Wednesday, May 9, 2012

Party of The 1%

Which political party represents the 1%? One of the most amazing examples of the triumph of political marketing over facts is how many Americans without hesitation answer this question: “Republicans.” Yet the evidence of political contributions shows that there is a stronger case that Democrats are the 1%. Let me emphasize at the outset of this essay that I am not arguing that Republicans do not also look out for the top 1% in wealth—but the Democrats enjoy an undeserved reputation for being the party of the poor and middle class.

First, look at how Democrats win Presidential races: by outspending Republicans by astonishing margins. In politics, all other things being equal…spending more money makes some animals more equal than others. None of us who pay attention to this little detail were surprised that the guy who spent $730 million in 2008 won the election, beating the guy who spent $333 million. You may be asking yourself, “I thought that there was some rule about candidates for President having to spend the same amount on the general election.” Well, yes. After the 1972 campaign, Congress created a public financing system for presidential elections, but the only way to enforce those spending limits is if the candidates takes public funds. In the general elections, every major candidate from 1976 until 2008 pledged to take the public money, and accept the campaign limits. McCain stupidly believed Obama, and took the public funds, and therefore the spending limits. Obama changed his mind, had no spending limits to watch out for, and beat McCain to a pulp with wads of cash.

But Obama decided to skip the public funds because he knew he could get money from the little people, right? Obama did raise some money from little people: $31 million contributed in chunks of $200 to $500. For a lot of Americans, making a $200 or even $500 contribution shows real commitment to their candidate, especially because no one expects to get anything for a contribution that small—not even a handshake. But the little contributions were nothing compared to the big contributors. Obama raised $56 million from people who contributed $4600 or more each, in the primary and general campaigns. I don’t know about you, but I suspect that many of these contributors were expecting, and getting, something a bit more useful than a handshake. You notice that contributors who worked for Goldman Sachs gave more than a million dollars to Obama’s campaign in 2008. Employees of another big Wall Street firm, Morgan Stanley, gave more than half a million dollars.

Some of the individuals who gave relatively small amounts (I mean, relative to the people giving $4600) are interesting. For example, George B. Kaiser gave the legal maximum of $2300 in the primary campaign to Obama. And why is that name familiar? Why, he was a principal owner of Solyndra—which received federal loan guarantees of almost half a billion dollars, just before going bankrupt, and leaving us taxpayers holding the bag. If you think that’s a great investment—give $2300 and get a $535 million loan guarantee—well, George Kaiser did more than just give $2300. He is a billionaire, and somehow managed to contribute “$53,500 personally and bundled large amounts more.”

A bundler is someone who goes and raises money from others, bringing a great big pile of money—more than he could legally give individually. But of course, this is only because they are trying to make life easy for the campaign, by bringing it all as one big chunk, right? It’s not like they are trying to score brownie points (redeemable in federal loan guarantees) or anything. That would be illegal, and we know that people giving this kind of money are completely altruistic.

By this point, you are wondering, “Well, if the candidate looking out for the little guy, Barack Obama, managed to raise this kind of money from the 1%, the Republicans must have done really well from those rich people. Everyone knows that Republicans are the party of rich people who light their cigars with $100 bills.”

Pretty clearly, there are rich Republicans (although I can only recall having ever met one, while I have lost count of the multimillionaire and billionaire Democrats that I have known). But they sure weren’t helping John McCain much. In 2008, he raised $31 million from people who contributed $4600 or more—or not quite half what Obama raised from people in the top 1%. Republicans, for the most part, aren’t members of the obscenely rich class, and that’s why when we do have a candidate who is part of that class, it is rather important that he gets the nomination. If Mitt Romney wants to spend $100 million out of his pocket defeating Obama, he can legally do so. If he wanted to help some other Republican do that, there are significant legal barriers that prevent it.

So we know that the 1% heavily contribute to Democrats—no surprise. If you want to buy government favors, you better grease the right palms. But who votes for Democrats? Not too surprisingly, considering that Democrats promise the welfare state, that Obama outperformed McCain (by wide margins) among those making less than $30,000 per year. But Obama actually beat McCain in the $75,000 to $100,000 group, and tied McCain above $100,000 a year.

It would be interesting to know well each candidate did in the $200,000 per year, $500,000 per year, and $1 million per year income categories—but looking at how much each candidate received in chunks of $4600 and above gives me a pretty good idea that the 1% are generally more supportive of Democrats than Republicans. Warren Buffett, billionaire investor from Nebraska, isn’t all that unusual in his wealth group.
The bad news for Republicans is that 2012 is starting to look like a repeat. So far, Obama has raised more than $191 million—or more than Romney, Ron Paul, Newt Gingrich, Rick Santorum, and Rick Perry managed to raise combined. And Obama did not even have a serious challenger in the primaries. And those bundlers are once again showing which is the party of the 1%. As Open Secrets succinctly points out: “Together, 532 elites are directing at least $106,300,000 for Obama's re-election efforts -- money that has gone into the coffers of his campaign as well as the Democratic National Committee.” People show up at the White House door with hundreds of thousands, sometimes millions of dollars of contributions that they have gathered to show Obama how much they love him. I’m sure that there will be some love coming back from the President who styles himself the advocate of the middle class—while raking in money from the obscenely rich.


  1. This article makes me a little sick to my stomach. Even if Romney were a candidate I can solidly rally behind, it's not pleasing to know that Obama can still outspend him.

    On the other hand, it should be useful to remember that even with his big war chest, Obama is running into fundraising problems: he isn't able to raise as much as he had hoped. And he's keeping a tight hand on that cash--it's not clear whether he's just selfish, and could care less about other Democrat races, or if he is so fearful about this election that he's just holding on to his cash, or both.

    Finally, we should keep in mind that even in politics, money isn't everything. Every so often, a person gets into office, who was outspent 20 to 1, because his message was more appealing to the voters. All money gets you, is the ability to get your message to the voters--if those voters reject your message, you are up a creek!

    And Romney has a certain advantage here: his message is "Obama hasn't done well with the economy. I can do better!" At least, that's what his message has been so far...

  2. Nice article, thanks for the information.