Note: unless otherwise indicated, the source for the following campaign funding and spending figures is the Center for Responsive Politics, a non-profit, non-partisan organization.

Intro

Just how grateful would you be if someone gave you a half million dollars?  Would you pick up the phone when they called?  If they had a problem or a special need would you hook them up?  What if they “only” gave you about a quarter million?  Would you still take care of them when needed?  Another question…   What would you do with all that money?  Buy a house or two, a car, pay off your student loans, travel the world, or just blow it partying with all of the new friends you never knew you had?   I’d be willing to bet that almost none of us would spend the bulk of it buying thirty-second TV commercials broadcasting how great we are or how horrible our enemies are.  However, that’s probably what Barack Obama and John McCain will do with most of the six-figure gifts they’ve received from their friends at Goldman Sachs (investment bankers - $571,330 to Obama by employees and associates) or Merrill Lynch (financial investment firm - $230,310 to McCain by employees and associates).

That’s the state of our election system today.  It’s virtually impossible to run a realistic campaign without piles and piles of money.  According to the Center for Responsive Politics (an independent non-profit organization), Obama has already raised $265 million thus far.  That’s over a quarter of a billion dollars and we’ve just begun the general election cycle.  McCain has raised $97 million.  In either case, that’s a LOT of dough-re-mi.  So, where is all this money spent and where does it come from?  And how does this affect our democracy, if at all? 

TV Shopping Spree

In the case of Obama, the largest sum of money has been spent on broadcast media (tv commercials).  He spent a whopping $86 million on TV ads, more than double the $31 million he paid his campaign staff.  He spent about another $13 million on other media buys (print, radio, internet, and other advertising.)

As for McCain, he spent much less on advertising.   This is presumably because the Republican primaries ended much quicker than the Democrats’. McCain didn’t need to spend a lot of money in the later primary states like Obama and Clinton were doing until only a couple of weeks ago.  McCain “only” spent about $14 million on media, though it still beat out what he paid his staff (about $11 million.)  You can rest assured that he’ll be spending a lot more of his cash on media advertising as we move closer to the general election.

Let’s look a little closer, though.  All that money spent on TV and radio advertising goes to the owners of TV and radio stations.  However, those same owners are using our airwaves.  We, the citizens of the United States, own them (the internet is more complicated so I’ll leave it alone for now).  The Federal Communications Commission, a government agency, oversees this process and decides who does and doesn’t get to own a tv or radio station.  The people who own these stations and use our citizen-owned airwaves pay exactly nothing for their use (ok, maybe a meager licensing fee).   All they have to do in return  for the free use of our public goods is provide some content “in the public interest.”  Mainly, this accounts for a little news programming and a few public service announcements sprinkled in the mix (you know, those commercials that tell you to read more books and stay off drugs.)   So, we the PUBLIC give these stations our airwaves for free and then they use them to make tens of millions of dollars (or more) selling advertising to those who want to be our PUBLIC representatives.  The candidates offer us thirty-second sound bytes describing who they are, what they will do, or why their opponent sucks.  Obviously, these ads are effective.  Why else would they spend so much money on them if many people didn’t form their opinions about candidates based on these quick snapshots?

Where the Money Comes From

All this campaign money comes from donations.  It comes from people like you and me partially.  Much has been made in this campaign about how internet donations have revolutionized campaign fundraising, especially in the Obama camp.  That doesn’t mean big donors have gone away, though.  An individual can only donate a maximum of $2,300.  That’s a great gift and way more than I could afford, but it won’t get you any face time in the Oval Office.  So how is it that companies like Goldman Sachs can give a half a million dollars and others can only give a couple thousand?  Well, Goldman Sachs didn’t actually donate all that money.  Companies don’t just write a check to a candidate; that’s illegal.  Corporations cannot donate anything, actually.  What they and/or their employees can do is form a Political Action Committee (PAC) which involves two or more people and functions separately from their business accounting. PAC’s are not always associated with businesses; individuals and non-business organizations can form them, too.  The donation limits for a PAC are a little higher than for an individual - $5,000 per candidate.

Ok, but that’s still nowhere near a half million dollars, where did the figure of a half million dollars come from?  Well, the Center for Responsive Politics associates certain companies with certain campaign dollars. They add up all the money donated by individual employees, their family members, PAC’s associated with the company, and PACs associated with employees of the company.  It gets complicated.   Here’s an example.  Mr. Biggs, CEO of Big Money Corporation, can donate the maximum amount to a candidate.  His wife, two daughters, and son can also donate the maximum ($2,300 each).  His company’s PAC can donate the maximum $5,000. He can also donate to other PAC’s.  That’s already $16,000 for just one employee, their family, and their company PAC.  Multiply that by one or two dozen employees, family members, and other PACs.  The numbers can add up pretty quickly.  It’s not at all illegal because the money is distributed through several different people and several different organizations.  (After all, the people who receive this money write our laws, too.)  Even with this complicated system, the candidates know who donated what and where the money came from.  While your $2,300 contribution may not get you a meeting in the Oval Office (much less your $20 or $50 donation), it’s much more likely that some of the companies associated with six-figure donations might have better luck getting the President’s ear.

Money, Campaigns, and Democracy

So, how does all this money affect our democracy?  Is it good for us, bad for us, or something different?  Obviously, that’s in the eye of the beholder.  It's certainly a matter of importance by the media's standards given that money has often come to dominate political discussion.  Quite often, pundits, anchors, and analysts decide who is "winning" a campaign based on how much money they've raised.  This often trumps any talk of policy and even trumps the other "horserace" issue of who is polling well and who isn't.  More importantly, though, does all of this money influence politicians?  It’s ridiculous to say it doesn’t.  Let’s not pretend that gravity doesn’t exist or that the world isn’t round.  How much or how little this influences candidates and officials varies from person to person and can’t easily be quantified.  The bottom line, however, is that if citizens don’t have a bunch of money or they’re not aligned with those who do, they are at a strong disadvantage when it comes to influencing policy.  So, the next time you see Barack Obama or John McCain in a campaign commercial, ask yourself if they are advertising for themselves or the people who actually paid for the ad.  It’s an open question for which only the candidates themselves know the full answer.

For a list of Obama’s top contributors, go here.

For a list of McCain’s top contributors, go here.