US Campaign Finance: Anything Goes?

Campaign finance in the wake of Citizens United Photo: donkeyhotey flickr

Forget social media, these elections are all about super-PACs (Political Action Committees). Empowered by a recent Supreme Court ruling, these new advocacy groups are pouring unprecedented amounts of money into political campaigns. Theirability to fill both TV and radio with ads makes them a force to be reckoned with. What is this doing to America’s democracy? A small number of wealthy individuals account for the vast majority of super-PAC contributions and loopholes are exploited to provide anonymity for donors. This may make US politicians more dependent onshadowy groups of donors, further distancing them from the electorate.

Modern campaign finance regulation was born during the 1970s, in the wake of the Watergate scandal. Congress introduced restrictions with the intention of prohibiting donations large enough to be seen as bribes. Contributions could, for example, not exceed $5000 during an election cycle. Campaigns were also forced to disclose donors. But the development since then has been one of loopholes and deregulation. Corporations, unions and wealthy individuals quickly figured how to funnel unlimited amounts of money into independent political action committees. These committees, or “PACs”, were able to launch political ads, albeit with some restrictions.

Remaining restrictions on PACs were lifted in 2010 after a 5-4 Supreme Court ruling in Citizens United v. Federal Election Commission. The campaign finance regulations were seen by the conservative justices as a restriction of free speech, and thus unconstitutional. Political action committees, dubbed “super”-PACs, can now broadcast political ads which expressly speak for or against a certain candidate.

Most ad-spending is done by a few, very well-funded, organizations. The three largest super-PACs are Restore Our Future (conservative), American Crossroads (conservative) and Priorities USA Action (liberal). These groups are largely dominated by a new breed of superdonor, such as Harold C. Simmons who recently contributed $14 million to Republican super-PACs. Another important figure is Sheldon Adelson who, in an interview with Forbes Magazine, said he considers spending $100 million during this election cycle.  Important liberal donors include James Simons and George Soros, who have donated over $4 million and $1 million respectively. The vast majority of contributions have so far been made to conservative super-PACs, who have outspent their liberal counterparts two and a half to one.

Protesters rally against undisclosed money. Photo: wikimedia commons Determined donors are constantly looking for new ways to improve the campaign machinery, resulting in the mutation of some super-PACs. A loophole in IRS (Internal Revenue Service) regulations allow advocacy groups to register as “social welfare nonprofits”. This is significant as it removes any obligation to declare taxes and disclose the identity of donors. These “social welfare nonprofits” are more regulated than their super-PAC cousins, but most such regulation can be bypassed. They are, for example, not allowed to broadcast overtly political ads telling viewers to vote for or against a candidate. Instead, they broadcast what they call “issues ads”, which criticize everything from Obama’s handling of the deficit to Romney’s foreign policy, all in the name of “Public Education”. As nonprofits do not have to declare taxes, it is difficult to judge exactly how much money is being spent in these elections, and where it has come from. Reports suggest that they may perhaps be outspending even the regular super-PACs.

The Citizens United ruling coincided with, and had profound effects on, the 2010 midterm elections. Outside spending (excluding party committees) during the last midterms was $289 million, which can be compared to $59 million during the 2006 midterms. Several candidates for Congress considered vulnerable were strategically targeted by super-PACs, resulting in floods of negative and discrediting ads.

Super-PACs continue to play an important role in 2012. Their relevance, and candidates’ reliance upon them, is demonstrated by the fact that $944 million of outside spending has been reported during this cycle. This figure can be compared to the 2008 elections, in which outside groups spent $286 million. While a large portion of super-PAC money is put to use in battleground states, groups such as American Crossroads are targeting House Democrats with negative ads in order to secure a conservative majority in Congress.

It is therefore not surprising that the campaign finance debate has received considerable attention during this election cycle. Democrats have long denounced the Citizens United case, and are calling for reform, as are some Republicans, such as Senator John McCain. To date, the most serious attempt to blunt the effects of super-PACs is the DISCLOSE Act, put forward by Democrats earlier this year, but it has been unable to pass through a stubbornly partisan Senate.

Moving forward, what can be done to fix the campaign finance system? Lawrence Lessig, a Harvard professor, believes that overturning Citizens United will not cut it. The system needs an overhaul for power to return to the people. Among other things, he prescribes making campaign funds a mix of public and limited private donations. He would also like to see “outside” groups such as Occupy Wall Street, and the Tea Party make an active push to root out the “corruption” of Washington “insiders”.  Ilya Shapiro, a libertarian scholar, takes another approach to solving the issue. He claims that removing money from politics is a utopian goal – and that the solution is therefore to shrink government to an extent that donors will no longer seek to influence it.

Whatever the solution, the potential implications for democracy warrant further scrutiny. If large sums of undisclosed money have the ability to make or break a candidate, it will probably increase their dependence upon big donors. This puts candidates’ credibility into question. Whose interests do they really represent?



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