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The power of outside money in the US election


After spending cartloads of money to beat President Barack Obama and retake the Senate in the November 6th elections, conservative powerhouses of the likes of Karl Rove, Sheldon Adelson and David Koch were gearing up for a feast as returns started rolling in that night. By the time the ever-undecided state of Ohio was called for Obama a few hours later, however, these financial champions of the Republican Party were forced to set aside their balloons and flutes of champagne and face instead what suddenly looked like a bruising defeat and an expensive investment gone badly wrong.

In the year of the Super PACs, of outside money flooding the political arena to the tune of $1.3 billion and in the process drowning the American democracy, voters managed to hold their sway and left billionaires hanging out to dry. This, at least, is what an all too naïve narrative emerging in the aftermath of the vote would have you believe. The reality is, as always, much more complicated and, if people were ever to buy this argument, Democrats in particular would expose themselves to the near certainty of being steamrolled in the future.

There is little doubt that this electoral cycle was a major disappointment for conservative donors, especially in terms of the races for the White House and the Senate. Just to understand how much, the Sunlight Foundation, a non-profit, non-partisan organization in Washington, D.C. that tracks independent expenditures in political campaigns, decided to calculate the returns on investment (ROI) for the most active independent groups this year, how much money they spent to support winning candidates and to oppose losing ones. Pro-Republican Super PACs don’t come out looking very good. Rove’s American Crossroads had a ROI of 1.29%, The US Chamber of Commerce of 6.90% and the National Rifle Association of 0.83%. And this analysis doesn’t even take into account Restore our Future, the specifically pro-Mitt Romney group which unsuccessfully spend upwards of 100 million dollars to unseat Obama.

But the ineffectiveness of conservative organizations in the 2012 election season is a far cry from being the definitive proof that American elections cannot be bought.

“I don’t think the impact of Super PACs and outside money can be overstated,” says John Dunbar, Managing Editor of The Center for Public Integrity, a Washington, DC investigative news organization, “It’s a simple-minded way to look at this election to say that the Supreme Court’s Citizens United decision (which, in 2010, banned government from limiting campaign contributions by corporations and unions) didn’t have an impact. It had a profound impact and will have a profound impact going forward.”

To start with, Obama won the election thanks to the money race, not in spite of it. The President raised a lot more than Romney did ($632 million to $390 million) and outspent him by just as big a margin ($541 million to $336 million.) Even including the amounts raised by the two parties and the two Super PACs closest to the candidates (Priorities USA for Obama and Restore our Future for Romney), the democrats came out ahead by about $100 million.

“It’s not that money can’t buy the White House, it’s a question of whose money bought it,” says Bill Allison, Editorial Director of the Sunlight Foundation. “A Hollywood producer named Jeffrey Katzenberg raised more than $500,000 for the Obama campaign and contributed $2 million to Priorities USA.” According to Allison, Vice President Joe Biden called Katzenberg several times as he was negotiating the end to a long-running dispute with China over royalties owed to American filmmakers for showing their films there.

It would also be incorrect to say that money, in particular Super PAC money, didn’t help Romney, although this is what the results of the vote seem to suggest. In fact one could say that Restore our Future, which raised and spent about twice as much money as its pro-Obama counterpart Priorities USA, was what made the former Massachusetts Governor a truly competitive candidate. “Nobody gave Romney a chance early in the race and yet he made a real run of it right up to the end and I think that outside spending essentially even out the money race,” says Dunbar of the Center for Public Integrity. “Were it not for that outside spending, Romney would have lost by a lot more than he has.”

Additionally, while the attention of the media is now focused on the presidential race and a few high-profile Senate ones, it is fair to say that independent expenditures had an even larger impact in state-level elections, where campaigns are generally not as expensive and a little money can go a long way. For example, NPR recently reported on the successful attempt by Independence USA, the Super PAC created by New York Mayor Michael Bloomberg, to defeat incumbent Democratic Congressman Joe Baca in California’s 43rd Congressional District. Independence USA poured $3.3 million into the race, more than twice the two opponents’ campaigns combined, and managed to get Gloria Negrete McLeod (another Democrat in an intra-party feud which resulted from California’s new system of open primaries.)

Because of the same cost-benefit analysis, this is probably even truer in local elections, although it is too early to assess the damage done in this arena this year. But in 2010 for example, as reported by the progressive-leaning Institute for Southern Studies, North Carolina discount-store magnate Art Pope and his family invested $2.2 million in 22 local legislative races and won 18 of them, ensuring that both houses of the state assembly would be under GOP control for the first time since 1870. This result was repeated this year, when Republicans also took the governor’s mansion. And Pope has been appointed to incoming Governor Pat McCrory’s transition team.

Given this picture, it is hard to argue against the influence of outside money in American politics. And although this time around the Democrats survived the barrage of attacks bearing down on them at the hand of conservative billionaires, they did so primarily for two reasons: they were better prepared than in the midterm election of 2010, when independent expenditures truly wreaked havoc, and as a consequence they managed to raise just as much money as Republicans did. In particular thanks to the President’s unique fundraising talent. “Obama’s fundraising prowess is super human, he is similar to Bill Clinton, who outraised everybody he ran against,” says John Dunbar. “He’s an imposing candidate, strictly from the financial perspective. Not everybody enjoys that, not everybody can raise money that well.”

If Democrats were ever to let their guard down, or if they were simply to run a candidate lacking the personal appeal of a Barack Obama and, therefore, unable to raise as much small donations by as large a number of people, Republicans would bury them with their Super PACs. For obvious reasons, the interests of the top 0.1% of Americans who want to influence politics with their money are more closely aligned with the GOP, in favor of fewer taxes and less regulations for the businesses they run.

Luckily for them, aside from offhand comments made by Obama’s senior adviser David Axelrod gleeful from his victory (in a conference call with reporters two days after the elections he said that “the heartening news is that you can’t buy the White House, you can’t overwhelm the Congress with these super-PAC dollars,”) it looks like the party leadership is well aware of the significance of independent expenditures. POLITICO recently reported that, shortly after the country was done counting votes, House Minority Leader Nancy Pelosi, New York Senator Chuck Schumer and a number of top White House aides appeared at a secret gathering of Democratic donors and liberal organizations to kick off the launch of the 2014 fundraising effort.

This election was not the end of the influence of outside money in US politics. It was just the beginning.