The Money Race: Further Debunking the Billion-Dollar Myth

A couple weeks ago, I debunked the myth that the Obama campaign had raised $1 billion — or that they even had much of an advantage over Romney, once you include party money and Super PACs.

Now it seems that even the prediction that they will eventually raise $1 billion is looking unlikely. According to the latest numbers, they are now behind where they were at this point in 2008, when they raised $750 million:

And the decline isn’t confined to one or two industries. It’s across the board:

It’s worth noting that the Republicans’ plans to eviscerate Medicare and Social Security have not been lost on retired donors, just as their anti-contraception, pro-invasive-vaginal-probe crusade has driven women further into the arms of the Obama campaign.

But those gains aren’t nearly enough to keep up with Republicans’ Super PACs:

“They clearly are feeling the pressure,” said one major Obama fund-raiser, who asked for anonymity to characterize his conversations with campaign officials. “They’re behind where they expected to be. You have to factor in $500 million-plus in Republican super PAC money.

On the other hand, the Obama campaign didn’t have to wage war in the primaries, so they have more cash on hand than they had in 2008. But that will dry up fast, and they’ll be left with a big hole to fill:

To raise as much money for his campaign as he did four years ago, the president would have to raise about $70 million a month through the end of the election cycle, more than triple the rate he has been bringing in cash so far.

So campaign spending will probably decline as a percent of GDP for this election, which isn’t surprising since 2008 was a little above the norm. Contrary to popular belief, however, 2008 was not the most expensive election ever, relative to the size of the economy:

So, while we’re debunking myths, we can add the “money has taken over presidential elections” myth to the list. The truth is that money was always important — even more so in 1896, 1908, 1932, and 1968. As I said last month:

Policy is made by the elite. Always has been.

You can overturn Citizens United. You can ban Super PACs. You can even institute public financing of elections. But you can’t take money out of politics.

I’m not saying we shouldn’t try. I’m saying this problem predates Super PACs. It goes so much deeper than lobbying and campaign contributions. The elite have always had the ear of Congress. They have always been Congress. They have always owned the media. They have always controlled the conversationAnd they do not speak for us.

What remains to be seen is how Super PACs will change this equation. Based on the numbers above, it looks like they’ll be almost as powerful as the campaigns themselves…

The Money Race: It’s Closer Than You Think

People seem to be fascinated by the money raised and spent by both parties in the presidential election, but they also seem to be quite misinformed — or, at least, confused — about who has the advantage and what that advantage means.

Many Republicans, for example, are telling scare stories about the Obama campaign being close to raising $1 billion. This is completely untrue. Some experts have predicted that they will eventually raise $1 billion, extrapolating from the $750 million they raised in 2008, but as of now, they are nowhere near that number:

Still, from these numbers, it looks like the Obama campaign has an incredible advantage. Don’t be fooled. That advantage will shrink quickly. The only reason the gap is so big is because Romney was competing against a half dozen other Republican candidates for money:

Now that he has the nomination, all the Republican donors will flow to Romney, which begs the question: Who are those donors?

Two characteristics distinguish Romney’s donors from Obama’s. First, they’re almost certainly richer, given the higher proportion of large contributions:

And second, they’re overwhelmingly dominated by Wall Street:

I still find it astonishing that, in the wake of the worst financial crisis since the Great Depression, the Republican party would nominate a candidate from Wall Street. But I digress.

Of course, the campaigns themselves won’t be the only spenders in this election. The parties also raise lots of money to promote their respective candidates. By that measure, it’s Romney who has the advantage:

Finally, independent groups — especially the new Super PACs — play a critical role in buying media time and airing attack ads. On this front, there’s no question that Romney is winning:

Republican-aligned groups are hitting President Barack Obama with almost $2 million in attack ads and the response so far has been silence.

The reason: Democratic groups formed to counter those charges don’t have the money to do it.

the hardest-hitting television ads will be crafted by outside groups run by advisers closely aligned with the campaigns. In this sphere, Obama and his allies are behind.

[The Republican-founded] Crossroads [GPS], which has two arms, plans to spend $250 million to influence the presidential and congressional races, it announced last year. One entity, American Crossroads, has raised $27 million, according to Federal Election Commission disclosure reports. The other, Crossroads GPS, takes unlimited donations and doesn’t reveal its contributors.

Romney has another friendly super-PAC, Restore Our Future, which was founded by his former aides. It raised nearly $43 million by the end of February, and spent $40 million on ads…

In contrast, Priorities USA set a goal of raising $100 million to defend the president during the general election. According to FEC reports, Priorities USA Action has raised just $6.5 million. When combined with Priorities USA, a partner group that doesn’t disclose donors, the total contributed to the effort was about $10 million by the end of February, according to Burton.

So, no matter what you hear, remember: It’s close, and it’s getting closer.

When Money Talks, Congress Listens

With the Republican primary coming down to the wire, the candidates are running low on cash.

Thanks to the Supreme Court’s ruling in Citizens United v. Federal Election Commission, Super PACs have sprung up, with no limit on how much they can spend. According to OpenSecrets.org, Super PACs have raised $153 million so far, prompting a renewed debate over the effect this money will have on policymaking.

Let’s begin with the obvious: Money matters.

In multiple studies, scholars have found that policymakers pay no attention to the views of the bottom third of income earners and that the views of the upper third receive 50 percent more weight than the middle third. Take a moment to consider just how undemocratic that is.

There are many reasons for this behavior, but here are a few.

First, 75 percent of campaign contributions come from the top 25 percent of income earners and only 2 percent come from the bottom 20 percent.

Second, the median individual net worth of legislators is approximately six times the median net worth for the general population.

Third, throughout history, less than 5 percent of legislators have come from the working class, while more than 75 percent of them have been lawyers and businesspeople (who only comprise 10 percent of the general population).

Fourth, it’s easier for concentrated powers like corporations and unions to organize large-scale lobbying efforts than for dispersed groups like the homeless or the unemployed.

And fifth, only the rich can afford lobbyists and personal access to policymakers.

As Harvard law professor Lawrence Lessig points out in his new book Republic, Lost, legislators do not literally vote in exchange for money. That would be bribery, which is a crime. Instead, they listen to lobbyists whom they consider their friends. Maybe the lobbyist is an ex-employee or an ex-colleague or just a really smart, well-connected Washington insider. The lobbyist gives the legislator advice, and the legislator uses that advice to advance legislation that both of them support. It’s more like an exchange of gifts, says Lessig, than a cash transaction.

This is not a new theory. In the 1990s, social scientists Dan Clawson, Alan Neustadtl, and Mark Weller performed the most thorough investigation to date, interviewing hundreds of behind-the-scenes players in campaign fundraising. In their book Dollars and Votes, they concluded that the true value of money in politics is access to power. Only the top few percent can afford to take their case directly to policymakers, and that makes all the difference.

A few years ago, in the book Lobbying and Policy Change, a team of political scientists reported results from an unprecedented study where they tracked dozens of specific policies over time, including everyone who lobbied for or against the policies. The imbalance they found between the corporate elite and the rest of the population is stunning.

In a lobbying battle, the side with more high-level government allies won 78 percent of the time! Business corporations had a high-level government ally 74 percent of the time, compared to 45 percent for unions and 33 percent for citizen groups.

Similarly, the side with more “covered officials” lobbying won 63 percent of the time. Business corporations had a covered official lobbing 91 percent of the time, compared to 14 percent for unions and 24 percent for citizen groups.

“Where the mobilization of resources is unbalanced, we do find that the wealthy side tends to win,” they report. On average, business corporations spent $1 million on lobbying. Trade associations spent $1.3 million. Unions spent $0.5 million. Citizen groups spent $0.2 million.

Policy is made by the elite. Always has been.

You can overturn Citizens United. You can ban Super PACs. You can even institute public financing of elections. But you can’t take money out of politics.

I’m not saying we shouldn’t try. I’m saying this problem predates Super PACs. It goes so much deeper than lobbying and campaign contributions. The elite have always had the ear of Congress. They have always been Congress. They have always owned the media. They have always controlled the conversation. And they do not speak for us.

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This op-ed was published in today’s South Florida Sun-Sentinel.