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Tilting at Windmills

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May 18, 2008
By: Kevin Drum

THE SMALL DONOR REVOLUTION....Mark Kleiman argues today that for the past couple of decades the Democratic Party has been in hock to corporate interests. Not as much as Republicans, maybe, but enough to prevent Dems from pursuing lots of worthy public policies that a party of the common man ought to be pursuing. I assume he'll get little argument on this score from the lefty blogosphere, but then he muses about how this might change in November:

Assume for the second that November goes well, with a big win for Obama and increased majorities in both Houses. Assume in addition that the Obama money machine can keep cranking even after he becomes President, and can substantially replace the usual big-money interests as a source of campaign funding for Congressional Democrats.

One implication of that ought to be that some popular (and in some cases populist) programs that Democrats have been shying away from since 1974 because they can't afford to lose the donors suddenly become possible.

Mark has a list that includes things like copyright reform, hedge fund taxation, credit card regulation, and so forth, but it strikes me that he's putting the cart before the horse here. I chatted with him about this on Friday, and his basic argument is that Obama has created a spectacular money machine that he can call on at will. Got a congressman who's nervous about voting for healthcare reform because he'll lose the support of the insurance industry? No problem. President Obama can send out an email to his list, raise a couple mil overnight for the guy's reelection campaign, and there are no more worries about the insurance industry. Ditto for telecommunications, entertainment, and high tech cash.

This sounds great, but I'm skeptical. Obama has been raising enormous amounts of money from small donors, but he's been raising that money from people who are enthralled by Barack Obama and are willing to donate money to help Barack Obama become president. Once he actually becomes president, however, a lot of the thrill goes away. Partly this is because once the deed is done, the deed is done and people move on. Partly it's because the real-life Barack Obama is going to have to make compromises and tradeoffs just like any other real-life politician and his supporters will inevitably become a little less enthralled by him over time. Partly it's because people who are willing to donate to the Obama campaign aren't necessarily also willing to instantly open their wallets for other people just because Obama asks them to.

Plus there's this: Although Obama, and to a lesser extent online organizations like MoveOn, have been able to raise huge amounts of small-donor money, "huge" is a relative term. The amount may be big compared to my house payment, but compared to the cost of an entire election cycle it's still fairly small. This means that big corporate donors are going to stay pretty important.

Still, it's an interesting topic. Just how far is the small-donor revolution going to take us? I'm not convinced Mark is entirely wrong about this, but I'm not really convinced he's entirely right either — and it seems like a conversation that's worth having in public, not just as party chitchat. Should big corporate interests be feeling scared right about now? Comments are open.

Kevin Drum 8:04 PM Permalink | Trackbacks | Comments (41)

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I think that the key is for Obama to score some early legislative victories on important issues, and against tough opponents, such as those he will face on health care, financial services, etc. If people see that there is substantial return on investing political capital with Obama.

The great unknown in this issue, of course, is foreign policy. Who knows how, when, or if events in Iraq, Afghanistan, Iran, and elsewhere come 2009 will impact the domestic political debate here.

Posted by: AB on May 18, 2008 at 8:20 PM | PERMALINK

Should big corporate interests be feeling scared right about now?

Big corporate interests provide lots of goods and services to the public. They employ lots of people, and those people in turn contribute a lot to the local economies through their own purchases of goods and services. Lots of small businesses earn their livings by providing goods and services to large corporations.

Big corporate interests will always be heard from.

Consider, for example, the corn growers of Illinois: Obama backs them. Or consider John Deere Health Care (or John Deere and Caterpiller manufacturers) in Illinois: Obama backs them too. Copyright reform? Obama has been open to suggestions from the universities, private research labs, and federal labs in Illinois. Obama has a liberal voting record, but he hasn't voted against the corporate interests of Illinois.

Has he?

Posted by: spider on May 18, 2008 at 8:38 PM | PERMALINK

Two wrongs don't make a right. Gladiatorial combat is no way to solve anything, even if the weapons are dollars.

The way to put business in its place is simply to ENFORCE THE LAW. Do that, comprehensively and uniformly, and you break the back of the current crop of businessmen, who have grown accustomed to unaccountability. Let the honest men come back. They have better ideas than the crooks and they work harder.

Posted by: Frank Wilhoit on May 18, 2008 at 8:40 PM | PERMALINK

Kevin Drum's skepticism is amply justified.

Even if small donors in large numbers could be mobilized on behalf of specific Congressmen to pass specific pieces of legislation, the time required to organize such an effort would stretch well beyond the first two years of Obama's Presidency, when his major legislative initiatives would need to be introduced. By Year 3 of an Obama Presidency, the magic is likely to be gone. Moreover it is a lot harder to get large numbers of small donors excited about a bill than about a candidate, and even harder to get them excited about several bills than about just one. Copyright reform? Credit card regulation? These might be good ideas, but they aren't driving contributions to Obama now and wouldn't drive contributions to supportive Congressmen later. Finally, Obama as President would need success on one or two big domestic issues to define his administration. If a Congressman backs him on health care reform but not on regulation of credit card companies or taxation of hedge fund income, will that Congressman lose Obama's support? Not likely.

There is one other aspect to this that Obama's supporters -- I am not one -- need to think about. Obama's campaign rhetoric about rejecting the "old politics," and "fighting the special interests" has been working for him in this election cycle, but it isn't reflected in his record either in Illinois or in Washington. His record is that of a fairly conventional Chicago reform liberal, able to bring people of differing views together on legislation that they did not consider life and death issues but not a major player on any of the big stuff. I don't know if Obama believes himself all the talk of his being a new kind of transformational leader -- actually, I suspect he does -- but in his real life he's never actually been one before. If anything, he's shown himself to be somewhat comfortable with the "old politics" of balancing organized interest groups and making incremental progress on a small number of issues in which he takes a personal interest. A lot of his supporters right now are projecting onto Obama's almost-blank screen, imagining that he will do the things they believe they would do in his place. They are likely to be disappointed.

Posted by: Zathras on May 18, 2008 at 8:41 PM | PERMALINK

I agree with AB. And I hope Publicly Financed Campaigns is an early achievement.

Until then rather than just referring his donors to other candidates can't Obama just use his campaign fund as a leadership PAC to support friendly candidates?

Posted by: Paul Silver on May 18, 2008 at 8:42 PM | PERMALINK

I would love to see a good test case, supported by the executive and legislative branches, that would challenge the notion of corporate "personhood." I think there is no single more fundamental change that could be made to our current political and economic structure than to change the underlying notion of the corporation as from the primary arbiter of politics and culture, to a means to a set specific ends (production, economic development, etc.)

Posted by: Osama Von McIntyre on May 18, 2008 at 8:47 PM | PERMALINK

What % of campaign costs derive from TV ads that benefit MSM - private distributors on public airways? 10%? 60%? Legislate that during campaign season, 1-3 min per hour is dedicated to open free campaign spots for national politicians and decreasing ratio for decreasing district size.

Posted by: Doug Jacobson on May 18, 2008 at 8:50 PM | PERMALINK

The current small donor model is a stop-gap until public financing of all elections. If the Obama Admin can pull that off, he wouldn't need to guarantee such a huge volume of fundraising...

Posted by: Omar on May 18, 2008 at 8:52 PM | PERMALINK

I'm not entirely sure that a "spectacular money machine" controlled by a president is necessarily significantly less problematic than pots of money controlled by corporations, even given that the stated goals would be different. I don't think either should be in the business of essentially bribing legislators to vote their way with promises of campaign funding.

I'm a Clinton supporter, but I wouldn't approve if she were telling her supporters to stop contributing to outside groups and do only what she tells them to with their money.

Posted by: Swift Loris on May 18, 2008 at 9:01 PM | PERMALINK

I agree with your analysis. Obama is neither rewriting the rules of the game nor, to address a recent paranoid fantasy some people have had, consolidating his power and drawing all the fundraising strings into his fist.

Btw, the trackback link to this post seems to go to a google blog search url. Is it coded incorrectly?

Posted by: Mithras on May 18, 2008 at 9:04 PM | PERMALINK

Seems to me that the answer depends on some concept analogous to price elasticity of demand: given where we are on the curve relating amount (or share) of contributions to impact on policy and legislation, how significant will a minor but non-negligible change be?

I'm guessing it could actually be quite significant, if only because corporate interests tend to be conservative and reactive -- they hedge their bets except with regard to issues they consider truly vital -- while a political organization interested only in swinging a few votes on a particular bill can focus flexibly and selectively, and thus can have a major impact.

Then again, maybe someone with actual experience in the field could comment...

Posted by: bleh on May 18, 2008 at 9:08 PM | PERMALINK

If you look at many of the progressive losses and victories of the past 20 years, it's not clear that progressives always have to get near actual parity in spending to win on their issues. The typical ratio isn't 10 or $100 million to 5 or $50 million, it's 10 or $100 million to diddly. So yeah, an organization that can get 100,000 people to sign a check or make a phone call on a few days' notice might well have some serious impact.

Of course the question then arises: what uses will the people who have built this network actually think worth using it for? And I'm not sure how much that meshes with the traditional progressive agenda.

Posted by: paul on May 18, 2008 at 9:09 PM | PERMALINK

Obama has rightly called the "summer moratorium on federal gasoline taxes" a useless gesture. What does he say about the federal tariff on ethanol? Doesn't he support the "large corporate interests" on this issue?

Posted by: on May 18, 2008 at 9:14 PM | PERMALINK

oops. that was spider commenting at 9:14pm.

Posted by: spider on May 18, 2008 at 9:16 PM | PERMALINK

Barack Obama is going to have to make compromises and tradeoffs just like any other real-life politician and his supporters will inevitably become a little less enthralled by him over time.

Won't that depend on how well the Obama fundraising translates into voters for the whole ticket? Sixty senators and a larger # of reps might permit more of the agenda to be addressed early in his term which would result in less disillusionment. Your centrist cynicism may lead you to be more disappointed than Obama's backers.

Posted by: JM on May 18, 2008 at 9:29 PM | PERMALINK

Mithras: The trackback is correct. We disabled trackbacks long ago because there was no good way to control the spam. Rather than get rid of it altogether, though, I replaced it with a Google Blog search for each post's permalink. Better than nothing, I figured.

Posted by: Kevin Drum on May 18, 2008 at 9:31 PM | PERMALINK

Maybe we should start pressing Obama for some priorities he intends to devote his first 100 days. I hope he would include credit card reform, for example, and call Biden, D-MBNA on the carpet and read him the riot act about it. Maybe a sin tax on lobbying included in a larger bill imposing a surtax on excessive CEO compensation? We can dream, anyway.

Posted by: loki the michief maker on May 18, 2008 at 9:46 PM | PERMALINK

The Democratic donor base consisted mostly of small donors prior to 1972. After the '72 elections, the Democratic leadership actively courted big corporate donors in large part because they didn't want any more McGoverns. The Democrats would be happy to use the current small-donor base to supplement corporate donors, but never to replace them, for the reason cited above.

Posted by: dr sardonicus on May 18, 2008 at 9:48 PM | PERMALINK

I think a lot of small donors are going to be out of money if nothing is done about the cost of living and growing income disparity. Who funded FDR's campaigns?

Posted by: B on May 18, 2008 at 9:54 PM | PERMALINK

Small donors can pour money in, but all it does is raise the amount of money in the system. Corporations can always spend more, and when they need to, they will. Reform is necessary. And frankly, people shouldn't have to fund politics to keep it clean. That's perverse.

Posted by: big money donor on May 18, 2008 at 10:43 PM | PERMALINK

Kevin, you're forgetting about the absolutely seismic shifts brought about by Daily Kos focus and fundraising. That's not going to diminish....

Posted by: jane on May 18, 2008 at 10:44 PM | PERMALINK

"Still, it's an interesting topic. Just how far is the small-donor revolution going to take us?"

Not very far, unless or until full public financing becomes a reality.

Patrick Meighan
Culver City, CA

Posted by: Patrick Meighan on May 18, 2008 at 10:51 PM | PERMALINK

I would love to see a good test case, supported by the executive and legislative branches, that would challenge the notion of corporate "personhood." I think there is no single more fundamental change that could be made to our current political and economic structure than to change the underlying notion of the corporation as from the primary arbiter of politics and culture, to a means to a set specific ends (production, economic development, etc.) Posted by: Osama Von McIntyre

Bingo. Santa Clara was a questionable ruling to start with (if indeed it was ever really more than improperly inserted dicta) and the consequences have been enormous.

Posted by: on May 18, 2008 at 10:56 PM | PERMALINK

Bingo, I couldn't figure out what notion of the corporation as from the primary arbiter of politics and culture, to a means to a set specific ends (production, economic development, etc.)

What does "to a means to a set" mean? Corporations are the primary arbiter of politics and culture? Confusing the means with the ends, more like.

Posted by: TJM on May 18, 2008 at 11:06 PM | PERMALINK

Corporations have to be taken out of the system, and that's going to require tackling, for once and for all time, the issue of corporations as persons (Santa Clara County v. Southern Pacific Railroad). You do that, and corporations lose their rights of free speech as persons, as well as a slew of other people's rights (like their ability to get away with polluting the environment with toxics due to persons' fourth amendment rights, etc.)

Posted by: Etoufe' on May 18, 2008 at 11:40 PM | PERMALINK

Of course they shouldn't. All that's going to happen is that the price might go up a little.

Posted by: Sean Riley on May 18, 2008 at 11:49 PM | PERMALINK

Hi all --

Osama again. The sentence was supposed to read:

.. to change the underlying notion of the corporation from the primary arbiter of politics and culture, to a means to a set of specific ends (production, economic development, etc.)

What I meant was that the corporation was traditionally seen, until the post- Civil War era, as an instrument for organizing a specific endeavor (a bridge, a railroad, etc.), when the capital requirements exceeded what an individual was likely to be able to raise.

The "consensus culture" of the United States is primarily determined by the products we consume, including media products--the movies we see, the news we read, the music we listen to, etc. I took a marketing class a couple years ago, and the professor asserted that we are subjected to over 3,000 commercial messages per day. I cannot vouch for the number, but on reflection it does not seem unreasonable.

A corporation can be sued by its stockholders for persuing any objective other than maximizing shareholder value. To give such an instrument "rights" to free speech, when they--and only they--have the means to have their speech broadly heard, colors almost every aspect of American life. By their very nature, corporations have a set of interests that is divergent from that of the general public good.

I have nothing against business or businessmen (I have a small company myself). But take a look at the degree to which our political system is responsive to narrow corporate interests. When a business or industry employs a lobbyist, or makes significant political contributions, it is to advance their interests where it diverges from the general public interest.

But, because corporations are, currently, understood to have the "right" to free speech, all attempts (thus far) to curb purchased political influence has been interpreted as an unconstitutional abridgment of their rights.

Posted by: Osama Von McIntyre on May 19, 2008 at 12:05 AM | PERMALINK

Before we can answer this (and I tend to agree with Mark-with-a-k on this), one issue is the real mix of Abama's donor base - remember that everyone who buys a $5 keychain or bumpersticker is officially a 'donor' as they have been counting them - so they have a huge number of very small donors - but I wonder how much they raised from them? I'd kill (OK, wound) to see a breakdown of the amounts raised by size of donor in his campaign...anyone have any pointers? Because this is what will drive the ability to do what Kleiman suggests post-election...


Posted by: Armed Liberal on May 19, 2008 at 12:30 AM | PERMALINK

The current small donor model is a stop-gap until public financing of all elections. If the Obama Admin can pull that off, he wouldn't need to guarantee such a huge volume of fundraising...

Posted by: Omar on May 18, 2008 at 8:52 PM

What Omar said!

Posted by: Jim in Chicago on May 19, 2008 at 1:27 AM | PERMALINK

Oboma was not the pioneer of the small low cost Internet donation model. It was Howard Dean. Now; Oboma took this model too a newer and higher level, but he was not the originator. But Barack and Howard are on the same page. A page to create a new political fundraising and 50 state campaigning and organizing model that the Repug Lizard's will have many hard years to try to copy. Rock on Barack and way to go Howard. Love you both.

Posted by: DaveA on May 19, 2008 at 3:35 AM | PERMALINK

Isn't all this talk about challenging corporate "personhood" a little premature, unless or until a President Obama can re-cast the Supreme Court? Because that's where the question will ultimately end up.

Posted by: dougR on May 19, 2008 at 8:09 AM | PERMALINK

On the question of corporate personhood (because I truly don't know the answer to this question):
Are corporations subject to the same campaign contribution caps as us meat-people? I can only give a few thousand dollars to each candidate I support, right? Does that hold for corporations (as legal persons)?
I'm guessing that it doesn't. If it did, PACs would have no real influence, because they'd just be able to act like a single person. And the DNC/RNC would just be big overgrown donors, able to help lots of individual campaigns, but not too much per candidate.
If this is the case, then aren't we-the-people actually second class citizens, when it comes to campaign contributions? That seems a little bit awkward, from a framers/founding-fathers point of view.
Again, I don't know the legal rules on corporate contributions. Anyone?

Posted by: Govt Skeptic on May 19, 2008 at 8:47 AM | PERMALINK

If I remember correctly a while back I came across a blog post concerning a possible amendment to the constitution considered by the founding fathers that would not have given corporations the rights of citizens. The purpose of the amendment was to relegate corporations to some sort of second class entities that could not enjoy the rights described by the Bill of Rights for people. Needless to say the amendment was not adopted. But it shows that the founding fathers had an inkling of what was to come.

I may have read it here on Kevin's blog as a matter of fact. Can't be sure though.

Posted by: leftcoastindie on May 19, 2008 at 11:19 AM | PERMALINK

I did some rough calculations a few years ago and it turns out the typical corporate investment in politicians had almost a 1,000 to 1 rate of return. Ask Disney how much the copyright extensions are worth, or the credit card companies how much they've made on excessive fees and usorious interest rates.
The point is that if Kevin is correct and the money can keep flowing to Barack and his extended team in Congress, we can avoid those corporation-favoring payouts from our personal lives and federal checkbook. Imagine if your credit cards were capped at 18% and overlimit fees and late payments were reduced to a couple bucks. Imagine if Pharma couldn't get a new patent by changing the color of the pill.
This is a fight worth having.

Posted by: Common Sense on May 19, 2008 at 11:27 AM | PERMALINK

There is an easy fix to this that would REQUIRE small donation/small donor power: ban any and all corporate political donations. Corporations, regardless of what the totally compromised SCROTUS has said, are NOT people and cannot have the rights of actual human beings. Corporations exist ONLY on paper, not in reality. Corporations cannot vote, do not live and breath, do not worry or need healthcare, etc. Also, no corporation can have a voice because any attempt by a CEO and board of directors to say what a corporation "stands for" is bogus from the start. Did they poll their entire work force (what REALLY makes the corporation) or did they just pull an opinion out of their personal asses? We all know the answer to that.

No political donations of any kind from corporations allowed.

Tied to that, set a maximum, inflation-indexed individual donation limit at $5000, reinstitute the Fairness Doctrine and/or require ALL networks, whether satellite, cable, or broadcast, to GIVE a certain amount of time to candidates for political adds. No ifs, ands, or buts.

There. Fixed.

Posted by: Praedor Atrebates on May 19, 2008 at 11:29 AM | PERMALINK

I understand the whole "oooh, evil corporations" and the personhood issue. I don't agree with the position but that's a different issue. FindLaw is a great site for basic information. See this article for a primer.
For example: Direct corporate contributions to candidates are obviously prohibited, but so are any uses of corporate facilities, resources, or employees provided by the corporation to a campaign.

Corporations as well as unions may communicate with their restricted class. In the 2000 election cycle, the AFL-CIO alone reported spending over $4.1 million in union funds on federal campaign communications

PACs:The PAC in turn can contribute up to $5,000 per election (the primary and general elections each count as one election)

Posted by: TJM on May 19, 2008 at 12:09 PM | PERMALINK

Posted by: Praedor Atrebates on May 19, 2008 at 11:29 AM | PERMALINK

Spot on.

Posted by: e henry thripshaw on May 19, 2008 at 1:15 PM | PERMALINK

What makes Mark's theory interesting is that it's kind of about solving the real problem that underlies politicians' failure to act on these issues - they're all collective action problems. The group that stands to be hurt - in most of these cases, like hedge funds or credit card companies - would be hurt a great deal. The benefits accrue in relatively small increments to a large group of people. So the people who stand be hurt are active and vocal, those who stand to gain have a hard time organizing and being heard. If you only had some mechanism for capturing all of those who benefit, you might have a shot... And online organizing and donating networks seem like they are a part of the solution. Obama has certainly built an impressive one.

I think Kevin is right, though, that you're going to have a hard time getting people together on most of these issues. The benefits that accrue to them are still small and there isn't the positive sense of leading someone to the Presidency. You might be able to mobilize people on an issue like health care reform. But copyright? Forget it.

Posted by: EG on May 19, 2008 at 1:24 PM | PERMALINK

"President Obama can send out an email to his list, raise a couple mil overnight for the guy's reelection campaign".

Can you imagine the uproar this would cause if instead of Obama it was McCain doing this?

So that's the "change", "democracy" Obama stands for?

I thought it was too much to talk about Kool-Aid, but now I can really see it.

Posted by: must be crazee on May 19, 2008 at 2:24 PM | PERMALINK

I'm skeptical at least in the near-term because it seems like there are a lot of Dems(maybe even including Obama) who are philosophically fairly pro-business to begin with. They largely aren't champing at the bit to crack down on corporate America and only being held back by the need for campaign funds. Further, many of them would probably rather be beholden to business and interest group money where the returns are fairly well-known and the expectations are clear and familiar. Constituents might ask them to do any old thing, might withhold money over issues that seem arbitrary or pop up unexpectedly, etc. It is going to take a whole lot of turnover and a whole lot of moreandbetter Democrats who come up through the system as dedicated small-donor-financed reformers to get past that culture. I think small donor money can make a big difference and provide the background conditions necessary to finally change the culture in DC, but it's going to be a long, long game, and it's going to take a whole lot of discipline and organization on our side.

One thing that worries me about Obama's rapid consolidation of this movement is that he's making it a lot easier to control and coopt. I'm wary of the whole online donor base being moved within the party and put in control of basically one person like this. I love what he has accomplished and how he has embraced our approach, but he's asking us to trust him with a whole lot. If he takes that and truly leads as you hope, it might well speed up the process, but if not, it could set things way back too. We'll see.

Posted by: J. Dunn on May 19, 2008 at 2:37 PM | PERMALINK

Why is every so confident that the internet small donor system is squeaky clean? It isn't. Not by a long shot. Everyone has just given it the clean bill of health by repeating over and over that it is the good little guy system versus the big bad donor. However, no one knows since the data is not given out by the campaign nor is it required at the FEC. The squeaky clean internet small donor system is chock full of holes. If you look at the contribution form, the collection process and the verification/monitoring/enforcement system they are so porous as to allow almost anyone to give, give, and give again. Can you imagine the campaign crossing off small donors after they cross the $200 threshold? Can you imagine the contractor money collectors ferreting out abuse when they are the ones getting a percentage of the total take?

The story is that no one is looking because no one cares to look. The campaign, the watchdogs, the FEC have no structures in place to actually evaluate anything that is going on. The internet small donor system is a free flowing cash cow that doesn't pass the smell test. And the money keeps rolling, rolling, rolling in.

Posted by: helene rosenberg on June 21, 2008 at 5:49 PM | PERMALINK



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