Sheila Krumholz, executive director of the Center for Responsive Politics, an independent non-profit that tracks money in US politics and its effect on elections and public policy, told Ahram Online during a roundtable on US elections, that the American system needs more transparency and that the coming elections are the most expensive yet, with around $11 billion spent.
The importance of transparency
Krumholz said that transparency reassures the public of the integrity of our campaign finance laws in our political system.
"Without transparency, where we can't consider the source of the money fueling political campaigns, or the motivations driving it, we are all operating with one hand tied behind our backs. In a democracy, we need everyone at the table enjoying the privileges, but also engaging in the work of living in a democracy with equal access to public information about how policy is made and how money is used to shape it," she said.
"The Center for Responsive Politics is not an advocacy organisation, but we do advocate for transparency. Everything is based on what is disclosed. If we cannot see the money, if we don't have the right to access the information, then we can't do this work. The press also can't do its job and voters can't defend their own interests through political engagement."
The most expensive election in US history
Krumholz added that the current election, slated for 3 November, has cost around $11 billion while the last election cycle cost more than $5.7 billion — the biggest jump in election spending in at least 20 years. Given the massive hauls that Trump and Biden are bringing in today, some $476 million for the Trump campaign, and $531 million for Biden, not to mention the sum spent by billionaire presidential candidates Michael Bloomberg and Tom Steyer earlier in the Democratic primaries, 2020 is shattering all previous spending records.
2010 Supreme Court decision Citizen United
Krumholz mentioned that the rapid increase in money flowing into US politics is partly due to the US Supreme Court's landmark decision "Citizens United versus Federal Election Commission" in 2010, which allowed organisations that are nominally independent from candidates to raise and spend unlimited sums from any source.
While this groundbreaking decision was based on the notion that the public can see where the money is coming from, deterring corruption, this was not true, or the result. In each cycle since the decision, tens or hundreds of millions of dollars flow in from secret sources to outside groups, including highly political non-disclosing non-profits and "Super PACs” (political action committees).
Krumholz underlined that "Citizens United" was a watershed moment in US campaign finance regulation. She added: "I think that the Supreme Court weighed in on an area it did not understand well. The decision allowed for politically active nonprofits. Primarily these are what are called social welfare organisations. It allowed them to raise and spend as much as they wanted on behalf of or against any candidate at any level in the United States.”
"These entities are not required to disclose where they get their money from, and many nonprofits raise money abroad. There is this intermingling of types of organisations that are not supposed to be primarily political with a highly regulated political finance system, which breaks because there is no ability for us to ensure that the money is coming from the sources that it should be, based on campaign finance law.”
"Again we've fallen into the cracks between oversight provided by the Internal Revenue Service (IRS), which governs tax exempt organisations and non-profits, and the Federal Election Commission (FEC), to which politically active organisations or political committees must submit reports of their financial activity.”
"The Supreme Court through its decision left us with this really unworkable system. At some point, I really think that the courts or Congress need to step in to draw some lines around what is permissible, to prevent organisations and non-profits from pretending to be social welfare organisations or other types of non-profits that should be tax exempt, but are actually acting as political committees, which should be disclosing their contributions to the Federal Election Commission and abiding by limits on contributions.”
"Regardless of the merits of the decision, the court decided eight to one to protect transparency of donations. But they did not provide the mechanism for ensuring transparency, leaving it up to Congress to do this, and to date they have been unwilling to take this on.”
"With regard to corporate donations, there was a lot of hand wringing, a lot of worry that this system would be flooded with corporate donations. We have not witnessed that. Again, most of the money is coming from very politically active individuals, mega donors, very wealthy and powerful people who run companies. But the money is not the money that we can see. The money that is reported to the Federal Election Commission is not coming directly from corporate treasuries.”
"That's not to say that there isn't corporate money flowing into these outside groups. But it is limited. It is usually not blue chip, powerful Fortune 500 companies, or consumer facing companies, because they don't want to risk the fallout — blowback on their retail operations from consumers. There is corporate involvement, but not to the degree that people originally worried would be the case."
Super PACs and other nominally independent outside groups have reported spending over a billion dollars this year alone — nearly as much as the record billion plus spent in the entire 2018 midterm election cycle, and not far behind the record of $1.4 billion spent in 2016. This money is known as “dark money,” because it cannot be seen.
"Again, this is only the amount reported to the FEC. Even more is spent on issue ads that may identify a federal candidate, but are run outside of the reporting windows, 30 and 60 days before a primary or a general election. We can see some of this hidden spending by comparing the spending reported to the FEC with that reported to the FCC for TV ads and the social media platform Ad Archives for online ads. But in both cases, we're too often prevented from seeing where the money is coming from."
"To be sure, the spending makes up a tiny fraction of the overall billions spent on federal elections, but it is money raised from the most concentrated, the most powerful mega-donors and influential organisations, and used in the most precise ways — laser targeting in competitive elections where outside money can have the greatest impact.”
"Also there is a very clear symbiotic system of mutual benefit between the most interested donors and the political candidates seeking their support. And it's up to the American public, ultimately, to pay attention to where candidates are getting their money from. And if victorious, what they're doing in terms of policy — whether they're passing policy based on the merits of the argument or based on the national interest, or constituents’ interest, or whether they're passing policy that benefits their cash constituents. So, there is a lot of concern about potential for conflicts of interest.”
"We think the influence of dark money on American politics and on our campaign finance system is really pernicious and troubling because it leads people to suspect that the system lacks integrity. If we can't see where the money is coming from, people fear that it is coming from places that would be highly influential in swaying voters against a candidate if they were privy to its source.”
"It really behooves candidates, and the system, and the American public, to close this loophole. To disallow money coming from these dark money sources. Again, after the "Citizens United" decision, many non-profits suddenly sprung up and were again, highly politically active, even though they said they were social welfare organisations, they were in fact acting like political action committees.”
Winning House and Senate candidates need millions
Krumholz said there has been a steady rise in the money running through US politics over the last 30 years until you get to 2018, when there was a significant leap in spending, rising from $1.5 million in 2016 to over $2 million for winning House of Representatives candidates, and on the Senate side, jumping from $12 million to $16 million in 2018.
"Personally, I wouldn't know where to begin to raise that money if I were running for Congress. That's just on average. Some candidates are raising far more — candidates like Majority leader Mitch McConnell. Altogether, candidates running for his seat this year have raised $86 million so far, the most of any race in this cycle. On the House side, the Louisiana 1st district race is the most expensive at nearly $26 million, despite the fact that the money was raised entirely by just one candidate, House Minority whip Steve Scalise, who has virtually no opposition yet still has raised $26 million and spent nearly $20 million already."
Where the money is spent
Krumholz explained that the millions raised are increasingly spent on digital advertising. Especially in the time of the Covid-19 pandemic, when voters are all sitting at home. Online political ads are a cost-effective way to message and fund raise. This month, Open Secrets launched a new searchable portal to help reporters track spending on Facebook and Google ads.
Concerning if Covid-19 has had an impact on campaign contributions, Krumholz explained: "We fully anticipated that the economic hardship that many are going through would have a depressive effect on donations. However, I think one counteractive tool is Act Blue, which is the Democrats online fundraising tool. It's really just a website for transacting donations."
"On the right they have a similar platform, Win Red. But Act Blue has been around longer and has raised much more money to date. So these platforms allow for small donations from massive numbers of people. Both are a new trend and interesting, and also, a largely healthy thing to get more Americans participating, to have more money coming from larger numbers of people in smaller amounts. But that, of course, doesn't mean that the mega-donors are giving any less. We've already seen millions and millions of dollars largely going to these Super PACs and outside groups, which is making up more than a billion dollars already this cycle."
Meanwhile, how candidates spend contributions is another issue. "President Trump is really on a level apart from his predecessors because he has merged his own personal and financial and family interests with his public duties. And so when he travels, he travels to resort golf courses he owns, and the public has to foot the bill for that travel and for his security detail, and for all the events that are held in ways that benefit him financially."
"That kind of potential for personal enrichment at the expense of public interests is unprecedented and very troubling to many people. And it is one of the messages of President Trump's opponents. We will see on election day, or in the days following, whether that message resonates with people, and how much they care.”
"I guess his supporters, one argument they say is, he's a savvy businessman. Of course, he's going to take advantage of every opportunity — it's human nature. But again, this kind of mixing of personal and public interests really has no counterpart in the past.”
Those who spend more usually win
According to Krumholz, the candidate that spends the most wins nine out of 10 times. "That is, I think, a very stark reality about US politics. On the other hand, it masks certain important aspects, which is that money is a fascinating window through which to look at politics. And it is a critical element for a winning campaign."
"However, campaigns also need to have good campaign organisation, good charisma, connection with voters, a message. And so, generally speaking, those candidates who excel in those other areas are more likely to raise the money they need.”
"At some point, money is not going to be the determinative factor. Say two candidates raised a million dollars. It becomes less about the money and more about how they're waging their campaigns, and potentially the proclivities, the leanings of the constituency they seek to represent. So money is essential, but not everything.”
"And I think we'll absolutely see that in this presidential race. Here are two candidates, Trump and Biden, that are raising hundreds of millions of dollars. I mean the money, it's just a juggernaut, it's astounding. So, whoever wins this race I would say that it will not be attributable to the money."
Money coming from foreign sources
Concerning who can give money, Krumholz said only Americans or Green Card holders may give contributions. However, Americans abroad may send in contributions. But the money cannot come from foreign sources.
"However, since we now know, following "Citizens United," anonymous donations are flowing into the US political system. There is no way for us to assure that the money is not foreign. It's essentially an honour system. And that is troubling, because we have had scandals where foreign contributions have been given to parties and candidates.”
"People have gone to jail. But now, with the FEC functioning without a cop on the beat, we're both in a situation where there is more money than ever, and opportunity for foreign money to get into our electoral system.”
"Nobody is overseeing violations of that. So it's a troubling time and one that needs to be rectified.”
“The FEC has been regarded as a toothless watchdog for decades. But beyond that, I think there are significant challenges to the election laws, and how they are interpreted both by Congress and by the FEC. Really, this country needs to have a reckoning with its campaign finance rules, and enforcement."
Conflicts of interest
As to whether financing can alter democracy, in the sense that donors can, after the victory of candidates, have a greater say in decision making, Krumholz answered: “Absolutely! Donors will be blunt about their expectations on access and their rationale for spending the money — being to influence policy outcomes in favour of their own narrow agenda. So, unfortunately, there's not a lot we can do about that, about private interests spending money in hope of skewing policy toward their advantage.”
"What we can do as citizens is to hold our representatives accountable. They're the ones that we need to connect with, to ensure that they know that we're paying attention. We see to whom they may be beholden because of their fundraising and their benefactors. And that we are paying attention to what they're doing in our name, because if we are not paying attention, then we're essentially giving them carte blanche. We're letting them do whatever they want.”
"And again, they are not just trying to understand and create policy; they are also fundraising non-stop. The problem is that there isn't necessarily time for our representatives to seek perspectives from people who are not donors, from people who can't afford to donate, from interests that may be opposed to the politician’s donors. But this is their charge: to not sell policy, but to make policy in the best interests of their constituents, and in the national interest."
What happens after a period in office? Krumholz states: "The revolving door is a term referring to people who work in government and then go on to represent companies, corporations and private interests as a lobbyist. So, they're taking their expertise, that they've gathered as a public servant, and maybe their connections as a public servant, and then moved to the lobbying industry — what's referred to as K Street. Historically, this is a boulevard in Washington, DC where many of the biggest, most vaunted lobbying shops were based. So, K Street is synonymous with lobbying and the revolving door refers to people spinning in and out of government and private industry, in particularly the lobbying industry.”
"In this way, they are able to sell a shortcut to companies, primarily corporations who can pay the premium to cut in line, to get to the head of the line, in terms of having their calls returned, gaining access to powerful committees, chairmen and ranking members who have jurisdiction over their industry, by dent of their committee assignments."
Krumholz explained that the Centre for Responsive Politics was founded 37 years ago, in 1983, by two former senators, Frank Church, a Democrat, and Hugh Scott, a Republican. In those pre-internet days, the centre looked at how to make government more accessible to the public.
"In the 1980s, we began to focus more on the role of money in politics as a critical reason for some of the cynicism and distrust people had of politics and politicians."
“We take each reported political donation at the federal level from PACs, individuals and organisations. We classify them by industry and interest group. We standardise them by organisation and parent organisation, so that we can aggregate them to get the big picture on who's paying for our elections and the impact all of that money has. We organise and present the data in as many ways as we can, to anticipate whatever questions you may have to better understand long term trends and to discover anomalies that we might learn from. In 1995, we launched our website opensecrets.org, where you can find millions of data points on hundreds of thousands of pages.”
"While campaign finance has long been our focus, we go beyond campaign donations to follow the money in US politics wherever it flows. That also includes studying how it is being spent and who's being paid. PACs, including leadership PACs and hybrid PACs, and unlimited spending by nominally independent outside groups, including Super PACs, and non-disclosing non-profits; spending on political ads, both TV and online, lobbying, both foreign and domestic, and related to that, the revolving door that swings between government and private industry. And finally, personal financial disclosures of government officials, which allows for constituents to monitor their legislator’s actions for conflicts of interest."
*Suzy Elgeneidy is the Deputy Chief Editor of Al-Ahram Al-Araby magazine