What Campaign Finance is—and How it’s Used

How politicians get and spend money says a lot about them—but it says more about us, as voters, and as Americans. The 2020 election saw unprecedented spending—from our wallets to candidates’ war-chests, and back onto TV where we watched our donations at work. But we also saw corporate money at work—corporate money that gave politicians more money than we ever could.

Campaign Finance Does Equal Power

A recent Politico headline read, “Larry Elder surges to GOP fundraising lead, but Newsom still lapping the recall field.” There’s a lot to unpack, there, but to the casual reader, it may seem that California Governor Gavin Newsom doesn’t face a real threat in the upcoming September recall vote. But that’s not really what the article—or the headline—say.

This article serves as a great cautionary example of a mistake Americans make all the time: confusing money with something that actually matters.

Every election cycle, the major news outlets run stories about fundraising. How much has this candidate run, how much does the leadership of this party have in their “war chest.” These numbers have become exorbitant. According to opensecret.org, the 2020 election cycle spent more than $14 billion. 14 thousand millions. If just our national election cycle were a country, it would rank 123rd in the world as measured by GDP. We generated almost as much money on one election as the island nation of Jamaica. Or the State of Palestine. (Information on GDP taken from worldometers.info.)

And for all that money spent, many people still don’t feel like the election is over—or was conducted fairly.

Here it must be pointed out, and so I will, that that $14 billion was not spent on election supervisors, or on voting poll employees, or on anything related to actually casting ballots. Those billions of dollars were sent from voters to their candidates. Beyond what we spend as a tax-payer collective, beyond what it costs us in terms of energy and time spent, in terms of having to look at the ads, hear the coverage, watch the debates—beyond all that, American voters voluntarily sent almost three times the GDP of Fiji to the candidates. And those candidates in turn spent that money on the very ads and debates and travel we had to spend our precious time looking at.

In the immediate aftermath of that election that broke records for spending, the money kept pouring in to the Trump campaign. According to the New York Times, in the first month after losing the election, Donald Trump raked in over $200 million dollars. Recently, the Washington Post reported that the former President has over $100 million in cash-on-hand from political donations.

That’s a lot of money to not run for president, this year.

Many people in America become numb to numbers. Perhaps it’s in our nature, as a country with nearly a quarter of the world’s total GDP. After all, many people around the world live on two dollars or less a day. I can’t find a cup of coffee for under two dollars.

But why do we spend all that money on candidates? The obvious answer, of course, is to get them elected.

Crash Course in Political Donations

America has a problem with money. We equate it with power, with happiness, with well-being. And increasingly, in our politics, we’ve been equating money with votes. Over the course of several years during the ‘90s and early 2000s, politicians took sides on how a candidate could raise money, and what they could do with it. In 2010, the Supreme Court stepped in. In their decision, the high judges declared that corporations and special interest groups could spend unlimited money on elections. Unlimited money. Figuring how much money American corporations have at their disposal, the idea of “unlimited” starts to have real implications. Roughly 14 billion real implications.

(There is an important though largely useless distinction to be noted: Corporations cannot give directly of their general treasuries to a candidate. So they have to set up a Political Action Committee, or PAC, that is technically a nonprofit, to funnel the money through. In essence, instead of a corporation giving money to a candidate, they have to set up a shell organization, staffed by their friends and family, to act as a middle-person.)

What candidates actually do with that money can sometimes be anyone’s guess. In the articles from the New York Times and Washington Post, the writers and quoted experts admit that Trump could be using his hundreds of millions on anything from airplanes to food and wine. Anything at all, really, that he could call election-related. A man famous for resurfacing from shady bankruptcy status has now found the ultimate loophole in American Capitalism—run for office, and he can just have money.

Trump has raised this money from large corporations, to be sure, and he’s raised it from selling merchandise and soliciting small donations from private citizens. His grassroots style of politicking has also shown his ability to build millions out of $5 donations from every-day people.

Trump’s style of donation receipt isn’t new. In fact, President Obama used a similar tactic in 2008. In an article written in 2009, the Huffington Post detailed how Obama half of his money from donations $200 or less.

Both ex-Presidents used their donations to run attack ads. To run messaging on cable news, to fuel jets to fly them from place to place, to hold rallies. To pay for security at those rallies, to pay the electricians to wire the lights, engineers to hook up the PA systems. They also used that money to pay staffers, to eat lunch, to maybe buy a new suit.

So far, the lesson of Campaign Finance seems like a fine way to earn a living. Sure, a candidate can’t give themselves a salary with campaign funds. But who needs a salary when you can fly around in a private jet, eat whatever you want, and pay people to surround you and do what you say?

Where things get ugly is when we look at the effects of that money. It’s fair to say that while money doesn’t equal happiness, it does equal power, in many areas. Money in politics gets someone’s face on the TV. Gets them access to putting their surrogates on local radio stations, telling the voters how the candidate is just a real swell person, and gosh-darn-it, really means well.

The Beatles famously sang that money can’t buy love, but in politics it can buy access. If a person has ever wondered how all those ads keep getting generated on Facebook, or why every time they binge YouTube they have to see a political ad, it’s not Facebook’s fault, and it’s not the Russians, the Chinese, or the Matrix, either. It’s because we, the voters, keep dumping money into the coffers of political figures, and there are only so many plane trips they can take before they need to buy some air-time.

How Corporations Spend their Way into Politics

It’s fair to say that advertisements work. This article won’t delve into how they work, or why. Sure, everyone would like to think they aren’t susceptible to messaging. But billions of dollars spent on sports jerseys, Star Wars tee-shirts, and fast-food argue that advertisements and messaging work very well, indeed.

Many of us would likely say we are too smart to be influenced by political advertisements. But it’s important we set aside our hubris and look at what data may have been collected. And here we turn to those data. In a 2020 edition of Science Advances, authors of a large study concluded that political messaging has a “small effect.” But in their Discussion section, they note,

…the marginal effect of advertising is small but detectable; thus, candidates and campaigns may not be wrong to allocate scarce resources to television advertising because, in a close election, these small effects could be the difference between winning and losing.

We all know how close elections were in the 2020 cycle. In a previous article, I explained how those small counties, in small States, still wield out-sized power in the Electoral College. And here we see the other end of the through-line. It probably doesn’t make sense for a Democrat to outspend their opponent in a heavily blue county. But in a swing county, in a swing state, candidates from both sides come and spend all the money they can.

The real-world example is the Georgia Senate races of last year. The Brennan Center reported that special interest groups spent “almost $460 million” on those Senate contests. And those contests were what gave the Democrats a one-vote majority in the Senate this term.

Earlier in this article I mentioned that Trump and Obama have built significant sums out of small donations. But in a piece from 2018, Business Insider cites some hefty sums that corporations have been donating to politicians.

So I ask the reader—given the $14 billion spent in the last election, how much came from small donors, and how much came from corporations? In the Senate races that decided the majority in our nation’s legislature, how much of the $460 million spent came from individuals and their $3 bumper stickers, and how much came from corporations?

Vote with Your Dollar

I’ve been told since I first had a job that I can vote with my dollar. That is to say, if I support the practices and politics of a given company, I should give them my patronage. In a cynical world view, that sounds like something out of a Max Barry novel. In this world, it makes cold, logical sense. We vote two ways in this country. With our ballot, and with where we spend our money.

In the aftermath of the Insurrection at the Capitol, dozens of companies came out decrying the event, and saying they’d pull funding. Here are three articles that say the money still flows from corporations to Conservative Political Action Committees, articles from the Washington Post, Newsweek, and the Hill.

If a voter supports a candidate, then they should buy their t-shirts, and wear them. But the voters shouldn’t pretend that their donations are competing with the funding from corporations. At best, the voter’s donations are buying lunch for the staff at local elections headquarters.

The real money—and real influence—is coming from the corporations. Corporations who are also getting their profits from our patronage. If we really care about how a candidate gets their funding, or if we care about what corporations are donating to who, we should do our research. (Opensecrets.org is a great place to start.)

Of course, perhaps the best solution would be to have actual campaign finance reform. But first we’d need politicians in office who will effect that change—and presidents who will put Justices on the bench who will enforce those changes.

Until we make those changes happen, $460 million will keep pouring into the Senate races in a single state, determining the majority for all of us. And $14 billion will keep trying to pick our presidents for us.