Follow the money..........

It's still 15 months to the Presidential election, and almost $500 million has been already been raised during the first half of 2015.  By far, this has been the fastest start to a presidential contest in terms of dollars raised. In a departure from previous elections, most of the money is flowing not into the campaigns directly, but into outside groups like “super PACs” and other political organizations that are allowed to raise unlimited amounts of money from wealthy individuals, labor unions and corporations.

In other words, these millions of dollars are coming from a handful of powerful individuals, most with an agenda of their own.

An often stated refrain regarding Donald Trump's popularity thus far in the early election cycle is that Trump is doing so well in the polls because he is not beholden to any kingmakers for cash.  Trump, as did Ross Perot and Mike Bloomberg before him, is using his own money, so doesn't need direct fund raising.  Here is a recent quote from Trump on his fellow candidates going to a Republican retreat sponsored by the Koch brothers:

I wish good luck to all of the Republican candidates that traveled to California to beg for money etc. from the Koch Brothers.

Perhaps they weren't begging, but voters want to know what these candidates are offering in return for these huge piles of cash.

Voters are frustrated that candidates are so frozen when speaking and just dribbling back talking points, that they don't really state what they feel.  Instead, they are simply being cautious to ensure they don't offend any of these big donors.  Trump has successfully tapped into this issue, speaking off the cuff and telling people what he thinks - whether they like it or not.  Bottom line, at least so far, its working.



The Trump impact I believe is best summed by columnist David Brooks:

The times are perfect for Donald Trump. He’s an outsider, which appeals to the alienated. He’s confrontational, which appeals to the frustrated. And, in a unique 21st-century wrinkle, he’s a narcissist who thinks he can solve every problem, which appeals to people who in challenging times don’t feel confident in their understanding of their surroundings and who crave leaders who seem to be.

Why are the non Trump candidates working so hard to say so little?  Because they need the money, and this big money is coming from fewer and fewer.

The NY Times recently ran an article listing 65 individuals who have already given over $1 million to candidates, a year and a half before the election!  This list ranges from Wall Street Executives, to casino owners to film directors.  Some names are recognizable, some are not. 

At this writing, almost half of the money raised so far in the Presidential campaign has been contributed by less than 400 individuals and families.  This top heavy cash grab is without precedent, and all due to the rise of Super PAC's as I have written about in prior posts.

Most candidates simply don't have the wallet to finance their own campaigns, and with the Super PAC's laws as they are, make it irresistible to chase these limited donors.  Why attempt to raise $50K from 20 different potential donors, when you can chase $1 million from a single potential donor.

Simply put, the speed in which these Super PAC's can raise money has allowed candidates to raise enormous campaign war chests in a fraction of the time that it would take candidate to raise similar amounts directly.

As with everything that involves politics and money, there is a potential cost.  As noted above, these small wealthy donors have made today's candidates deeply dependent on this small pool of the richest Americans.  While the concentration of donors is greater on the Republican side, this issues cuts across party lines.

As an examples, 130 donors provided more than half of the money raised by Republican candidates via the Super PACs.  Instead of these campaigns listening to hundreds of people's questions/issues while fund raising, they now only need to address dozens.  Not to pick on Scott Walker from the GOP,  but of the $20 million or so raised by Mr. Walker to date, at least $13.5 million (68%) came from just four donors.   From the Democratic side, Hillary Clinton brought in $15 Million, with nine donors giving at least $1 Million.

Fred Wertheimer, the president of Democracy 21, which favors limits on political money had this to say about the recent Super PAC figures:

The 2016 presidential candidates and their individual candidate super PAC's are wiping out the nation's anti corruption candidate contribution limits.

Unless we have some limits, or rolling back of these Super PAC's, only the super wealthy will have a say in fund raising and politicians ears.  No longer can a candidate rely on grass roots support; they are all feeding from the same trough.

The money race updated, and what the figures don't show.

Last Wednesday was the first deadline for candidates to report to the Federal Election Commission details on how they are raising, and spending their money.

This NY Times article details how much has been raised, spent, and in some instances, where the money is coming from.

As you can see from the table below, while Hillary Clinton has raised the most from direct contributions ($47.5 million), Jeb Bush has raised the most money from outside support (PAC's) with $103 million. 


For those of you that have been following my blog, you can clearly see the disconnect between direct funds raised and PAC money raised, and how this is impacting campaigns.

What the campaign filings don't show is how much the Super PAC's continue to have growing sway.  While these reports do provide an early glimpse at each campaign's financial operations, they promise to tell only part of the story.  These figures do not include any of the money being raised by the "super PACs" and other outside groups supporting many of the candidates.  In many cases, the money raised by these super PAC's will dwarf what the direct campaign brings in.

As we have discussed, some candidates are relying on these groups, which can tap unlimited corporate and individual contributions, so long as they do not coordinate directly with the candidates.  This is a huge departure from past campaigns and has directly led to candidates becoming reliant on a handful of super rich donors.

As you can with the table above, without Super PAC's, Jeb Bush would have raised approximately the same amount as Marco Rubio and Ted Cruz in the Republican field.  Instead, the field is clearly separated by those that have the most Super PAC money (and again, this table doesn't show all of it).

Rick Perry offers a perfect example.  The former governor of Texas, who ran a choppy campaign in 2012, has had trouble firing up direct contributions.  Perry is at the bottom of direct money raised. 

However, a few super PAC's have furnished Perry with over $10 million, with most of that money coming from just a handful of super wealthy donors.

With some much power and influence in the hands of a few, watchdog groups (and citizens) continue to be concerned about this growing trend in fund raising.