Super rich cashing in to reshape the world.

US President Barack Obama arrives for for a campaign rally at the University of Miami, in Florida.US President Barack Obama arrives for a campaign rally at the University of Miami in Florida. Photo: AFP

A MONTH before the presidential election, America’s political landscape is awash with cash. Hundreds of millions of dollars have been pumped into the election by corporations, unions and ideologically driven billionaires determined to reshape the world to suit themselves.

Cash has sluiced through the Obama and Romney campaign headquarters, pooled in the corporate offices of the ”independent” Political Action Committees (super PACs) that support them and has flowed in from the so called ”social welfare” groups that pump ”dark money” into the super PAC engine rooms.

What impact this roiling sea of cash will have on these elections and, America’s democracy is still being debated. It is not even clear why the tide of cash rose so quickly this year. All anyone can seem to agree on is that there is much, much more to come.

A combination picture of the vice presidential debate between US Vice President Joe Biden (left) and Republican vice presidential candidate Paul Ryan (right).US Vice President Joe Biden (left) and Republican vice presidential candidate Paul Ryan (right). Photo: AFP

According to the mythology of this election the floodgates were opened by the Supreme Court’s 2010 Citizens United decision.


Citizens United was a conservative group that had made a documentary attacking Hillary Clinton. It wanted to air the feature in the lead-up to the 2008 election, breaking campaign finance rules that forbade corporations or unions from engaging in campaign spending 60 days before an election. The case found its way before a conservative Supreme Court, which knocked the regulations on the head.

Just months after the decision the first PACs had formed and raised $65 million to weigh into the 2010 mid-term elections.

The impact might not have been so great were it not for subsequent decisions in new cases in the following months that stripped away rules governing how much individuals could donate to the PACs and how and when the PACs could spend their money.

The PACs became super PACs. Even this might have been contained had the Federal Election Commission been able to draw up regulations on how closely the PACs could co-ordinate with campaigns and candidates. But like the rest of Washington the commission is hopelessly deadlocked between the Republican and Democrat commissioners that govern it. Super PACs could not co-ordinate with campaigns or candidates, it ruled.

But that doesn’t mean much. Staff flitter back and forth between the PACs and the campaigns, candidates are allowed to travel with PACs and appear at their functions. PACs are formed specifically to promote individuals or parties, or even issues, and to attack others.

The money river began to flow and soon those running the show became more sophisticated.

The Republican strategist Karl Rove set up a super PAC but then realised some donors might like to maintain anonymity.

He set up an associated tax-exempt ”social welfare” organisation (or a ‘501 (c) (4)’ in the jargon of the American code) that funnelled ”dark money” into his super PAC.

So far Rove’s super PAC, American Crossroads, has spent $51 million supporting the Romney campaign, and his social welfare group, Crossroads GPS, has kicked in an extra $30 million in dark money.

The president of Democracy 21, Fred Wertheimer, has been fighting for tighter controls on political money since the Watergate days. ”This is a very sophisticated system,” he told The Atlantic. ”That’s the beauty of the system for these guys. This is a legalised-bribery kind of system where no one has to say anything. I don’t have to say what I want – you know what I want.”

But Columbia Law School’s Professor Nathaniel Persily, who has written broadly on the issue, is not so sure the Citizens United decision is entirely to blame. He thinks it has been possible for wealthy individuals or groups to get money to candidates for years, but Citizens United might have prompted a cultural shift.

”Corporate involvement in politics changed from being a licence into being a blessing,” he said, adding that it is possible that wealthy people simply found themselves at odds with Barack Obama and sought to remove him as president.

After the laws passed Democrats and their supporters feared the Republicans would secure an immediate advantage. Obama even attacked the Supreme Court decision in a State of the Union address. Since then the left has proved to be as adapt at extracting cash from donors as Republicans.

But Professor Anthony Corrado of Colby College notes that individuals can manipulate government even if competing sides raise similar amounts of money. ”Just the threat of a campaign [by an outside group] against a candidate can be enough to change the way they act,” he said.

Indeed there is evidence this is already happening. On Wednesday the Huffington Post reported on the campaign of a Long Island-based hedge fund manager, Robert Mercer, to defeat Peter DeFazio, a liberal congressman from Oregon, on the other side of the country.

This is Mercer’s second attempt to unseat DeFazio, and so far he has given $839,000 to a super PAC that is targeting him.

Why? Well, DeFazio is not sure, but he suspects it may be because he is the champion of legislation that would impose a tax of 0.25 per cent on stock market transactions in an effort to curtail speculation through the kind of high-frequency, computer-driven trading that was pioneered by Mercer’s company Renaissance Technologies.

”After the last election, when I would ask my [colleagues] to co-sponsor a speculator tax they’d say, ‘I don’t really want to make the people on Wall Street that angry and didn’t somebody spend a lot of money against you?”’ DeFazio told the Huffington Post. ”It has a chilling effect against some people on legislation.”

Even when the candidates billionaires choose to back fail, their presence can reverberate through the system.

By far the biggest single donor of the current election cycle is the casino magnate Sheldon Adelson, who is dedicated to strengthening ties between Israel and American and to attacking trade unions.

Adelson and his wife gave $10 million to Newt Gingrich, a man who once urged Congress to ”establish a program of economic aid for the Palestinians to match the aid the US government provides Israel.” This year, with Adelson at his back, Gingrich described Palestinians as ”an invented people”. When Mitt Romney defeated Gingrich to become the Republican presidential candidate, Adelson transferred his support to Romney and travelled with the candidate on his visit to Israel.

Harvard Law School Professor Lawrence Lessig recently described in The Atlantic magazine how fewer than 200 people now account for more than 80 per cent of super PAC spending. ”A tiny number of Americans – 0.26 per cent – give more than $200 to a congressional campaign. 0.05 per cent give the maximum amount to any congressional candidate. 0.01 per cent give more than $10,000 in any election cycle,” he wrote.

”And 0.000063 per cent – 196 Americans – have given more than 80 per cent of the individual super-PAC money spent in the presidential elections so far.”

Not everyone laments the situation. Jim Bopp jnr, the pro-life Republican lawyer from suburban Indiana who championed Citizens United’s cause, is celebrating its success.

”We are absolutely at tipping point,” he recently boasted, also to The Atlantic. ”We are in the second election cycle with super PACs and now they are going to equal candidate spending. Two years from now they’ll exceed candidate spending by 50 per cent … Two years after that it’ll be three times candidate spending.”

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