Inside Spending: How Citizens United restored the soft money system

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a plane dropping money on symbols of the Democratic and Republican party
Image credit: Flickr user DonkeyHotey

Last February, Tom Steyer, the billionaire hedge fund manager turned global warming activist, pledged to spend $100 million to support candidates who shared his sense of urgency. Democrats in the Senate responded with an all-night climate change debate to demonstrate theirs. Sheldon Adelson, the billionaire casino operator who may have spent as much as $150 million on the 2012 election, wanted to reverse an Obama administration interpretation of the Federal Wire Act to allow more Internet gambling. Republicans in the House and Senate introduced bills to do just that.

Though the vast majority of Steyer and Adelson’s political giving was directed to independent organizations, their deep pockets still influenced politicians.

That wasn’t supposed to happen. In 2010, a closely divided Supreme Court struck down a ban on some incorporated entities funding independent expenditures — advertisements that tell citizens to vote for or against a candidate for public office. The majority opinion argued that the ban excluded from public debate “voices that best represent the most significant segments of the economy.” The court held that more speech by corporations — whether Exxon-Mobil or the Sierra Club — would better inform the public about government policies and the elected officials who propose, enact and implement them.

Instead, it has allowed well-heeled donors, and the political operatives who raise money from them, more leverage to prioritize their own agendas priorities for Congress and the president. That’s the same situation that prevailed in the 1990s, when the Democratic and Republican parties raised “soft money” from corporations, labor unions and well-heeled individuals.

Special interests then and now showed little interest in more speech with the public. Politicians and interest groups did not run campaigns calling for the creation of gigantic financial institutions, so big that their failures could imperil the entire U.S. economy, as happened in 2008. Rather, they slowly chipped away at a series of Depression-era laws that kept banks small, limited the kinds of risks they could take and restricted the number of jurisdictions they could operate in. Banks and other financial firms worked to do away with those safeguards, and contributed more than $170 million in soft money to the parties from 1991 to 2000.

More recently, financial firms were able to undo one of the very restraints put upon them after the crisis of 2008, which barred banks from using taxpayer-insured deposits in speculative, sometimes risky, transactions. The only public debate about the measure, written by lobbyists for Citigroup, came after it had already been inserted in must-pass, year-end legislation that funded operations of the federal government, when the measure was a fait accompli. Needless to say, there were no political ads sponsored by Citigroup attempting to win the public over to its position.

While the Citizens United decision hasn’t necessarily led to more speech about public policy, it has restored the soft money system of politics.

Party insiders dominate “outside” spending groups: Carl Forti, a former National Republican Congressional Committee staffer, was the strategist for both Restore Our Future — Mitt Romney’s super PAC — and American Crossroads — founded by Karl Rove, senior adviser to President George W. Bush as well as former RNC head Ed Gillispie. Rebecca Lambe, who served as chief of staff to Sen. Harry Reid, D-Nev., and Monica Dixon, his political strategist, led the Senate Majority PAC, which sponsored five percent of the ads in Senate races across the country in 2014 all by itself. In 2012, political insiders controlled 94 percent of the $679 million these groups spent.

As in the original soft money era, those insiders serve as the conduit between wealthy donors seeking public policy outcomes and the politicians who want their financial support.

In the 1990s, big soft money donors appeared to impact everything from national security (an investigation into a defense contractor’s sale of missile technology to China was suspended after the company’s CEO made a large donation to the Democratic National Committee) to public health (tobacco companies killed any number of measures to discourage Americans from smoking). The appearance of corruption provided sufficient grounds for Congress to ban soft money in 2002.

As Sheldon Adelson’s gambling bill and Tom Steyer’s marathon climate change session show, donors wielding large amounts of money — even if they are giving to super PACs rather than candidates or parties — still influence politicians. And while there might be someone, somewhere, who believes our democratic discourse has been improved by the barrage of 30-second attack ads, it is a certainty that those paying for it have benefited.