Money, Politics, and Elections

George Washington said it so well, "Few men have the virtue to withstand the highest bidder." Exactly what effect does money have on politics, at what point does money corrupt elections, and when will the monetary cost of winning elections stop escalating?

These are critical questions if the "people" are to elect politicians instead of organizations and their lobbyists.

So how does money get into the political system?

Hard Money versus Soft Money 

"Hard money" is money contributed directly to a candidate or to a political party. It is regulated in both source and amount, and monitored by the Federal Election Commission.

"Soft money" is money contributed to organizations and committees rather than to candidates and parties. It is "soft" money is not reported to or monitored by the Federal Election Commission, making it harder to trace its origins.

Soft money originated in the U.S. Supreme Court decision in Buckley v. Valeo 1976. This case ruled that limitations on donations to candidates were constitutional; however, it created a loophole in which organizations could spend unregulated money for "issue advertising;" any advertising that was not expressly advocating the election or defeat of a candidate. 

Soft money can be used for:

o Support for the party rather than the party's candidate 

o Advertising support for political issues (especially those tied to your candidate) 

o Registering voters (especially those you think will vote for your candidate) 

o Hiring people for voter canvassing in neighborhoods 

o Getting people to the polls on election day 

o Campaign administrative costs

Since soft money comes from outside the candidate's election organization, it can be used to attack the opposition, while claiming to come from a neutral source; in effect, negative campaigning by proxy.

Such organizations became called "political action committees" or PACs. Approximately 90% of PAC money goes to incumbents, making it a tool to keep incumbents in office.

Matching Funds 

Matching funds are subsidies limited to presidential candidates. They affect both the primary and general election. Candidates qualify by privately raising $5,000 each in at least 20 states.

Once qualified, the government provides a dollar for dollar "match" for each contribution to the campaign, up to a limit of $250 per contribution. In return, the candidate agrees to limit their spending according to a statutory formula.

From 1976 through 1992, almost all candidates who qualified, accepted matching funds in the primary. That changed from 1996 thru 2006 when Steve Forbes, George W. Bush, John Kerry, and Howard Dean opted out of the program because they could raise more funds on their own. In 2008, rejection of matching funds took a big step up with Hillary Clinton, Barack Obama, Rudy Giuliani, Mitt Romney and Ron Paul deciding not to take matching funds. Once these candidates refused matching funds, they were free to spend as much money as they wanted.

Beyond primary matching funds, the federal government subsidizes the general election. No major party turned down government funds for the general election since the program was launched in 1976, until Barack Obama did so in 2008.

The presidential public financing system is funded by a $3 tax check-off on individual tax returns (the check off does not increase the filer's taxes, but merely directs $3 to the presidential fund). However, the number of taxpayers who use the check off has fallen steadily since the early 1980s, and in 2006 fewer than 8 percent of taxpayers were directing money to the fund.

Fund Raising on the Internet 

In the 2004 presidential election, Senator Kerry broke the internet record by raising $3 million through the internet in a single day. By the end of June 2004, Kerry had raised $44 million through mail and phone solicitations and more than $56 million over the Internet. The 2008 presidential election took another major jump when Barack Obama raised $650 million for his election, more than twice as much as any other candidate in U.S. history, and much of that money came through the internet.

Internet fundraising offers several important advantages. First, it is the cheapest method of raising money. Second, the average contribution on the internet is far less than the $2,000 legal limit per individual, so the campaign can continue to solicit contributions from the same donor throughout the election.

On November 20, 2008, the Washington Post stated the following incredible statistic: "Barack Obama raised half a billion dollars online in his 21-month campaign for the White House, dramatically ushering in a new digital era in presidential fundraising."

What Does it All Mean? 

The ever expanding costs to get elected raise a number of troubling issues and problems:

o The rise in costs to elect candidates to federal positions has been staggering since the 1990's. Without spending limits, candidates have a rising minimum spending floor to win the election. They likely have to spend more money than it took to elect the last candidate to run for that office. 

o Politicians need donations from all sources to accumulate the amount of money necessary to win office. Once elected, politicians need to assure the donors that their money was well placed, or they will not get donations for re-election. Plainly stated, donations buy access to politicians.

The end result is, there are two kinds of politicians with enough money win election:

o Politicians that are wealthy individuals, or 

o Politicians that raise the most cash through contributions.

Do we really want only the wealthy running our country? No. So we are left with politicians bought and paid for by campaign contributors.

After obtaining a degree in political science, I embarked on a career in insurance and government. For the last 21 years, I have worked for local government and government associations. I have written articles, as well as manuals, assisting local government in effectively managing their activities and exposures. I have also provided training in these areas, been a frequent speaker at educational seminars, and acted as President of an association of governmental employees.