We Have the Best Politics Money Can Buy (Part 1 of 2)

The news on May 2, 2012 that $4 million will be spent by the Romney “SuperPAC” to buy ads in eight swing states once again reminds us of the staggering amounts of money that lubricate American politics today.  As of April 20, Obama has raised $197 million; but the combined total of donations to all the Republican presidential candidates is $220 million. It is still a half-year away from election day.

Most of the money goes into TV advertising and it debases political debate.  Most TV advertising in politics is negative: first, by “defining” the opposition as unfit, and second, by broadcasting half- and quarter-truths about one’s opponent.  Of course, it is not enough to criticize an opponent’s policies or ideas; it seems necessary to define an opponent as a rogue, a knave or borderline subversive.  It seems the more money that goes into political campaigning, the less informative is the result.

Cascades of money make this possible.  As far as freedom to spend is concerned, we are now back to the days of William McKinley’s 1896 presidential campaign.  His campaign manager was Mark Hanna.  I am reminded (by J.J. Goldberg, Forward [Weekly], May 4, 2012) that Hanna said, “There are two things that are important in politics.  The first is money and I can’t remember what the second is.” 

This is the first of two articles in Politikos on money in politics in the USA.  It describes a situation of practically unlimited spending to influence outcomes.

 Official spending, in national and sub-national politics, is subject to certain controls…but they are increasingly growing meaningless.  There are federal laws limiting individually donated amounts to official campaign committees.  We all know about the little box on our federal income tax return that would permit $3 to go into a Presidential election expenditure fund, shared by the candidates if they agree to certain campaign expenditure limits.  The number of people checking that box is going down –-now only 8 % of individual tax returns--  in parallel to the candidates increasingly no longer accepting federal limits on campaign expenses, because they need to raise more than permitted…and because they can.

Public financing of presidential campaigns still exists.  Its origin is in the idea in the 1970s of giving the less well-endowed candidates a chance: to try to reduce the impact of unrestricted spending on elections.  At the federal level, public funding is limited to subsidies for presidential campaigns. This includes a "matching" program for the first $250 of each individual contribution during the primary campaign; financing the major parties' national nominating conventions, and funding the major party nominees' general election campaigns.

To receive federal subsidies in the primary, candidates must privately raise $5000 each in at least 20 states. During the primaries, in exchange for agreeing to limit spending, eligible candidates receive matching payments for the first $250 of each individual contribution (up to half of the spending limit). By refusing matching funds, candidates are free to spend as much money as they can raise privately.  That is where we are today: the era of “the sky’s the limit in spending on presidential elections.”

From 1976 through 1992, almost all candidates who could qualify, accepted matching funds in the primaries. By 1996 private wealth became more important, as Republican candidate Steve Forbes opted out of the program. In 2000, Forbes and George W. Bush opted out. In 2004 Bush and Democrats John Kerry and Howard Dean did not take matching funds in the primary.  In 2008, Democrats Hillary Clinton and Barack Obama, and Republicans John McCain, Rudy Giuliani, Mitt Romney and Ron Paul decided not to take primary matching funds.

In addition to primary matching funds, public funding also assists with financing the major parties' (and eligible minor parties') presidential nominating conventions and funding the major party (and eligible minor party) nominees' general election campaigns. The grants for the major parties' conventions and general election nominees are adjusted each Presidential election year to account for increases in the cost of living. In 2012, each major party is entitled to $18.2 million in public funds for their conventions, and the parties' general election nominees are eligible to receive $91.2 million in public funds. If candidates accept public funds, they agree not to raise or spend private funds or to spend more than $50,000 of their personal resources.

No major party nominee turned down government funds for the general election from 1976, when the program was launched, until Barack Obama in 2008.  Obama again declined government funds for the 2012 campaign, as did Mitt Romney. So the 2012 election  will be the first since 1976 in which neither major party nominee accepts federal funding.  It will break all records on spending.

The biggest opening today for campaign spending bloat is permitting the “superPACS” – political action committees – to spend what they like (and not report it) as long as such PACS are not officially connected to a candidate’s campaign.  So we have multi-millionaires, or fronts for such people, creating vehicles for spending millions—in addition to what candidates raise, and in addition to what parties raise.  (Newt Gingrich’s campaign was virtually single-handedly financed by one person’s superPAC—that of casino mogul Sheldon Adelson.)

Campaign finance law in the United States changed drastically in the wake of two 2010 judicial opinions: the Supreme Court’s decision in Citizens United v. Federal Election Commission and the D.C. Circuit Court of Appeals decision in SpeechNow.org v. FEC. According to a Congressional Research Service report (2011), these two decisions constitute “the most fundamental changes to campaign finance law in decades.”

Citizens United struck down, on free speech grounds, the limits on the ability of organizations that accepted corporate or union money in running electioneering communications.

Two months later, a unanimous nine-judge panel of the U.S. Court of Appeals for the D.C. Circuit decided SpeechNow, which relied on Citizens United, to hold that Congress could not limit donations to organizations that only made independent expenditures, that is, expenditures that were “uncoordinated” with a candidate’s campaign. These decisions led to the rise of “independent-expenditure only” PACs, commonly known as “Super PACs,” which can raise unlimited funds from individual and corporate donors and use those funds for electioneering advertisements, provided that the Super PAC does not “coordinate” with a candidate.  Do you believe that Karl Rove’s “SuperPAC” will be independent of Romney’s campaign?

In 2008—the last presidential election year—candidates for office, political parties, and independent groups spent a total of $5.3 billion on federal elections. The amount spent on the presidential race alone was $2.4 billion, and over $1 billion of that was spent by the campaigns of the two major candidates: Barack Obama spent $730 million in his election campaign, and John McCain spent $333 million.  In the 2010 midterm election cycle, candidates for office, political parties, and independent groups spent a total of $3.6 billion on federal elections. The average winner of a seat in the House of Representatives spent $1.4 million on his or her campaign. The average winner of a Senate seat spent $9.8 million. (In the news not long ago was the item that Senator Orrin Hatch, seeking the Republican re-nomination in the Utah pre-primary convention, spent $5 million influencing delegates.  He was unsuccessful in preventing a primary.)

The money for campaigns for federal office comes from four broad categories of sources: (1) small individual contributors (individuals who contribute $200 or less), (2) large individual contributors (individuals who contribute more than $200), (3) political action committees, and (4) self-financing (the candidate's own money).

One result of the limit on personal contributions from any one individual is that campaigns seek "bundlers"—people who can gather contributions from many individuals in an organization or community and present the sum to the campaign.

Although bundling existed in various forms since the enactment of the FECA, bundling became organized in a more structured way in the 2000s, spearheaded by the "Bush Pioneers" for George W. Bush's 2000 and 2004 presidential campaigns. During the 2008 campaign the six leading primary candidates (three Democratic, three Republican) had listed a total of nearly two thousand bundlers.

 Corporations and labor unions organizations may sponsor a "separate segregated fund" (SSF), known as a "connected PAC." These PACs may receive and raise money only from a "restricted class," generally consisting of managers and shareholders of a corporation, and members in the case of a union, or another interest group. The sponsor of the PAC may absorb all the administrative costs of operating the PAC and soliciting contributions. By January 2009, there were 1,598 registered corporate PACs, 272 related to labor unions and 995 to trade (business) organizations

Elected officials and political parties cannot give more than the federal limit directly to candidates. However, they can set up a “Leadership PAC” that makes independent expenditures. Once again, provided the expenditure is not coordinated with the candidate, this type of spending is unlimited. Under the FEC rules, leadership PACs are non-connected PACs, and can accept donations from individuals and other PACs. Since current officeholders have an easier time attracting contributions, Leadership PACs are a way parties keep their own seats or attempt to capture seats held by other parties. A leadership PAC sponsored by an elected official cannot use funds to support that official's own campaign, but, it may fund travel, administrative expenses, consultants, polling, and other non-campaign expenses.  Between 2008 and 2009, leadership PACs raised and spent more than $47 million.

But the “big dogs” in this arena are the "Super PACs."  The 2010 election marked the rise of this new political committee. They are officially known as "independent-expenditure only committees," because they may not make contributions to candidate campaigns or parties, but rather must spend independently of the campaigns. They can raise funds from corporations, unions and other groups, and from individuals, without legal limits.

Finally, we have 501(c)(4) organizations: civic leagues and other corporations operated exclusively for the promotion of social welfare, or local associations of employees with membership limited to a designated company or people in a particular municipality or neighborhood, and with net earnings devoted exclusively to charitable, educational, or recreational purposes. Unlike 501(c)(3) charitable organizations – the charities we all know about -- they may also participate in political campaigns and elections, as long as the organization's "primary purpose" is the promotion of social welfare and not political advocacy. 501(c)(4) organizations are not required to disclose their donors publicly. This has led to rising use of 501(c)(4) organizations in raising and donating money for political activity without disclosure of donors, from 1.3% of outside spending in 2006 to 44% of outside spending in 2010.

Think of the alternative useful purposes all this election expenditure might go toward!  Other civilized, constitutionally democratic countries spend much less in holding elections.  Why can’t we?