“The narrative earlier this year about how much money is being flushed. Six out of 10 primary voters are supporting outsider candidates. A socialist raised $25 million in the same period a libertarian raised $2.5 million — a 10-to-1 surprise fund-raising advantage” – Scott W. Reed, Senior political strategist for the United States Chamber of Commerce.
Across the United States, the long race to the white house is in full swing. The bruising fight to be the Democratic and Republican candidates has brought a number of surprises – from the bouffant and loud-mouthed Donald Trump, a self-proclaimed “multi-billionaire” forging ahead in the Republican vote, to the grass-roots powered and staunch “socialist” Bernie Sanders giving party favourite Hillary Clinton a hard fight within the Democrats.
Beyond the debates and sound bites however, this election will be unique in another sense. By the end of the 2016 election season, spending by outside parties and groups are projected to reach $10 billion dollars. It is believed that between front-runners Hillary Clinton and Jeb Bush alone, more than $2 billion in donations will be received. That’s twice as much as what was spent by Barrack Obama and Mitt Romney in 2012.
Those with the biggest wallets…
Beyond the scandals over evicting every illegal immigrant or private email servers, there is a darker side to this years election. Now more than ever, money from private organizations and collective has a bigger and more direct influence on national politics thanks to changes to funding rules. In 2010, the Supreme Court lifted restrictions on how outside sources may contribute to a candidate’s campaign. The Supreme court made a series argued that major money does not give rise to “quid-pro-quo corruption” or give big donors special access. Others have taken a darker view on these changes, such as Albert R. Hunt who observed that it’s only “opened the way for an orgy of spending by well heeled interest groups and super rich individuals on both sides of politics”, allowing for blatant and open investment by powerful groups to better shape candidates to suit desires of those with power and money.
The most controversial aspect of these changes are how they benefit the so called “Super Pacs“. These are independent committees which are not bound by the rules that govern prospective political candidates. They may raise unlimited sums of money from corporations, unions and individuals but are not allowed to coordinate directly with the party or candidate they are supporting. That being said, this does not limit them from from using those funds to support their chosen candidate in other means such as advertising. Where Super Pacs get murky is its quite hard to prove or disprove that these groups aren’t actively coordinating with their candidate or their team. By allowing these powerful interest groups to effectively funnel money into aligned interests, the supreme court has effectively allowed those with money to have a far bigger say in politics and shape it to serve their interests better. Or perhaps all the supreme court did was legitimize a practice that has arguably happened as long as humans have organized into government.
Over the next twelve months, the multi-billionaire Koch Brothers are planning to spend almost $900 million on their chosen Republican candidates representing the highest ever single sum paid by an interest group in American history. Through a bloc of roughly 300 donors they’ve recruited over the years, the Koch Brothers hold considerable power and connections, able to make or break primaries through their near bottomless war chests of cash and favours.
In 2012, the network spent more than $400 million. In the coming election, it’s believed that they will continue to push candidates towards deregulation, tax cuts and smaller government. It should come as no surprise that the Koch brothers are strongly opposed to campaign disclosure laws.
Facts and figures:
- In 2008, there was no money raised by Super Pacs, and $416 million raised by individual donors.
- In 2012, Super Pacs raised $15.4 million, and individual donors raised $176.5 million
- In 2016, Super Pacs are projected to raise $278 million which would almost match the $290.4 million raised by individual donors.
On average, Republicans have traditionally outpaced Democrats in raising money from unlimited donations whereas Democrats excel at raising money from individuals:
- The Republicans have fielded 17 candidates and have raised $260.7 million from Super Pacs and $162.5 from private donors.
- The Democrats by contrast have just 6 candidates so far and have only raised $17.1 million from Super Pacs and 127.9 from private donors.
In terms of private donations, Jeb Bush dominates the field with $108.5 million raised by Super Pacs, well ahead of the next highest recipient, Ted Cruz, who received $38.4 million. On the Democrat side, Clinton is the only Candidate with any significant donations through this system with a comparatively small, though arguably hypocritical $20.3 million.
If there is a bigger issue beyond Super Pacs, it’s the controversy surrounding “dark money”. Dark money is the term given to fake entities masquerading as social welfare organizations. Whilst the Democrats can arguably point the finger at the Republicans for the most part when it comes to Super Pacs, both sides of politics are equally guilty of establishing major networks of sham organizations to funnel money without having to reveal the identity of the donors. During the last election more than $300 million was spent through these organizations and that figure is projected to double by the end of the election cycle.
By masking the identities of these donors, “dark money” gives parties more direct access to resources. There is a catch to this of course as in return for constructing these convoluted networks, donors often desire special access or favours that they could otherwise miss out on if their spending were reported openly.
The Grass-roots revival
Just because a candidate is receiving millions behind the scenes does not guarantee them complete success. The one crucial point with Super Pacs is that they cannot directly finance a campaign, meaning that they cannot provide money for the day-to-day running that is essential for any run at the presidency. Without the money for staffing, offices, transport and equipment, all the add space in the world means nothing. Republican hopefuls Rick Perry and Scott Walker have found this out the hard way when they ran out of cash and were forced to back down.
For the Democrats, the outsider sweet-heart is Senator Bernie Sanders. His energy and passion have drawn millions of followers who have been funding his campaign which has proven to be a nasty surprise to establishment favourite Hillary Clinton. The $26.2 million he has raised so far has largely been through small donations from the public and with no support from the Super Pacs which he has publicly blasted.
Similarly, the former neurosurgeon Ben Carson has gained a lead within the Republican party. Like Bernie, his power comes from thousands who have made small donations to his cause, though he is also receiving more and more support from the party simply because he is not Donald Trump. Of the $20 million he’s raised so far, it should be noted that the majority of the money is reinvested into more fund raising. During the last quarter for instance, Mr. Carson reinvested $11 million of the $14 million raised right back into advertising, cold calling and staffing.
Regardless of how the US Primaries turn out one thing is for sure. The nature of American politics has changed, though how this will effect elections and the major parties moving forwards is a question we’ll be watching closely.
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So what is a Super Pac: