TOPICS > Politics

How Does Outside Money Flow Into Campaigns?

November 2, 2010 at 5:25 PM EDT
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Paul Solman tracks the outside money pouring into some campaigns and examines how big of an influence they have. This is all part of his regular reporting on 'Making Sense of Financial News'.

PAUL SOLMAN: Another campaign season, another campaign ad record, some $3 billion spent this midterm year, up from $2.6 billion during the last midterm.

NARRATOR: But Conway is the wrong way for Kentucky.

PAUL SOLMAN: A recent Supreme Court decision, Citizens United, lifting limits on corporate and union spending, is making a big difference, says political scientist Tom Ferguson.

THOMAS FERGUSON, senior fellow, Roosevelt Institute: Citizens United for sure made it not only legal, but respectable, to just spend any amount of money you want on anything, as long as you didn’t hand it to a politician formally in a bag.

PAUL SOLMAN: Politicians and parties still face spending restrictions, but, asks Republican lawyer Ben Ginsberg:

BEN GINSBERG, former Bush-Cheney campaign attorney: How can you have too much speech in a democracy? The Supreme Court decision said that the restrictions on speech by corporations and individuals was an unconstitutional infringement on their free speech rights.

WOMAN: Sharron…

WOMAN: … you’re too dangerous…

MAN: … to have real power…

MAN: … real power…

WOMAN: … over real people.

NARRATOR: AFSCME is responsible for the contents…

PAUL SOLMAN: And so we have unions battling corporations as never before.

NARRATOR: Paid for by the U.S. Chamber of Commerce.

PAUL SOLMAN: But the Citizens United decision, coupled with the Republican filibuster of a bill to force full disclosure of third-party ad-buyers, has also meant more money from anonymous groups this year.

ACTOR: Gramps is sad. Obama cut $455 billion from his Medicare.

PAUL SOLMAN: This ad is part of an estimated $90 million blitz againstso-called Obamacare.

ACTOR: I don’t know what smells worse, my diaper or this new bill.

NARRATOR: The Coalition to Protect Seniors is responsible for the content of this advertising.

PAUL SOLMAN: But who is the Coalition to Protect Seniors?

EVAN TRACEY, chief operating officer, Campaign Media Analysis Group: Well, we don’t know.

PAUL SOLMAN: Evan Tracey runs the Campaign Media Analysis Group, which tracks political ad spending.

EVAN TRACEY: There’s a lot of these groups that have names very similar to this that really aren’t disclosing who is funding the ads.

PAUL SOLMAN: Even The New York Times couldn’t trace the wise guy baby. Reporter Mike McIntire tracked the funding back as far as one Jay Handline, who brokers health insurance in Florida and runs Dance Trance, an exercise venture with no obvious political bent.

JAY HANDLINE, Dance Trance: When students leave Dance Trance Fitness, I want them to turn around and look back and go, whoa.

PAUL SOLMAN: Handline didn’t return our calls. He told The Times, “I can’t give you any details about where the money came from.”

NARRATOR: You have seen the ads, millions being spent by right-wing groups to buy an election, all from secret donors.

PAUL SOLMAN: Democrats have tried to make hay of the fact that Republicans seem to be relying heavily on secret funding this year. But when it comes to spending by candidates and parties, with the old contribution limits and disclosure rules, says ad tracker Tracey, Democrats hold the edge.

EVAN TRACEY: It’s almost like the fridge is constantly being restocked. In other words, there’s nobody that’s lacking for money.

PAUL SOLMAN: Tom Ferguson of the liberal Roosevelt Institute wrote the book on politics and money “Golden Rule,” as in, he who has the gold makes the

rule. He says Vermont Senator Jim Jeffords’ 2001 switch from Republican to Democrat proves that firms get what they pay for.

THOMAS FERGUSON: When Senator Jeffords switched parties, he also changed the balance of power in the Senate from control by the Republicans to

control by the Democrats. Right at that point, the stock values of companies that were heavy givers in Republican soft money dropped.

PAUL SOLMAN: Ben Ginsberg advised the Bush campaign in the Florida hanging chads recount and the soft money Swift Boat ads against John Kerry. To him, the Citizens United decision and anonymous donors are not the problem.

BEN GINSBERG: The reason that the system is out of whack is that the reforms of the last 35 years have tried to reduce the amount of money in politics. What they have succeeded in doing is reducing the amount of money that candidates in political parties can raise and spend. So, therefore, the loudest voices in the political debates belong to special interest groups, at the expense of candidates.

PAUL SOLMAN: Do you think public financing would be a good thing if we had the resources?

BEN GINSBERG: No. The government ought not to be providing what amounts to food stamps for its politicians.

PAUL SOLMAN: Tom Ferguson disagrees.

THOMAS FERGUSON: The bottom line on this is very simple. Campaigning is expensive. Somebody has to pay for it. Either we all pay a little, or they control it by paying all of it.

NARRATOR: This ad is not paid for…

NARRATOR: … by the corporate front groups.

PAUL SOLMAN: Pernicious propaganda? Free speech? Both? You get to decide.

NARRATOR: American Crossroads is responsible for the content of this advertising.