By Ari Berman
While the power of money in US
electoral politics is well known, some recent developments have laid bare its
increasingly dominant role. Ari Berman explains how the politics of the
super rich have now become American politics.
AT a time when it's become a
cliche to say that Occupy Wall Street has changed the nation's political
conversation - drawing long overdue attention to the struggles of the 99% -
electoral politics and the 2012 presidential election have become almost
exclusively defined by the 1%. Or, to be more precise, the .0000063%. Those are
the 196 individual donors who have provided nearly 80% of the money raised by
super PACs in 2011 by giving $100,000 or more each.
These political action committees,
spawned by the Supreme Court's 5-4 Citizens United decision in January 2010, can
raise unlimited amounts of money from individuals, corporations, or unions for
the purpose of supporting or opposing a political candidate. In theory, super
PACs are legally prohibited from coordinating directly with a candidate, though
in practice they're just a murkier extension of political campaigns, performing
all the functions of a traditional campaign without any of the corresponding
accountability.
If 2008 was the year of the small
donor, when many political pundits (myself included) predicted that the fusion
of grassroots organising and cyber-activism would transform how campaigns were
run, then 2012 is 'the year of the big donor', when a candidate is only as good
as the amount of money in his super PAC. 'In this campaign, every candidate
needs his own billionaires,' wrote Jane Mayer of The New Yorker.
'This really is the selling of
America,' claims former presidential candidate and Democratic Party Chairman
Howard Dean. 'We've been sold out by five justices thanks to the Citizens United
decision.'
In truth, our democracy was sold
to the highest bidder long ago, but in the 2012 election the explosion of super
PACs has shifted the public's focus to the staggering inequality in our
political system, just as the Occupy movement shined a light on the gross
inequity of the economy. The two, of course, go hand in hand.
'We're going to beat money power
with people power,' Newt Gingrich said after losing to Mitt Romney in Florida as
January ended. The walking embodiment of the lobbying-industrial complex,
Gingrich made that statement even though his candidacy is being propped up by a
super PAC funded by two $5 million donations from Las Vegas casino magnate
Sheldon Adelson. It might have been more amusing if the GOP presidential primary
weren't a case study of a contest long on money and short on
participation.
The Wesleyan Media Project
recently reported a 1600% increase in interest-group-sponsored TV ads in this
cycle as compared to the 2008 primaries. Florida has proven the battle royal of
the super PACs thus far.ÿ There, the pro-Romney super PAC, Restore Our Future,
outspent the pro-Gingrich super PAC, Winning Our Future, five to one. ÿIn the
last week of the campaign alone, Romney and his allies ran 13,000 TVÿads in
Florida, compared to only 200 for Gingrich. Ninety-two percent of the ads were
negative in nature, with two-thirds attacking Gingrich, who, ironically enough,
had been a fervent advocate of the Citizens United decision.
With the exception of Ron Paul's
underdog candidacy and Rick Santorum's upset victory in Iowa - where he spent
almost no money but visited all of the state's 99 counties - the Republican
candidates and their allied super PACs have all but abandoned retail campaigning
and grassroots politicking. They have chosen instead to spend their war chests
on TV.
The results can already be seen in
the first primaries and caucuses: an onslaught of money and a demobilised
electorate. It's undoubtedly no coincidence that, when compared with 2008,
turnout was down 25% in Florida, and that, this time around, fewer Republicans
have shown up in every state that's voted so far, except for South Carolina.
According to political scientists Stephen Ansolabehere and Shanto Iyengar,
negative TV ads contribute to 'a political implosion of apathy and withdrawal'.
New York Times columnist Tim Egan has labelled the post-Citizens United era
'your democracy on meth'.
The .01% primary
More than 300 super PACs are now
registered with the Federal Election Commission. The one financed by the
greatest number of small donors belongs to Stephen Colbert, who's turned his TV
show into a brilliant commentary on the deformed super PAC landscape. Colbert's
satirical super PAC, Americans for a Better Tomorrow, Tomorrow, has raised $1
million from 31,595 people, including 1,600 people who gave $1 each. Consider
this a rare show of people power in 2012.
Otherwise the super PACs on both
sides of the aisle are financed by the 1% of the 1%. Romney's Restore Our Future
super PAC, founded by the general counsel of his 2008 campaign, has led the
herd, raising $30 million, 98% from donors who gave $25,000 or more. Ten million
dollars came from just 10 donors who gave $1 million each. These included three
hedge-fund managers and Houston Republican Bob Perry, the main funder behind the
Swift Boat Veterans for Truth in 2004, whose scurrilous ads did such an
effective job of destroying John Kerry's electoral prospects. Sixty-five percent
of the funds that poured into Romney's super PAC in the second half of 2011 came
from the finance, insurance and real estate sector, otherwise known as the
people who brought you the economic meltdown of 2007-08.
Romney's campaign has raised twice
as much as his super PAC, which is more than you can say for Rick Santorum,
whose super PAC - Red, White & Blue - has raised and spent more than the
candidate himself. Forty percent of the $2 million that has so far gone into
Red, White & Blue came from just one man, Foster Friess, a conservative
hedge-fund billionaire and Christian evangelical from Wyoming.
In the wake of Santorum's upset
victories in Colorado, Minnesota, and Missouri on 7 February, Friess told the
New York Times that he'd recruited $1 million for Santorum's super PAC from
another (unnamed) donor and upped his own giving, though he wouldn't say by how
much. We won't find out until the next campaign disclosure filing in three
months, by which time the GOP primary will almost certainly be
decided.
For now, Gingrich's sugar daddy
Adelson has pledged to stay with his flagging campaign, but he's also signalled
that if the former Speaker of the House goes down, he'll be ready to donate even
more super PAC money to a Romney presidential bid. And keep in mind that there's
nothing in the post-Citizens United law to stop a donor like Adelson, hell-bent
on preventing the Obama administration from standing in the way of an Israeli
attack on Iran's nuclear facilities, from giving $100 million or, for that
matter, however much he likes.
Before Citizens United, the
maximum amount one person could give to a candidate was $2,500; for a political
action committee, $5,000; for a political party committee, $30,800. Now, the
sky's the limit for a super PAC, and even more disturbingly, any donor can give
an unlimited contribution to a 501c4 - outfits defined by the Internal Revenue
Service as 'civic leagues or organisations not organised for profit but operated
exclusively for the promotion of social welfare' - and to make matters worse,
that contribution will remain eternally secret. In this way, American politics
is descending further into the darkness, with 501c4s quickly gaining influence
as 'shadow super PACs'.
A recent analysis by the
Washington Post found that, at a cost of $24 million, 40% of the TV ads in the
presidential race so far came from these tax-exempt 'social welfare' groups. The
Karl Rove-founded American Crossroads, a leading conservative super PAC
attacking Democratic candidates and the Obama administration, also runs a 501c4
called Crossroads GPS. It's raised twice as much money as its sister group, all
from donations whose sources will remain hidden from American voters. Serving as
a secret slush fund for billionaires evidently now qualifies as social
welfare.
The Income Defence
Industry
In his book Oligarchy, political
scientist Jeffrey Winters refers to the disproportionately wealthy and
influential actors in the political system as the 'Income Defence Industry'. If
you want to know how the moneyed class, who prospered during the Bush and
Clinton years, found a way to kill or water down nearly everything it objected
to in the Obama years, look no further than the grip of the 1% of the 1% on our
political system.
This simple fact explains why
hedge-fund managers pay a lower tax rate than their secretaries, or why the US
is the only industrialised nation without a single-payer universal healthcare
system, or why the planet continues to warm at an unprecedented pace while we do
nothing to combat global warming. Money usually buys elections and, whoever is
elected, it almost always buys influence.
In the 2010 election, the 1% of
the 1% accounted for 25% of all campaign-related donations, totalling $774
million, and 80% of all donations to the Democratic and Republican parties, the
highest percentage since 1990. In congressional races in 2010, according to the
Center for Responsive Politics, the candidate who spent the most money won 85%
of House races and 83% of Senate races.
The media loves an underdog story,
but nowadays the underdog is ever less likely to win. Given the cost of running
campaigns and the overwhelming premium on outspending your opponent, it's no
surprise that nearly half the members of Congress are millionaires, and the
median net worth of a US Senator is $2.56 million.
The influence of super PACs was
already evident by November 2010, just nine months after the Supreme Court's
ruling. John Nichols and Robert McChesney of The Nation note that, of the 53
competitive House districts where Rove's Crossroads organisation outspent
Democratic candidates in 2010, Republicans won 51. As it turned out, however,
the last election was a mere test run for the monetary extravaganza that is
2012.
Republicans are banking on that
super PAC advantage again this year, when the costs of the presidential contest
and all other races for federal posts will soar from $5 billion in 2008 to as
high as $7 billion by November. (The 2000 election cost a 'mere' $3 billion.)ÿ
In other words, the amount spent this election season will be roughly the
equivalent of the gross domestic product of Haiti.
The myth of small
donors
In June 2003, presidential
candidate Howard Dean shocked the political establishment by raising $828,000 in
one day over the Internet, with an average donation of $112. Dean, in fact, got
38% of his campaign's total funds from donations of $200 or less, planting the
seeds for what many forecast would be a small-donor revolution in American
politics.
Four years later, Barack Obama
raised a third of his record-breaking $745 million campaign haul from small
donors, while Ron Paul raised 39% from small donors on the Republican side. Much
of Paul's campaign was financed by online 'money bombs', when enthusiastic
supporters generated millions of dollars in brief, coordinated bursts. The
amount of money raised in small donations by Obama, in particular, raised hopes
that his campaign had found a way to break the death grip of big donors on
American politics.
In retrospect, the small-donor
utopianism surrounding Obama seems naive. Despite all the adulatory media
attention about his small donors, the candidate still raised the bulk of his
money from big givers. (Typically, these days, incumbent members of Congress
raise less than 10% of their campaign funds from small donors, with those
numbers actually dropping when you reach the gubernatorial and state legislative
levels.) Obama's top contributors included employees of Goldman Sachs, JPMorgan
Chase, and Citigroup, hardly standard bearers for the little guy. For obvious
reasons, the campaign chose to emphasise the small donors over the big ones in
its narrative, as it continues to do in 2012.
Interestingly enough, both Obama
and Paul actually raised more money from small donors in 2011 than they did in
2008, 48% and 52% of their totals, respectively. But in the super PAC era that
money no longer has the same impact. Even Dean doubts that his
anti-establishment, Internet-fuelled campaign from 2004 would be as successful
today. 'Super PACs have made a grassroots campaign less effective,' he says.
'You can still run a grassroots campaign but the problem is you can be
overwhelmed now on television and by dirty mailers being sent out... It's a very
big change from 2008.'
Obama is a candidate with a split
personality, which makes his campaign equally schizophrenic. The Obama campaign
claims it's raising 98% of its money from small donors and is 'building the
biggest grassroots campaign in American history', according to campaign manager
Jim Messina. But the starry-eyed statistics and the rhetoric that accompanies it
are deeply misleading. Of the $89 million raised in 2011 by the Obama Joint
Victory Fund, a collaboration of the Democratic National Committee (DNC) and the
Obama campaign, 74% came from donations of $20,000 or more and 99% from
donations of $1,000 or more.
The campaign has 445 'bundlers'
(dubbed 'volunteer fundraisers' by the campaign), who gather money from their
wealthy friends and package it for Obama. They have raised at least $74.4
million for Obama and the DNC in 2011. Sixty-one of those bundlers raised
$500,000 or more. Obama held 73 fundraisers in 2011 and 13 in January alone,
where the price of admission was almost always $35,800 a head.
An increase in small-donor
contributions and a surge of big-money fundraisers still wasn't enough, however,
to give Obama an advantage over Republicans in the money chase. That's why the
Obama campaign, until recently adamantly against super PACs, suddenly relented
and signalled its support for a pro-Obama super PAC called Priorities
USA.
A day after the announcement that
the campaign, like its Republican rivals, would super PAC it up, Messina spoke
at the members-only Core Club in Manhattan and 'assured a group of Democratic
donors from the financial services industry that Obama won't demonise Wall
Street as he stresses populist appeals in his re-election campaign', reported
Bloomberg Businessweek. 'Messina told the group of Wall Street donors that the
president plans to run against Romney, not the industry that made the former
governor of Massachusetts millions.'
In other words, don't expect a
convincing return to the theme of the people versus the powerful in campaign
2012, even though Romney, if the nominee, would be particularly vulnerable to
that line of attack. After all, so far his campaign has raised only 9% of its
campaign contributions from small donors, well behind both Senator John McCain,
21% in 2008, and George W Bush, 26% in 2004.
In the fourth quarter of 2011,
Romney outraised Obama among the top firms on Wall Street by a margin of 11 to
1. His top three campaign contributions are from employees of Goldman Sachs
($496,430), JPMorgan ($317,400) and Morgan Stanley ($277,850). The banks have
fallen out of favour with the public, but their campaign cash is indispensable
among the political class and so they remain as powerful as ever in American
politics.
In a recent segment of his show,
Stephen Colbert noted that half of the money ($67 million) raised by super PACs
in 2011 had come from just 22 people. 'That's 7 one-millionths of 1%', or
roughly .000000071%, Colbert said while spraying a fire extinguisher on his
fuming calculator.' So Occupy Wall Street, you're going to want to change those
signs.'
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