The Equilibrium of Campaign Finance

When the Supreme Court announced its decision in Citizens United v. FEC in 2010, the reaction was hyperbolic.  The New York Times lead read:

“The Supreme Court has handed lobbyists a new weapon. A lobbyist can now tell any elected official: if you vote wrong, my company, labor union or interest group will spend unlimited sums explicitly advertising against your re-election.” (NYT, Jan 21, 2010)

In Citizens, the Supreme upheld the longtime ban on direct campaign contributions from corporations or unions, but said that these entities could use First Amendment protections to engage in unlimited speech for or against candidates, as long as it is remained uncoordinated with campaigns.  Shortly after, the Federal Court ruling in SpeechNow.org v. FEC, in conjunction with the Citizens United ruling, gave rise to what have become known as “superpacs,” or organizations whose sole purpose is to spend money on behalf of a candidate or campaign in an independent and uncoordinated way. What distinguishes a superpac from a regular PAC (political action committee)? Contributions to superpacs are unlimited, whereas contributions to corporate, union, and other organizations’ PACs are limited to $5,000.

Independent expenditures were predicted to explode, and they have.  The graph below shows the change in independent expenditures over the last several election cycles.  Clearly, Citizens United (and SpeechNow) have had an effect.  Note that superpacs account for about half of all independent expenditures.

 

Given that President Obama raised about $745 million for his 2008 presidential bid (breaking all previous records), the question of the day quickly became: what will be the relative difference in candidate and independent spending in the 2012 elections?

I even went so far as to wonder whether this would be the first election in history where outside money would surpass what the candidate’s themselves spent on the election. [Spoiler Alert: it’s not.]

With a little less than two weeks to go, I thought I’d look at the data.  A quick glance at the data from the Federal Election Commission, nicely summarized by the folks at the Center for Responsive Politics (opensecrets.org), shows that spending has been fierce, and it seems like President Obama again has the edge. Independent expenditures have been high, but the candidates are doing quite a bit of individual fundraising.  President Obama has raised over $500,000,000 for his cause.  The graph below shows how much the candidates have spent (as of Oct. 25, 2012) individually, and the independent groups for and against them.  It seems like Obama is getting all the attention here.

 

However, it strikes me that the coding here is odd.  Shouldn't we count money spent against Obama as money for Romney, and vice-versa (money spent against Romney as being for Obama)?  After all, an anti-Romney add, is really a pro-Obama ad, right?

If we adjust the data for this coding and look at how much money the candidates and outside groups have spent so far, it looks like this:

And there you have it.  There is a near perfect parity between the candidates.  What Romney lacks in individual campaign contributions, he makes up for with pro-Romney/anti-Obama independent group spending.  And for the liberals who worry that the President is under undue attack by the conservative superpacs, it turns out he makes up for it in individual contributions. 

It seems to me the edge here is still for Obama for two reasons.  One is that he has more cash on hand (unspent raised funds) than Romney (about $100 million versus $63 million).  The other is that since more of the Obama money comes from the campaign, the campaign has better control over how it is spent and where.  This allows the campaign to have better control over messaging and strategy.

I should note that these totals include pro- and anti-Romney money spent during the primary, so it’s not quite true that there is perfect parity in the general election financing.  A more detailed analysis of the FEC filings would be needed to parse out the primary spending; presumably this would also show a slight edge for Obama in the general election.

Whatever else is said about the fallout from Citizens and Speechnow, it turns out that in the 2012 presidential race the new rules have resulted in an even fight, from a financing perspective.

**[Author’s Note: I posted this blog entry yesterday, briefly, and then took it down because of a concern about the correct interpretation of the data posted on opensecrets.org. I have since verified that my interpretation is correct.]