The Conversation

By David Weisbrot

The fear of Big Money swamping the 2012 federal election cycle in the United States was borne out in sheer dollars, with $US6billion in spending, including $2.7 billion on the presidential race alone.

Whether major donors receive the commensurate bang for their bucks remains open to doubt, although we can say more definitively that the system is screwed.

In 2008, Obama became the first presidential candidate to refuse public funding, which would have placed limits on the amount he could raise privately.

In 2012, both candidates opted in favour of unlimited private funding. Apart from the huge spending by political parties and candidates, a significant new wrinkle is the emergence of nominally independent “Super PACs” and “politically active non-profits”, which spent nearly $1billion: an estimated two-thirds of which went to conservative causes and candidates.

The big bucks campaign was the predictable legacy of the judicial savaging of bipartisan congressional efforts to restrain campaign spending and force greater disclosure of private donations.

In 2010, the US Supreme Court delivered one of its most preposterous judgments in Citizens United v. Federal Election Commission — certainly its worst decision since Bush v. Gore halted the vote count in the 2000 federal election and handed the presidency to George W Bush. While these decisions have had far-reaching consequences for the political process in America, each rested on a slender 5-4 majority.

In Citizens United, the Court overturned the McCain-Feingold Campaign Reform Act of 2002, the culmination of a long effort to reform campaign financing by tightening the many loopholes employed by corporations and special interest groups. McCain-Feingold prohibited broadcast communications (TV, cable and satellite) paid for by corporations or trade unions in the period before a presidential primary or general election if the message was “susceptible to no reasonable interpretation other than as an appeal to vote for or against a specific candidate”.

The Supreme Court ruled that the law was unconstitutional on the novel basis that corporations should enjoy the same largely unfettered right of free speech accorded to natural persons — or, as Mitt Romney later put it, “Corporations are people too!”

In providing the decisive vote, Justice Anthony Kennedy argued that the First Amendment equally “prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech”. Kennedy added, contrary to common sense and experience, that allowing corporations to directly enter the political fray “will not give rise to corruption or the appearance of corruption”.

John McCain and Russell Feingold described the decision as “a terrible mistake”, reflecting “extreme naïveté” in underestimating the corrosive effect of special-interest money on the legislative process.

President Obama called it “a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans”.

Soon after, the Federal Court of Appeals (D.C. Circuit) ruled that PACs that did not directly make contributions to candidates, parties or other PACs could accept unlimited contributions from individuals, unions and corporations for the purpose of making “independent expenditures”.

Connecting the dots about what corporations could and could not do in this new environment spawned the creation of this new species of SuperPACs.

Unlike traditional PACs, SuperPACs can receive unlimited contributions from corporations (but not foreign corporations), but the “independent expenditures” requirement means that they are prohibited from donating funds directly to a political candidate or party, or planning or coordinating strategy or expenditures with a candidate or party.

Super PACS must report quarterly to the Federal Election Commission (FEC), which means they can effectively shield the identity of a donor for only three months. A much larger loophole exists, however, since the reporting requirements do not cover corporate donations made to a tax-exempt charitable trust or “social welfare organization” (under s 501c(4) or (6) of the US Income Tax Act), and nothing prevents that kind of body from passing those funds on to a Super PAC.

According to a recent study by the non-partisan Sunlight Foundation, at least $300 million of election spending in 2012 was by groups that are not required to disclose their donors, and 80% of this so-called “dark money” was used to support Republicans.

Interests associated with the insurance, pharmaceutical, financial and resources industries contributed many millions of dollars to the US Chamber of Commerce (a tax-exempt charitable trust), which in turn made large donations to “pro-business” SuperPACs that are officially unaligned with the Republican Party, but share values, goals and even personnel.

For example, Restore Our Future is run by two former aides of Mitt Romney, and long-time Republican campaign strategist Karl Rove heads up Crossroads and its dark money brother Crossroads Grassroots Policy Strategies. The Club for Growth and FreedomWorks have arch-conservative track records, including funding Tea Party activists and causes.

On the other side of politics, Priorities USA is the main pro-Obama Super PAC, and the Majority PAC, House Majority PAC and a swag of others associated with large trade unions spent big in support of Democratic candidates.

There are also Super PACs associated with the LGBT community, funding sympathetic candidates as well as the effort to pass marriage equality referenda in a number of states. Similarly, there are Super PACs associated with the environmental movement, ranging from the mainstream Sierra Club to more radical campaigners.

There are currently 1,115 Super PACs registered with the FEC, and according to the non-partisan Center for Responsive Politics they collectively raised over $US660 million in 2012, and spent almost all of it on the primaries and the general election.

Only 200 or so Super PACs raised as much as $50,000, and a high proportion are inactive or serving as placeholders for future use. Others, such as “Zombies for Tomorrow”, “Raptors for Jesus” and “We Just Want Colbert to Come to Our College”, probably just seemed like a good idea at the time.

Obviously, the most worrying aspect of the SuperPAC phenomenon is the disproportionately large voice — and presumably outsized influence — afforded to a small number of extremely wealthy donors. Half of all SuperPAC funding this year was provided by only 22 individuals and corporations. The top 100 donors represented less than four percent of all contributors, but accounted for over 80% of the total funds raised.

For the Republican camp, the major contributors included casino mogul Sheldon Adelson (over $60 million); billionaire oil and gas tycoons David and Charles Koch, the principal funders of the Tea Party movement; and Wall Street financiers — 16 of Romney’s top 20, despite the industry having been controversially bailed out by President Obama post-GFC. Left-leaning SuperPACs were best supported by Hollywood and large trade unions — such as the United Auto Workers, the National Education Association and the Service Employees International Union, although Obama has famously raised enormous amounts by accumulating large numbers of small donations, driven by effective use of social media.

But was it money well spent? The jury is still out on whether these riches ultimately provided some electoral advantage for candidates and a “return” for donors in the form of added influence, or whether all or most of this money was squandered in screening the relentless negative attack ads that bombarded voters in key swing states. What we know for certain is that after burning through $6billion, the election more or less restored the status quo, with President Obama re-elected, Democrats continuing to control the Senate and Republicans continuing to control the House of Representatives.

This masks some churn below the surface, however. The fact that a significant part of the conservative spend was controlled by SuperPACs and true believers, rather than by more pragmatic GOP operatives, helped contribute to the selection of some extreme and unattractive candidates and for the Republican message to skew even more sharply to the right.

Party discipline is difficult to maintain when it is divorced from the allocation of precious resources. For example, the GOP tried to distance itself from Missouri Senate candidate Todd Aikin after his infamous “legitimate rape” remarks, but outside money allowed him to remain in the race, and to be defeated in an otherwise very winnable Senate seat for the Republicans.

While Romney was catching his breath, Obama used his war chest early and wisely to help define Romney in negative terms in the voters’ minds. Democrats were defending 23 of the 33 Senate seats being contested this year, yet managed to gain a couple of seats. Voters in Minnesota, Maryland, Maine and Washington approved referenda in favour of same sex marriage, the first time this has been achieved in the US through popular votes rather than judicial decision.

And some recipients used this largesse much more effectively than others. Karl Rove’s two SuperPACs are estimated to have spent about $US176 million, but Mitt Romney nevertheless lost his race — as did ten of the twelve Senate candidates and four of the nine House candidates that the Rove groups supported. The US Chamber of Commerce and the National Rifle Association also fared poorly despite large expenditures. Unless this was some form of covert stimulus spending, it has to be seen as a major strategic failure.

Election analysts have partially attributed the Democrats’ success to their early spending, which helped define the issues and the candidates before the public got turned off by the later onslaught. Even more importantly, however, the Democrats used their resources to nurture a much stronger grassroots organisation — Obama’s vaunted “ground game”, which set about registering new voters and focusing on the critical “get out the vote” effort. As a result, the Obama campaign had three to four times the number of campaign volunteers in key battleground states such as Wisconsin, Ohio, Florida, Pennsylvania, Virginia, Minnesota, Nevada and Colorado.

There has been some suggestion that the failure of the conservative SuperPACs to turn their financial advantages into votes might harm their fundraising efforts in 2016. However, the prize of electoral success will be even more valued after another four years in the political wilderness, without the added challenge of an incumbent president to unseat, and influence will be no less keenly sought.

The bigger question is whether Republican strategists, and especially their proxies in the conservative Super PACs, will learn from 2012 and resist the shock and awe of TV advertising in favour of “boots on the ground” and the long hard slog of grassroots campaigning.

This article was originally published by The Conversation