“Money On My Mind” is a monthly column by Jay Mandle. The views expressed here are those of the author (not necessarily those of Democracy Matters) and are meant to stimulate discussion.
By Jay Mandle
More than ever, American politics is a process owned by the super-wealthy. The Center for Responsive Politics (CRP) reports that small-donor contributions (individuals making political donations of $200 or less) fell by about 3.4 percent from 2012-2016. Over those same years, the amount of money provided by the top 0.01 percent of the population increased by 45 percent. That means that more than one-third of the $6.5 billion spent during the 2016 election cycle came from fewer than 25,000 people. But that is not all. At the very top of this group, just 200 people together contributed almost $1 billion. If these were stock holders in a corporation, this small group would own a controlling interest. And they do so in politics.
While there is no lack of big Republican donors (Sheldon and Miriam Adelson contributed $82.4 million), the fact is that nine of the biggest fifteen donors identified by the CRP provided all or almost all of their donations to “Democrats or Liberals.” Six of these nine mega-donors were based in the financial services industry, two ran technology firms, and one was a publisher. Huge amounts of money were involved. Combined, this small group of liberal political funders provided $305 million.
Since all politics costs money, contributions from wealthy benefactors are hard to resist. But dependence on big donors, especially from the financial sector, has dire political consequences for liberals and progressives. It moves concern away from the interests of most of the population to those of the financial elite. This is not to doubt the good intentions and progressive values of liberal donors. But hedge fund directors do not count working class people among their clients, have next to no interaction with union members, and are unlikely to seek policies that will damage their own interests by reversing the trend toward income inequality. Increased dependence on Wall Street funders has almost certainly moved the Democratic Party away from reliance on its former core of working class supporters.
It was this dependence on a new Wall Street-financed liberalism that underlay the conflict between Bernie Sanders and Hillary Clinton. We know that Sanders’ campaign relied much more heavily on small donors than did Clinton’s. Almost three fifths (59.0 percent) of the money given to Sanders came in the form of small donations, while the comparable level for Clinton was less than one-fifth (18.7 percent). But perhaps even more important were the differences in the industries in which their donors were employed. The sector described as Finance, Insurance & Real Estate (FIRE) was the top ranked industry donor among Clinton supporters. People working in this sector contributed more than one-fifth (22.9 percent) of her campaign’s funding. In contrast, FIRE was ranked sixth among Sanders’ contributing industries, providing only 4.6 percent of his funds. Interestingly, the sector described as Ideological/Single Issue was ranked first for Sanders, providing 35 percent of total contributions.
As the costs of political campaigns rise over time, candidates and party officials possess an imperative to raise ever higher levels of donations. But doing so can require ideological concessions. The Sanders insurgency suggests that, for many progressive political activists, the ideological concessions associated with obtaining big money donations are unacceptable. The struggle for control of the Democratic Party has extended beyond the 2016 election itself. In light of the widespread willingness of working class people throughout the country to abandon Democrats, the issue of what the party stands for is actively under discussion. And by extension, so too should be its sources of financial support.
The pressure to succumb to Wall Street funding would of course be lessened if there were in place a system of public campaign financing. Those on the side of resisting big donations should adopt that reform of the electoral system as a priority. It would immediately reduce the pressure of fund-raising. But in the absence of public campaign financing, political activists can take advantage of the fact that it is only at the highest levels of politics – governorships, Congressional races, mayoral candidacies in big cities – that raising colossal sums of money is required. In most state and local races, the costs associated with candidacies are much lower. What the Sanders campaign demonstrated is that it is possible to do effective fundraising among small-donor progressives. Resisting the siren call of Wall Street while running for state and local office is, in many places, possible without jeopardizing electoral viability.
At higher political levels, however, with their inflated costs, dependence on small donors is politically risky. Our privately financed political system is rigged, as is any market, against the interests of low-income people. A liberalism that speaks to the interests of the working class and the poor is necessarily at a financial disadvantage. The hope here is that if the Democratic Party becomes strong enough at the grassroots – dependent on committed activists – it can put an end to that disadvantage by successfully pressuring for the public funding of political campaigns.