Wednesday, November 27, 2013

The changing role of money in politics

For both liberals and conservatives, a common refrain we hear when a political battle is lost is that we can blame the role of money in politics. We've seen ample reason for this conclusion in the past. For example, when it comes to presidential elections we've seen the amount of money raised for candidates go from $162 million in 1980 to $2.3 billion in 2012. Of course with the SCOTUS' Citizen's United ruling, about $550 million of the 2012 total came from outside groups (ie, SuperPACs).

But I'm here to suggest that it might be time to challenge the conventional thinking about the role of money in politics. Things are changing fast in both political parties and technology is playing a BIG role in altering the landscape.

When it comes to the changes in political parties, Barack Obama's campaigns have ushered in a death blow to traditional thinking about fundraising. In the past candidates have relied on big donors to fund their endeavors. But President Obama showed that small donors in large numbers can beat that system.

In order to understand how that's done, its important to know that, when it comes to individual campaigns, donors are limited to being able to contribute $2,600 individually. When the relatively small number of people who can give that much have done so, they are finished with that particular campaign and have to look to other means of financial support. But when you mobilize millions of people to give $25 or $50 or $100, they can continue to contribute over the course of the campaign until they reach that $2,600 limit.

This is exactly how the Obama campaign was able to blow Hillary Clinton, John McCain and Mitt Romney's campaigns out of the water with the amount of money they raised. For example, in 2012 Obama raised $715 million to Romney's $443 million.

Of course Romney evened that out with outside funding where big donors can contribute an unlimited amount. In 2012, that meant over $400 million spent on behalf of Romney to $130 million for Obama. An awful lot of that outside funding was raised by SuperPACs controlled by Karl Rove. You may have read that big Republican donors were pretty angry with him because all their money didn't seem to buy them much of anything.

To understand why all of Rove's money didn't matter much in the end, you have to start with the reality that the only thing money can provide for those outside groups is to purchase media and direct marketing appeals. When it comes to grassroots activities for candidates, that money has to come from individual campaigns (where donors are limited to $2,600).

Money spent on media and direct marketing is an attempt to influence voters. But it can't be successful if voters aren't paying attention. And that's where all the advances in technology come into play. When it comes to direct marketing, the reality is that people are flooded with those kinds of things via snail mail or email. Most of us have become immune to all that and have systems in place to discard it all.

But technology is having an even bigger impact on the role of media in political campaigns. The most common way money is spent in that arena is on television ads. The first blow to the effectiveness of that kind of spending came with the proliferation of remote controls for TVs. Rather than sit through commercials, we started channel surfing. Then came commercial-less pay TV. And finally...streaming. One of the most important trends that few people are talking about was recently reported on Business Insider: Cord-Cutters and the Death of TV. Take a look at what is happening with cable TV subscribers.

This trend will likely continue as more and more people recognize all of the options to traditional television that are available. And with that, big advertising buys on television for campaigns will become even more meaningless. 

I believe we are at a crossroads when it comes to the role of money in politics and that it is the opposite of what the doom-and-gloomers about Citizen's United have been warning us about. All the money in the world that Karl Rove can raise is no match for the innovations in grassroots campaigning that President Obama demonstrated, coupled with the opportunities afforded us via new media. The question in front of both we the people and our political candidates of the future is whether or not we see what's happening and take advantage of this opportunity. 


  1. Nothing replaces knocking on doors and making calls to voters. Voter contact and GOTV is the end all and be all of winning elections. Technology helps with GOTV and branding and messaging, but only direct voter contact wins.

  2. Kay who posts at Balloon Juice, has been a grass roots political activist for many years and she makes the same point, Tien Le. When Ohio Governor Kasich tried to strip public unions of their bargaining power (SB5), the unions affected got enough signatures to put Kasich's proposal on the ballot. Kasich and his backers, who poured tons of money into media campaigns, lost by a resounding vote. Kay said a well organized, effective on the ground effort can successfully trump money, especially if it's coming from out of the state.

    1. We saw the same thing happen on a really local level here when the Chamber of Commerce spent tons of money on a referendum to get the city to pay for a new baseball stadium. It was fun to watch - mostly because none of the CEO's in the Chamber lived in the city so they didn't get to vote ;-) It went down...big time.

    2. I agree, but Karl Rove having $400 million to spend to help sway elections, in any form or fashion, is not good. I still don't understand how that man came away unscathed after all the Bush debacles and the 2012 elections.

  3. The other important thing to remember is that we can't change Citizens United. We can stand around and shake our fists at the clouds ... or we can do what Tien Le suggests and get out and knock on doors and call people. At some point, more money buying more commercials just puts more money into the pockets of those who sell air time, it simply does not move the needle when it becomes white noise. Time to quit wasting time screaming at money in politics and counter it with more people in politics.