The Campaign Money Industrial Complex

The current Democratic presidential primary with its fifteen surviving candidates is a political spectacle of the first order.  Oddities abound, for example, several former governors and members of Congress, many with illustrious records, have dropped out yet others, notably Andrew Yang, Marianne Williamson and Tom Steyer, still hang on despite having zero political experience. Equally odd, two of the leading contenders in the pack, Senators Warren and Sanders, openly espouse views which only a few years ago would have been far beyond the ideological mainstream, for example, open borders, drastic tax increases and a hodgepodge of socialist-flavored hyperexpensive entitlements. So much for the old truism that American politics favors moderation and consensus. Meanwhile, the proliferation of candidates means that candidates able to garner a mere 20% in a poll or two, normally judged a paltry level of public support, are anointed as frontrunners though their supporters may only be a fringe element in the general electorate.   

Clearly, one would think that this oddity-prone system would draw closer examination, Alas, no such luck. Yes, a few may speculate why the field is a weak one and so ideologically Left, but the entire system itself escapes scrutiny.

Money explains that lack of scrutiny. Specifically, the availability of endless millions in internet-solicited campaigns has created an irresistible, enduring cash cow, and with so many getting a piece of the action, nobody wants to kill the cow. Senator Bernie Sanders, an avowed Socialist, has raised $74.5 million as of early December 2019. While Kamala Harris bombed early, lots of people “won” from her spending $22.8 million dollars. No wonder the Democratic field remains large though candidates come and go -- even the long-shot Andrew Yang will spend millions, and those on his payroll will cheer him on no matter how slim the odds. The current primary-based arrangement  may be a debatable way of choosing a Democratic nominee, but it puts lots of bread on millions of tables and levels of campaign spending are soaring.  

The most obvious beneficiaries of this three-ring circus-like process are TV stations, no small matter given that many are struggling financially as young people increasingly turn to the free internet for information and entertainment, According to one analysis, local TV stations are expect to earn between $3 and $4 billion in political advertising over the current election cycle, a huge amount considering that their entire advertising take in 2020 is estimated to be between $20 and $22 billion (Facebook, by contrast, is expected to earn “only” $200 million in political advertising).  No doubt, celebrations erupted at mass media corporate headquarters when billionaire Michael Bloomberg announced that he was joining the pack and kicking off his campaign with a $57 million TV campaign though the Washington Post claims the real cost is closer to $250 million.  As far as the mass media is concerned, there can never be too many candidates and even long-shot crackpots are welcome to buy all the advertising they can afford.  

Along with an enriched mass media are the thousands of consultants and advisors who will help candidates spend their donated millions. These firms, for a fee, will assist you with everything from organizing a junk mail campaign, providing advice about public speaking, how to run polls, organizing a grassroots campaign  to concocting strategies to reach elderly Hispanics. It is unlikely that any modern candidate will go it alone without this rented expertise. (Donald Trump’s 2016 campaign made relatively little use of consultants and this may well explain some of the animus from the political establishment.)

It is difficult to get precise figures here, but the numbers must be substantial. One study reports that the firm Mentor Media has earned over a billion dollars working for GOP candidates in recent elections. On the Democratic side, GMMB handled some $435 million in President Obama 2012 campaign. Overall during the 2012 election cycle consulting firms billed federal candidates, parties and super PACs more than $3.6 billion for products and services. The hapless Jeb Bush paid over $50 million to various consultants during his failed 2016 primary campaign. Keep in mind that when candidates purchase media time, this transaction is typically handled by an advertising firm that charges a 10 to 15% commission so, for example, Michael Bloomberg’s TV blitz might bring in as much as $8.5 million to an ad agency.

Holding a presidential primary is also a financial bonanza for primary states as thousands of campaign workers and consultants on expense accounts arrive to push their candidate.  According to one statistical analysis, a presidential primary increases per capita earnings in that state during that economic quarter by 25% with an especially large boost to the hotel and retail sector. In the case of New Hampshire, every visitor in New Hampshire during the campaign season spends approximately $350 on transportation, lodging, rental cars, among other expenses. Why else would hordes of people every four years trudge to New Hampshire in middle of winter? It is no wonder that the state has long successfully defended its position as the nation’s first presidential primary though critics have argued that its February primary is premature, and the state’s demographic is hardly a cross section of the nation’s increasingly diverse population.

Though the current system of nomination-by-primary ordeal may appear irresistible given its huge economic benefits, it is actually a recent political innovation. Historically, nominees were selected at national conventions where delegates were chosen by party officials at state-level conventions. The first modern presidential primary occurred in Florida in 1901 and their number ebbed and flowed (seldom exceeding twenty with usually with only a handful of serious contenders).  Recall that John F. Kennedy secured the 1960 Democratic nomination by wining just two primaries (Wisconsin and West Virginia); Hubert Humphrey, the Democrat’s 1968 nominee, did not win a single primary. But matters changed dramatically beginning in 1972 under the guise of giving more “power to the people.”  Today there are 57 contests of one type or another where political Democratic nominees can troll for convention delegates.

Will this arrangement continue despite its obvious flaws, among others, its huge cost which requires endless fundraising, the exhausting drawn-out schedule, encouraging bizarre pandering to attract attention in a crowded field while facilitating debates heavy on cliché sound bites? At least in the short run, survival is virtually guaranteed but nothing lasts forever. It is conceivable that the current system will bring a monumental electoral disasters on the order of 1964 for the GOP or 1972 for the Democrats.

What if a 2020 Democratic ticket of Elizabeth Warren/Duval Patrick were crushed by Trump while hundreds of Democratic incumbents further down the ticket also lost? And this debacle was repeated in 2024? With two disasters in a row, the Democratic National Committee, the official body that decides nominating convention selection rules, might re-evaluate the current system. Plausibly, they could return to an earlier era when elected public officials whose jobs depended on nominating a winner not ordinary voters, largely chose the party’s nominee. But, until that time arrives, we will continue to endure the costly three-ring circus whose chief benefit seems to be enriching thousands, not choosing the best possible presidential candidate.  

The current Democratic presidential primary with its fifteen surviving candidates is a political spectacle of the first order.  Oddities abound, for example, several former governors and members of Congress, many with illustrious records, have dropped out yet others, notably Andrew Yang, Marianne Williamson and Tom Steyer, still hang on despite having zero political experience. Equally odd, two of the leading contenders in the pack, Senators Warren and Sanders, openly espouse views which only a few years ago would have been far beyond the ideological mainstream, for example, open borders, drastic tax increases and a hodgepodge of socialist-flavored hyperexpensive entitlements. So much for the old truism that American politics favors moderation and consensus. Meanwhile, the proliferation of candidates means that candidates able to garner a mere 20% in a poll or two, normally judged a paltry level of public support, are anointed as frontrunners though their supporters may only be a fringe element in the general electorate.   

Clearly, one would think that this oddity-prone system would draw closer examination, Alas, no such luck. Yes, a few may speculate why the field is a weak one and so ideologically Left, but the entire system itself escapes scrutiny.

Money explains that lack of scrutiny. Specifically, the availability of endless millions in internet-solicited campaigns has created an irresistible, enduring cash cow, and with so many getting a piece of the action, nobody wants to kill the cow. Senator Bernie Sanders, an avowed Socialist, has raised $74.5 million as of early December 2019. While Kamala Harris bombed early, lots of people “won” from her spending $22.8 million dollars. No wonder the Democratic field remains large though candidates come and go -- even the long-shot Andrew Yang will spend millions, and those on his payroll will cheer him on no matter how slim the odds. The current primary-based arrangement  may be a debatable way of choosing a Democratic nominee, but it puts lots of bread on millions of tables and levels of campaign spending are soaring.  

The most obvious beneficiaries of this three-ring circus-like process are TV stations, no small matter given that many are struggling financially as young people increasingly turn to the free internet for information and entertainment, According to one analysis, local TV stations are expect to earn between $3 and $4 billion in political advertising over the current election cycle, a huge amount considering that their entire advertising take in 2020 is estimated to be between $20 and $22 billion (Facebook, by contrast, is expected to earn “only” $200 million in political advertising).  No doubt, celebrations erupted at mass media corporate headquarters when billionaire Michael Bloomberg announced that he was joining the pack and kicking off his campaign with a $57 million TV campaign though the Washington Post claims the real cost is closer to $250 million.  As far as the mass media is concerned, there can never be too many candidates and even long-shot crackpots are welcome to buy all the advertising they can afford.  

Along with an enriched mass media are the thousands of consultants and advisors who will help candidates spend their donated millions. These firms, for a fee, will assist you with everything from organizing a junk mail campaign, providing advice about public speaking, how to run polls, organizing a grassroots campaign  to concocting strategies to reach elderly Hispanics. It is unlikely that any modern candidate will go it alone without this rented expertise. (Donald Trump’s 2016 campaign made relatively little use of consultants and this may well explain some of the animus from the political establishment.)

It is difficult to get precise figures here, but the numbers must be substantial. One study reports that the firm Mentor Media has earned over a billion dollars working for GOP candidates in recent elections. On the Democratic side, GMMB handled some $435 million in President Obama 2012 campaign. Overall during the 2012 election cycle consulting firms billed federal candidates, parties and super PACs more than $3.6 billion for products and services. The hapless Jeb Bush paid over $50 million to various consultants during his failed 2016 primary campaign. Keep in mind that when candidates purchase media time, this transaction is typically handled by an advertising firm that charges a 10 to 15% commission so, for example, Michael Bloomberg’s TV blitz might bring in as much as $8.5 million to an ad agency.

Holding a presidential primary is also a financial bonanza for primary states as thousands of campaign workers and consultants on expense accounts arrive to push their candidate.  According to one statistical analysis, a presidential primary increases per capita earnings in that state during that economic quarter by 25% with an especially large boost to the hotel and retail sector. In the case of New Hampshire, every visitor in New Hampshire during the campaign season spends approximately $350 on transportation, lodging, rental cars, among other expenses. Why else would hordes of people every four years trudge to New Hampshire in middle of winter? It is no wonder that the state has long successfully defended its position as the nation’s first presidential primary though critics have argued that its February primary is premature, and the state’s demographic is hardly a cross section of the nation’s increasingly diverse population.

Though the current system of nomination-by-primary ordeal may appear irresistible given its huge economic benefits, it is actually a recent political innovation. Historically, nominees were selected at national conventions where delegates were chosen by party officials at state-level conventions. The first modern presidential primary occurred in Florida in 1901 and their number ebbed and flowed (seldom exceeding twenty with usually with only a handful of serious contenders).  Recall that John F. Kennedy secured the 1960 Democratic nomination by wining just two primaries (Wisconsin and West Virginia); Hubert Humphrey, the Democrat’s 1968 nominee, did not win a single primary. But matters changed dramatically beginning in 1972 under the guise of giving more “power to the people.”  Today there are 57 contests of one type or another where political Democratic nominees can troll for convention delegates.

Will this arrangement continue despite its obvious flaws, among others, its huge cost which requires endless fundraising, the exhausting drawn-out schedule, encouraging bizarre pandering to attract attention in a crowded field while facilitating debates heavy on cliché sound bites? At least in the short run, survival is virtually guaranteed but nothing lasts forever. It is conceivable that the current system will bring a monumental electoral disasters on the order of 1964 for the GOP or 1972 for the Democrats.

What if a 2020 Democratic ticket of Elizabeth Warren/Duval Patrick were crushed by Trump while hundreds of Democratic incumbents further down the ticket also lost? And this debacle was repeated in 2024? With two disasters in a row, the Democratic National Committee, the official body that decides nominating convention selection rules, might re-evaluate the current system. Plausibly, they could return to an earlier era when elected public officials whose jobs depended on nominating a winner not ordinary voters, largely chose the party’s nominee. But, until that time arrives, we will continue to endure the costly three-ring circus whose chief benefit seems to be enriching thousands, not choosing the best possible presidential candidate.