The first true test of the post-Citizens United campaign financing landscape resulted in a cash “arms race”that drove election spending to unthinkable records, but with surprisingly little to show for the big checks cut by a cache of wealthy donors.
The 2012 campaign will end up costing a total of over $6 billion, with $2 billion of it coming from the presidential campaigns of Barack Obama and Mitt Romney alone. Their traditional money machines relied on an aggressive outreach strategy and an army of rich bundlers able to give money and collect contributions from their friends largely in secret. Both presidential bids have likely changed the framework of how campaigns raise funds and the amount of money necessary to run in the future.
But by far the most groundbreaking aspect of the 2012 money game was “outside money,” the vague euphemism for billions of dollars raised and spent by super-PACs and so-called “dark money” groups created after the Supreme Court’s ruling on Citizens United. No limits, no rules for disclosure, and little effective regulation meant these groups proliferated at a dizzying pace, bankrolled by relative handful of millionaires and billionaires intent on protecting their own business investments through unchecked political activism.
But in the days following the Tuesday vote that reelected President Obama and left the House and Senate at a veritable status quo, questions are being raised about the effectiveness of the vast sums spent by wealthy financiers on behalf of candidates or causes that ultimately were unsuccessful.
Though hundreds of millions of outside dollars were spent by allies to President Obama and Democrats, the overwhelming majority of super-PAC and non-profit funds were used to either support GOP nominee Mitt Romney or run attack ads against the president or Democratic candidates in other races. Most of the candidates these wealthy super-donors backed with their fortunes wound up losing their races, leaving some to wonder about the investment skills of the developers and casino magnates that flooded the country with political ads.
At the private air terminal at Logan Airport in Boston early Wednesday, men in unwrinkled suits sank into plush leather chairs as they waited to board Gulfstream jets, trading consolations over Mitt Romney’s loss the day before.
“All I can say is the American people have spoken,” said Kenneth Langone, the founder of Home Depot and one of Mr. Romney’s top fund-raisers, briskly plucking off his hat and settling into a couch.
The biggest single donor in political history, the casino billionaire Sheldon Adelson, mingled with other Romney backers at a postelection breakfast, fresh off a large gamble gone bad. Of the eight candidates he supported with tens of millions of dollars in contributions to “super PACs,” none were victorious on Tuesday.
And as calls came in on Wednesday from some of the donors who had poured more than $300 million into the pair of big-spending outside groups founded in part by Karl Rove — perhaps the leading political entrepreneur of the super PAC era — he offered them a grim upside: without us, the race would not have been as close as it was.
The most expensive election in American history drew to a close this week with a price tag estimated at more than $6 billion, propelled by legal and regulatory decisions that allowed wealthy donors to pour record amounts of cash into races around the country.
But while outside spending affected the election in innumerable ways — reshaping the Republican presidential nominating contest, clogging the airwaves with unprecedented amounts of negative advertising and shoring up embattled Republican incumbents in the House — the prizes most sought by the emerging class of megadonors remained outside their grasp. President Obama will return to the White House in January, and the Democrats have strengthened their lock on the Senate.
The grand totals for some of the richest contributors to the super-PACs and shadow organizations are truly staggering. Taken in the context of a generally disappointing Election Day for these mega-donors, the amount of money squandered is incredible. How many teachers could be hired or homeless fed for the billion dollars spent on TV ads this election cycle?
The single largest political donor in the history of any American election, casino tycoon Sheldon Adelson, finished the 2012 campaign having contributed at least $53 million to various super-PACs and other outside groups on behalf of conservative candidates. Adelson’s first 2012 investment was in Newt Gingrich’s failed presidential primary bid, and the remainder of his choices fared little better.
Karl Rove’s two outside groups, super-PAC American Crossroads and non-profit dark money group Crossroads GPS, had set a target for 2012 spending at $300 million before the campaign began. The groups ended up beating those lofty expectations, surpassing the total money spent by outside groups in entire election cycles in the past.
How could such a cash juggernaut backed some of the country’s richest men and best political minds fail so miserably? Does it means that the furor over Citizens United and unregulated election spending was misguided? What happened?
Overlooked by many in the predictable election post-mortem is the size and strength of Barack Obama’s campaign money machine. Far from a “David vs. Goliath” story, the battle between the president and the well funded outside groups backing his foe was quite evenly matched.
The Obama campaign met their early estimate of running a billion dollar campaign in 2012, actually outraising Mitt Romney when super-PACs and non-profits are removed from the equation. And with more cash in their own coffers, Obama’s team had considerably more control over how and where to spend their record election war chest. Unlike the competing voices and strategies of a collection of mega-donors, the Obama campaign made more effective ads and ad buys through their decision to court rich bundlers to give money directly to them rather than support outside groups.
So is this it for the “super-PACs” and the “shadow money” interest groups? Has record spending on the 2012 race made any difference in the outcome?
The spin from critics of campaign finance regulation and the rich donors themselves is that outrage over Citizens United was misplaced and predictions of a few wealthy businessmen being able to “buy” and election was exaggerated. Their argument is that if a record $6 billion and unregulated political spending from outside groups could not sway voters, controlling that money is largely irreverent.
But the reverse of this rhetoric is much more likely to be played out. Rather than eschew political spending as a bad investment, rich donors will merely double down on their 2012 strategy in future races as more and more loopholes are found that allow groups like those run by Karl Rove to maximize their contributions and their organization. Corporations and wealthy individuals may even soon be able to contribute directly to candidates, “double dipping” between campaigns and outside groups.
A status quo on Capitol Hill also means it is impossible for any restrictions on election spending to be considered before 2014 or 2016. Lawmakers elected with the help of unlimited cash are unwilling to take any steps to address the outcry over the huge coast of 2012.
And the avalanche of money and ads is actually more likely to get worse in the next cycle. There are already indications that those remaining on the sidelines in 2012 are prepared to reach into their own fortunes and match the spending of Sheldon Adelson or Bob Perry. Democrats largely avoided super-PACs and non-profit organizations in favor of bundling directly for President Obama.
Without the vaunted Obama ground game, however, and having seen how much their conservative foes are willing to spend, liberal-leaning donors are vowing to “double down” and compete in the outside money arena in 2016 and beyond.
Romney and his allies spent $1.2 billion on the race, compared with $1 billion spent by Obama and his allies, according to a POLITICO analysis of records on Federal Election Commission data and public statements. Nearly 40 percent of Team Romney’s spending came from super PACs and other unlimited outside money groups, compared with about 12 percent for Team Obama.
But the final tally for 2012 might never be known because some of the biggest spending outfits, particularly on the right, are nonprofit groups that are allowed to keep their donors and many details of their spending a secret from the public.
With slim prospects for any significant clampdown on campaign cash from Congress, the Internal Revenue Service or the courts, a $2 billion presidential campaign could seem quaint in 2016, especially with competitive primaries on both sides.
Rove, for one, isn’t backing down. The unofficial GOP outside money boss argues the efforts by his Crossroads outfits prevented a bigger electoral blowout.
“Crossroads, which you helped found, spent what, $325 million, and we’ve ended up with the same president, the same Democratic majority in the Senate and the same Republican majority in the House. Was it worth it?” Chris Wallace asked Rove on Fox News about an hour after most media had called the race for Obama.
“Yeah,” Rove responded. “Look, if groups like Crossroads were not active, this race would have been over a long time ago. President Obama came out of the box on May 15 with $215 million of advertising over a 2½-month period, designed to demonize Mitt Romney.”
Democrats — who set aside their qualms about outside money en route to proving that the best way to beat a $1 billion blitz is with $1 billion of their own — said they’ll be ready for the next arms race.
If wealthy Republican donors go big in 2014 or 2016, Democrats “will be more willing to participate in super PACs early and more than they did this time,” said Steve Mostyn, a Houston trial lawyer who lent his plane for fundraising trips to the operatives running the pro-Obama super PAC Priorities USA Action and donated $4.2 million to the super PAC and others backing Democratic congressional candidates.
And despite Hubbard and Friess’s reservations, Mostyn is convinced the big GOP money will be back in force by the midterms. “After a while, they will double down and we’ll double down. These things get ridiculous,” he said.
With no action coming from Washington to control big money in American politics, states are increasingly becoming ground zero in the fight to curb financial influence on elections. Last Tuesday saw voters in two states approve ballot initiatives that symbolically take on the question of election spending.
Montana voters passed a ballot measure in a nearly 3-to-1 vote that included language stating “that corporations are not entitled to constitutional rights because they are not human beings.” And Colorado’s Amendment 65, calling on state lawmakers to support campaign finance limits, passed in a “landslide.”