US turning into plutocracy as small number of donors buy into power

In the US money and politics are bound in a mutually beneficial relationship

It says something about the topsy-turviness of the Republican presidential race that TV star and frontrunner Donald Trump spent more on his "Make America Great Again" hats in the last quarter than down-the-field candidate Bobby Jindal spent on his entire campaign.

In the US money and politics are firmly bound in a mutually beneficial relationship. The quarterly fundraising figures are as closely watched as the day-to-day polls for indicators of how the candidates are performing. The money race is the “invisible primary” as the cash totals are used as a proxy for viability and popularity.

Large numbers of small donors show broad support which can turn on big donors too. "Success begets success," said Rick Hasen, a professor at the University of California, Irvine who specialises in election law. "Being able to show you have lots of people supporting you is a good way to get the big fish to give you money too."

In this election cycle, insurgent candidates such as socialist Vermont senator Bernie Sanders on the Democratic side and the anti-establishment figures on the Republican side – Texas senator Ted Cruz and political outsiders such retired neurosurgeon Ben Carson – are sucking up lots of cash in small-dollar donations.


Carson collected $20 million (€17.6 million) in the three months to the end of September, leading that quarterly total, ahead of Jeb Bush with $13.4 million and Cruz with $12.2 million.

Billionaire Trump has said he is self-financing his campaign, though he still yielded $3.8 million from 74,000 donors. Carson's fundraising clout is even more impressive: 60 per cent of his contributions – or almost $12.5 million – came from small donors of less than $200. "He has been able to tap into a deep mine of dissatisfaction among conservatives that has allowed him to amass a large amount of money from small donors," said Tony Corrado, professor of government at Colby College in Maine and campaign finance watcher.

Likewise for Sanders on the left: the 74-year-old appeals to grassroots progressives with his populist message about wealth in American politics and taking on corporations. The money has followed. Since April, Sanders has raised almost $41.5 million – more than $27 million in the last quarter – from 680,959 donors. His campaign noted that just 0.039 per cent have reached the $2,700 limit a person can donate to a single candidate.

In other words, he can return to this well. In contrast, Hillary Clinton, his Democratic rival and the frontrunner, is not doing as well among small donors. Donations of $200 or less in the third quarter made up 17 per cent of her fundraising haul, compared with 77 per cent of Sanders.

The presence of the Super PACs – the political action committees affiliated, but not allowed to coordinate, with candidates – skews the field. These groups can raise unlimited sums from big donors, most of which funds valuable TV advertising.

The PAC figures are mind-boggling. Right to Rise USA, the Super PAC supporting Bush, raised $103 million in the first half of the year at a time when he wasn’t a candidate – a move campaign finance observers claim he used to coordinate the fundraising efforts of his PAC. Republican Scott Walker’s PAC, Unintimidated, raised $20 million yet the Wisconsin governor still left the race.

This showed direct contributions are still vitally important. That PAC money can simply be used to support another candidate's campaign. The New York Times reported last week that just 158 families, mostly ultra-wealthy people who made their fortunes in finance and energy, gave almost half of all the seed money raised to support Democratic and Republican candidates: a whopping $176 million.

An indignant Sanders has argued that the US is turning into an oligarchy. A plutocracy is probably more accurate. Sanders’s claims are “essentially correct”, said Corrado. “Campaign financing in presidential races has evolved in a manner that has given great force to the wealthiest donors,” he said. “What we have seen is a transformation where a very small group of about 200 donors are responsible for a large share of money.”

This is not new. About 200 donors to Super PACs in 2012 gave more money than the 4.4 million people who contributed mostly small sums to Barack Obama's re-election campaign, said Corrado. "A lot of the donors are making investments in future public policy," said Paul Ryan, senior counsel at the Campaign Legal Centre.

"They want to have the phone answered, have their meetings made with whoever is in the White House, whoever is in the US Senate. For that reason it is quite common to see big donors simply switch candidates." In America, money buys much more than just campaign hats.