Cost of Political Campaigns – 2012 US Election

2012 Election Spending Will Reach $6 Billion, Center for Responsive Politics Predicts. The 2012 election will not only be the most expensive election in U.S. history, the cost will tower over the next most expensive election by more than $700 million. The most significant difference compared with earlier cycles is the unprecedented money being raised and spent by outside – and ostensibly independent – organizations, which it is predicted will spend more than $970 million. Post-Citizens United, these outside organizations are dominated by a small number of individuals and organizations making exceptional contributions.

Not only is the total cost of the election record breaking, but the rate at which spending has increased — and continues to increase — in the closing weeks of the election is as well. In particular, outside groups are spending furiously. Spending by these groups, for and against the two main presidential candidates, has grown from $19 million per week in early September to $33 million per week in early October to $70 million during the week beginning October 21.

The presidential election alone accounts for $2.6 billion, which is actually a decrease from 2008 when, all told, nearly $2.8 billion was directed at the presidential race. In 2012, presidential candidates along with major party committees are expected to spend about $2 billion. Outside organizations that report spending to the Federal Election Commission are predicted to spend more than $528 million to influence the presidential race. Spending by the party convention host committees and public funding for the conventions totaled $142 million.

Spending in congressional races is projected to increase slightly in 2012. House and Senate candidates combined will spend about $1.82 billion, up from $1.81 in 2010. House campaign spending alone will total nearly $1.1 billion, a slight increase of 3 percent more over 2010. In the Senate, spending by candidates will approach $743 million, which is down about 7 percent compared to 2010. The increase in the House is mainly among Republican candidates and is accounted for by the big increase in Republican House members due to the 2010 wave election. Incumbents outraise their challengers, in general, and freshmen often raise more than other incumbents because their first reelection campaign is seen as their most difficult. This year is proving no different. Congressional races are being affected by the huge increase in outside spending as well. For just the week beginning October 20, outside spending in the 59 House contests rated either toss up or leaning to one party or the other totaled $41 million. Together, all candidates for Congress have raised more than $1.7 billion, based on data available from the FEC as of October 30, 2012. Incumbents have a sizable advantage, the Center found, with the average incumbent senator raising $11 million over his or her six-year term, compared to $1.2 million for the average challenger, an advantage of nearly 10-to-1. Candidates in open seats raised more than $2.5 million on average. In the House, the average incumbent raised $1.5 million compared to just $245,000 for average challenger. Candidates vying for open seats in the House raised, on average, more than $453,000. Self-funding candidates have spent more than $200 million of their own money to run for office in 2012.

Republican candidates have raised more than their Democratic counterparts in both chambers this election cycle. Republican House candidates have also raised more on average — $712,000 to $594,000, –though Democrats did better than Republicans in the Senate, on average, raising $3.8 million to Republicans’ $2.6 million on average. Overall it appears Republicans will end up collecting $1.1 billion, or 55 percent of the money raised by congressional candidates in 2012. In 2010 overall, Republicans outraised their Democratic counterparts by 15%.

Despite heavy losses by incumbents in the 2010 “wave election,” 2012 is likely to see reelection rates climb back to their usual high levels. Since 1992, House election rates never dipped below 94 percent until they fell to 85 percent in 2010. In the Senate, where reelection rates are more variable, incumbents have nevertheless won in at least 79 percent of their races over the past two decades. Incumbents won reelection 84 percent of the time in 2010.

The potential for huge outside amounts, sometimes realized, sometimes not, has likely helped drive all committees and outside groups involved in these elections to redouble their efforts to collect more money. Outside organizations are predicted to spend $187 million in House races and $258 million in Senate races. Of the $970 million to be spent by outside groups, super PACs (which make only “independent expenditures” and report both their donors and spending to the Federal Election Commission) have, so far, spent $540 million and politically active nonprofits and others have spent $351 million.
What remains unknown — and may never fully be accounted for — is how much money secretive “shadow money” organizations spent, with some investing massive sums on ads, but also on unreported and purportedly “non-political” activities, as the election neared. It may take years to determine how much they spent. Furthermore, it likely will never be known who provided the vast majority of this money, which includes at least $203 million in the last two months. One thing we can say for certain is that the transparency the Supreme Court relied upon to justify this new framework has been sorely lacking.
In addition to the spending reported by nonprofits, however, at least $100-200 million more has been spent by these groups on “issue advocacy” that identifies a federal candidate, but was not required to be reported to the FEC. This is of concern because a number of these organizations — particularly those that have organized since the Citizens United ruling, are spending huge sums and have super PAC counterparts — are primarily political in nature. More disturbing than the secret spending (some of which can be pieced together based on studies of political ads and will eventually be summarized in tax reports to the Internal Revenue Service), is the secret source of this money. With no requirements to disclose where the money is coming from, voters in 2012 have been left with no real means to judge the credibility of the message or consider any hidden agendas leading those donors to give.

The largest of these groups include American Crossroads and its nonprofit “social welfare” counterpart, Crossroads GPS, organizations conceived of by GOP strategist Karl Rove which together have reported spending more than $158 million on independent expenditures and electioneering communications. Restore Our Future, the super PAC supporting Mitt Romney’s presidential campaign has spent nearly as much, $125 million, on independent expenditures. Next on the list, but spending less than half as much, is Priorities USA Action, the super PAC supporting President Barack Obama. The US Chamber of Commerce, a 501(c)6 nonprofit and one of the most powerful interest groups in U.S. politics, reported spending $35 million on electoral activity, but routinely spends tens of millions more on unreported “issue advocacy” that target federal candidates. The fifth top spender is another 501(c)4 “social welfare” organization, Americans for Prosperity, which has spent about $34 million on political ads, but perhaps more importantly built a massive ground operation to get out the conservative vote.

Different candidates and different political committees used a variety of tactics. President Obama’s campaign kept much of its fundraising in-house, churning to collect millions of small donations at least $214.3 million. The campaign also heavily tapped networks of wealthy and powerful supporters, known as bundlers, who combined to raise at least $180.1 million. The Romney campaign never reached historic levels of fundraising but was aligned with powerful outside spending groups. While the campaign raised just $389 million (only a relatively small fraction, $70.8 million, raised from small donors), Romney’s campaign was undoubtedly buoyed by the support of Restore Our Future, which raised $131.6 million. It has spent one out of every five super PAC dollars this cycle.
The sources for money fueling the presidential campaign in 2012 reflect the same basic interests that fed the coffers of candidates in the 2008 presidential campaign. In 2008, among business, labor and ideological interests, the top 3 sectors providing funds to all presidential candidates were: Finance, Insurance and Real Estate, delivering $141.2 million (54 percent to Democrats); Lawyers and Lobbyists, with $100.7 million (78.2 percent to Democrats); and Miscellaneous Business interests, giving $86.6 million (63.6 percent to Democrats). Business interests account for about 62 percent of all contributions to all presidential candidates, with ideological, labor and other interests making up the rest.
In 2012, these same top sectors lead the list, with some important differences. FIRE delivered only $80.7 million to a smaller field of Republican candidates and only a single Democratic contender. More important, though, was how that money was distributed. This time, 76 percent of that went to all Republican candidates and 65 percent went to Romney alone. To date, Romney holds an advantage over Obama among financial interests by a margin of 5-to-2. Instead of Lawyers and Lobbyists, Miscellaneous Business is second contributing $52.2 million (60.2 percent to Republicans); and Lawyers and Lobbyists places third with $42.4 million (61.7 percent to Democrats).

Once again, within the financial sector, the primary powerhouse is Wall Street, which delivered $28 million to date this cycle. But, after heartily backing Obama four years ago, securities and investment firms pivoted sharply and threw their financial support behind Romney in 2012, sending him the lion’s share — $19.6 million — more than 3 times the amount contributed to Obama.

Lawyers and Law Firms supplied similar support in 2012, sending $40.2 million total to presidential candidates, but unlike Wall Street, Lawyers stuck with their favored candidate of 2008, sending Obama $25.7 million through October 17. While far less than the $46.5 million lavished on the Obama campaign in 2008, Obama’s 2012 haul from lawyers is still more than twice as much as Romney has so far received. The only other industry or interest group to deliver $20 million or more to the Obama campaign is Education. Education-related interests provided Obama with $20.1 million out of $24.3 million to all presidential candidates this cycle.

As in past cycles, when including all itemized donations, (beyond Business, Labor and Ideological interests), topping the Center’s 2012 list of big donors to all presidential candidates are contributors who list their occupation as “retired,” giving $121.3 million, divided nearly evenly between Obama and Romney: $54.5 million to Obama and $56.4 to Romney, with the rest distributed among other presidential candidates.

These major categories of top campaign support are reflected in the list of top organizations supporting the Obama and Romney campaigns. Employees of the University of California have contributed more than $1 million to the Obama campaign and 5 other universities are also among his top 20 organizational donors, along with 4 leading tech companies and government employees. Most of Romney’s top donors, on the other hand, are financial interests (16 of 20), the top 5 of which are all heavy hitters on Wall Street.
Rise of the Wealthy Donor. One important difference in fundraising for the two presidential campaigns has been the emphasis on small donors by the Obama campaign. Every presidential campaign focuses on maximum contributions from individuals, now commonly raised through joint-fundraising organizations receiving up to $75,800 from each individual, often delivered by bundlers seeking to demonstrate the extent of their support for a particular candidate. Less common is the ability of the Obama campaign to raise about 30% of his contributions in amounts less than $200 per person – more than $214 million through October 17 and three times the amount raised by Romney in similar amounts.

While small donors have played a role in this campaign, it remains extraordinarily unusual for Americans to contribute to political candidates, and the rise of unlimited contributions for outside spending has further concentrated financial participation in politics this year. For example, fewer than 40 donors to outside groups have given more than $200 million to those groups – while at least 350,000 people were needed to reach the $71 million in small donations to the Romney campaign. It’s also important to note that President Obama raised nearly twice as much money from donors giving more than $200 as he did from those giving $200 or less and Gov. Romney raised nearly 4.5 times as much from large individual donors than he did from small donors.

Women donors have also played an increasingly important role in presidential campaigns in recent cycles, and this cycle is no different. Continuing a rising trend over recent years, women donors have given 36% of the overall itemized individual money to the major party nominees, with the Obama campaign approaching gender parity, raising 44.2 percent of its itemized contributions from women, whereas Romney raised 28.5 percent from women giving more than $200.