Political Activity Keep the Economy Moving

Hi everyone! Sorry I’ve been off the map for the past three months or so, I was working a very exciting race in Milwaukee County over the summer and had to take a break from the blog.

Now I’m back.

I’ll have more on the race I did in the future, but in the meantime I thought I’d share an interesting story I heard on NPR recently.

We all know that the United States is going through a rough patch economically. But there are some high-growth industries out there, and one of them is politics.

Thanks to the Supreme Court’s decision in Citizens United v. FEC, there has been an explosion of growth within the world of political campaign activity. Even Democratic consultants who disagreed with the outcome of the case couldn’t help but look around and say “there is some strong opportunity for business here.”

And just like that, one relatively nominal sector of the economy received the biggest stimulus of all -- an influx of corporate and union cash.

Now, as I pointed out back in January, it’s not likely that many of these organizations would be willing to dole out cash for independent expenditures supporting or opposing candidates. What happened to Target in Minnesota is a good example. But as NPR makes clear, it’s been pretty easy for these corporations and unions to do it without being identified.



It’s been an interesting election year, watching just how much of an impact the Court’s ruling -- and the precedence it’s created -- has had on the political realm. I am certain this will not be the last we hear about campaign finance issues this year.

Midterm Money: What the Fundraising Figures Are Telling Us

Summary: Mixed results for Democrats and Republicans should make for an interesting year.

Two weeks ago we noted how the campaign finance reports for the first quarter of 2010 would be something to watch when thinking about how this year’s midterm elections will shape up.

Well, the numbers are coming in. What do they tell us?

Democrats Are Falling Behind

Republican challengers in ten of the most competitive Democratic seats have outraised the incumbents. A few of them weren’t just edged out by the GOP candidates, they were crushed.

From Politico:

Democratic Reps. Mary Jo Kilroy of Ohio, Frank Kratovil of Maryland, Gabrielle Giffords of Arizona, Ron Klein of Florida, Carol Shea-Porter of New Hampshire, Harry Teague of New Mexico, Jerry McNerney of California, Larry Kissell of North Carolina and John Hall and Michael Arcuri of New York were all outraised by GOP candidates running against them.

For some of the incumbents, the financial disparity was stark. Arcuri raised just $208,000 in the first three months of the year – about $150,000 less than challenger Richard Hanna brought in over the same period. Teague, who has the capacity to put some personal resources into the race, brought in $134,000 to former GOP Rep. Steve Pearce's $278,000.

Still, others were only edged out, and for the most part the Democratic incumbents still retain the advantage in cash-on-hand. Besides, I personally have worked on campaigns in which an incumbent lost the first quarter fundraising contest and still won in November.

Democrats Are Ahead of the Game

Despite the dire forecast for Democrats made by Politico, other targeted Democrats did particularly well last quarter. Reps. Tom Perriello (D-VA), Betsy Markey (D-CO), and Alan Grayson (D-FL) all raised over $500,000 from early January to late March, bringing each of the war chests to over a million dollars.

Sen. Harry Reid (D-NV) raised nearly $2 million, bringing his cash-on-hand to an incredible $9.4 million - something unheard of in a state with such a small population.

Raising money is always easier for incumbents - it’s one of the so called “powers of incumbency.” And it’s a lot easier when the President of the United States is on your side.

From the Los Angeles Times:

With midterm elections looming, President Obama is raising campaign money at a ferocious pace, tapping into an energized corps of Democratic donors.

Obama trailed his predecessor, George W. Bush, in the amount of money raised 13 months into their tenures ($32 million to $53 million), but had more than twice the number of fundraising appearances (33 to 13) compared with Bush…

… Polls show Obama enjoys less popular support than he had when he took office 15 months ago. Yet his fundraising prowess shows that he remains a powerful political force who can stockpile chits from grateful Democratic candidates eager for his help.

Meanwhile, Democratic challengers have outraised at-risk GOP Representatives Joseph Cao (R-LA) and Dan Lungren (R-CA).

However, it’s important to remember that despite the good news, it’s still going to be a tough year for Democrats.

According to Reuters:

The Center for Responsive Politics, a nonpartisan watchdog group that tracks money in politics, says Democrats received about 57 percent of all campaign donations in the current election cycle as of December 31. By contrast, Republicans claimed about 62 percent of campaign donations just before they lost control of Congress in 2006.

Questions That Need Answers

In our last post on fundraising, we also posed three questions to keep in mind when reviewing the campaign finance figures.

Who is winning and losing on health care reform? Will the RNC’s woes be another Republican’s gain? And how will the Citizens United case play a role?

First, it would appear Democrats are winning on health care reform. Even if it hurts some particular Democratic campaigns, the DNC saw a huge spike in fundraising once the overhaul passed - and that money can filter down to the at-risk incumbents.

Second, it is not yet obvious that the RNC’s frequent PR problems have shifted money to individual Republican campaigns, although the RNC did fall behind yet again in fundraising.

Third, the impact of the Citizens United decision has not yet been seen at all. However, it is likely that we’ll see more on that front in the coming months.

Show Me the Money: First Glimpse into the Midterms

Summary: With the first quarter over, campaigns prepare for a competitive year.

A lot of people have enjoyed speculating the outcomes of this year’s midterm elections. I’ve done it. You’ve probably done it. We’ve all done it.

This morning I read an interesting post by a liberal blogger who claimed we’re in a “new progressive era” in which Republicans simply won’t win this November. He claims Democrats are in good position with the base now that the healthcare bill is law and we don’t really need to worry anymore.

On the other hand, a new Gallup poll finds that 37% (a significant number) of independents views the Tea Party movement favorably. Meanwhile, Friday’s jobs report found that unemployment is still hovering around 10%.

So how can we know we’re speculating the right way? We can’t, of course.

But there is one important, relevant, and tangible way to get a glimpse into this year’s midterm elections: campaign finance figures.

At this point, we still don’t know exactly how it’s going for everybody - the filing isn’t due until later next week. Until then we’ll just be getting periodic and voluntary fundraising updates from individual campaigns. For now, here are three interesting things to watch for when looking at fundraising headlines…


1) Who is Winning and Losing on Healthcare?

After the healthcare bill passed, CQ Politics reported that it led to a big influx in contributions to candidates of almost all stripes. The exception was moderate Democrats, especially the ones who switched their votes one way or another. Both GOP and primary challengers saw big gains in their war chests as a result.


2) Will the RNC’s Woes Be Another Republican’s Gain?

We all know the RNC has had money problems lately. A lot of donors are now discontinuing their relationship with the organization. The question is whether or not this loss will be offset by more money going to individual campaigns.


3) How Will Citizens United play a role?

A big concern about campaign finance this year has been surrounding the Citizens United v. FEC case from last year, as well as a lesser known case the RNC took to the Supreme Court over soft money contributions. Can Democrats use it to raise more money? Will Republicans bring in less because resources will shift to corporate IEs? We’ll have to see.

Do YOU have any good tips, suggestions, or questions for watching the first quarter fundraising results? Let us know!

How Will Yesterday’s Supreme Court Decision Affect 2010 Elections?

Summary: Show me the money! 2010 and the Supreme Court.

As you probably know by now, the Supreme Court yesterday overturned decades of precedent by ruling that a century-old law forbidding corporate (and possibly labor union) funding of political campaigns was unconstitutional. The issue, they claimed, was that the law infringed on free speech as protected by the First Amendment.

We first explained the case, Citizens United v. FEC, in a post last year.

The concept that campaign finance is an issue of free speech dates back to the case Buckley v. Valeo of the mid-1970s, and the concept that corporations are similar to individuals dates back to the mid-to-late 1800s.

Yet, in a 1990 case - Austin v. Michigan Chamber of Commerce - the Court found there was a “compelling government interest in preventing corporations, in particular, from having an inordinate influence in the political process.”

And even if you don’t believe the ruling itself was a sign of judicial activism, the way the Court went about the ruling was totally out of character. The justices actually called for a second round of oral arguments so the two sides could debate the broader constitutional issues surrounding their particular case. In other words, the justices needed more to be said in order to make a more sweeping change to precedent.

Anyone who has studied constitutional law or the Supreme Court knows that such a move would generally be considered within the Court’s limitations, but highly irregular and a sign of improper conduct.

Constitutional issues aside, the practical implications of the decision are not yet certain.

First: do corporations actually want to risk alienating customers by running political ads close to an election? My guess is “no” for the most part. Yet there are definitely exceptions to that, especially with financial regulatory reform now on President Obama’s legislative agenda.

Now firms like JP Morgan, Chase, and other lenders - who are at risk of being broken up under the president’s plan - can target at-risk members of Congress who support Obama’s reform agenda.

Second: do campaigns really want corporations to help them? The SCOTUS decision didn’t say that a corporation could contribute an unlimited amount of money to a campaign - it would be limited, like an individual, to $4,600 per candidate this cycle - but only that corporations could make unlimited independent expenditures running ads supporting or attacking a candidate.

In other words, the 527 ads that liberals came to fear so much would be child’s play compared to the ads that corporations can spend money on.

But that could come with its own set of problems. It is unclear at this point how much coordination a campaign could have with a corporation producing and supporting a political ad. If their coordination is limited - like it is between a campaign, a party, and PACs at the moment - then campaigns would actually fear the ads throwing them off-message.

Explaining why the Obama for America campaign did not take federal funding - largely ceding advertisement expenditures to the DNC - campaign manager David Plouffe writes about this issue in his new book, The Audacity to Win:

“All the decisions would be made without our input. They would invariably be running a negative health care ad in a market where we would have preferred a tax cut comparative. And since tone was so important to our campaign - we did not want traditional low-blow negative ads run on our behalf - this factor took on added weight.”

So it is possible that corporate spending on behalf of a candidate could hurt a campaign more than help it.

Third: will Congress take action to limit the impact of the ruling? Within hours of the decision being released, liberal activists and grassroots organizations started a firestorm of angry criticism. When I emailed the story to co-workers yesterday, the subject line I gave it was “holy sh**, the levees just broke…”. And online petitions have already popped up from Organizing for America - who blasted an email about it - Public Citizen, and others.

What kind of action could they take? One of the comments I read on the post from the blog Campaign Diaries included a good idea.

“…perhaps Congress could address this without violating the Court’s new ruling on censorship. Could Congress require stock holders and union member to explicitly approve of political expenditures before they are made by those individual entities? I know that in a few states, union members must given written permission for their union dues to go political activity. Similar approval rights could be given to stock holders regarding corporate profits, or something even more specific for both groups, such as written permission for political spending per issue or per candidate. That would likely reduce the spending from those entities without the need for government censorship. The people that make up those entities would in effect be censoring themselves.”

In fact, one of my arguments against opening campaign finance to corporations was that executives wouldn’t just be making political speech decisions with their own personal money, but their investors’ money as well. This would be a good way to counter corporate spending that investors might not agree with.

At the end of the day, laws must be passed to counter the implications of more than just Citizens United v. FEC. In an op-ed yesterday, Michael Waldman - executive director of the Brennan Center for Justice at NYU School of Law - noted more campaign finance cases to come.

Another big campaign finance case soon likely to reach the high court would test the ban on large "soft money" contributions to political parties, last upheld by the court in 2003. Just days after John McCain's presidential campaign ended, the Republican National Committee sued to overturn the provision that was his proudest legislative accomplishment. That would mark a true plunge into partisan wars. Explaining the case, the RNC's political director was blunt: To have a chance of matching Obama's small donations, "we need to be on an equal footing, and we think that law [McCain-Feingold] keeps us from doing that."

While it is reasonable to fear that the floodgates have been opened, it is still not entirely clear what impact the Court’s decision will have on this year’s elections - especially given the fact that no one has ever seen a corporate-funded political ad. The only way to know the implications for sure will be to live through it in 2010.

In the meantime, however, you can petition Congress through OFA to take action to counter the decision by clicking here.

Fox News Fabricates Story for GOP Gains

Summary: Could Fox News be in violation of campaign finance law?

Some of you who read the title of this post probably said “duh” - but a recent clip from their broadcast was picked up by the Daily Show last night, revealing that Sean Hannity literally showed false footage to make a recent Tea Party protest look bigger than it was.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Sean Hannity Uses Glenn Beck's Protest Footage
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

To be fair, the freedom of speech and the press is very much guaranteed in the First Amendment - even to the point of protecting false speech and fabricated press stories.

But a few months ago we mentioned a Supreme Court case which questions the limits of the First Amendment. The case, Citizens United v. FEC, begs the question over whether a documentary film aimed at persuading voters one way or another in an election falls under the limits of campaign finance. These films are funded by corporations which are strictly prohibited from direct spending on campaigns.

In order to make a GOP sponsored rally look bigger, Fox News found clips of a better attended, non-Republican sponsored, conservative protest. In other words, Fox News - part of a publicly traded corporation - was specifically assisting one party over another for that party’s political gains.

Could that be a campaign finance issue?

Inevitably, I want to say no, as many news outlets will endorse one side over another as they have since campaigns first began in this country - but let’s first see what the Court decides.

Either way, it’s food for thought when exploring what constitutes as free speech in the era of campaign finance reform.

Was Bloomberg’s Campaign Spending “Worth It?”

Summary: After spending nearly $100 million we can now ask how much is too much to spend on a campaign.

It was well noted in last year’s presidential election that the Obama campaign spent about $730 million to put the junior Illinois senator in the White House while earning about 69.5 million votes - in other words, they spent about $10.50 per vote.

It may not have come from Obama himself, but it was certainly seen as a lot of money per vote.

This year, New York City Mayor Michael Bloomberg put nearly $100 million of his own money into his re-election efforts - it came out to about $35,000 an hour for his campaign. On Tuesday he garnered 557,059 votes - enough to win with about 50.6% of the electorate.

In other words, Bloomberg personally spent about $175 per vote.

There’s a term economists use to explain the financial choices individuals make: “utility.” The idea is that every individual tries to maximize their utility given the limits of their income.

Obviously, the billionaire Mayor has virtually unlimited income compared to the rest of us - but many are still asking whether all that spending was worth it.

The great thing about “utility” is that it can mean anything. If an individual gets happiness out of buying a big-screen TV, they’ll buy one to increase their utility. If they feel better about themselves by giving some of their money to charity, they’ll do so to increase their utility. Or - in Bloomberg’s case - if they like running a city enough, they’ll put enough money into a campaign to keep doing so and increase their utility.

And because economists will look at what individuals do rather than what some figure they ought to do, the other great thing about “utility” is there’s no way of disproving that a person is not getting their money’s worth!

Bloomberg outspent his main opponent - Bill Thompson - at least 14 to 1, simply because he had the resources to do so.

No matter how you feel about Bloomberg’s ability to govern, it is concerning that one of the nation’s richest men - and perhaps the richest man in New York City - can hold on to the top office by putting so much money into a race. It’s especially troubling when you consider the fact that you’d probably vote for someone regardless of their policies if they actually just gave you the $175 they were already spending for your vote.

This race shattered records in American campaign finance history. And can you not imagine some more calls for campaign finance reform in New York City when there’s such a hint of plutocracy in their local government?

I can.

The Biggest Supreme Court Case You Haven’t Heard About

According to an article in the New York Times last week, the U.S. Supreme Court will soon hear a second round of arguments for a case that may have sweeping implications for campaign politics.

The case is Citizens United v. FEC and it surrounds the 2008 documentary “Hilary: the Movie” - a conservative film that tried to persuade voters not to select Hilary Clinton as the Democratic nominee for President. Such films have been gaining popularity on both sides of the political spectrum since Michael Moore released documentaries like “Bowling for Columbine” and “Fahrenheit 9/11”.

But what few had previously considered is the role such pictures have in campaign finance reform. Like most Hollywood films, these non-neutral documentaries are financed by corporations. But corporations (as well as labor unions) are strictly forbidden from spending money on political campaigns under U.S. law. They must do it through Political Action Committees, which are limited in how much they can put into a race.

And it has split the political spectrum wide open on the issue of “free speech” as defined in Buckley v. Valeo - which found that campaign donations could not be constitutionally forbidden since they constituted a form of speech. The hearing - which is scheduled for tomorrow - has generated over 40 friend-of-the-court briefs from advocates and opponents of both sides of the debate.

As a group, they depict an array of strange bedfellows and uneasy alliances as they debate whether corporations should be free to spend millions of dollars to support the candidates of their choice.

The [ACLU] and its usual allies are on opposite sides, with the civil rights group fighting shoulder to shoulder with the [NRA] to support the corporation that made the film.

Although the well-known law at hand, McCain-Feingold, applies only to broadcast, satellite or cable transmissions, some are arguing this case fits under the current regulations. One government lawyer even made the argument that it gives the FEC the power to regulate political books that were published with corporate cash.

Meanwhile, the New York Times recently published an editorial asserting that a ruling for Citizens United “would usher in an unprecedented age of special-interest politics.”

According to Politico, that could be an overall benefit for Republicans.

The [DNC]’s top lawyer, Bob Bauer, who also personally represents President Obama, argues that opening the door to more corporate spending in elections would discourage what Bauer contends is the rising power of the type of small donors who helped power Obama to victory in last years’ presidential campaign, and who “are now enlisting to volunteer in their political causes, forming a new online corps of freshly empowered average citizens of varying party affiliations and political commitments.”

“A sudden change in the law, to the advantage of corporate wealth amassed in commercial transactions would cause a violent disruption in this process,” Bauer asserts in a brief filed with the court opposing the new spending.

The law preventing corporate funding in elections goes back to the Tillman Act of 1907, and the Supreme Court has generally upheld it as minimally adverse to free speech and “offset by a compelling government interest in preventing corporations, in particular, from having an inordinate influence in the political process.”

Such cases upholding the Tillman Act’s purposes include Austin v. Michigan Chamber of Commerce, and a 2003 case in which Sen. Mitch McConnell - the current Senate Minority Leader - challenged McCain-Feingold in part because of its restrictions on corporate spending.

As the Politico article continues…

Since 2003, however, the court has become more hostile to campaign finance regulations…

…advocates for stricter campaign finance rules were shocked when the justices, who initially heard the Citizens United case in March, asked the parties to return for a rare re-argument of the case – with a much broader focus. Instead of merely arguing whether federal election laws requiring donor disclosure and limiting content and airing dates should have applied to “Hillary: The Movie,” Chief Justice John Roberts asked the parties to argue whether the court should reverse its rulings in the 2003 McConnell case and the 1990 Austin case.

While the Supreme Court has been unraveling campaign finance reforms incrementally over the past few years - with decisions that even limited the McCain-Feingold law - the decision to re-hear arguments for Citizens United v. FEC do appear to indicate a dramatic decision is awaiting.

That decision may change the face of American politics for years - making it even more difficult to separate politicians from special interests.