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Leaders of the PAC 

Ari Berman on the new math of the Super-PACs shaping this year's presidential election

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TomDispatch.com

At a time when it's become a cliche to say that Occupy Wall Street has changed the nation's political conversation — drawing attention to the struggles of the 99 percent — electoral politics and the 2012 presidential election have become almost exclusively defined by the 1 percent. Or, to be more precise, the .0000063 percent. Those are the 196 individual donors who have provided nearly 80 percent of the money raised by Super-PACs (political action committees) in 2011 by giving $100,000 or more each.

These political action committees, spawned by the Supreme Court's 5-4 Citizens United decision in January 2010, can raise unlimited amounts of money from individuals, corporations, or unions for the purpose of supporting or opposing a political candidate. In theory, Super-PACs are legally prohibited from coordinating directly with a candidate, though in practice they're just a murkier extension of political campaigns, performing all the functions of a traditional campaign without any of the corresponding accountability.

If 2008 was the year of the small donor, when many political pundits predicted that the fusion of grassroots organizing and cyber-activism would transform how campaigns were run, then 2012 is "the year of the big donor," when a candidate is only as good as the amount of money in his Super-PAC. "In this campaign, every candidate needs his own billionaires," wrote Jane Mayer of The New Yorker.

"This really is the selling of America," says former presidential candidate and former Democratic Party chairman Howard Dean. "We've been sold out by five [Supreme Court] justices thanks to the Citizens United decision."

"We're going to beat money power with people power," former Speaker of the House Newt Gingrich said in January, after losing Florida's Republican primary to former Massachusetts Gov. Mitt Romney. Gingrich made that statement even though his candidacy is being propped up by a Super-PAC funded by two $5 million donations from Las Vegas casino magnate Sheldon Adelson.

Florida has proven the battle royal of the Super-PACs thus far. There, the pro-Romney Super-PAC, Restore Our Future, outspent the pro-Gingrich Super-PAC, Winning Our Future, five to one. In the last week of the campaign alone, Romney and his allies ran 13,000 TV ads in Florida, compared to only 200 for Gingrich. Ninety-two percent of the ads were negative, with two-thirds attacking Gingrich, who, ironically enough, had been a fervent advocate of the Citizens United decision.

With the exception of Rep. Ron Paul's underdog candidacy and former Pennsylvania Sen. Rick Santorum's upset victory in Iowa — where he spent almost no money but visited all of the state's 99 counties — the Republican candidates and their allied Super-PACs have all but abandoned retail campaigning and grassroots politicking. They have chosen instead to spend their war chests on TV.

The results already can be seen in the first primaries and caucuses: an onslaught of money and a demobilized electorate. Compared to the 2008 primary, turnout was down 25 percent in Florida, and that, this time around, fewer Republicans have shown up in every state that's voted so far, except for South Carolina.

More than 300 Super-PACs are registered with the Federal Election Commission. The one financed by the greatest number of small donors belongs to Stephen Colbert, who's turned his TV show The Colbert Report into a brilliant commentary on the Super-PAC landscape. Colbert's satirical Super-PAC, Americans for a Better Tomorrow, Tomorrow, has raised $1 million from 31,595 people, including 1,600 people who gave one dollar apiece.

Otherwise the Super-PACs on both sides of the aisle are financed by the 1 percent of the 1 percent. Romney's Restore Our Future Super-PAC, founded by the general counsel of his 2008 campaign, has led the herd, raising $30 million, 98 percent from donors who gave $25,000 or more. Ten million dollars came from just 10 donors who gave $1 million each. These included three hedge-fund managers and Houston Republican Bob Perry, the main funder behind the Swift Boat Veterans for Truth in 2004, whose ads did such an effective job of destroying former Sen. John Kerry's electoral prospects. Sixty-five percent of the funds that poured into Romney's Super-PAC in the second half of 2011 came from the finance, insurance and real estate sector, otherwise known as the people who brought you the economic meltdown of 2007-2008.

Romney's campaign has raised twice as much as his Super-PAC, which is more than you can say for Santorum, whose Super-PAC — Red, White and Blue — has raised and spent more than the candidate himself. Until last month, 40 percent of the $2 million that has so far gone into Red, White & Blue came from just one man, Foster Friess, a hedge-fund billionaire and Christian evangelical from Wyoming.

In the wake of Santorum's upset victories in Colorado, Minnesota and Missouri on February 7, Friess told The New York Times he'd recruited $1 million for Santorum's Super-PAC from another unnamed donor and upped his own giving, though he wouldn't say by how much. (Last week, a campaign finance report seemed to show the donor was Lake Charles businessman William Dore, who donated $1 million to Santorum's Super-PAC in January.)

For now, Adelson has pledged to stay with Gingrich's flagging campaign, but he's also signaled that if the former Speaker of the House goes down, he'll be ready to donate even more Super-PAC money to a Romney presidential bid. And keep in mind that there's nothing in the post-Citizens United law to stop a donor like Adelson from giving $100 million, or for that matter, however much he likes.

Before Citizens United, the maximum amount one person could give to a candidate was $2,500; for a political action committee, $5,000; for a political party committee, $30,800. Now, the sky's the limit for a Super-PAC, and any donor can give an unlimited contribution to a 501(c)4 — outfits defined by the IRS as "civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare," and to make matters worse, that contribution will remain eternally secret. In this way, 501(c)4s are gaining influence as "shadow Super-PACs."

A recent analysis by The Washington Post found that, at a cost of $24 million, 40 percent of the TV ads in the presidential race so far came from these tax-exempt "social welfare" groups. The Karl Rove-founded American Crossroads, a leading conservative Super-PAC attacking Democratic candidates and President Barack Obama's administration, also runs a 501(c)4 called Crossroads GPS. It's raised twice as much money as its sister group, all from donations, the sources of which will remain hidden from American voters.

The influence of Super-PACs was already evident by November 2010, just nine months after the Supreme Court's ruling. John Nichols and Robert McChesney of The Nation note that, of the 53 competitive House districts where Rove's Crossroads organization outspent Democratic candidates in 2010, Republicans won 51. As it turned out, the last election was a test run for the monetary extravaganza that is 2012.

Republicans are banking on that Super-PAC advantage again this year, when the costs of the presidential contest and all other races for federal posts will soar from $5 billion in 2008 to as high as $7 billion by November. (The 2000 election cost a "mere" $3 billion.) In other words, the amount spent this election season will be roughly the equivalent of the gross domestic product of Haiti.

In June 2003, presidential candidate Howard Dean shocked the political establishment by raising $828,000 in one day over the Internet, with an average donation of $112. Dean, in fact, got 38 percent of his campaign's total funds from donations of $200 or less, planting the seeds for what many forecast would be a small-donor revolution in American politics.

Four years later, Obama raised a third of his record-breaking $745 million campaign haul from small donors, while Rep. Ron Paul, R-Texas, raised 39 percent from small dollars on the Republican side. Much of Paul's campaign was financed by online "money bombs," when enthusiastic supporters generated millions of dollars in brief, coordinated bursts. The amount of money raised in small donations by Obama, in particular, raised hopes that his campaign had found a way to break the death grip of big donors on American politics.

Despite all the media attention about Obama's small donors, the candidate still raised the bulk of his money from big givers. (Typically, these days, incumbent members of Congress raise less than 10 percent of their campaign funds from small donors, with those numbers actually dropping when you reach the gubernatorial and state legislative levels.) Obama's top contributors included employees of Goldman Sachs, JP Morgan Chase and Citigroup. For obvious reasons, the campaign chose to emphasize the small donors over the big ones in its narrative, as it continues to do in 2012.

Interestingly enough, both Obama and Paul actually raised more money from small donors in 2011 than they did in 2008 — 48 percent and 52 percent of their totals, respectively. But in the Super-PAC era that money no longer has the same impact. Even Dean doubts that his anti-establishment, Internet-fueled campaign from 2004 would be as successful today. "Super-PACs have made a grassroots campaign less effective," he says. "You can still run a grassroots campaign but the problem is you can be overwhelmed now on television and by dirty mailers being sent out. ... It's a very big change from 2008."

The campaign has 445 "bundlers" (dubbed "volunteer fundraisers" by the campaign), who gather money from their wealthy friends and package it for Obama. They have raised at least $74.4 million for Obama and the Democratic National Committee (DNC) in 2011. Sixty-one of those bundlers raised $500,000 or more. Obama held 73 fundraisers in 2011 and 13 last month alone, where the price of admission was almost always $35,800 a head.

An increase in small donor contributions and a surge of big money fundraisers still wasn't enough, however, to give Obama an advantage over Republicans in the money chase. That's why the Obama campaign, until recently adamantly against Super-PACs, suddenly relented and signaled its support for a pro-Obama Super-PAC called Priorities USA.

A day after the announcement that the campaign, like its Republican rivals, would Super-PAC it up, Messina spoke at the members-only Core Club in Manhattan and "assured a group of Democratic donors from the financial services industry that Obama won't demonize Wall Street as he stresses populist appeals in his re-election campaign," reported Bloomberg Businessweek. "Messina told the group of Wall Street donors that the president plans to run against Romney, not the industry that made the former governor of Massachusetts millions."

In other words, don't expect a convincing return to the theme of the people versus the powerful in campaign 2012, even though Romney, if the nominee, would be particularly vulnerable to that line of attack. After all, so far his campaign has raised only 9 percent of its campaign contributions from small donors, well behind both Sen. John McCain (21 percent in 2008) and former President George W. Bush (26 percent in 2004). In the fourth quarter of 2011, Romney outraised Obama among the top firms on Wall Street by a margin of 11 to 1. His top three campaign contributions are from employees of Goldman Sachs ($496,430), JPMorgan ($317,400) and Morgan Stanley ($277,850).

In a recent segment of his show, Colbert noted that half of the money ($67 million) raised by Super-PACs in 2011 had come from just 22 people. "That's 7 one-millionths of 1 percent," or roughly .0000063 percent, Colbert said, while spraying a fire extinguisher on his fuming calculator. "So, Occupy Wall Street, you're going to want to change those signs."

— Ari Berman is a contributing writer for The Nation magazine and an Investigative Journalism Fellow at The Nation Institute.


The public interest journalism website ProPublica has been charting the top individual donors to the 12 biggest Super-PACs.

To see the results in an interactive chart, go to http://projects.propublica.org/pactrack/contributions/tree

To see the results as a list, go to

http://projects.propublica.org/pactrack/#contributions=all

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