Corporate Power and the Deregulation of Campaign Finance
Sunday, January 24, 2010
The Supreme Court took a big step this week in extending corporate power in the electoral arena. In a 5-4 decision, the court struck down limits on interest groups wishing to directly fund campaign ads in the run-up to national elections. Previous rules – including the 2002 bi-partisan campaign reform act – prohibited corporations from directly funding campaign ads in Congressional races, either in favor of, or against individual candidates. Those rules have been struck down in this new decision. Previously, rules regulating spending merely required that corporate interests channel their money through formal mediums; corporations were required to filter spending through political action committees (PACs), and were still able to spend unlimited amounts on “issue ads,” although not on ads attacking specific candidates. In this sense, the Supreme Court’s ruling should not be seen as a milestone so much as one of many recent rulings seeking to strengthen corporate power. Buckley v. Valeo (1976) represents one of the earlier efforts to expand the voice of corporations, as the Supreme Court ruled that spending money on campaign contributions was a constitutionally protected form of free speech. The Supreme Court also struck down a portion of the 2002 bi-partisan campaign reform act in 2007, which prohibited corporations and unions from financing political ads during the two months before general elections and the month before primaries.
The rationale for easing campaign finance laws was provided in a majority opinion written by Justice Anthony Kennedy, proclaiming that “speech is an essential mechanism of democracy, for it is the means to hold officials accountable to the people…Political speech must prevail against laws that would suppress it, whether by design or inadvertently.” Undergirding the court’s rationale is the assumption that money does not pervert the electoral process, but is in fact vital to it. Philosophically, campaign spending is seen as nothing more than a form of political expression – to be wielded by any group or individual who wishes to lobby for or against candidates running for office.
There are good reasons to reject the notion that campaign money is a form of free speech that nurtures democracy. One particular danger from the Supreme Court’s actions is the increased probability that businesses will stifle progressive change. Officials who enthusiastically support corporate power may be rewarded by massive increases in spending on issue and candidate ads that benefit them during re-election, while candidates who support progressive reform will be the subject of an organized business onslaught that is without financial restrictions.
The complexities of campaign finance already strongly favored business interests prior to this ruling. It’s difficult to see how reducing restrictions on lobbying will not further tip the scales in favor of business. Consider some of the following evidence regarding the entrenchment of corporate electoral power:
- Business elites already exercise the power of the purse over campaign contributions, in addition to dominating the interest group process more generally. The vast majority of campaign contributions in the 2008 election – 71 percent – came from business PACs and individuals associated with business, contrasted with just 2.7 percent of contributions from labor PACs and those associated with labor. This pattern is longstanding: 75 percent of all contributions also came from business in the 2000 election, with just 5.5 percent from labor. Privileged actors including business, trade and professional associations - which combine to form the heart of the capitalist economy - account for approximately 74 percent of the competing sides of public policy conflicts in Washington, as compared to citizens groups, unions, and all other interest groups, which make up just 10 percent of all actors.
- Business is in the best position to benefit from escalating campaign costs. Incumbents are increasingly forced to raise small fortunes to win or remain in office. While the average winner of a Senate election spent $5.2 million in 1998, that had increased to $8.5 million by 2008 (a 63 percent increase). Similarly, the average House winner spent $650,000 in 1998, and $1.37 million in 2008 (a 110 percent increase). Scholarly studies of Congress find a strong positive relationship between campaign contributions from interest groups and legislators’ voting on bills benefitting those groups. While this relationship is not consistent for public policy issues that are of high salience and strongly contested, the relationship holds for low visibility issues – which account for the vast majority of bills passed.
- Campaign Contributions and spending are most common among those of extreme wealth, not the common person. Consider that the 2008 election was the most expensive in U.S. history, with $5.3 billion raised by all candidates (compared to $4 billion in 2004). In a time when money increasingly dominates elections, those who provide contributions will exercise a major advantage in aiding their preferred candidates. In the 2002 election cycle, the richest .1 percent of Americans dominated this process, providing 80 percent of all campaign contributions. Business power is dispersed across both parties; in the 2008 election, business gave 54 percent of their donations to Democrats, and 46 percent to Republicans. The most dominant of all contributors to both parties – those who are in the best position to gain from the recent ruling – include the finance, insurance, real estate, and health care industries.
- Business interests give disproportionately more to incumbents, helping the current office holders in both parties to solidify their monopoly power and limit democratic competition. In the 1990s, it was common for incumbents in contested elections to receive 83 to 93 percent of the total contributions for their races. Business dominated elections in the U.S. are extremely uncompetitive because of the dominance of incumbents. On average, 86 percent of Senate incumbents were re-elected in the six Congressional elections from 1998 to 2008, while an average of 96 percent of House incumbents were re-elected. “Congressional stagnation” has become a serious problem, considering that the primary requisite for democratic elections is competitiveness. As of 2002, only 39 of the 435 races in the House were won with less than 55 percent of the vote. Essentially, this means that just 9 percent of House races were competitive, meaning they had an electoral margin of victory of less than ten percent. This problem continues today, with just 11 percent of elections being competitive in 2008 and with the incumbency re-election rate at 94 percent for the House and 83 percent for the Senate.
What are we to take from all these statistics? To summarize: elections are already extremely expensive and becoming more so. Business and other privileged actors dominate the electoral process, as they are the main actors in Washington and the primary financial supporters for elections. Finally, elections are largely uncompetitive with corporate financed incumbents monopolizing campaign contributions in order to appeal to the largest number of voters.
Most scholars refuse to take issue with corporate dominated elections. The dominant view in political science is that American elections are generally democratic affairs that allow voters to connect with officials in pursuit of the common good. If elections are uncompetitive, these academics often argue, it’s because the public is already so happy with its leaders and the benefits they provide in the form of constituency service and representation. There’s little reason to take these assumptions seriously in light of the widespread distrust of all levels of government among the public. According to the American National Election Study of 2004, 56 percent of Americans said “the government is pretty much run by a few big interests looking out for themselves” rather than “for the benefit of all the people.” By late 2008 the Program on International Policy Attitudes reported that 80 percent of Americans felt government was run by “a few big interests.” The same study found that 80 percent of Americans felt that “the public should have greater influence on government” than they currently do.
Public distrust of government exists at all institutional levels. Looking at the Executive branch, former President Bush enjoyed among the lowest public approval rating in the history of modern polling. According to the Gallup polling group, Barack Obama is unimpressively teetering at the 50 percent approval mark as of January 2010. Approval of the Supreme Court is not very encouraging either, as support for the institution also hovers around 50 percent. Congress is the most unpopular of federal institutions, currently enjoying an approval rating of 23 percent, with 63 percent public disapproval according to the latest CBS poll.
Congressional unpopularity is at its lowest point since the late 1970s when support reached just 19 percent, according to Gallup. According to the Center on Congress, 90 percent of Americans think that Congress “listens more to the lobbyists” than to “the voters back home.” Regarding job performance, 74 percent give Congress a “D” or “F” in “holding its members to high ethical standards.” Even the job approval ratings of individual members of Congress (which are traditionally cited by scholars as evidence that the public likes its leaders) are fairly unimpressive. CBS polling from the last two years finds that between 43 to 51 percent of respondents gave their individual member of Congress a positive job approval rating.
The Supreme Court majority operates according to the assumption that government should be as limited as possible in regulating the activities of private actors in the political arena. But there’s no reason to think that corporations should enjoy special “rights” to dominate the electoral process. Neither the Constitution nor the Bill of Rights even mention corporations, as their rights were largely created at the turn of the twentieth century by the national courts and by states seeking to grant corporations the status of immortal “personhood.” This tradition continues today, as the recent Supreme Court ruling demonstrates.
What systematically eludes the court’s majority is the reality that economic and political inequality are inseparable. The U.S. is the wealthiest, but one of the most unequal first world countries. Increasing economic inequality, Frederick Solt finds, “increases the relative power of the wealthy to shape politics.” More specifically, “higher levels of income inequality powerfully depress political interest, the frequency of political discussion, and participation in elections among all but the most affluent citizens, providing compelling evidence that greater economic inequality yields greater political inequality.”
In the arena of political advertising, the Supreme Court’s empowerment of corporate interest groups poses an additional problem. Relaxation of the rules governing campaign ads allows business groups to increase their efforts to manipulate voters’ opinions. Voters often react strongly to political advertising. At a time when the public is increasingly dealigned from the political parties and elections are candidate centered, campaign messages can exert a strong influence on “floating voters” – or those who refuse to consistently vote for one party over another. Political rhetoric from candidates influences what issues voters think are most important. Increased media exposure for incumbents also translates into a greater electoral advantage over challengers. This is in part because incumbents benefit from more extensive media coverage throughout their term, as well as during elections (as a result of incumbents’ increased prominence among journalists and their ability to saturate voters with paid advertisements). Perhaps most problematically, negative ads from third party groups (such as those deregulated by the Supreme Court) are very effective in depressing voter turnout. This reality is all the more disturbing in the light of the possibility that corporate elites will increase their use of negative ads when challenging progressive officials who seek to change the status quo.
Gallup reports that 55 percent of Americans think that the “same rules [should] apply to corporations, unions, and individuals” for campaign advertising. Their opinions might radically change if they were aware of the electoral trends discussed here. When I teach American Government, my students typically enter the course with little knowledge of politics and elections. Students become far more critical, however, after a review of the facets of the election business discussed above. Most Americans know little about the problems confronting our electoral system. Sadly, their ignorance is likely to continue in light of a Supreme Court ruling that emboldens privileged actors who operate behind the electoral scenes.
Anthony DiMaggio is the author of When Media Goes to War (February 2010, Monthly Review Press) and Mass Media, Mass Propaganda (2009). He teaches American and Global Politics at Illinois State University, and can be reached at: email@example.com
 Frank R. Baumgartner, Jeffrey M. Berry, Marie Hojnacki, David C. Kimball, and Beth L. Leech, Lobbying and Policy Change: Who Wins, who Loses, and Why (Chicago: University of Chicago Press, 2009).
 For more on the relationship between roll call voting and campaign contributions on low-salient issues, see: Robert M. Stein and Kenneth N. Bickers, Perpetuating the Pork Barrel: Policy Subsystems and American Democracy (New York: Cambridge, 1995). For more on the inconsistent relationship between roll call voting and campaign contributions on highly salient issues, see: Frank R. Baumgartner, et. al., Lobbying and Policy Change, 2009; and Frank R. Baumgartner and Beth L. Leech, Basic Interests: The Importance of Groups in Politics and in Political Science (Princeton: Princeton University Press, 1998).
 Frederick Solt, “Economic Inequality and Political Engagement,” American Journal of Political Science, 52 (1), 2008.
 Milton Lodge, Marco R. Steenbergen and Shawn Brau, “The Responsive Voter: Campaign Information and the Dynamics of Candidate Evaluation,” American Political Science Review, 89 (2), 1995.
 Martin P. Wattenberg, The Decline of American Political Parties: 1952-1996 (Cambridge, Ma.: Harvard University Press, 1998); Paul F. Lazarsfeld, Bernard Berelson, and Hazel Gaudet, The People’s Choice: How the Voter Makes up his Mind in a Presidential Campaign (New York: Columbia University Press, 1948); Richard W. Boyd, “Electoral Change and the Floating Voter: the Reagan Elections, Political Behavior, 8 (3), 1986.
 Danny Hayes, “Does the Messenger Matter? Candidate-Media Agenda Convergence and its Effects on Voter Issue Salience,” Political Research Quarterly, 61 (1) 2008.
 Christopher Kenny and Michael McBurnett, “Up Close and Personal: Campaign Contact and Candidate Spending in U.S. House Election,” Political Research Quarterly, 50 (1) 1997.
 Joseph W. Boesch and Shinya Wakao, “When the Messenger Matters More than the Message: The Influence of Candidate and Third Party Ads in the 2008 Presidential Election,” Working Paper, 2009,
http://cess.nyu.edu/ExpPoliSci-Con-2-09/Papers/conference%20paper-nyu-Final-Jboesch.pdf; Richard G. Niemi and Herbert F. Weisberg, eds. Controversies in Voting Behavior (Washington D.C.: CQ Press, 2001); Stephen Ansolabehere and Shanto Iyengar, Going Negative: How Political Advertisements Shrink and Polarize the Electorate (New York: Free Press, 1995).