Thanks to the Center for Responsive Politics and its OpenSecrets.org website, voters across the United States can get a sense of who is buying American politicians and how much they are willing to spend to get positive attention from Washington. In this two part posting, I want to take a brief look at who are the top individuals and organizations that have spent money to influence Congress, an issue that ultimately impacts tens of millions of American middle class voters. Please keep in mind, that these are the top disclosed voters only; groups that fall under the IRA's section 501(c)(4) are considered "exempt" and do not have to declare their donors. These non-profits are considered "social welfare organizations" and are supposed to operate solely for the promotion of social welfare, as shown in this definition from the IRS:
"To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). For example, an organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community and, therefore, does not qualify as a section 501(c)(4) organization. Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, because its activities benefit the member-tenants and not all tenants in the community, while an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization....The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f)." (my bold)
That said, as we all know, many 504(c)(4) organizations are pretty much completely political in nature.
Let's first look at the definition of "outside spending". Outside spending is money that is spent by groups or individuals that is independent of, and not co-ordinated with, candidates' election committees. Before the Supreme Court's Citizens United case, political parties and traditional political action committees were directly responsible for the majority of election spending by federal candidates. When the 2010 Citizens United decision was handed down, it changed the entire complexion of federal elections; now, corporations, trade associations, labor unions and social welfare (the aforementioned 501(c)(4) groups) can spend unlimited amounts of money on elections. The most nefarious change made in 2010 changed the rules by allowing donating entities to keep the identities of their donors confidential. This is the so-called dark money that is now pervasive in America's electoral system. Fortunately, many outside spenders including political parties, traditional political action committees and Super PACs still disclose the identities of their donors.
In this posting, I want to look at the top individual donors to outside spending groups including Super PACs thus far in the 2016 election cycle, how much they have spent to get Washington to see things their way and what their political leanings are. Let's start with the top 20 individuals as shown on this table:
As we can see, the conservative cause has benefitted far more than the liberal cause with 16 out of 20 top individuals donating to the conservatives compared to only 2 for the liberals and 2 who are unknown. The biggest individual donor, Robert L. Mercer, has donated $12.255 million to the conservative cause.
Let's look at a bit of detail about the top three donors. In case you haven't heard of him before, the number one donor, Robert Mercer, is the co-CEO of Renaissance Technologies, a hedge fund headquarters in East Setauket, New Jersey. According to Forbes, he was ranked as one of the top 40 hedge fund earners, coming in at number 16 with earnings of $125 million in 2011, and $115 million in 2013. His net worth is approximately $12.5 billion according to Forbes, putting him well in the one percent of the one percent.
Here's where he has spent his money:
The John Bolton Super PAC has no declared candidate and is supporting "candidates who are committed to restoring strong American economic and national security". Believe Again is a Super PAC that supported Bobby Jindal. Make DC Listen is a Super PAC that is supporting Ted Cruz. Keep the Promise I, the beneficiary of $11 million, is another Super PAC that is supporting Ted Cruz.
The number two donor, Toby R. Neugebauer, is the co-founder of Quantum Energy Partners, Houston-based private equity firm that invests in companies in the upstream, midstream and downstream oil and gas business. Interestingly, in 2014, he moved to Puerto Rico "so his children could learn Spanish" and not because Puerto Rico has an advantageous tax system which guarantees that personal investment income including capital gains and dividends will be completely tax free, claiming that he "wouldn't have moved for the taxes but it is an interesting proposition.".
Here's where he has spent his money:
Keep the Promise II is a Super PAC which is supporting Ted Cruz.
Lastly, let's look at the third place finisher, Staci Wilks. Ms. Wilks is from the little-known Texas Wilks family of Frac Tech fame. This Texas-based fracking company, which was founded by brothers Farris and Dan Wilks, was sold to a group of Singaporean investors in 2011 for $3.5 billion; according to Forbes, each brother is worth $1.5 billion. Staci Wilks is Dan Wilks' wife; this couple donated $55 million to their Heavenly Father's Foundation in 2011 and have been big supporters of the conservative cause. They have also funded organizations that lie within the Koch brother's political network including the American Majority, the Heritage Foundation and the Franklin Center. If you are interested in a complete summary of the Wilks family, please click here.
Here is where Staci Wilks spent her money:
Keep the Promise III is yet another Super PAC which is supporting Ted Cruz.
In total, the top 20 individual donors in the 2016 election cycle have spent $96.017 million so far with $86.919 million going to conservatives and only $7.108 million to liberals.
While it should come as no surprise, it is interesting to see how much wealthy Americans are willing to spend on federal politics. In one election cycle, even the 100th individual on the list, Stephen Lessin of Barclays Capital, has spent $286,761, more than five times the 2014 median household income of $53,657. That really puts things into perspective, doesn't it?
In Part II of this posting, I will take a look at how much organizations have spent thus far during the 2016 election cycle.