How money affects national political elections

Money & National Political Elections

Money, Lobbying, & Elections:

How Interest Groups Use Money to Affect National Political Elections

In democratic societies, ordinary citizens are supposed to have equal rights and have an equal say in forming and shaping the political landscape of the country. That is, of course, in theory and the reality is much more complicated than that. People therefore often question the extent democratic institutions function properly when it comes to national political elections. What is the role of money in elections? What is the role of lobbying? Is there a connection between lobbying and money? How do money and lobbying affect the electoral process? These are some of the questions that, for various reasons, attract the interests of politicians, public advocacy groups, businesses, lobbyists, trade unions, media commentators, and ordinary citizens. The purpose of this paper is to address these questions. And it is the position of this paper that money and lobbying are being increasingly used by interest groups to affect political elections. As a result, a small minority -- with money or access to generous funding -- disproportionately affect the electoral process in the United States. The paper is organized in the following way: first, we will look at the existing works on this question and summarize their main points; second, there will be a discussion of methodology; and third, we will discuss our findings and conclude based on the results of this research.

Literature Review

The literature on this topic is obviously huge. We will limit therefore the discussion of existing literature to three main works from the 1990s (which will serve as primary sources) and three from the 2000s (which will serve as secondary sources). The primary sources deal primarily with theoretical issues, while the secondary sources look at empirical data and concrete examples. This is not done just out of convenience, but in order to reflect some of the latest debates on the use of money in national political elections and functioning of lobby groups. Public advocacy groups began to critically analyze the activities of intermediaries between the public and the government or business companies in the early twentieth century (Loomis, 2009). But this paper is not concerned about the early development of lobbying or even in the classic works that appeared in the Civil Rights era. The development of communications technologies have significantly changed the nature of political campaigning in the last twenty years, and the paper will try to reflect the relationship between lobbying and the electoral process in this changed political environment.

The first work under review here is by Austen-Smith (1993). Austen-Smith argues that interest groups, or lobbyists, influence policy either through giving campaign contributions or by providing specialist information. But Austen-Smith focuses on the latter, describing interest groups as "sources of policy-relevant information," and lobbying as "strategic information transmission" (p. 799). Austen-Smith contends that decision-makers are not always competent enough to make rational and proper decisions on a given policy because very often they lack "complete information" on potential consequences of the policies they pursue. He further argues that only a lobbyist can "possess technical information about the consequences of selecting any given policy" (p. 800). While Austen-Smith's discussion of the nature of lobbying is useful, as it explains why interest groups may be sometimes necessary as sources of specialist information, he does not entertain the possibility of manipulation and propaganda that interest groups may resort to in pursing their interests.

Grossman and Helpman (1994) take a more critical stance toward interest groups and how they influence political processes. In their landmark study of how interest groups affect trade policy, Grossman and Helpman discuss the way lobbies represent industry interests. They argue that lobbyists try to affect trade policy by supporting the incumbent officeholders. The officeholders in response try to maintain the support of the lobbyists by representing their interests. "In other words," they point out, "politicians' penchant for campaign gifts makes 'protection for sale'" (p. 835). In Grossman and Helpman's model, lobbyists make campaign gifts to incumbent officeholders but do not contribute to any challenger candidates. Their model describes the electoral process in the United States. For example, "political action committees (PAC's) gave more than three-quarters of their total contributions in the 1988 Congressional campaigns to incumbent candidates. If elections for open seats are excluded, incumbents received 6.3 times as much in contributions from PAC's as did their challengers" (p. 835).

Grossman and Helpman further argue that political officeholders are also concerned about the voices of the average voter. So, the politicians' aggregate interest, according to this model, is to "maximize a weighted sum of total political contributions and aggregate social welfare" (p. 836). But what if the politicians have to choose between the voter support and the lobbyist support? Grossman and Helpman do not give a clear answer to that. In their work that they published two years later, however, Grossman and Helpman (1996) point out that the interests of lobbyists weigh heavier for politicians. In this work, they look at how interest groups affect the electoral process to the legislature. In discussing the activities and the ability of interest groups to affect national policies, Grossman and Helpman write that it is "difficult to argue that the political process serves only the interests of the median voter" (p. 265).

Grossman and Helpman in this work develop a model that explains how two competing parties vie for seats in the legislative body. Since party members engage in costly political campaigns, they need generous contributions from interested groups. The influence of money to the electoral process in this model is direct. Grossman and Helpman argue that parties normally have two kinds of policies. Some of the policies they pursue reflect the party's ideology. But there is a second kind of policies which Grossman and Helpman call "pliable policies": "policies about which the parties have no explicit preferences and so are willing to tailor their positions to further their election prospects" (p. 266). In other words, the "pliable policies" allow parties to pursue flexible policies in order to cater to the interests of lobby groups who are willing to make financial contributions. By catering to the interests of lobby groups, political parties then may get greater contributions that then they can use to influence median voters. The lobby groups, Grossman and Helpman argue, make contributions for two reasons: to influence election outcomes and/or influence policies.

Grossman and Helpman make a case for the direct influence of money on political elections, but their works primarily lay the theoretical ground for understanding the process. They propose models and formulas to explain the way lobbyists influence political elections, but their work lacks data and concrete examples. The secondary literature on the subject here offers more insights by delving into statistics and examples. Smith (2006), for examples, looks at the John Kerry campaign leading to Presidential elections in 2004. In December 2003, Senator Kerry found himself in an unfavorable situation, having votes of only 9% of Democrats nationally. He was the third in Iowa and was more than 30 percentage points behind in New Hampshire. And his campaign was in debt. Realizing that he was in a dire situation, Kerry used his home in Boston as collateral to set up $6.4 million dollar line of credit to finance his campaign. This quick cash injection allowed Kerry to win the Iowa elections and then led to a first-place finish in New Hampshire. By February 2004, Kerry already had the 49% of national Democratic support. "While neither Senator Kerry nor his campaign did anything illegal or unethical by setting up a bank loan," Smith points out, "this large infusion of cash at just the right moment vividly demonstrates the importance of money in politics, particularly to a campaign that is struggling" (p. 59).

Likewise, Professor Bartels at the Department of Politics and Woodrow Wilson School of Public and International Affairs looked at the statistical data covering the Senate elections of 1988-92. Professor Bartels found that Senators were very response to the views and interests of the richest third of their constituents; senators were less responsive to the views and interests of the middle third (50% less responsive than to the richest third), and they were totally unresponsive to the views and interests of the poorest third. The Senators' responsiveness was especially telling in economic votes, according to Bartels. "The results for the vote on raising the minimum wage reflect the political plight of poor constituents in especially poignant form," he writes. "Those results suggest that senators attached no weight at all to the views of constituents in the bottom third of the income distribution -- the constituents whose economic interests were obviously most directly at stake -- even as they voted to approve a minimum wage increase." "The views of middle-income constituents seem to have been only slightly more influential," he further writes. "On this issue, even more than the others considered in Table 2, senators' voting decisions were largely driven by the ideological predilections of their affluent constituents and by their own partisan inclinations" (p. 17).

The third secondary source we will look at here is Kaiser (2009). Kaiser argues that money has corroded the electoral process in the United States. He gives statistical data on the rising cost of political campaigns as an indication of how money's importance has grown in the last several decades. If the campaigns of all the candidates for President, the House, and the Senate cost less than a billion dollars in 1976, in 2000 it was $2.8 billion (even if adjusted to the inflation), while in 2004 it was $4.2 billion. "This steady increase appears now to be a permanent fixture of our politics," he says (p. 290). Kaiser also gives examples of how money spent by individuals allowed them to win seats in the House or the Senate. For example, John Corzine, a retired investment banker and a Democrat, won a Senate seat from New Jersey in 2000 by spending $62 million of his own money.

Kaiser finds support for his arguments in the words of some members of Congress. "We let the lobbyists run it all because we have these big fund-raising dinners . . . Democrats and Republicans," Kaiser quotes Church Hagel, a Republican Senator from Nebraska. "And we raise $20 million, $25 million at these things [for the House and Senate campaign committees]. Who do we go to make sure that we get $20 to $25 million? I've run these dinners so I know what I'm talking about. You go to a committee of twenty-five lobbyists, a steering committee. And you say, Okay, you guys each have to come up with a million dollars. . . . So we go to them for that fast money" (p. 291). The lobbyists, of course, cannot be expected to make such large financial contributions just for the sake of supporting political campaigns. They expect their interests be represented in the Congress by those who receive their financial endowments.

Smith, Bartels, and Kaiser give sufficient data to support their arguments and demonstrate that money obviously affects political elections. But their overemphasis on how money affects elections and political decisions in Congress downplay the role of the average voter. For Smith, Bartels, and Kaiser, the median voter becomes virtually non-existent as a force influencing political elections. They also ignore the fact that many Senators and Congressmen represent various civil rights groups, public advocacy groups, consumer rights, and the working class. Not all of them are concerned about money only. Smith, Bartels, and Kaiser show the importance of money in political elections but ignore other factors that influence politicians.

Methodology

The methodology used in this paper is case study. The paper looks at the case of lobby groups as an intermediary between voters and political elections. Money plays an important role in the relationship between voters and lobby groups and between lobby groups and political officeholders. The paper, for example, looks at the case of lobby groups and the way they functioned three decades ago and the way they function today. The paper also looks at the normal and deviating trends in discussing how lobby groups use money to influence national political elections. The main purpose of the paper and the use of this method is to understand the case of lobby groups. And the research on the functioning of lobby groups shows the importance of money in influencing national political elections.

Findings

The research findings show lobby groups have several functions. As Austen-Smith (1993) argues, lobby groups transmit specialized knowledge to less informed political officeholders. But that is what the public expects the lobby groups to do theoretically. In practice, the lobby groups may directly represent the interests of businesses and large corporations, which may have other interests than simply providing officeholders with relevant information. This paper finds that lobby groups act both as transmitters of specialized knowledge but and serve the interests of businesses and corporations. And because of the lobby groups' ability to influence political officeholders due to the availability of cash money provided by large corporations, elected officials cater more to the interests of the richer voter constituents, to the detriment of median and poor voters.