Does Big Money Still Matter?

During the past few months, I've been flying around the country talking about my new book Corporate Citizen?, which deals with money in politics and our privately-financed elections. (I'll be talking about the book in New York October 27th.)

One of the fair questions I'm asked is whether campaign finance rules still matter given the events of the 2016 presidential election?

It's probably an understatement to say that this presidential election has been a wild ride. It has sounded more like a celebrity sex tape at times than a contest for the world's most powerful office. Another oddity this year has been the comparatively muted role of money in politics.

The general trend in Presidential races has been fundraising arms race between the two major party candidates. In 2008, Barack Obama raised $745 million against John McCain's $368 million. McCain took public financing during the general election which limited him to $84 million in the general. McCain was the last major party nominee to take public financing. In 2012, Barack Obama raised $722 million against Mitt Romney's $450 million.

By mid-October, 2016 has been considerably less expensive than its predecessors. Clinton has raised $373 million directly for her campaign, while Trump has raised $166 million, according to opensecrets.org. (You can win bar bets if you know that Bernie Sanders raised more money than Trump. Surprising but true.) So far, both campaigns have raised 25 percent less than what Obama alone spent on his campaign four years ago.

Thus, there has been a decided dip in spending in the presidential race, mostly because of the unorthodox approach of the Trump campaign to rely on free media rather than paid political ads. Even as other candidates in the primary raised and spent at high levels, (Jeb Bush had a super PAC that raised $120 million and Marco Rubio had a super PAC that raised $60 million), Trump's campaign has raised and spent less than the major party candidates over the past few cycles.

But it's important to note that less money is not the same as no money. With roughly one month to go before Election Day, $1.1 billion has been raised by all candidates who vyed for the White House, and an additional $529 million has been raised by super PACs.

As of October 15, Trump himself has provided roughly one-third of the money in his campaign ($56 million). But that means the remaining two-thirds has come from other donors. Clinton has put in $1.2 million of her own money, which is .3 percent of what the campaign has raised, making her campaign more than 99 percent funded by other people's money. Direct contributions to federal candidates are still subject to hard money limits of $2,700 per candidate per election. But super PAC donations are unlimited. Some of the $529 million in independent funds raised by super PACS has been at the multi-million dollar level. For example, unions have given millions to Priorities USA, a super PAC that supports Clinton. (The largest contributor to Priorities USA so far is billionaire investor George Soros, who has given a total of $7 million.) Then there are the super PACs that spend against candidates. For example, Thomas Steyer's NextGen Climate Action has spent $4.6 million against Trump. (Steyer is the largest individual contributor so far this cycle, donating a total of $39 million.)

Of course, not every person who donates or makes a political expenditure wants anything from a candidate after an election. But there are a lot people who could feel that they have a claim on the presidential victor, especially those who gave $1 million instead of $100.

And here's where it gets weird. When you look at the top donors this is what you find: Robert Mercer, the secretive billionaire who is co-CEO of the hugely successful Renaissance Technologies hedge fund, has given $22 million to Republicans, including $15.5 million to a super PAC that has spent $1.5 million against Hillary Clinton. Meanwhile, James Simons, who is Renaissance's founder and chairman, has given $12.5 million to Democrats, and Henry Laufer, a Renaissance board member, has kicked in another $7.5 million to Democrats. So no matter who wins, Renaissance is likely to have friends in the White House. So I'll ask you, do you think money in politics doesn't matter?

The 2016 Presidential election with its $1.5 billion price tag (and counting) is a still a live example why refreshing and revitalizing the presidential public financing system is a good idea. It will have to be retooled so that major party candidates have incentives to use it. Better that the candidates feel responsive to all taxpayers than to a few hedge fund managers who all work at the same firm.