Money Behind the Midterms—How the Game Has Changed
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The Fiscal Times
August 8, 2014

American politics and campaign finance tactics have undergone a seismic shift in the past four years. This shift has occurred largely in the wake of several critical Supreme Court and lower court rulings that effectively blew open the floodgates of campaign spending and eliminated virtually any meaningful limitation on who could contribute and how much they could give.

Those landmark rulings, including the 2010 Citizens United v. FEC and last April’s McCutcheon v. FEC, prohibit the government from restricting political independent expenditures by corporations, associations or labor unions. They lifted overall limits on the amount that any one donor can give to candidates, parties and political action committees in any election cycle.

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The results were historic levels of campaign spending during the 2012 presidential battle and the emergence of a new class of wealthy political elites willing to gamble millions to try to sway the outcome of elections.

The 2014 midterm election is turning into another barnburner of a campaign, with literally billions of dollars of “hard money” contributed directly to House and Senate candidates and “soft money” coursing through SuperPACs and non-profit political advocacy groups that go largely unreported.

With control of the House and Senate at stake, Americans are being treated to one of the hardest hitting and costliest congressional elections in history. And voters are being targeted by political strategists and image-makers who get their funding and take orders from this new breed of plutocrats and kingmakers whose names they’ve never heard.

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With such a dramatic change in the landscape, The Fiscal Times asked Matea Gold, a political reporter and campaign finance expert for The Washington Post, to discuss key campaign developments in recent years:

Eric Pianin (EP): How have the two major Supreme Court decisions changed the political world?

Matea Gold (MG): We have seen the real loosening of what had been a very strict regimen of campaign finance rules put in place after the Watergate era. The cumulative effect is that really wealthy individuals, interests and labor unions have the ability to influence campaigns and elections at a much greater level than before. This is the product of not just Citizens United, but of a much lesser known 2010 lower court ruling called speechnow.org v. FEC. It pretty much blessed the creation of SuperPacs – which has been the most dramatic change on the political landscape.

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EP: What about the impact of the McCutcheon ruling in April?

MG: That ruling has had a more subtle effect. We have not seen a sort of explosion and change of strategies in how people are donating money. But wealthy donors who can now give to as many political parties and committees as they want are starting to take advantage of that. The Center for Responsive Politics so far has tracked at least 25 wealthy individuals or couples that have blown through what would have been a cap of $123,200 for this cycle.

EP: Describe the sheer volume of campaign spending on House and Senate races this year.

MG:  That’s a tricky question. With so much outside spending not being done formally by political committees, a lot of money is not being reported. My favorite analogy is to describe this as an iceberg. We can see part of it – the surface above the water – but we don’t know how large it is underneath. Outside groups that do report their spending have spent more than $144 million to date, according to the Center for Responsive Politics. That’s pretty close to the amount of money they spent at this time in the cycle in the 2012 presidential year. More than $1 billion in outside spending was reported to the Federal Election Commission that year. So we could be on track to have another $1 billion in outside spending or more.

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EP: During the 2012 presidential campaign, there was a lot of focus on the big spending by conservative SuperPacs like Karl Rove’s American Crossroads and Charles and David Koch’s political advocacy group Americans for Prosperity. Liberal groups were spending a great deal as well, but conservative group spending seemed to dominate the scene. With big Democratic donors like billionaire Tom Steyer now in the mix, have the two parties reached parity in fundraising? 

MG: There’s no question the attitude toward this kind of unfettered spending has changed. There was an incredible amount of reluctance by Democrats, especially in 2010 in the wake of Citizens United, to take advantage of this ruling. A lot of wealthy donors said they felt uncomfortable with this unlimited spending. We saw Republicans rush to fill that void, and largely they had the turf pretty much to themselves.

Even in 2012, Republicans did seem to have a lot more money on their side of the ledger. But this year we see that the top spending SuperPAC – the Senate Majority PAC – is supporting Democratic Senate candidates so far. And new liberal donors such as Tom Steyer are jumping into the fray. He has already given $20 million to his group and others. I definitely think we will see a lot more activity on the left. But when you look at sheer volume, the Republicans and conservatives have a very robust network of donors.  

EP: Yet even with all the spending by Republican SuperPacs and advocacy groups in 2012, President Obama handily defeated Republican Mitt Romney – and all that money went to waste.

MG: One fascinating development in this election is that donors are trying to take matters more into their own hands. A lot of individualized SuperPacs are financed by one or a couple of donors. There’s a lot of grumbling among conservative donors in the aftermath of 2012 – they did not think their money was well spent. They felt there wasn’t a lot of transparency in where it went. I’ve heard from a lot of campaign finance lawyers that donors are increasingly sophisticated about asking for not just spending plans, but regular reports of return on investments.

EP: We’re in the midst of a hard-fought Senate race in which the Republicans could win back control of the Senate by picking up six seats. How crucial is campaign spending to this, whether it’s from the Koch brothers or people on the left?

MG: It’s a huge ingredient. All of the key contested Senate races are being targeted by a gusher of outside money, from SuperPacs to politically active non-profit groups that don’t even report their spending or their donors. Outside groups are there in a very big way and they are going to try to really determine the outcome. That’s where the big stakes are in the election, and that’s where people are putting their money.

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Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.