August 7, 2016    8 minute read

The Influence Of Big Money On US Elections

Shadow Politics    August 7, 2016    8 minute read

The Influence Of Big Money On US Elections

In 2016, through his political revolution, Sanders refreshed his 2012 concerns on campaign finance, promising to overturn Citizens United, expunge big money from politics and restore democracy. He emphasised the corrupt campaign finance system that allowed Wall Street billionaires to “pour huge sums of money into the political process.”

A Bloomberg Politics national Poll from September 2015 reflected and confirmed similar worries around campaign financing. The survey showed that 87% of respondents wanted to reduce the excessive influence of wealth in politics and put the power of a rich person on par with the common voter.

Clinton’s campaign is championing several agendas that are key to Sanders’ progressive and more popular campaign. In a recent video, Clinton addressed the issue of campaign finance and called for overturning the Citizens United case by proposing constitutional amendments within 30 days of being elected President.

But interestingly, Clinton’s campaign has benefitted greatly from huge donations from wealthy individuals, Wall Street billionaires and big banks that Sanders aimed to restructure when he spoke of “Wall Street reforms”. According to the Center for Responsive Politics, Super PACs supporting Clinton have raised $110m from outside money, an amount that is second only to the Super PACs that supported Republican candidate Jeb Bush ($121m through outside money).

Why Is Campaign Finance Debatable?

The candidates raise money through different ways. Contributions to campaigns are allowed although there are limits on the amount. This amount is different for individuals, committees, and corporations. An organisation becomes a PAC when the contribution is more than $2,600 with the purpose of electing or defeating a candidate. They can contribute up to $5,000 to a candidate committee per election. However, the contribution limit for Super PACs is a different story.

The debate of big money in the field of political campaigns usually exists around Super PACs and dark money groups since it not only highlights the power of wealthy lobbyists but also exhibits their eagerness to influence important policymaking decisions in Washington.

Influence and lobbying happen through excessive and more often through undisclosed funding during political campaigns. The amount of money flowing in the campaign is so huge that it can either distort or reflect a true picture of the candidates in the minds of the voters. While there are limitations on the contributions made directly to campaigns, other means allow enough room for unlimited and unaccountable contributions.

Outside spending allows organisations other than the candidate committees to advocate the election or defeat the federal candidates. This allows a few billionaires, wealthy lobbyists and special interest groups to control the political campaign finance system. Once a certain candidate is elected, there is a high probability that huge benefits are reaped in comparison to the amounts spent in advocating that candidate.

Super PACs

Super PACs are the result of 2010 v. Federal Election Commission decision and are technically called independent-expenditure only committees. By law, they are allowed to contribute unlimited sums of money from corporations, labour organisations, unions, and individuals, etc. to promote or condemn a certain candidate. However, Super PACS are prohibited from making any direct contribution to the candidates or having any coordination with the parties whatsoever.

They are not permitted to communicate directly with the candidates or their campaigns and have to disclose the list of its donors, publically and to the FEC, except for in exceptional cases.

However, it is often that even the groups that choose to disclose the name of their donors do not do so in real time. The amount of contributions made also remains undisclosed for a long time after the election cycle is over.

$936m is the amount reported
by Super PACs in 2016

So far in the 2016 presidential campaign, Super PACs have reported total receipts of approximately $936m and total independent expenditures of $442m in the 2016 cycle, according to the Center for Responsive Politics.

Early this year, Sanders’ campaign had said that “he doesn’t have a Super PAC. He believes you can’t fix a rigged economy by taking part in the corrupt campaign finance system in which politicians take unlimited sums of money from Wall Street and other powerful special interests and then pretend it doesn’t influence them.”

Dark Money Groups

Many wealthy individuals and corporations tend to avoid disclosing donor names and a number of contributions. In such cases, Dark Money groups are allowed to influence the decision of a voter by accepting money from donors that are not bound to disclose the sources of their funding or reveal their identities to the public. These are usually through political non-profits or shell corporations. Super PACs can only be identified as Dark Money groups if they accept payments from non-profits or shell companies. Such channels allow “dark money” to stream into the political system.

The total outside spending with no disclosure of donors (excluding party committees) has risen at an alarming rate. Over a decade, spending by organisations that do not disclose their donors has increased more than eight-fold – from $5.2 million in 2006 to $44 million in 2016.

Donald Trump has attracted a large amount ($3.6m) from dark money groups, but a meagre amount in comparison to Ted Cruz ($10m), who dropped out of the presidential race.

One of the problems lies in the unlimited flow of contributions under the soft money description. With no restriction on the amount of money contributed and time-delayed public disclosure of donors, dark money groups are on the rise. Even though they are not allowed to coordinate any promotional activity with candidates or their committees, their size and scope are increasing with each campaign.

Super PACs can accept donations from dark money groups, which include 501(c) nonprofit groups. 501(c)(4) groups are not required to reveal their donors’ identities and under IRS rules should not have politics as their primary purpose. Some of the leading donors in 2016 campaigns belong to Super PACs under 501 (c) which include groups like the Club for Growth, the US Chamber of Commerce, the American Future Fund and Ending Spending.

Another group that allows dark money to creep into the political system are Limited Liability Corporations (LLCs). The exorbitant levels of contributions are many times funnelled through shell corporations. According to the Sunlight Foundation, untraceable LLCs contributed to Super PACs that supported Marco Rubio. LLCs have been condemned for their lack of transparency and ease of formation, especially in states like Delaware. According to findings by the Sunlight Foundation, the biggest donation ($500,000) came from IGX, an LLC located in Delaware. IGX LLC donated to the Super PAC Conservative Solutions that was backing Rubio. But IGX LLC is only one name in the long list of untraceable donors that remain active throughout presidential elections.

Since so little is known about the whereabouts of so many LLCs, this segment of campaign finance could be casting the biggest shadow amongst the dark group donors.

The Other Side Of The Debate

The other issue of the campaign finance debate is the fact that billions of dollars in politics do not prove enough for a candidate win. A classic example is Jeb Bush, who had more than $100m for his cause but dropped out of the race.

It is often argued that, on one hand, money is important as it is needed to advertise political campaigns, support free speech and make candidates more accessible to the public, but on the other hand, there is the risk of an unfair influence of the wealthy. In either case, there is only so much campaign finance can do to promote a certain candidate.

However, the argument here is that the amount of big money flowing in through campaign finance is only a small part of a greater problem. The real issue begins when such Super PACs, interest groups, and lobbyists attempt to influence some crucial decisions in the White House through their elected candidates. In 2009, Richard L. Hasen, a professor at Loyola Law School in Los Angeles, wrote about the slow deregulation of the 2009 campaign finance system, which remains relevant even in 2016.

In 2009 on, Hasen wrote:

“It is a world in which those with more money use their considerable funds to elect candidates of their choice and to have disproportionate influence over public policy. The unlevel playing field awaits.”

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