AN OVERVIEW
So far there has been $1.6 billion raised for the 2016 US federal election season—roughly the equivalent to the 2015 GDP of Belize. At this rate, the country is on pace to pass the astonishing $7 billion that was spent during the last election cycle in 2012. Such massive sums of political spending are a recent development, due in most part to two important US Supreme Court case decisions: Citizens United v. FEC in 2010, which allowed non-profits, corporations, and other entities to spend unlimited amounts of money in support or opposition of political candidates; and the lesser-known, but equally transformative McCutcheon v. FEC in 2014 that abolished aggregate limits on individual political contributions during a single election cycle (the old limit was just over $123,000).
These two decisions remade the US campaign finance system, allowing for a new flood of political groups to rise to the forefront and facilitate a truly spectacular influx of money into political campaigns for federal office. They also allowed for the formalization of so-called “dark money” entities, or groups that engage in political activities but are not required to disclose their donors. The following is a breakdown of the various political groups that dominate the new political landscape and how they are most commonly employed in US elections today.
Political Action Committees (PACs)
These groups were popular before Citizens United and have remained a mainstay of the campaign finance system since. While they must report their donors, limit their contributions to $5000 per election, and are unable to make independent expenditures (such as the production and airing of political ads or electioneering communication), they are able to contribute to multiple political campaigns, parties, and other PACs. Additionally, candidates are allowed to explicitly affiliate with their own PAC, which makes them the ideal vehicles for candidates looking to create their own political fundraising networks. Often times, contributions to these groups are also used as a sort of Washington currency, allowing congressmen, lobbyists, corporations and associations to offer rewards to those who make political decisions which they favor—this is particularly relevant amongst the congressional leadership and committee chairmen, as they have control over setting the legislative and policy agendas.
527s and Super PACs
These groups have experienced a dramatic rise in popularity since 2010 and account for nearly half of all money raised so far this cycle. While they cannot contribute directly to a campaign and must report their donors (in a limited fashion), they are able to raise unlimited funds and make unlimited independent expenditures. These groups are technically forbidden from coordinating with campaigns, but in practice they can explicitly support or oppose a single candidate and have often taken advantage of loop-holes and outdated regulations to skirt the coordination ban. Historically, they have specialized in targeted media campaigns and political ads in the weeks and months leading up to the elections.
501(c)(4)s and Other Outside Groups
This final category is similar to Super PACs in that they are not allowed to contribute directly to campaigns, but they can make unlimited independent expenditures and accept unlimited contributions. An added benefit of these groups is that they can exist across election cycles without registering, and support or oppose multiple candidates. Additionally, a 501(c)(4), along with other nonprofit designations, can be used in conjunction with a Super PAC or a series of Super PACs to shield the identity of their donors, making them the leading source of “dark money” in federal elections. Until Citizens United, these groups were forbidden from explicitly participating in political activity related to elections but are now allowed to do so, as long as political activity is not their primary purpose. Because their actions cannot be traced back to their donors, they are often used to launch ruthless political attacks on candidates and instigate ethically dubious media campaigns in the lead-up to Election Day.
EFFECTS OF THESE GROUPS ON PUBLIC POLICY AND ELECTIONS
There is much disagreement as to the effects this money has on democratic governance. An increasingly large body of scientific studies and statistical analysis finds that organized business groups and ‘economic elites’ have the only measurable effect on US policy outcomes, meaning that the US is now closer to an oligarchy than a democratic republic. Yet, the apparent advantages that business groups and wealthy individuals hold in gaining policy influence may have less to do with their campaign contributions and more to do with the skilled and costly lobbyists they employ in droves, who know exactly how to interact with Congress and the Executive to get their clients’ policy goals accomplished.
However, that is not to say that the rise of unlimited campaign spending and anonymous dark money has been positive—far from it. Together, the negative effects of this cataclysmic shift in US campaign finance threaten the core pillars of the democratic republic—free and public access to elected officials and the resources of their office, the ability of federal regulators to enforce the law, and the equal opportunity of every constitutionally qualified American citizen to promote their political ideas by seeking elected office.
The Congressman will see you now (if the price is right)
Federally elected officials are acutely aware that raising campaign funds is an important part of maintaining their position—in 2014, the better-funded congressional campaign won 91% of the time. And yet recently, Congressman David Jolly made waves for describing the fundraising pressures associated with the job. He asserted that party leaders told him he needed to raise $18,000 a day in order to win reelection. Disgusted with the prospect of so much fundraising, Jolly pushed for a ban on it for members of Congress. It has yet to gain any traction, and in an ironic twist, just days after branding himself a reformer, invitations surfaced for a fundraising event for his campaign scheduled for later that week. This contradiction is the new reality elected officials face—fundraising is both resented and viewed as an integral part of the job.
This highlights an important component in the debate over contribution limits that often gets overlooked: the large amount of time elected officials now must use for fundraising. Conservative estimates put the time members of Congress fundraise at four hours per day. During this time, they are only accessible to donors—whether by phone or in person at events that can cost anywhere from $500 to $2,500 to attend—and are certainly not providing the public services that their constituents desperately require. This is a deeply troubling shift which suggests the commodification of elected officials’ time and public accessibility.
No One Left to Enforce the Law
Another oft-overlooked effect of the Citizens United and McCutcheon decisions is the immense practical challenge they posed in enforcing the remaining federal campaign finance regulations. Political groups are regulated by either the Internal Revenue Service (IRS) or the Federal Elections Commission (FEC). Nonpartisan studies and analysis have shown that the IRS is drastically underfunded and therefore unable to enforce the laws governing political groups. Former FEC leaders have also attested to the debilitating lack of enforcement resources. These problems have only been exacerbated as the cash flow and sheer number of political groups which fall under their enforcement purview has swollen in recent years.
Some of these groups—as well as campaigns themselves—have exploited and exacerbated FEC deficiencies in the past by filing compliance reports in paper, rather than electronically, forcing government regulators to spend days processing thousands of pages of information, effectively shielding their contents from publication until after the election. Additionally, legislative proposals to further limit transparency by shielding donor names from IRS reports altogether have recently gained traction in Congress.
Too Poor for Politics
A final disturbing trend which has accompanied the rise of money in US politics is the growing inequality of opportunity amongst those American citizens who choose to run for federal elected office. There is a definitive body of data that shows quite simply that the more money a challenger spends on their campaign, the better the chances they have of winning. And with the average cost of winning an election in the House of Representatives or the Senate rising above $1.6 million and $10.4 million respectively, it can be quite a difficult financial undertaking to run for federal office. Thus it is no surprise that the median net worth of a member of Congress is $1,029,505 or just over 18 times the median US household income. This election cycle, there are already 30 candidates that have given their campaigns $250,000 or more, which is more than double the number of candidates at this point last cycle.
While these statistics don’t directly indicate the disenfranchisement of would-be candidates with lower socioeconomic status, it does show that said candidates would have a higher election ladder to climb. Additionally, the growing ability of the major political parties to raise money unlimitedly—through servers full of donor data, networks of professional fundraisers and bundlers, increasingly elaborate and valuable joint fundraising committees, and ready access to lobbyists and their clients’ money—further restricts the ability of outsiders who run for office as an Independent or part of a smaller party to compete on equal footing (which is a major reason why Bernie Sanders, an Independent Senator, is running for President as a Democrat). The compounding effect of higher entry costs of competing in the political system and the increased ability of political elites to affect which candidates run for federal office should be of grave concern, as it makes it more difficult for historically disenfranchised populations—working class minorities and the poor—to seek and gain political office.
CONCLUDING THOUGHTS AND TRENDS TO WATCH
The influx of money into US federal elections is undeniably profound, with one former US president publicly describing the current state of campaign finance as “legal bribery.” Whether or not this broken system will degrade and erode US democratic governance remains to be seen. But what does seem clear is the growing presence of certain threats to free and fair elections throughout the country. These threats are most explicitly evident in:
- The growing preoccupation federal officeholders have with fundraising and increasing public costs of time spent with campaign donors
- The continual breakdown of regulatory standards and ability of regulators to enforce campaign finance law; and
- The new practical barriers that keep average American citizens from seeking political office.
The single most important measure of success in restoring equity and honesty in the US electoral system is the level of transparency in tracking political contributions and election spending. The same majority opinion from Citizens United that has been credited with unhinging US campaign finance regulation was adamant about maintaining one element of it—the proper disclosure of political donors and independent expenditures. With billions of dollars set to be spent on political activity in the coming months, ensuring this transparency has never been more critical to the legitimacy and democratic foundation of US elections, nor has it seemed such a daunting and unlikely feat.
Please note that the views expressed by guest author(s) do not necessarily reflect those of the Heinrich-Böll-Stiftung.
