Revealed: Why the Pundits Are Wrong About Big Money and the 2012 Elections

Analysts of American elections routinely confuse the voice of the people with the sound of money talking. Habitual modes of thought and long standing incentives to reaffirm the democratic faith encourage grasping at straws. Pundits become hopeful that big money doesn’t matter as much as they feared, and that democracy is alive and well.

In the Spring of 2012, however, as Mitt Romney’s Super Pacs carpet bombed the rest of the Republican field into oblivion, falling into that trap became much harder. It was obvious that a handful of multimillionaires were playing pivotal roles in the election. Despite some talk about small donors in President Obama’s campaign, the general election enhanced the impression that American politics was sliding into a new and sinister phase. Once Romney clinched the nomination, his campaign paused to restock its war chest in advance of the Republican convention. The Obama campaign seized the opening. Instead of waiting until fall to deploy its heavy artillery, first the president’s formal campaign vehicle and then its nominally independent SuperPac laid down monster barrages of negative ads.

Sheldon Adelson, Harold Simmons, the Kochs, and a raft of Wall Street 1 percenters responded by opening their wallets even wider to the GOP, determined to engineer their own vision of “real change.” As campaign expenditures soared past all records, unpublished polls showed voters of all persuasions – even many Republicans – filled with revulsion at the spectacle of elections so clearly compromised.  

Alas, in America, it’s tough to keep a bad idea down. Only hours after polls closed on Election Day, a revisionist wave began building that downplayed the role of big money. Analysts asked if the costly Republican failure to retake the White House and a handful of Senate reverses meant that all the handwringing about the torrent of political money was misplaced:

“Republican presidential candidate Mitt Romney was supported by outside groups that outspent allies of President Barack Obama by $260 million. And yet he still lost. This ultimately raises the question of whether the much-feared independent spending unleashed by the Supreme Court's 2010 Citizens United ruling was a dud. After all that money spent by independent groups largely financed by billionaires and millionaires, the government looks almost identical to the way it did before. Obama remains president, the Senate is firmly Democratic and the Republicans control the House.” (Paul Blumenthal, Huffington Post).

The skepticism quickly hardened into conventional wisdom. Even the Sunlight Foundation, which, along with the Center for Responsible Politics, has probably done as much as any institution to deepen awareness of how money corrupts American democracy, joined the parade. Its assessment of “How Much Did Money Really Matter in 2012?” investigated “the emerging post-campaign narratives” according to which “all the outside money (more than $1.3 billion) that poured into the 2012 election didn’t buy much in the way of victories.” Its conclusion was that “the story holds up: we can find no statistically observable relationship between the outside spending and the likelihood of victory.”

Here we choose our words carefully. It is impossible to assess precisely the totality of money’s influence on the 2012 elections, but notions that it did not matter can be immediately dismissed. The evidence we have reviewed suggests exactly the opposite: that most of 2012’s little piggies went to market.

Let’s take the House elections first. If you want to understand money’s role in an election, the best idea is always to try the simplest approach first. Recognize that candidates and Super Pacs coordinate, whatever the law. Thus, don’t try too hard to artificially separate “outside” from “inside” spending, where the latter refers simply to expenditures by candidates’ formal campaign committees. Instead look at total spending by or on behalf of candidates and then ascertain whether relative, not absolute, differences in total outlays are related to vote differentials.

In 2012, across the House as a whole, they certainly were. As Figure 1 shows, a virtual straight line relationship existed between Democratic candidates’ shares of total political money and their showing against their Republican opponents. (Our figure reflects formal campaign expenditures and cash hoards through October 17, plus Super Pac and independent expenditures reported as of Nov. 9. We exclude a handful of races in which candidates in the same party competed with one another. A very few races in which the FEC data are likely incomplete are included. None of these fine points matter.)


We would be the first to caution against rushing to the judgment that this striking figure is the whole picture. The relationship between levels of money and winning is for sure at least partly reciprocal (“endogenous” in social science jargon). For example, it is obvious that many donors will hesitate to pour money into races in which there is little chance of success. The same probably is not true of likely winners or, as we will see below, candidates running unopposed – analysts need to recognize auctions when they see them and not blithely assume that most money rains down on toss up races. Lots of other, unmeasured influences could also be at work, such as individual representatives’ committee slots, seniority, or his or her status within the national party and House leadership.

There is also gerrymandering to consider, though most discussions of that phenomenon in 2012 exaggerate its importance by failing to recognize that Democratic votes tend to clump more tightly in specific areas, thus confusing simple votes/seats calculations.

Other ways of breaking down the data confirm the impression that money was important. We are dubious about popular lists of “close elections”; we suspect many are affected by reports of campaign contributions. But we did examine spending differences between Democrats and Republicans in two types of races that should have had better than average chances of being winnable by both parties in 2012. The first involves districts in which a new Republican candidate won for the first time in the 2010 landslide; the other is the smaller subset of those races in which the GOP winner either ousted an incumbent Democrat or defeated a Democrat running in an “open seat” race. Both kinds of districts show heavy Republican advantages in average total spending compared to their Democratic opponents. (See Figures 2 and 3.) Walter Dean Burnham has impressed upon us 2012’s singular character in the long sweep of American history. Typically a party that takes losses on the scale the Democrats did in the House elections of 2010 bounces back fairly strongly in the next election. We think money goes a long way to explain why that didn’t happen this time.



A final piece of evidence about big money’s role in the House is also worth mentioning, especially considering the current furor over the fiscal cliff. GOP House Speaker John Boehner, running unopposed for reelection, raked in almost $21 million dollars in contributions to his campaign committee. (Our figures, like those above for the rest of Congress, do not include contributions to congressional leadership PACs, which we have not yet had time to examine. Boehner’s leadership PAC, though, took in just under $3.7 million dollars more. Boehner also has close ties to a Super Pac that received $2.5 million from Chevron late in the campaign.

The campaign committee of that other paladin of low taxes on the 1 percent, House Majority Leader Eric Cantor, took in some $7.6 million, with another $5.4 million going to his leadership PAC. By contrast, Nancy Pelosi, the Democratic minority leader, raised $2.3 million for her own campaign (less than what Chevron alone donated to the Boehner Super Pac) and slightly over $1.1 million for her leadership Pac.

What about the presidential race?

In sharp contrast to Mitt Romney, the President did not mock poor people. His campaign was not a cartoon of 1950s white America, nor was it flanked by aggressively garrulous billionaires. Early in the campaign, its fundraising even appeared to lag for a while among the 1 percent, though our impression is that those stories reflected confusion over how the White House was raising the money. The campaign also touted the number of small donations it was collecting, striving in 2012 to create the same impression that it had in 2008, that donors of modest means propelled it forward. 

In the final weeks of the campaign, it looked as though the Romney campaign would hugely outspend it. Based on data for Super Pacs through roughly October 27, we raised the question whether the Romney campaign’s advantage in the final weeks might approach that of 2000, when George W. Bush’s campaign emulsified Al Gore in the battleground states.

A few days ago, however, the Federal Election Commission posted reports by both the Romney and Obama campaigns covering the final days of the campaign. Read in the light of reports by the Super Pacs, these lead to some surprising conclusions. Firstly, total spending by both campaigns, including the Super Pacs, was much closer than generally supposed, though the wide range of secondary committees that the campaigns utilized makes a single estimate treacherous and double counting an occupational hazard. One summary that (very reasonably) takes a wider view of total receipts than we do below suggests the Romney camp spent perhaps $1.51 billion, while Obama’s campaign just a shade less -- $1.45 billion.  Secondly, in the last week of the campaign, contrary to what we feared at the time, 2012 was very far from repeating 2000 – though the Republicans spent more, spending by the Obama campaign also surged.

These numbers inevitably raise the question whether the Obama campaign’s 2012 claims to be fueled by small donations might be as hollow as its 2008 claims turned out to be.

Though the FEC has posted summary reports for the campaigns, it has inexplicably not updated the roster of individual donors to the President’s campaign, even though campaigns file these reports electronically. But we can use the data that are on file, covering the period through mid-October, to make an estimate that past experience suggests will change only slightly.

Our figures reflect only the narrow list of campaign committees that concentrated on the President’s campaign. They include his principal campaign committee, the main Super Pac, a few much smaller Super Pacs that only gave to Obama, and the Democratic National Committee and some other committees that engaged in joint fundraising with the President’s campaign). We employ the same intensive name matching techniques that we used for our analysis of 2008 and have taken pains to eliminate double counting among committee transfers, so our totals, which are for individual contributions, will run lower than some published estimates.

Our results are extremely interesting. As Table 1 shows, across the entire roster of contributions reported to the FEC (i.e., those summing to $200 or more), contributions adding up to less than $250 supplied barely 1 percent of the campaign’s funds. Contributions below the threshold of $200 dollars don’t have to be itemized. Obama’s principle committee reported raising $234 million in unitemized contributions, while the Victory committees reported raising $94 million; it is likely that the real total is less than the sum of these because of double counting of committee transfers. By contrast, eighty-six percent of all the itemized money came from donations summing to $1000 or over, with over half of it coming from individuals donating $10,000 or more. (Because the unitemized totals come from later spending reports, it is senseless to compare them directly with the total for itemized contributions shown in our table – that number will rise sharply when the FEC finally posts the full roster.)


Our conclusion is that there is nothing paradoxical about the Republican loss. One  campaign funded largely by the super-rich lost to another just about as affluently funded.

On another occasion we will pursue the question of what this might mean for the future. For now we remind readers that the dynamics of campaigns funded mostly by major investors are quite different than the campaigns imagined by traditional democratic theory: “Big Money’s most significant impact on politics is certainly not to deliver elections to the highest bidders. Instead it is to cement parties, candidates, and campaigns into the narrow range of issues that are acceptable to big donors. The basis of the “Golden Rule” in politics derives from the simple fact that running for major office in the U.S. is fabulously expensive.  In the absence of large scale social movements, only political positions that can be financed can be presented to voters. On issues on which all major investors agree (think of the now famous 1 percent), no party competition at all takes place, even if everyone knows that heavy majorities of voters want something else.” (Thomas Ferguson, Paul Jorgensen and Jie Chen, AlterNet).

So when Treasury Secretary Tim Geithner, who is now in charge of the talks on the fiscal cliff for the White House, tells reporters that the administration would like to include Social Security in the negotiations, pay attention.


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