How the Politics of the Super Rich Became American Politics
First Published: 2012-02-17
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, writes Ari
Berman.
Middle East Online
At a time when it’s become a cliché 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 organizing 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.
There, the pro-Romney super PAC, Restore Our Future, outspent the
pro-Gingrich super PAC, Winning Our Future, five to one. In the last week of
the campaign alone, Romney and his allies ran 13,000 TV ads 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 demobilized 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 labeled the post-Citizens United era “your
democracy on meth.”
The .01 Percent 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 2007-2008.
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 February 7th, 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 signaled 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 IRS as “civic leagues or
organizations not organized 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 Defense Industry
In his book Oligarchy, political scientist Jeffrey Winters refers to the
disproportionately wealthy and influential actors in the political system as
the “Income Defense 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 U.S. is the only industrialized 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, totaling $774 million dollars, 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 U.S.
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 organization outspent Democratic candidates in 2010, Republicans
won fifty-one. 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.) 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 dollars 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 naïve.
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, JP Morgan Chase, and
Citigroup, hardly standard bearers for the little guy. For obvious reasons,
the campaign chose to emphasize 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-fueled
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 last month 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 signaled 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 demonize 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 favor 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 percent," or roughly .0000063%,
Colbert said while spraying a fire extinguisher on his fuming calculator.
“So Occupy Wall Street, you’re going to want to change those signs.”
Ari Berman is a contributing writer for the Nation magazine and an
Investigative Journalism Fellow at The Nation Institute. His book,
<
http://www.amazon.com/dp/0312610629/ref=nosim/?tag=tomdispatch-20> Herding
Donkeys: The Fight to Rebuild the Democratic Party and Reshape American
Politics (Picador) is now out in paperback with a new afterword. Follow him
on Twitter _at_AriBerman.
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Received on Fri Feb 17 2012 - 18:11:56 EST
