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January 8, 2014
Did the ball that dropped in Times Square at midnight on January 1 really signal a new political era?
Headlines in the major media proclaim that a wave of “populism” is building. Inequality and the minimum wage are suddenly front-burner
political issues. Cities like New York and Boston have just elected
progressive mayors with strong ties to unions and are now being touted
as liberal laboratories
for testing the limits of the grudging free-market conservatism and
neo-liberalism that have been the sun and moon of our political system
Even the atmosphere within the DC Beltway is subtly altering. The steady decline of the deficit
is turning the tables on the massively funded campaign to cut Social
Security and Medicare. In December 2013, the corporate-oriented
Democratic policy group Third Way launched a campaign in the Wall Street Journal
to smear Massachusetts Sen. Elizabeth Warren and other Democratic
politicians who favor raising Social Security benefits. It backfired
Progressive groups mounted a powerful counterattack. Within days politicians started tumbling off the centrist bandwagon
and the president of the Center for American Progress, perhaps the most
important of all the corporate-funded, centrist Democratic think tanks
(with perhaps the best ties to the White House) spoke out against
efforts to short-circuit discussions of inequality and whether the rich
were paying their fair share of taxes.
With evidence like this,
you don’t need a weatherman to tell you that political winds are
shifting. But we are old enough to remember Nixon attorney general John
Mitchell’s famous admonition
to “watch what we do, not what we say.” For sure, the new mayors of
Boston and New York genuinely hope to usher in real, progressive change
in their cities, yet the larger national context gives us pause.
facts are crucial in understanding what is happening. Firstly, the
national Democratic Party is in deep trouble as it faces the 2014
Congressional elections. The strong media framing of “populist”
tendencies reflects a prior White House determination signaled by the
President himself to move left to reenergize voters turned off by the
serial disasters of 2013, including the economy’s continuing doldrums,
public revulsion against surveillance, and the healthcare rollout
debacle. Not for nothing has John Podesta, Bill Clinton’s one-time chief
of staff and the key figure in the Center for American Progress, returned to the White House
, even as he was being touted as Hillary Clinton’s likely adviser on handling inequality as a political issue.
after five years, the Obama administration has simply failed to deliver
on the economy. Whoever you blame for this — the Republicans for
stonewalling, the timidity and mistakes of the President and his
advisers, or sheer Washington gridlock —the plain fact is that even with
the modest uptick in the economy, ordinary Americans are really
hurting. Unlike 2012 (despite all the reminders we will be getting about
the Kochs and their allies within the GOP),
Democrats cannot count on running against a Republican nominee who
looks, acts, and talks like someone Central Casting selected to
caricature the GOP as the party of the superrich. Even now, Stanford’s
John Taylor and other Republican economists are mounting increasingly aggressive attacks
on the administration’s record. Regardless of how you assess their claims, they are certain to reverberate in 2014.
most important background condition concerns the facts of political
money. Until the campaign reports for the 2013-14 political cycle are
filed, the precise facts will be elusive, but the leadership of both
major parties appear to be concentrating on activities that are anything
but populist. They are beseeching big donors for money at a breakneck
pace, while the Supreme Court prepares to take up, and possibly strike
down, another of the few restrictions on money in politics left, namely,
the limits on total contributions to formal political parties and
Campaign $$ More Concentrated Than Ever
Despite all the commentary about super-PACs, the situation is even worse than you think. Our analysis
of political money in the 2012 elections confirmed that it’s not simply
that the apparent relation of money to votes in congressional elections
appears to be shockingly direct – indeed, almost a straight line. The
larger problem is that campaign donations turn out to be far more
concentrated than even we imagined.
probably draw more money and interest from ordinary Americans than
other, less visible campaigns at lower levels, where funds from
corporate PACs commonly make up much larger shares of the totals. So if
you want a guide to what political money in the 2014 congressional
elections will look like, the answer is that it will probably look like
an even more lopsided version of 2012.
And in 2012, alas,
political money was absurdly top heavy. Basically the campaign was a
contest between different parts of the 1 percent.
For 2012, we
looked at regular presidential campaign committees, plus 527s,
super-PACs, and other forms of independent expenditures that supported
those campaigns, and combed these sources for every “itemized”
contribution by specific contributors. We also tracked down all the lump
sum reports of un-itemized contributions — that is, those totaling less
than $200 from individual contributors, wherever they could be found,
including 527 committees that report to the IRS, not the Federal
Election Commission. This allowed us to directly compare revenue streams
to candidates and parties from big and small donors alike. (See our full-length study
, published by the Roosevelt Institute.)
what we found: small donations were almost twice as important in
percentage terms to President Obama’s campaign as they were to Romney’s.
About 37 percent of the President’s political money consisted of
unitemized contributions amounting to less than $200. Romney’s
percentage was just over half of that — 18 percent. This is important,
and on its face, appears to support traditional views of Republicans as
the party of affluent Americans.
But there is more to the picture.
When you sort through all the contributions that appear to be coming
from different people and firms and add them all up, the true extent to
which both major party campaigns depend on donors emerges. For both,
contributions of $10,000 or more bulk larger than un-itemized
Exactly who qualifies as a member of the famous 1 percent of top income earners is not easy to assess. TheEconomist suggested
in 2012 (on the basis of figures for 2007) that the cutoff might be as low as $347,000. Other, perhaps less careful estimates
put the threshold higher— at somewhat over a half a million dollars. In
any case, we think it is reasonable to treat contributions over $500 as
coming largely from the 1 percent.
If you apply that standard,
then our study of 2012 implies that both major party campaigns float
their campaigns on the basis of appeals to the 1 percent — fully 59
percent of President Obama’s campaign funding in 2012 came from
contributions of $500 or more (56 percent if one applies the higher
threshold of $1,000!) while 79 percent of the funds mobilized by
Romney’s campaign originated there.
If you reckon, as we suspect
many politicians actually do, not in terms of total funds raised, but
total itemized contributions — $200 or more, or in other words the money
that comes with somebody’s name on it — the dependence on the 1 percent
becomes breathtaking: Almost two thirds of the itemized financing for
the President’s campaign came from donors contributing more than
$10,000, while over 70 percent of the Romney campaign’s financing comes
from donors of that scale. By that metric, both major party presidential
hopefuls rely for about 90 percent of their funding on donors giving a
$1000 or more.
Direct financial contributions to presidential
races by labor unions are relatively low – our figures indicate about
$47 million in 2012. By contrast, labor contributions to congressional
campaigns ran substantially higher – more than $200 million, though
those are far outweighed by spending by business and affluent Americans.
The best face one can put on all this is that if you assume that the
un-itemized funds come mostly from unorganized average Americans, then
you understand that while the 1 percent largely funds both presidential
parties, average folks continue to have a more substantial toehold among
the Democrats. (We will consider the case of the Tea Party another
time; suffice for now to say that Mitt Romney’s serious challengers,
Gingrich and Santorum, benefited from very large contributions indeed.
Candidates like Bachmann and Cain, who really did run heavily on small
donations, flamed out fast.)
What both major investors and
candidates have long known is true: a relatively small number of giant
sources provide most of the funding for successful major party
candidates. The relatively thin stream of small contributions simply
does not suffice to float (conventionally managed) national campaigns
and all insiders know it.
Populism and Big Money Don’t Mix
are now in the sixth year of prolonged austerity following a major
financial collapse. If you step back and assess the see-saw pattern of
American electoral behavior since 2008, it is plain that many voters are
responding rather like voters in many countries did in the Great
Depression: their first response is simply to vote the outs back into
office. When that doesn’t work, they try again, voting back in the outs.
When things still fail to improve, they drift to extremes, and begin
exploring strange new alliances
that signal deeper desperation. Both the Tea Party and the Occupy
movements represent early forms of this pattern; the dismay driving them
State and municipal unions are now
being hammered like industrial unions were some decades ago, with
well-funded campaigns mounted to persuade voters that things like
pensions are luxuries that, really, no rich person should ever have to
pay taxes for. The relentless attacks launched by the political right at
the state level, as well as the increasing nationalization of political
finance even there, pose enormous threats to these unions. Doesn’t
sound like populism, does it?
In areas where unions retain
strength, it makes perfect sense for them to band together behind
candidates they trust, pool resources to make sizeable political
investments, and make a progressive case directly to the electorate.
These open and unapologetic appeals, which mainstream, business-oriented
Democrats have long recoiled from, clearly come as a tonic to many fed
up voters who sense that they are being fleeced by banks, telecom
providers, and the medical-industrial complex.
In New York, where
Mayor Bloomberg has left essentially all labor contracts for de Blasio
somehow to negotiate, and in Boston, where similar issues are
unresolved, both local and national unions mobilized.
In Boston, quite unprecedented amounts of outside spending rolled into the election, much of it from labor sources.
upon a time, mobilization on this scale would have triggered a media
blizzard of warnings about the dangers of a takeover of City Hall by
“special interests” (as labor is routinely labeled; bankers, of course,
usually are not). In both Boston and New York, there was some of this,
and there will likely be more. But national Democratic elites, including
the investor blocs that back them, are in a bind and they know it. They
are cautiously experimenting to see if they can work out arrangements
with the newly assertive state and municipal unions and work with and
through them to better reach out to African Americans, women, Hispanics,
and other groups that Republicans have thus far scorned. The problem,
of course, is that they are walking a tightrope. What they promise
voters cannot cut seriously against the interests of their major donors.
is not the first time in world history that alert leaders of a
declining empire dominated by a giant financial sector have been tempted
to juryrig political coalitions with organized workers and hard-pressed
groups that are coming under pressure to organize in their own defense.
In Great Britain just before World War I, “Lib-Lab” (Liberals and
Labor) coalitions emerged; after the war, Keynes and Lloyd George
famously tried to revive that alliance to end furiously maintained
austerity policies and an over-valued currency that were crushing living
standards. In 1931, those efforts failed calamitously. Britain
abandoned the gold standard, the British navy threatened to mutiny, and
most liberals split from labor, as a conservative “National” government
headed by a former labor Prime Minister took power. It was a big setback
for “populism,” though in the longer run those tumultuous events were
clearly stages in the birth of an independent Labor Party.
we are seeing something akin to the earlier British case is anyone’s
guess. The finances of American cities depend crucially on Washington,
not mayors; the latter’s powers are very limited. And city finances
depend above all on the still feeble American economy. A few mistakes,
clumsy contract negotiations, or bad economic luck could shatter the
nascent accords beyond repair. By contrast, even a modest economic
recovery would lift city finances and with that, chances that populist
mayors can actually deliver to long suffering constituents.
interesting that even some Republicans appear see the logic of striking
deals with what’s left of the organized workforce, if only to divide and
fool. As New Jersey Governor Chris Christie explained recently: “We
have an opportunity as a party to drive a wedge in the union
movement…And the laboratory where that is happening right now is in my
state.’” As the Wall Street Journal reported
Christie “contrasted his long-running feuds with the state's
public-sector unions with his friendliness toward the private-sector
unions, noting that he had won the endorsement of 24 building-trade
Our conclusion is that the fabric of American politics
may in fact be breaking down, but the basic structure of national power
is, if anything, hardening. The most important fact about political talk
is the real context in which the conversation occurs. And in 2014, that
context is clear: Competition between the national political parties
mostly represents competing blocs of the 1 percent. These older national
political forces are now testing whether they can absorb and profit
from changing local power constellations thrown up by years of
persisting austerity. Whether the old center or the new populists come
out on top will be a critical issue going forward; the fate not only of
the Democratic Party, but the whole political system may well hang in
The authors' “Party Competition and Industrial Structure in the 2012 Elections” has just appeared in the
International Journal of Political Economy, Vol. 42, No. 6 (2013), pp. 3-41.
Thomas Ferguson is
professor of political science at the University of Massachusetts,
Boston, senior fellow at the Roosevelt Institute, and contributing
editor of AlterNet. His books include "Golden Rule: The Investment
Theory of Party Competition and the Logic of Money-Driven Political
Systems" and "Right Turn: The Decline of Democrats and the Future of
is assistant professor of political science at University of Texas, Pan
American and non-resident fellow at the Edmond J. Safra Center at
Jie Chen is university statistician at the University of Massachusetts, Boston.
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