Campaign finance: Money and politics’ relationship gets stronger

Daron Shaw
Commentary

Daron Shaw

Professor, University of Texas at Austin
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Money and politics go hand in hand and the totals going back to 2008 reveal the relationship is only growing stronger. In 2020, spending in federal elections totaled $14.4 billion. It’s been increasing for more than a decade:   

  • 2016: $6.5 billion
  • 2012: $6.3 billion
  • 2008: $5.3 billion

Does money drive election results? 

Empirical analysis shows it does not. There are many examples of candidates spending extraordinary amounts of money and losing. Take South Carolina’s Jaime Harrison, D, who raised $109 million in 2020 and lost his Senate race to incumbent Sen. Lindsey Graham, R, by 10 percentage points. But there is a relationship between spending and success in swing districts and competitive races. 

It would be a mistake to suggest that money doesn’t influence election outcomes in the United States. But it would also be a mistake to exaggerate that relationship. So there is a relationship between money and politics, although it’s not quite as tight and powerful as some might have suggested. 

Regardless, spending is still substantial. The average winner of a congressional race in 2020 spent $1 million dollars, and the average winner of a Senate race spent $7 million. 

Where does all this money come from? 

In House races:

  • Large individual contributions (up to $2,900): 47%
  • Political Action Committees: 23%
  • Small individual contributions ($5-$20): 20% 

In Senate races: 

  • Large individual contributions: 52%
  • Small individual contributions: 33%
  • Political Action Committees: 10% 

The average contribution to a federal election in the United States is slightly less than $40. So while interest group money is consequential, it’s still the case that individual contributions are the dominant source of revenue. 

Campaign finance law

Congress sets the rules for election finance. The first big step to do that was the Federal Election Campaign Act of 1971. It placed a cap on individual contributions, required campaigns to disclose their funding sources, and created the Federal Election Commission.

Ironically, after the passage of the act, campaign spending increased dramatically. Which shouldn’t be surprising – if you give people a blueprint on how to raise and spend money, they’ll follow that blueprint. 

The law was altered by the Bipartisan Campaign Reform Act of 2002. It increased the individual contribution cap to $2,000 and created an automatic inflation adjustment. It was $2,900 for the 2021-2022 cycle and will likely be over $3,000 this year. It also outlawed soft money for parties, or money used for party building activities like registration or information drives. 

Then came Citizens United vs. the FEC which led to interest groups being allowed to spend unlimited amounts of money. Now organizations like the NAACP and the NRA can spend as much money as they want, as long as they don’t coordinate with a candidate.

But thanks to the internet, lower denomination donors have exploded. Campaigns can advertise online and receive donations almost immediately. So the amount of money sloshing around in the federal system has grown exponentially but the proportion of individual versus interest group contributions hasn’t changed all that much.

For more from Professor Shaw, access his commentary on voter IDvoter registration and election systems.

Straight Arrow News Political Correspondent Ray Bogan contributed to this commentary.

Money and politics go hand in hand. It could be a relationship only growing stronger. In 2020 spending in federal elections totaled $14.4 billion.

That’s more than double the record-breaking 6.5 billion spent in 2016. And all that money – can have an impact on results. That’s according to Straight Arrow News contributor Professor Daron Shaw. He says The average winner of a congressional race spent $1 million dollars in 2020, the average winner of a Senate race spent $7 million. 

Daron Shaw: It would be a mistake I think to suggest that money doesn’t influence election outcomes in the United States. But it would also be to exaggerate that relationship. So there is a relationship between money and politics. It’s not quite as tight and powerful as some might have suggested. 

So where does all this money come from? 

In House and Senate races about half comes from large individual contributions, which can be up to $2,900. The rest comes from Political Action Committees and small individual contributions which range from $5 to $20 dollars.

The average contribution to a federal election in the United States is about $40, slightly less than $40. So while we talk about interest group money as being consequential, while it is consequential with respect to the total amount of money. It’s still the case that individual contributions are the dominant source of revenue in federal election campaigns in the United States.

Congress sets the rules for election finance. The first big step to do that was the Federal Election Campaign Act of 1971. It placed a cap on individual contributions, required campaigns to disclose their funding sources, and created the Federal Election Commission. 

Daron Shaw: “Ironically, after the passage of the Federal Election campaign act in the early 1970’s campaign spending increased dramatically. Which shouldn’t surprise people. If you give people a blueprint on how to raise and spend money, they’ll follow that blue print. “

The law was altered by the Bipartisan Campaign Reform Act of 2002. It increased the individual contribution cap to $2,000 and created an automatic inflation adjustment. It was 2,900 for the 2021-2022 cycle and will likely be over $3,000 this year. It also outlawed soft money for parties, or money used for party building activities – like registration or information drives. 

Then came Citizens United vs. the FEC which led to interest groups being allowed to spend unlimited amounts of money. Now organizations like the NAACP and the NRA can spend as much money as they want, as long as they don’t coordinate with a candidate. 

But thanks to the internet, lower denomination donors have exploded. Campaigns can advertise online and receive donations almost immediately. Shaw: “So the amount of money sloshing around in the federal system has grown exponentially. But the proportion of individual vs. interest group contributions hasn’t changed all that much.”

With an evenly divided senate – the narrow fight for control of the chamber has only further emphasized the high figure spending. Early reports indicate 2022 will be another record year for campaign spending. 


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