard-money…
Soft Money – The opposite of hard money, meaning all the unlimited, unregulated stuff that goes to state and local party committees and electioneering groups. Before BCRA (McCain-Feingold), hundreds of millions in unlimited contributions from special interests were pouring into the national parties; now, it’s gotta be a bit more circuitous. Soft money was created back in the 1970’s when election law left parties free to solicit unregulated contributions for use in generic “party-building” activities, but with the advent of TV advertising and the sky-rocketing costs of campaigns, its uses inevitably became more candidate-specific. 527s are now the big soft-money culprits.
Political Action Committee (PAC) – These guys exist for the sole purpose of contributing money. They can be established by any type of organization (corporation, union, non-profit, etc.) or just individuals, and they raise individual hard money to make their contributions to candidates. While most of the 1,000-2,000 federal PACs today represent business or trade associations, every big non-profit (Sierra, NRA, NAACP, etc) has a PAC of its own. One perk: while the organization can’t contribute more than the regulated hard money amount, it can cover 100% of overhead costs (office, salaries, etc.)
Leadership PAC – PACs formed by party leaders in Congress to contribute to other congressional campaigns. Basically, if you’re the House Majority Leader and you want to keep your position (or move up to Speaker), you raise tons of (hard) money and contribute to other congressional campaigns to win the support (votes) of your colleagues. Everybody’s got to be beholden to somebody…
527 Organization – Today’s soft-money culprits. Since BCRA banned soft (i.e. unregulated, unlimited) money to the national parties, it had to go somewhere. The name “527” simply comes from the section of federal tax code which describes this type of organization, which is basically a political corporation which doesn’t have to pay income taxes. As long as they don’t coordinate their political activities with the candidates or parties, and as long as the FEC keeps refusing to classify their contributions as political (i.e. subject to limits), they can do pretty much whatever they want.
Contribution Limits – Thanks to the Federal Election Campaign Act of 1974, contributions to candidates, parties, and PACs are subject to limits. Since passage of BCRA in 2002, individuals can give up $2,000 per election (primary and general count as two) to candidates, $25,000 per year to federal party committees, and $5,000 per election to PACs. Also, PACs can contribute $5,000 per election to federal candidates, and $15,000 per year to national party committees.
Buckley v. Valeo – Landmark Supreme Court case back in 1976, which basically said “money is speech”. What they meant was just that prohibiting candidates or interest groups from spending their own money (spending caps) was an unconstitu-tional abridgment of First Amendment free speech, while it was acceptable, from a Constitutional perspective, to limit the size of contributions—in the interest of protecting against “corruption or the appearance of corruption”. It also said public financing of elections was just fine, so long as it remained voluntary.
BCRA/McCain-Feingold – The most recent “big” reform, which really isn’t very big. Technically known as the “Bipartisan Campaign Reform Act of 2002” (BCRA), McCain-Feingold’s biggest accomplishment was getting soft money (hundreds of millions by 2002) out of the hands of the federal party committees (state committees could keep on raising…) In the process, however, it doubled most of the contribution limits (individuals could now give $2,000 instead of $1,000), meaning special interest bundlers became literally twice as powerful. On a different note, BCRA threw in the “Stand By Your Ad” clause (“My name is John Kerry and I approved this message) to try and crack down on negative campaigning, and issued a moratorium on the running of any political ads paid for by anything but regulated, limited hard money in the last 30 days of the primary and 60 days of the general election.
FECA of 1974 & Amendments – Federal Election Campaign Act, the biggest this country has accomplished in campaign reform, ever. It issued a bunch of really progressive reforms post-Water-gate, some of which were struck down by Buckley v. Valeo (e.g. spending limits), others of which are still in effect today. In brief, the ones that are still round include: contribution limits, strict disclosure requirements, the FEC, and Pres. Public Financing.
Presidential Public Financing – A rusty remnant of FECA, which provides limited public financing of presidential elections, funded through a voluntary $3 tax check-off option on income tax returns. Basically, presidential candidates who meet certain polling requirements qualify to receive a dollar-for-dollar match on the first $250 of every (hard money) contribution they raise during the primaries, in exchange for agreeing not to exceed something like $35 million total during the primaries. Major party nominees then have the choice of accepting a public grant of around $70 million for the general election campaign, in exchan-ge for not raising private money. Also, the parties get a chunk of change for their nominating conventions, as do third parties who poll over 5% in the previous election. It’s a rickety old system (thanks partly to Bush and Kerry’s opting out during the primar-ies), and Washington reformers are pushing for an overhaul.
Clean Money, Clean Elections – A catch phrase for full public financing of elections, ala. Maine and Arizona. Basically, candidate X doesn’t have a million bucks to run for governor, so she gets a whole bunch of people (say, 5000) to give her $5 checks, so she can prove that she’s a valid candidate. During this “qualifying” period, she also gets to raise a small amount of “seed money”—no more than $100 per contribution—in order to finance her campaign. After she reaches the qualifying threshold 3 months before the primary, she gets a whole bunch of cash (enough to run a credible campaign) from the public fund, agrees not to raise or spend a dime in private or personal money, and agrees to take part in public debates. If her opponent doesn’t choose to opt in and spends more than her spending limit, she can get additional “matching funds” from the public fund to catch up. Finally, if she gets her party’s nomination, she’s automatically covered through the general election.