The big money behind the American throne

August 24, 2015

The 2016 election is already hogging media airtime, but some old truths are asserting themselves, writes Lance Selfa, author of The Democrats: A Critical History.

IN MOST parliamentary democracies, national elections unfold in campaigns that last for several weeks, leading to a vote, and the formation of a government only a few days after the election.

Not in the U.S. Here we are, 14 months before the November 2016 elections and more than 16 months before another administration will take over from President Barack Obama, and the 2016 presidential campaign--such as it is--is in full swing.

Over the summer, the national punditry occupied itself with assessing the 17 (or so) announced Republican presidential candidates, led by clownish billionaire Donald Trump. It obsessed over Hillary Clinton's e-mail server and what the large crowds turning out for Bernie Sanders' rallies might mean for the Democratic frontrunner's chances, rather than what they represented in their own right.

Perhaps you can't blame the media for trying to breathe a little life into the process. Whatever entertainment and drama they provide over the next year, the party primaries are designed to deliver a choice between two thoroughly pro-business candidates--to represent the Democrats and Republicans, two thoroughly pro-business parties.

2016 presidential contenders, clockwise from top left: Jeb Bush, Donald Trump, Scott Walker and Hillary Clinton
2016 presidential contenders, clockwise from top left: Jeb Bush, Donald Trump, Scott Walker and Hillary Clinton

Trump may make the business decision to promote his "brand" through a third party run, a la Ross Perot. And there will be a radical alternative from the Green Party and perhaps other forces to offer a choice to those on the left disgusted with the candidate the Democrats will try to foist on them.

But the standard commentary that assumes mainstream U.S. elections turn on strategic masterstrokes or gaffes by the candidates, or that voting blocs like "soccer moms" and "multicultural Millennials" drive election results, ignores the biggest predictor of who wins U.S. elections: money, and lots of it.

In their analysis of the 2012 U.S. House of Representatives elections, political scientists Thomas Ferguson, Paul Jorgenson and Jie Chen found a direct relationship between election spending in House districts and which candidates won. The higher proportion of total spending that a candidate accounted for, the higher their margin of votes over their opponent. Statistically, the money rivalry explained about 80 percent of the difference in the candidates' vote totals. The same thing held for U.S. Senate elections, according to the researchers.

In the 2012 presidential election, the Romney and Obama presidential campaigns and their assorted supporters spent something approaching $2.6 billion between them, according to the Center for Responsive Politics. While this is an astounding amount of money--in nominal terms, about a fivefold increase over what the campaigns of George W. Bush and Al Gore spent in 2000--it's peanuts for the billionaires and corporations who provide most of the money.


Do Dollars Equal Democracy?

These statistics contradict the standard story touted each election cycle by campaigns and commentators alike: the myth of the small donor. This is the campaign finance equivalent of each corporate candidate's attempt--except Trump, of course--to portray themselves as rising from humble beginnings. The count of small donors--those giving less than $250--is meant to demonstrate a candidate's support from the people, not the plutocrats.

This became a major talking point for the 2008 Obama campaign, which made a big deal about its development of a grassroots network of small contributors. Yet the big money that really funded Obama's campaign came from corporate "bundlers," who rounded up maximum contributions from as many of their management colleagues as possible.

Under pressure from the New York Times, Obama disclosed in July 2008 that more than 500 individuals had committed to raising at least $50,000 for him, with 178 committed to raising at least $200,000 each.

A post-election analysis of the Obama money machine showed that only 26 percent of its funds came from people who donated $200 or less--about the same percentage of small donors that contributed to George W. Bush in 2004. The flood of money from corporations and the rich assured that Obama's agenda wouldn't stray too far from economic orthodoxy.

It stands to reason that in a country where income inequality is approaching levels last seen since the 1910s, the political system should reflect that. Yet every election cycle, political campaigns try to persuade us of the opposite: that U.S. politics is place where everyone's vote and opinion is counted equally.

Before reviewing the figures, it's worth a reality check. If giving $250 to a candidate is considered a badge of populist honor, we should ask how many Americans are even in the position to do that much.

For a U.S. family at the median, $250 would amount to about 0.5 percent of median household income--the equivalent of a month's worth of utilities or so. Think about the number of people in the U.S. who say they are living paycheck to paycheck, and that's a clue that even the coveted "small donors" are more likely to be from the upper middle class than from the median family.

The Center for Responsive Politics estimates that in the 2013-14 election cycle, only 723,000 of the 311 million Americans gave more than $200 to federal political candidates--around 0.23 percent of the population. Of these, the 127,000 donors who gave more than $2,600 accounted for around $1.2 billion--three times as much as the 596,000 who gave between $200 and $2,600, for a total of $433 million.

In fact, the itemized contributions for the 2014 midterm elections were even more concentrated, with a shade fewer than 32,000 donors giving around $1.2 billion. Three individuals--liberal Democratic billionaire Tom Steyer, former New York Mayor Michael Bloomberg and hedge fund manager Paul Singer--gave more than $10 million each.

While most of the big money went to the Republicans, the Democrats got their share, too--and it's worth noting that Steyer alone spent more money on the 2014 midterm elections than the National Education Association, Service Employees International Union and American Federation of Teachers combined.


Who's Giving the Money?

It's not so much the richest 1 percent of the population that's flooding the U.S. political system with money as the richest 0.01 percent. And the U.S. Supreme Court's 2010 Citizens United decision, which essentially equated the ability to spend money with free speech, has opened the floodgates to a bewildering array of ways for the superrich buy the U.S. government.

It's not as if the rich and corporations hadn't figured out how to evade the U.S. government's pathetically weak post-Watergate campaign finance laws before 2010. But Citizens United gave corporations and the rich multiple channels by which to funnel money to politicians willing to do their bidding.

There are the political action committees (PACs), affiliated with different organizations like labor unions and the U.S. Chamber of Commerce, plus the "leadership" PACs through which members of the House and Senate leaderships dole out money.

Other organizations, with names referring to parts of the U.S. tax code where they are defined, include: the "527" committees, tax-exempt organizations like the infamous 2004 Swift Boat Veterans group that (theoretically) can't endorse or oppose a candidate; and 501(c)(4) groups, which allow anonymous donors to give money for a supposed promotion of the nebulously defined "social welfare." The most notorious of these is Americans for Prosperity, the largely Koch Industries-funded operation that has been the moneybags for many Tea Party politicians.

The main post-Citizens United innovation is the Super PAC, a political action committee that can raise and spend unlimited amounts of cash to support or oppose federal political candidates. While Super PACs are technically prohibited from giving money directly to candidates, that is a legal fiction. Every major candidate has a Super PAC, like Jeb Bush's Right to Rise USA or Hillary Clinton's Priorities USA. As Open Secrets.org put it, the Super PACs of the presidential candidates:

are anteing up more than ever before as their favored candidates' campaigns become ever more intertwined with the super PACs, announcing combined fundraising totals and splitting up activities, like voter outreach, that once were firmly functions of the campaign committees--not the supposedly independent outside groups.

To this point, Super PAC money has actually sustained many of the 2016 campaigns, with individual campaign organizations actually raising less than they did eight years ago, in 2007. The sheer amount that Super PACs raise--10 times what they did at this same point in 2012 presidential cycle ($258 million, compared to $26 million)--means they and their sponsors have much more influence on elections than even the official organs of the Democratic and Republican Parties.

After the drubbing the Republicans got in the 2012 election, the GOP's institutional "autopsy" urged changes like outreach to Latinos and tamping down strident social conservatism to attract younger voters. But precious little of either point has been heard in the Republican primaries to date.

Setting aside Trump, who doesn't need outside money for a campaign he could fund out of his own pocket, the more "mainstream" Republican figures are all campaigning on various extreme-right themes. This isn't just a reflection of retrograde sentiments in the aging GOP "base," but the influence of rich conservative money on various candidates' campaigns.

In 2012, Zionist casino billionaire Sheldon Adelson kept Newt Gingrich's campaign afloat for weeks after it won only one primary. Was it any wonder that in a field of candidates who pledged to back Israel 100 percent, Gingrich's voice was the most strident?

So this is one reason why the election season is so interminable. Not only does it have to run through a series of state-based primaries, but wealthy individuals and companies can sustain the process as a virtual auction in which candidates bid for their support as much as--and probably far more than--the support of voters. Meanwhile, a whole industry of political consultants, pollsters, data mining experts, "get out the vote" (GOTV) organizations and the media thrive off the financial arms race that modern elections have become.

This doesn't mean that the corporate political parties are irrelevant. Instead, they exist at the delta of all of these multiple tributaries of corporate and individual--typically derived from corporate--wealth. They still perform the function of officially nominating candidates, providing the label under which they run, and an easy identification for voters to use when they choose.

But before they get the party stamp of approval, candidates have already won the "money primary," signifying that Corporate America has signed off on them.


Who Rules America?

The U.S. electoral system may allow billionaire ideologues like Adelson and the Kochs to buy politicians. But most money that flows to U.S. lawmakers has much more mundane, and self-interested, strings attached.

On a local level, that's easy to see in donations from land developers and city contractors to mayors and city council members. At the presidential level, with much more at stake, whole industries are involved.

The analysis of the 2012 presidential campaign by Thomas Ferguson and his colleagues found that firms and industries most opposed to the Obama administration's even weak regulations on greenhouse gases supported the Republican candidate Mitt Romney. On the other hand, a number of the "new economy" telecommunications and information technology (IT) firms--including those heavily implicated in the surveillance state--backed Obama.

In addition to whatever vestiges of 1930s and 1960s-70s reforms continue to assure that the vast majority of money from unions, civil rights, and women's and LGBT groups goes to the Democrats, the opportunity for different industrial sectors to play the Democrats and Republicans against each other assures a future for the two-party system.

What does Corporate America expect for its investment? The billions spent in a presidential election year hardly faze the U.S. business class. That's why individual billionaires can have such a large impact on elections.

The Center for Responsive Politics estimates that the entire federal election for president and members of Congress cost about $6.2 billion in 2012. While this is an extraordinary amount of money, in truth, it's only about 7 percent of Microsoft founder Bill Gates' fortune, or about 1 percent of the value of Apple Corp.

In fact, what's most notable is how a relatively small investment in politicians will bring big returns for the "investors."

For what amounts to peanuts, the defense industry won untold billions in business from the Iraq war, and Wall Street scored trillions from the federal government's post-2008 bailout. A 2007 study analyzing corporate donations and company stock performance between 1979 and 2004 found that corporations that contributed the most to political candidates had stock prices that beat the overall stock market by an average of 2.5 percentage points every year.

Considering that a little over 126 million people voted in the 2012 federal election, the entire elections enterprise cost about $49 a vote.


Who Do They Represent?

Conservative defenders of Citizens United point out that the U.S. Supreme Court allowed labor unions to contribute directly from their treasuries to federal elections. And the unions have poured millions into mostly Democratic campaigns, but with little to show for it. That's because, as noted earlier, under the current system, a single billionaire can give more to fund elections than unions representing millions of members.

And, unlike the billionaires who can hide their contributions in various pools of "dark money," unions must report their expenditures, to every last penny, under Labor Department regulations, while allow their members to "opt out" from contributing to union political action committees. Moreover, the employers' drive to eviscerate unions--including a lawsuit now before the Supreme Court that could virtually outlaw public-sector unions--could effectively make labor's "right" to spend money in federal elections meaningless.

Thus, Citizens United's "equality before law" reminds one of the observation from 19th century French writer Anatole France: "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."

So even on the most basic level, the ability of working people to have any voice in what the radical scholar Noam Chomsky calls the "quadrennial presidential election extravaganza" is sharply curtailed. And that's not even to mention that unions, which give their money--and more importantly, their members' volunteer hours--to the Democratic Party, act as a populist prop to one of the two corporate parties.

One of the results of an electoral finance system that's skewed to corporations and the rich is an electorate that is also, by and large, skewed to the rich.

While there are many reasons for this--from restrictive voting laws to declining union membership to the sheer lack of time working-class people have for voting or any other socio-political activity--the facts are undeniable. Even in the highest turnout elections of the last half century, four out of 10 voters--most of them working class and poor--stayed home. Thus, in the 2012 presidential election, three-quarters of voters with incomes greater than $150,000 voted, while fewer than half of voters with family income between $10,000 and $40,000 did so.

An electoral system whose financing and participation are this skewed to the wealthy will also produce outcomes that favor the wealthy and their corporate makers.

Political scientists Martin Gilens and Benjamin I. Page produced an exhaustive study last year in which they compared 20 years of data on government action and the policy views of both the richest 10 percent of population and those of the "average" American.

The results were stark: The preferences of the average American have only a minuscule impact upon public policy--one that is statistically insignificant, according to the researchers.

Gilens and Page concluded, in another article, that the U.S. political system can be more accurately described as an "oligarchy," rather than a democracy. Not only do the preferences of the "economic elites" carry the day, Gilens and Page noted, but they also get to define what's even considered an issue worth discussing in the first place.

Ferguson and his colleagues had a more colorful, but no less true, description: "American politics is a giant jukebox: anyone who wants to play the song just inserts money."

Given this, is it any wonder that opinion polls register record levels of disaffection from the political system, with members of Congress consistently registering popularity levels in the single digits, and turnout for the 2014 midterms the lowest in 72 years? It wasn't an exaggeration when Kate Aronoff and Max Berger wrote in The Nation: "While the electorate is rarely excited for elections, the 2016 race takes place against the backdrop of a country on the brink of a crisis of democratic legitimacy."

The electoral circus that will unfold over the next 14 months will do little to change that.

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