Money and Politics in the 2016 U.S. Presidential Election
The 2016 U.S. presidential election will likely set a new record for campaign expenditures. Fundraisers expect up to $5 billion will be spent, more than double the amount spent in 2012. Other estimates are higher still. The Koch brothers’ network of political donors has a 2016 campaign budget of $750 million by itself. According to The Washington Post, by the end of January 2016 almost $800 million had been raised by the many White House contenders.
The spending floodgates were opened by the 2010 Citizens United Supreme Court case, which allowed unlimited independent political spending by corporations and unions. It is still illegal for corporations and labor unions to donate directly to individual candidate campaigns or coordinate their spending with those campaigns.
The decision led to political action committees, or super PACs, which can receive unlimited donations for political spending, and the source of those donations must be disclosed by the super PACs. However, this disclosure requirement does not exist for so-called “social welfare” organizations, 501(c)(4)s under the Internal Revenue Code. Unlike super PACs, 501(c)(4)s are not required to report sources of funds, but they must not have political activity as their primary activity, a requirement of questionable enforceability. These are among the so-called “dark money,” which reported spending $300 million in the 2012 presidential election.
Two sources of activism are animating the 2016 presidential season. Both have far-reaching implications for the future of governance in the United States, as well as its place in the world economy. One source is political activism. The other is dark money.
As described in the February 28, 2016 blog post on Fifty Year Perspective (https://fiftyyearperspective.com/populist-movements/), populism may arise from the political left or right. Represented in the current primary cycle by Bernie Sanders and Donald Trump, respectively, their supporters believe that government is either incompetent or rigged to favor the wealthy while denying opportunities for the middle class to reach a better future for themselves and their children. They cite international trade deals and globalization, Wall Street crony capitalism, and rising inequality as examples of the dominance enjoyed by the wealthy. The immigration that is a threat to middle-class jobs is favored by businesses seeking more entrants with advanced degrees and specific skills. Populist candidates shun super PAC money, but face the prospect of competing with billionaire-favored candidates in an election projected to cost $5 billion or more.
Causes championed by wealthy business owners are often the same as those opposed by populists: free trade, reduced entitlements including Social Security, Medicare, and Medicaid, lower taxes on the wealthy, and decreased governmental regulation. In her new book, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, Jane Mayer focused on Charles and David Koch and their four decade commitment to reduce the size of government. The Kochs believe that the function of government should be limited to protection of individual and property rights. David Koch was the Libertarian Party’s vice president candidate in the 1980 election. The Kochs work to maintain Republican majorities in Congress and to retake the White House, taking active roles in assessing the qualifications of prospective candidates. The Koch network has grown to a size larger than the Republican National Committee itself.
Citizens United also unleashed big money from wealthy Democrats in support of liberal causes such as climate change, corporate welfare, abortion rights, gun control, and public financing of elections. Including individuals such as George Soros, Tom Steyer, Jeffrey Katzenberg, Haim and Cheryl Sabin, and J.B. Pritzker, among others, they, in combination, are not expected to approach the sums donated by the Koch network. Pritzker, heir to the Hyatt Hotel fortune, suggests that 2016 “may be the closest thing America’s seen yet to a clash of America’s 1 percent.”
Then there is Donald Trump, who plans to finance his campaign with $100 million of his own funds. Trump was not supported by “establishment” Republicans as of late March. Should he be the Republican nominee, he will compete against a Democrat candidate funded by $2 billion or more. Unless either the establishment politicians or Trump relent, Trump may not be able to overcome the funding gap.