Economic Find: Paying to Politically Play

In American politics, money doesn’t just talk, it screams.  Finances have long influenced elections but, in 2010, the rules of conversation changed dramatically.  That’s when the Supreme Court infamously decided (Citizens United v. FEC) that the First Amendment allows for unlimited corporate (and union) spending in federal, state, and local elections.

Of course, money has always been present in politics.  Lobbying, soft-money, PACs, and even grassroots organizing have long shaped political outcomes.  But, according to the Center for Responsive Politics, the Citizens-United decision now allows for outside political spending that is funded by corporate coffers. The money can’t be used directly for a candidate’s campaign, but can be used externally for ads, phone calls, literature, etc. to sway the public’s opinion about candidates and their issues.  As you can see from the chart below, the 2010 elections felt the impact of this rule change in a big way.

What’s more, the donors for this newly funneled election money don’t have to disclose who they are.  Corporations are not even required to share their political donations with their investors.  Fortunately, a group of money and politics advocates have recently petitioned the SEC to require companies to do just that.  The broader fight is going to have to happen in Congress.  For example, one piece of proposed legislation is the Shareholder Protection Act, which would require shareholder approval to spend corporate funds on political activities.  In the meantime, political analysts are well aware that the 2010 midterms were just a sample for what lies ahead: the 2012 election for President.

 

OutsidePoliticalSpending

 

[add_pdf_link]
 
Created by Member Economist Sue Holmberg and partially based on the Field Guide to the US Economy. “The Price of Influence.” 1.9: p. 11.

October 2011

 

Source:

Torres-Spelliscy, Ciara. 2010 “Citizens United: Waking a Sleeping Giant.” http://business-ethics.com/2010/10/21/1304-citizens-united-waking-a-sleeping-giant/

http://www.opensecrets.org/resources/dollarocracy/09.php

http://www.opensecrets.org/outsidespending/index.php