Economic Disparities Distort Democracy

By Benjamin Shute, Jr.

The new reality of politics in a post-Citizens United world is more outside money—much of it secret—and most of it from a relatively small handful of individual donors and corporations.

With more and more wealth concentrated in the hands of fewer people, and more and more money required to mount effective campaigns for public office, it should be no surprise that those who can most easily afford to make large donations to candidates are having a disproportionate effect on public policy, and that more and more people believe that the government doesn’t work for them.

The U.S. unemployment rate is just over 9 percent, which means that 14.1 million people are officially unemployed, while another estimated 2.7 million are out of work but do not qualify to be counted in the official survey. Over the past decade, the incomes of most Americans have remained flat or declined in real terms—that is, adjusted for inflation. At the same time, the gap between those at the top and the rest of Americans continues to widen. As Joseph Stiglitz noted in a recent issue of Vanity Fair, one percent of the people in the United States now take in nearly one quarter of the nation’s income every year and control 40 percent of the nation’s wealth. The Washington Post’s Peter Whoriskey described the ways in which dramatic—some might say “obscene”—increases in the pay of company executives contribute to this growing income disparity. Whoriskey notes that “executive compensation at the nation’s largest firms has roughly quadrupled in real terms since the 1970s, even as pay for 90 percent of America has stalled.” Furthermore, the disparities are not evenly distributed: according to a recent report from the Pew Research Center, the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households. These lopsided wealth ratios are roughly twice the size of the ratios that had prevailed among these three groups for the two decades prior to the recent recession.

Meanwhile, back in Washington and across the country, fundraising for the 2012 elections is well under way. Each year, candidates for public office need to raise more and more money to be competitive. From their first days in office, members of Congress spend hours each week dialing for dollars—making fundraising phone calls to supporters around the country. In the 2010 Congressional elections, the winning candidates for the House spent, on average, $1,434,760, and for the Senate  $8,993,945. Although some candidates have success in raising significant amounts in smaller donations, even President Obama, who energized a large number of individual donors for the 2008 election, raised 48 percent of his combined primary and general election total from donors giving $1,000 or more. On top of these funds raised directly by candidates, “independent expenditures” bring even more big money into campaigns—especially since the Supreme Court in Citizens United v. Federal Election Commission ruled that corporations have a First Amendment right to spend unlimited—and unreported—amounts of money to influence the outcome of elections. When the few people who have most of the money finance political campaigns, political decisions—aka public policy—favor those very people. See, for example, Nicholas Kristof’s description of how hedge fund managers pay taxes at lower rates than ordinary citizens.

These distortions undermine democracy: those without the financial resources to influence public policy are marginalized, and private interests are frequently prioritized over the public good, fostering public cynicism and a distrust of elected officials.

One way to diminish the political influence of deep-pocketed individuals (and now corporations) is through voluntary public financing for political campaigns. Arizona, Maine, Connecticut, New York City, and North Carolina (for certain judicial races), among others, now have public financing systems in place. The RBF is proud to support several organizations that develop, promote, and defend public financing approaches, including The Brennan Center for Justice, The Campaign Finance Institute, Common Cause, Democracy Matters, The Piper Fund, and Public Campaign.