Monday, August 6, 2012

Super Wealthy Super PACs

Some interesting research by Demos, a New York City-based multi-issue advocate and USPIRG,  a decades-old research group that stands up for the interests of consumers by countering the influence of powerful special interests, takes a look at the role of Super PACs in the 2012 presidential election cycle.    In an article entitled "Million-Dollar Megaphones: Super PACS and Unlimited Outside Spending in the 2012 Elections", the two groups analyzed Federal Election Commission (FEC) data on outside spending and Super PAC fundraising for the first two quarters of the 2012 election cycle.  Here are a few of the highlights showing who is largely responsible for funding all of that advertising that seems to flood the airways during an election cycle, forcing us to hit the fast-forward button on our PVR remote controls.

Here are two summary paragraphs from the study, giving us a general sense of what is going on in American politics today:

"Outside spending by organizations that aggregate unlimited contributions from wealthy individuals and institutions is playing a significant role in the 2012 election cycle, and much of it is not disclosed."

"Super PACs continue to be tools used by a small number of wealthy individuals and institutions to dominate the political process."

As a bit of background for my non-American readers, the issue of political contribution levels in the United States is different during this Presidential election cycle.  The Citizens' United Supreme Court decision of 2010 by those supposedly wiser than the sweaty masses, stated that the First Amendment of the Constitution prohibited the government from restricting independent political expenditures by corporations and unions.  This was further complicated by the 2010 Court of Appeals decision in v. Federal Election Commission which ruled that Political Action Committees (PACs) that did not make direction contributions to candidates, political parties or other PACs could accept unlimited contributions from corporations, unions and individuals for the purpose of making expenditures that were independent of control of the candidate and his/her campaign.  These two decisions led to the creation of so-called Super PACs, groups that have become extremely important and influential during this Presidential election, raising hundreds of millions of dollars with certain affluent individual donors funding Super PACs to the tune of millions of dollars.

I hope that's enough background for you to put into context the stunning data that you are about to see.

Fortunately for all of us who sweat while we work, if we care to take the time to research the issue, Super PACS are forced by law to be transparent about their donors with two key exceptions; non-profit "social welfare" organizations that are exempt from taxation under Section 501(c)(4) of the Internal Revenue Code and trade unions or membership organizations organized under Section  501(c)(6).  These lucky organizations are allowed to spend money to influence elections at all levels but are not required to disclose who donated the money or how much they donated.  These groups are referred to as "dark money" since voters will never know who they are since their donors remain secret.

Why should we be concerned about "dark money"?  In the 2010 election cycle, the first under which the new donation rules applied, "dark money" nonprofits spent $95 million compared to only $65 million by Super PACs; of the $95 million in "dark money", more than $84 million came from groups that never revealed who their funders were.  Even more concerning is the fact that of the $94 million in "dark money", conservative-leaning groups spent $78 million compared to only $16 million for liberal-leaning groups.  Balanced?  Hardly.

Now, let's move ahead to the 2012 election cycle.  Here is a chart showing Super PAC fundraising by source, keeping in mind that none of this data includes "dark money":

Notice that 73.8 percent of the total of $312 million that Super PACs have raised came from individuals with an average donation of $19,944.

Let's break that down a bit further as shown on this chart:

Of all of the money that Super PACs have raised thus far from individuals, 94.1 percent came from contributions of at least $10,000 from 1082 individuals, representing just 0.00035 percent of America's population.  So much for the one percent!  More than 57 percent of individual Super PAC donations came from just 47 people giving at least $1 million, nearly 20 times the income of a median American family or 13 times the net worth of an average middle class American household.

Drilling further into the data, we find that 515 for-profit businesses have donated $34.2 million to Super PACs, accounting for 11 percent of all fundraising thus far in the 2012 cycle.

We need look no further than the example of multi-billionaire Sheldon Adelson and his wife who have donated $36.3 million to Super PACs this election cycle, a tiny 0.15 percent of their total net worth.  Mr. Adelson has said that he is willing to spend up to $100 million to back conservative causes and candidates in this cycle.  Jeffrey Katzenberg, a billionaire liberal film producer, has donated $2.1 million to his favoured liberal-leaning Super PACs.  Donations of this size can be highly distortionary on the outcome of an election and what happens afterwards since, common sense tells us that politicians are far more likely to listen to their wealthy backers than they are to "mom and pop" who send them their hard-earned twenty dollar bills one at a time.
Let's close this posting with three paragraphs from the Demos study:
"The reason that outside spending is currently distorting our democracy is that this unlimited spending is derived in large part from unlimited contributions.  The vast majority of 2012 outside spending is being conducted not by grassroots organizations that are aggregating the power and voices of thousands or millions of people making small political contributions, but rather by a small number of organizations that aggregate the power and voices of a tiny minority of wealthy individuals, businesses, or interest groups contributing sums that are well beyond the reach of average-earning citizens. (my bold)
One might think of today’s outside spending groups as megaphones for moguls and millionaires. The more money they pump in, the louder they’re able to amplify their voices—until a relatively few wealthy individuals and interests are dominating our public square, drowning out the rest of us.
This type of distortion is worse when much of the spending is secret, insulating big spenders from accountability and denying voters both critical information to make informed choices and a holistic picture of just how distorted the system is." (my bold)
Need anyone say more?


  1. This suddenly makes me wonder: Perhaps the real issue isn't quite so much unlimited funds coming from the rich.

    Perhaps the BIG issue is 'unlimited funds coming from who knows where?'

    Perhaps if it was easy to tell where the money comes from, it'll become a double edged sword as their opponent can now lable them a 'tool for (that hated) special interest group.'

    Full transparency may not solve the issues from Citizen's United, but it would help soften the blow.

    Btw, has there been politicians from either side actually supporting it?

  2. How do spell oligarchy? The U.S. may have started as a democracy but I'm no longer certain that the process as you've highlighted here merits the term. The top 0.00035 indeed.

    I'm reading. wb :-)

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  4. If they have enough money to buy an election, then they should be able to pay more taxes!