On Political Books

January/February 2012 The Campaign-Industrial Complex

Political reform will never happen until candidates and donors realize they’re being ripped off.

By Walter Shapiro

Republic, Lost: How Money Corrupts Congress—and a Plan to Stop it
by Lawrence Lessig
Twelve, 400 pp.


Campaign costs are increasing faster than almost anything else in this moribund economy, including law school tuition. As recently as 2004, George W. Bush and John Kerry spent about $700 million combined on every aspect of their presidential campaigns. These numbers are now as outmoded as reporters in fedora hats handing their copy to Western Union messengers from the back of whistlestop campaign trains. Projecting from current political fund-raising trends, and using the rule of thumb that 70 percent of all money in politics gets allocated for the media buy, a leading Republican operative and I estimate that Barack Obama and his GOP opponent will end up spending between $1.2 and $1.5 billion on television ads alone in the coming campaign. And that only counts the official spending by the candidates and the party committees on sun-dappled positive spots and grainy voice-of-doom attack ads. Commercials broadcast by lightly regulated super PACs like Karl Rove’s American Crossroads and issue advocacy groups like MoveOn.org could easily add another $500 million to $750 million to push the total spent on TV for the presidential race to more than $2 billion.

Almost all this advertising onslaught will be unleashed during the run-up to the November election. In that final 100-day frenzy, the presidential candidates will become the largest TV advertisers in America, eclipsing General Motors and Procter & Gamble. Nothing in political history will have matched the relentless firepower of next fall’s living-room wars, no matter how close or lopsided the presidential horse-race polls are. And these presidential spots—whose clichéd look and stentorian tone are throwbacks to the 1980s—will only constitute part of the campaign ad clutter that helps explain why Americans hate politics. Watching the five p.m. news in a Louisville hotel room in late October 2010, I counted within a single hour thirty separate cookie-cutter political ads (covering the Kentucky Senate race, House contests in Kentucky and Indiana, the Louisville mayoral battle, assorted state legislators on both sides of the Ohio River, and probably a stray county coroner or drain commissioner), totaling fifteen minutes of the half-hour broadcast.

The 2010 off-year elections may soon be remembered as the good old days of spending restraint. It was not until midway through 2010 that independent groups began to fully exploit the loopholes opened up by the Citizens United Supreme Court decision and the lower-court rulings that followed in its wake.

Still, more than $3 billion was spent on political ads in 2010, with $2.3 billion going for broadcast television alone, according to the research firm PQ Media. Since a reasonable projection suggests that another $2 billion in TV ads will accompany the presidential race, it is easy to imagine that campaigns and independent groups will end up lavishing more than $5 billion on the TV component of Campaign 2012. Throw in another $2 billion or so for the other essential aspects of modern campaigning, from pollsters to direct-mail fund-raising, to an assistant press secretary for tweeting. The result: Politics Incorporated may well raise and spend over $7 billion this year, which would put the industry roughly on par with Visa. This is a far cry from the innocent days when Adlai Stevenson recoiled at advertising agencies selling presidential candidates like soap. But in a nation that lavishes $20 billion on pet food annually, moralistic shock about how much money is squandered on campaign advertising can be overwrought. Yes, political commercials generally have all the intellectual heft of the Kardashian family, but the enduring problem is not the lack of an ennobling political discourse between sitcoms. Rather, the real crisis facing American politics is what elected officials have to do to raise the money to pay for those ads.

That, roughly, is the theme of Lawrence Lessig’s stirring new book, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It. Lessig’s focus is on the legislative branch of government (12 percent job approval), but his argument is actually rooted in presidential politics. A passionate Obama partisan since their days together on the faculty of the University of Chicago Law School, Lessig is suffering the agonies of a true believer confronted with a godlike figure who failed. As Lessig puts it, “The idealist in me certainly could not believe that Obama would run a campaign grounded in ‘change’ yet execute an administration that changed nothing of the ‘way that Washington works.’ But the pragmatist in me also could not believe it.… Nothing close to the reform that Obama promised is possible under the current system.” In Lessig’s telling (and he is exceedingly charitable to the least populist Democratic president since Woodrow Wilson), Obama was upended by the desperate need to placate the special interests, which have a choke hold over congressional legislation. A prime illustration: Obama had to buy off the drug industry with new subsidies as a price for winning their grudging support during the titanic struggles over health care legislation. Lessig’s apologia for Obama contains a whiff of “ If the tsar only knew …” The author, now a Harvard Law School professor, also does not fully appreciate the degree to which Obama’s second term, if it occurs, is already hemmed in by the president’s determination to raise about $1 billion for his reelection campaign and the coordinated activities of the Democratic National Committee. Karl Rove has reveled in correctly pointing out that Obama has already attended twice as many reelection fund-raisers as George W. Bush did at a similar point in the calendar eight years ago. On a typical evening in early November, Obama made a pilgrimage to a high-roller fund-raiser (minimum donation: $17,900 per person) at the Washington home of Dwight Bush, a health care executive with a lengthy background on Wall Street, and his wife, Antoinette Bush, a partner at the blue-chip mergers-and-acquisitions law firm Skadden Arps. In short, these are precisely the wrong people for a beleaguered president to be visiting at a time of nearly 9 percent unemployment and Occupy Wall Street rage against the financial elite. At the beginning of his brief remarks to the forty-five Democratic donors gathered in the Bush backyard, Obama declared, “I want to spend some time just in a conversation with you and answering some questions and getting your feedback.” (Washington backyard fundraisers, by the way, are a comparative bargain: New York donors had to pay a minimum of $35,800 each to attend a small dinner with Obama at the Gotham Bar and Grill in late November.

Presumably, there was no cash bar.) Every president lives in a cocoon, almost never talking to anyone without an appointment. People who give upward of $18,000 to the Obama reelection effort get as their reward a few minutes of seemingly casual, intimate conversation with the president. The danger of such access, in the popular imagination, is that donors will demand and extract explicit quid pro quos—like fixing a corporate tax problem with the IRS. But that is not the way that American politics has worked since the days of Richard Nixon. The real problem is that the inordinate time spent in the company of rich donors leads a president (Democrat or Republican) to absorb the concerns and worldview of those benefactors. Unlike most Americans, everyone at smallroom Obama fund-raisers has been treated extremely well by the twentyfirst- century economy. As a result, when these donors get a few moments with the president, they are far more likely to urge him to get tough with the deficit and rein in entitlement spending than they are to beseech him to reduce unemployment. This fiscal conservatism comes with the territory, even if big-ticket Democratic donors also worry about global warming, support gay rights, and want to go to the barricades to preserve Roe v. Wade. Since the days of Bill Clinton, I have always been amazed by how many wealthy Democratic donors sincerely believe that presidents treasure their policy advice. Presidents are adept at listening with laser-like eye contact as wealthy donors offer their theories about how America should be governed. Oddly enough, this altruistic policy advice tends toward recommendations like cutting the capital gains tax and lessening the burdens of Wall Street regulation.

This is the moment where I must offer the obligatory and truthful “Yes, Republicans are worse” sentence. But the problem is bipartisan. Indeed, gradually falling under the sway of big-time campaign donors is inevitable when political leaders—whatever their party affiliation or ideology—feel compelled to raise vast fortunes to pay for their campaigns.

Lessig sees the dilemma of democracy in much the same terms that Candidate Obama did in 2008—as a matter of the oversize power of lobbyists over Congress. But in Lessig’s shrewd argument, the problem with lobbyists today is not that they flout the law but rather that they slavishly obey it. The occasional Duke Cunningham (bribes for earmarks) and William Jefferson (cash bribes in the freezer) are the outliers, since Spiro Agnew-style cash corruption is mostly a thing of the past. “Yet when lobbying was this corrupt,” Lessig writes, “perhaps counter-intuitively, its effect was also self-limiting.… Lobbyists and members had to be discreet.” Now that lobbying is tightly regulated, and members of Congress rightly fear an unscheduled visit from the FBI, the entire process is far more insidious. These days, lobbyists prosper not from explicit quid pro quos but from the vague sense of obligation that accompanies campaign contributions and organized fund-raisers. They provide legislative and technical expertise (many lobbyists are former top Capitol Hill staffers or specialists in obscure but lucrative regulatory areas); they fund the leadership PACs that help keep legislators like John Boehner on the golf course; and they provide legislators with the ultimate safety net— the promise of a high-paying job if the voters ever turn rambunctious. In fact, Lessig quotes veteran Tennessee House Democrat Jim Cooper as worrying that too many of his colleagues “now view Capitol Hill as a stepping stone to life as a lobbyist.” Small wonder that when a reelection campaign to the House often costs upward of $2 million (not counting independent spending by outside groups), incumbents are understandably wary of doing anything to antagonize the particular lobbyists who are among their most dedicated fundraisers and, yes, friends. In the twenty-first-century Congress, fund-raising never stops, not even for senators at the beginning of a six-year term or House incumbents who just cruised to reelection by a lopsided margin. Lessig seizes on estimates that legislators spend more than 30 percent of their time dialing for dollars. As he writes, “For two or three or more hours every day, as a member fund-raises, she feels the effect of the ‘votes’ of funders.” This creates a type of tunnel vision, where the only voices a legislator hears belong to the wealthy or lobbyists—or party insiders screaming about the need to raise even more money. It is human nature—if you spend more than twenty hours each week making small talk with the affluent, it is hard not to identify with them and their concerns. Lessig’s dead-on understanding of how Congress fails to work has been shaped by his firsthand experience meeting with legislators as a legal expert arguing against electronic copyright statutes that benefit large corporations to the detriment of innovators. “The most striking feature of these exchanges was not that the members disagreed with me,” Lessig recalls. “It was that the members didn’t understand that there was another side to the issue. They had never heard it.” Three hours a day making small talk with would-be campaign donors cuts into the preparation time for even the most dedicated members of Congress.

Like most books fueled by outrage over our current system of funding campaigns, Republic, Lost loses its momentum when Lessig attempts to find a way to change the money-talks system. His notion is to convert the first $50 that everyone pays in federal taxes into “democracy vouchers” that would be given at the taxpayer’s discretion to candidates for federal office. If everyone participated (and they presumably would, because this would be, in effect, free money), these “democracy vouchers” could yield as much as $6 billion to pay for publicly funded campaigns. This would be enough of a subsidy, Lessig theorizes, that candidates in both parties would agree to accept no more than $100 contributions to augment these vouchers.

Without a doubt, the Lessig plan (which has been carefully designed to pass constitutional muster) would be a vast improvement over the current system—just as high-minded proposals for regulating handguns and curtailing the political power of the NRA would save lives. Alas, we live in the real world, in which new major campaign-reform legislation seems as much a liberal fantasy as effective handgun regulation. When it comes to reforming political finance, the core of the problem is that the same Congress that has prospered from the current system would be called upon to change it. To get around this obstacle, Lessig offers a series of impractical scenarios that range from protest candidates who bedevil incumbents in both parties with quixotic primary challenges to, yikes, a full-fledged constitutional convention. But ultimately Lessig admits that his democracy vouchers—even if they miraculously sprang into existence—would not eliminate the loopholes opened up by the Citizens United decision and its ripple effects. As he puts it with admirable in- tellectual honesty, “Even if we win the battle for funding reform, we could still lose the larger war.” The reason is that independent spending by super PACs and issue advocacy groups—funded by unlimited and, in some cases, undisclosed donations—could dwarf the $6 billion or so raised by democracy vouchers. The higher the percentage of overall campaign costs that comes from independent groups, the more candidates after the election are likely to feel beholden to them, even if there was no formal coordination during election season. The sad fate of the McCain-Feingold Act should remind us how quickly even the best reform legislation can be eviscerated by court decisions, regulatory permissiveness, and the creative ploys of political consultants. As a result, the Lessig plan would probably have the unintended consequence of moving the locus of power in politics from candidates and parties to independent groups on both the right and left.

Before we head for the window ledge in complete despair over the chances of even modest changes in the crass calculus that governs Washington, let us return to where we started—the roughly $1.5 billion that both 2012 presidential nominees will spend on TV ads. From the outset, the Obama political team has planned on bludgeoning his 2012 Republican rival into submission by massively outspending him. There may indeed be no connection between that resolve and the restraint that Obama and company displayed toward reining in Wall Street in 2009 and 2010, but a skeptic would be forgiven for thinking otherwise.

At minimum, the widespread suspicion that Obama is beholden to his campaign contributors both adds to the voters’ corrosive cynicism about government and accentuates Democratic disillusion with the president. Whatever the policy implications, it is undoubtedly true that as president (and as a 2008 candidate), Obama is exceedingly familiar with the color schemes and dimensions of certain Park Avenue living rooms. This assiduous presidential courting of the Democratic Party’s financial elite may ultimately bring in, say, an extra $100 million for the Obama campaign. But it is highly questionable whether the TV ads that money will buy will be enough to compensate for the politically damaging perceptions that flow from the president’s fund-raising ties to the mega-rich.

This is where most analyses of the problems flowing from our Gilded Age system of political finance end. It is as if the Wordsworth verse were simply “Getting, we lay waste our powers” rather than “Getting and spending.” And it is the spending side of the equation—what Politics Incorporated does with the money that candidates can mortgage their integrity to raise—that deserves equal scrutiny.

The dirty secret of major-league politics is that a significant portion of the money spent on TV spots is wasted. (Presidential primaries—especially during the early phase when candidates are introducing themselves to voters—are a rare exception to this general rule). The reason why voters are unmoved by most campaign spots in presidential campaigns is obvious: the effectiveness of television ads is inversely proportional to the amount of other information that voters have about the candidates. The presidential debates, the national conventions, and the incessant news coverage mean that few voters will lack a sharp sense of Obama and his Republican challenger. The 2012 election will be, more than anything, a referendum on Obama’s first four years in office. All the gauzy commercials in the world cannot erase the harsh economic memories of Obama’s first term. (When Ronald Reagan ran for reelection in 1984, the economy was roaring back at such a rapid pace that it justified the “Morning in America” spots that Ad Age later judged the best political commercials of the twentieth century.)

Okay, in an election as close as the one in 2000, it may be easy to imagine that the outcome could have hinged on a single TV ad (“Please be careful when you fill out your butterfly ballot. You don’t want to vote for Pat Buchanan by mistake”). But in most cases, commercials during the fall presidential election campaign are instantly forgettable. To illustrate: can you remember a single commercial aired by Obama or John McCain after the conventions in 2008? I have been covering presidential politics for four decades, and I couldn’t conjure up a single ad without prompting. Part of the explanation for the vapidity of these commercials is that, with the White House at stake and most decisions dictated by a committee, presidential campaigns tend to avoid anything risky or edgy, which is why political advertising is rarely as original as corporate spots.

Political reporters—relieved to be writing about an objective measurement like money raised—are often credulous when it comes to looking at campaign fundraising in isolation rather than linking it to how the money is likely to be actually spent. For example, many Democrats must have felt a bitter chill when the New York Times reported in mid-October,

Mitt Romney has raised far more money than Mr. Obama this year from the firms that have been among Wall Street’s top sources of donations for the two candidates. That gap underscores the growing alienation from Mr. Obama among many rank-andfile financial professionals and Mr. Romney’s aggressive and successful efforts to woo them.

You could just imagine loyal Democrats reading this and instantly lamenting the passage of Dodd-Frank. A few days later, the Washington Post responded with its own article, suggesting that Obama was doing fine in fund-raising among the financial elite when you also count the money donated to the Democratic National Committee for the 2012 campaign. But the Post story also overhyped the gravity of this financial competition: “The battle for Wall Street cash has become a crucial subtext in the 2012 campaign.”

This is ludicrous—voters in Colorado and Florida are “a crucial subtext” in the 2012 campaign. Financiers, no matter how intense their yen for politics, are comparatively bit players. Obama is going to corral so much money for his 2012 campaign that $75 million (a guess at the upper limit of the potentially lost swag from Wall Street) is little more than a rounding error. Sure, there are moments in politics when $10 million or $3 million represent the difference between a raucous election-night victory party and a wake. If Tim Pawlenty, for example, had had $3 million more in the bank at the time of the Iowa straw poll, he would never have dropped out of the GOP race. In a photo-finish Senate race, an extra $5 million can make all the difference. These orders of magnitude rapidly change when you get into the fall presidential campaign. What is misguided about both the Times and the Post stories is that the reporters assume that every single dollar in a presidential campaign shapes the outcome. As a result, the implicit message of this kind of journalism is insidious—that by not completely kowtowing to Wall Street, Obama risks losing the White House.

It is a mistake for political reporters to look at campaign fund-raising totals as if they tell the whole story. Not all campaigns are equally parsimonious in how they deploy their fiscal resources; there is, for example, wide variation in how much consultants take home for producing the ads, conducting the polls, plotting overall strategy, and shepherding the big-donor fund-raising. The finances of campaign consultants remain the biggest continuing mystery in politics. The press pack is often a tiger in its ferocious coverage of politicians, but it becomes a pussycat when it comes to the consultants, who are often invaluable sources. The result is that the personal finances and business arrangements of consultants in both parties are considered a private matter beyond public scrutiny.

This is admittedly difficult information to obtain even for the most hardnosed political reporter. The Federal Election Commission is meticulous about detailing the source of all money brought in by candidates and party committees. But the FEC’s reporting requirements have always been lax when it comes to disclosing where the money goes. The October 2008 spending disclosures by the Obama campaign—which I have picked at random—include slightly more than $1 million paid to Tiger Eye Productions, an Ohio fund-raising firm. There is no way to tell from that line item precisely what the money went toward and what profit Tiger Eye made on the deal. The same is true for the $262,000 that went to the Philadelphia mediaconsulting firm Shorr Johnson Magnus. Most of the Obama funds this late in the campaign were being transferred to state parties ($419,000 to Pennsylvania Democrats, $1 million to the Ohio party). What happened to the money after that—and who the media consultants were who benefited from what was presumably TV spending—is untraceable.

Please understand, I am not accusing the Obama campaign of anything unethical or outside the norms of politics. (Though I am a tad curious about the $1,280 that was spent at Thomas Keller’s signature Napa Valley restaurant, the French Laundry.) The larger point is that the fee structure of any campaign dictates how much of the money from donors ends up paying for prep schools for the media consultant’s children and an addition to the strategist’s beach house. In traditional political campaigns, the media consultant corrals as much as 15 percent of the overall television ad buy as his fee. And that is in addition to production costs and a possible victory bonus. The frequent result: out of every $1,000 donated to a candidate, less than $850 is spent on campaigning. Often general strategists and pollsters are brought in to share the media fee so that no one on the campaign team has economic incentive to complain at meetings with the candidate that so much money is going for TV advertising. Given how much compensation is wrapped up in the campaign’s media budget, it probably is not surprising that political candidates remain the ultimate true believers in the power of television ads in an era of social media and YouTube. These days— especially in presidential campaigns— this t radit ional fee st ructure has been downsized and some consultants (ssshhhh) even work on negotiated flatrate terms. But there is no way for a donor or a reporter to know whether the Obama reelection campaign will be more frugal in its payments to consultants than, say, the Romney campaign. The problem of rapacious consultants remains far more acute in House and Senate campaigns. I have had a series of recent off-the-record conversations with political operatives in both parties who identify specific ad makers as notorious for charging high fees and padding production costs while simultaneously producing ineffective commercials. But like doctors who are prone to misdiagnose, these media consultants mask their incompetence with an engaging bedside manner that wins the trust of candidates. Congressional incumbents often demonstrate their loyalty by sticking with the same consultants who ran their initial winning campaigns, regardless of fee structure. Moreover, when a senator spends three hours on a Wednesday afternoon in a cubicle at party headquarters coldcalling would-be donors, a fund-raising consultant is probably raking off a hefty percentage of the amount raised.

Over the years, I have written several indignant articles about the ways that campaign consultants prosper from the naïveté of candidates and major donors. Much to my surprise in our politics-obsessed culture, these pieces garnered all the reaction of a threepart series on the proper use of the adverb in contemporary Urdu. In hindsight, the problem of overcompensated campaign consultants came across as a victimless crime. After all, who’s going to weep for Hollywood executives, Washington lobbyists, and corporate chieftains whose campaign donations have been squandered?

In truth, the real victims are not the well-heeled donors but every candidate with a shred of idealism who falls under the sway of his or her campaign consultants. Let me explain the connection—and how it relates back to a problem that was identified so shrewdly and so depressingly by Lessig. The most tainted money in politics is not the first million that a candidate raises but the last. The more desperate a candidate, the more willing he is to put ethical beliefs in a blind trust and accept money that comes with winkand- nod strings attached. As Lessig writes, “Influence happens on the margin, and the most powerful are the contributors who stand there.” The more money that the press and the consultants claim is required to run a competitive race, the more likely a candidate is going to brush up against the yellow line to get it. That is what has been happening in recent years as the cost of running for president or for the Senate and the House has doubled or even tripled since 2004.

The depressing result is twentyfirst- century electoral politics—where money talks and everyone else listens. Is this political fundraising system completely impervious to nonlegislative change? Maybe, just maybe, demanding that c ampaigns publicly release the i r cont rac tua l a r - rangements with consultants could put the brakes on the current hyperinflation in the cost of running for major public office. The press certainly lacks the power to obtain these records, and campaigns themselves are unlikely to practice voluntary disclosure beyond what is required by the FEC. But there is one group that may have the market power to change the way that campaigns conduct their internal financial business. Wealthy ideological givers in both parties who live outside the Washington lobbying community should have no incentive to see their money blown on overpaid and underperforming political consultants. Such donors would not tolerate this sort of hidden insider dealing when supporting an art museum or a university. Why should they be any less responsible in their political philanthropy?

This is not a panacea, just a way to begin to bend the cost curve of politics. Believe it or not, there probably is a ceiling on the amount of money that can be effectively spent on political campaigns. Both Meg Whitman and Linda McMahon squandered nearrecord amounts on their 2010 campaigns and still lost despite the GOP tidal wave. Despite spending more than $100 million (or about $200 per vote), Michael Bloomberg won reelection to a third term with just 51 percent support. Putting aside these self-funders (plus the star-crossed Jon Corzine), the evidence suggests that many senators and congressmen in both parties are frustrated with the insatiable demands of the permanent fund-raising campaign. Maybe someday enough of them will rebel against constantly calling strangers whose names appear on fund-raising call sheets and demand that their high-priced consultants construct a winning campaign for less money.

Like Lessig, I despair over our current dollar-driven deadlock of democracy. And like Lessig, I may be guilty of clutching at straws in my hopes for even incremental change. But the ultimate responsibility for the current system lies with elected officials from Barack Obama to the Tea Party zealots who dominate the freshman class in Congress.

They are the ones who “approve this message” on shrill, deceitful, and often ineffective campaign spots. They are the ones who have allowed themselves to be convinced that making the moral compromises demanded by the current fund-raising system is their only way to return to office. And too often, they are the ones who have been played for suckers by their campaign consultants. In fact, maybe we can start of a rebellion by major donors and candidates united under the banner “I am not a schnook.”


If you are interested in purchasing this book, we have included a link for your convenience.


Walter Shapiro , a Washington Monthly contributing editor, is a special correspondent for the New Republic and writes for Yahoo. He is currently covering his ninth presidential campaign.

Comments

  • janinsanfran on February 04, 2012 12:01 PM:

    That just might be one of the most lucid descriptions of what's wrong with our democracy that I've ever read.

    The other constraint that will eventually tend to break up the current system is the spread of niche "information" systems in which we all live in personalized information bubbles. Hard to see how this broadcast model translates to that world.

  • school grants on July 26, 2012 5:05 AM:

    The other constraint that will eventually tend to break up the current system is the spread of niche school grants
    "information" systems in which we all live in personalized information bubbles.