Is it a person? Is it a group? No, it′s Super-Pac! | Americas| North and South American news impacting on Europe | DW | 05.03.2012
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Americas

Is it a person? Is it a group? No, it's Super-Pac!

This year’s US election race will be the most expensive ever. But while all the rage is about the role of Super-Pacs, they are just the tip of iceberg. The role of money in campaigns is much more complex.

Republican presidential candidate former House Speaker Newt Gingrich accompanied by his wife Callista

Thanks to generous campaign donors, Newt Gingrich is still in the running

Gone are the days when the US economy served as the shining example of a free market system. Since the government's bailout of the American auto industry and the nationalization of major finance firms, important parts of the US economy are either owned or controlled by Washington.

Curiously then, if you want to see a free market system at work in the US these days, probably the best place to look is how America elects its president.

To be sure, the US election system traditionally has been more loosely regulated, less dominated by party hierarchy and allowed for a larger financial input by wealthy individuals or outside donors than many other industrialized countries.

But while earlier there were still some rules of the road that limited the amount of money that could be infused into a political campaign, most of them have been dismantled by now.

Landmark rulings

The de-regulation of finance campaign rules was incremental and evolved over decades - interrupted by efforts to push back such legislation as the McCain-Feingold law of 2002 - but it was essentially three landmark rulings that created the current system.

In 1976, the US Supreme Court in Buckley versus Valeo upheld limits on direct contributions to candidates, but allowed candidates to spend unlimited sums of their own money and asserted that individuals could spend unlimited funds on campaigns if they didn't directly coordinate with the candidate.

In probably the most well-publicized and controversial case, Citizens United versus Federal Election Commission (FEC), the Supreme Court ruled in 2010 that political spending as a form of speech protected by the US constitution applies not only to people, but also corporations and unions. Therefore, corporations or unions can spend unlimited funds for political purposes as long as they don't give the funds directly to a candidate.

Later that same year, a federal appeals court said in Speech Now versus FEC that independent groups possess the same right to unlimited contributions to campaigns as individuals as long as they don't coordinate directly with candidates. This gave rise to the latest flavor in the current campaign cycle - the so called Super Political Action Committees or Super-Pacs.

Money rules

The current presidential election season then really is a real-life experiment on what happens when the remaining rule of the game is essentially ‘money talks'.

Just consider that Bill Gates, with a net worth of $59 billion (45 billion euros) according to Forbes magazine, could legally decide to spend all of it on his own campaign.

"The reason he may not want to do that is if he does than all the ads say 'Paid for by Bill Gates,'" explains Lloyd Mayer, an associate dean at the Law School at Notre Dame University in Indiana.

Instead and that's where the Super-Pacs are helpful to obfuscate where the money came from, he may chose a different path.

"If he would give it to Restore Our Future which is the pro-Romney Super-Pac than the ads say ‘Paid for by Restore Our Future' which sounds a little better."

To be clear, Bill Gates hasn't voiced any ambitions to become president nor has he given - as far as publicly known - any large contributions to a Super-Pac.

But other billionaires have. By giving $10 million to the Super-Pac supporting Newt Gingrich casino tycoon Sheldon Adelson can claim to have essentially kept Gingrich's candidacy alive.

Paypal co-founder and early Facebook investor Peter Thiel has given $2.6 million to Ron Paul's Super-Pac while mutual fund manager Foster Friess has helped out Rick Santorum's Super-Pac with $1 million.

More than Rwanda's GDP

According to ProPublica's Pac-Tracker the most prominent of the more than 300 Super-Pacs have so far raised more than $112 million. And we are still just in the middle of the Republican primary race. Most large corporations, industry lobbies and unions have kept their powder dry so far and are expected to open their coffers once the general election campaign starts in earnest.

The Center for Responsive Politics estimated last year that this election season will be most expensive ever with a price tag of more than $6 billion dollars, i.e. just north of Rwanda's 2010 GDP.

Defenders of de-regulation of campaign finance argue that more money spent and more donors mean more debate and more ads allowing citizens to better inform themselves about a candidate.

They also point out that without the rise of the Super-Pacs, Mitt Romney, just due to the size of his personal war chest would already have clinched the Republican nomination weeks ago. Essentially, defenders of Super-Pacs regard them as a great equalizer in the election landscape.

"But that is definitely a minority voice," says Mayer. "A lot of people are concerned that this money is going to corrupt the system."

While it is almost impossible to proof that large donations to technically independent Super-Pacs are buying actual action by government officials, common sense would tell you that it must be buying something, notes Mayer.

Critics also contend that rather than provide a diversity of views, Super-Pacs actually give wealthy individuals or groups a disproportionate voice in the debate, thereby drowning out other positions that may be funded by lots of people who each gave a little bit.

Public outrage

Trevor Potter, a former head of the FEC who has become a celebrity among policy wonks since helping US television satirist Stephen Colbert set up his own Super-Pac to spoof the system, says most Americans simply don't buy that Super-Pacs are independent:

"Everyone I talk to is outraged. They think it is crazy to claim this is independent."

Most people sense the possibility of corruption when a donor who supports a candidate's Super-Pac with millions of dollars can meet the candidate, adds Potter:

"That to most Americans looks like the sort of corruption we thought we outlawed when we limited the contributions to candidates to a small amount from individuals."

The FEC, explains Potter, says that candidates can't raise unlimited funds for the Super-Pacs and they can't coordinate directly with the Super-Pacs, but they can endorse the groups and they can even appear at fundraising events put on by the groups.

That's why it's legal, notes Potter, for Mitt Romney to show up at a meeting of donors to the Super-Pac that's supporting him where he apparently thanked them for their work.

"We also know that a major supporter of the Santorum Super-Pac has been travelling with Senator Santorum and appearing on the stage with him," says Potter.

"We know that Newt Gingrich went to Las Vegas and met privately with the donor who has given his Super-Pac $10 million. So it's hard to say these groups are actually independent of the candidates."

Arms race

But if you want to blame the financial free-for-all on Republicans alone, think again.

Sure, generally conservatives tend to prefer less regulation and Democrats more. But former Republican presidential candidate John McCain until recently was one of the most ardent proponents of campaign reform.

Meanwhile, President Barack Obama has changed his stance toward Super-Pacs. While he publicly opposed them previously, his campaign now also uses Super-Pacs to raise money.

"It really has become a classic arms race," says Potter. "No side wants to disarm unilaterally, so there will have to be an agreement on how to limit this kind of spending and I do not see that agreement occurring before the election."

So what then is the best hope to create campaign finance laws that can slow down what Potter calls a "typhoon of money?"

The legal route through the courts is long and all but certain. And the political route via Congress is likely to be as slow and almost certainly will be blocked by gridlock.

Scandal may burst bubble

That means say the experts - as cynical as that may sound - that the surest way to jump start serious campaign finance reform is by way of a huge scandal. Just like in the finance sector, it may take a massive jolt to the system to pop the bubble and create intense public pressure demanding immediate reform.

It has happened before. Remember that President Richard Nixon's Watergate scandal was essentially an election campaign scandal.

As discovered later, Watergate was not just about wiretapping, break-ins and cover-ups, it also involved shady campaign contributions and secret money flows to fund the Nixon campaign.

The result was the 1974 Federal Election Campaign Act which reformed the election landscape and established a public finance system for presidential elections.

Author: Michael Knigge
Editor: Rob Mudge

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