Life Savings or Max Donation: The Political Consequences of Asset & Income Inequality

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Our citizenship should grant us equal access to government, but nearly half of Americans would be bankrupted by making a maximum donation to a federal candidate. Underscoring this fact, this April, two well-received publications further cracked the façade of American democratic accountability and economic mobility. 

First, a paper by Professors Martin Gilens and Benjamin Page demonstrated, by tying income-based opinion polling with their respective policy results, that the wealthiest nearly always see their desired policy outcomes. Second, “Capital in the Twenty-First Century” by French economist Thomas Piketty substantiates we live in a new Gilded Age with concentrated wealth and little meritocracy. These works provide concrete evidence to support the growing consensus that the richest citizens too often inherit excessive wealth and exercise disproportionate political power. These well-documented studies, coupled with stagnating incomes and the recent Supreme Court ruling on McCutcheon v. FEC, deepen voters’ concerns about losing out under a new American oligarchy.

Some try to deflect concerns about power concentration with pseudo-egalitarian reasoning. The McCutcheon decision ‘permits’ both the poor and wealthy to donate $2,600 – the federal contribution limit per election – to as many candidates as they like. The Roberts’ majority justified these 21st century donations as analogous to 18th century philosopher Edmund Burke’s opinion on proper constituent services. Campaign finance rulings such as these that are ostensibly universal, but really only affect the elite, are exacerbating concerns about cynicism during growing economic inequality. This fear has one notable exception: former presidential hopeful, Newt Gingrich.

On ABC News, Gingrich explained that McCutcheon was the logical outcome because the majority of Supreme Court Justices view money is speech. He celebrates the rich’s new power to donate to all candidates and advocates for their influence to exceed the current limits of $5,200 per candidate, per election cycle. His view is simple: abandoning today’s contribution limits would “overnight, equalize the middle class and the rich.” His logic? If former New York mayor Michael Bloomberg can self-finance his own campaign and the New York Times can editorialize, then why not allow for unlimited donations from other of members of the elite? Of course, he never explains how the billionaire mayor and The Grey Lady are synonymous with the middle class.

Gingrich’s specious egalitarianism, especially from a politician that built his political career by attacking food stamp and welfare recipients, is also incompatible with the Sunlight Foundation’s finding that of the $6 billion donated in the previous election cycle, nearly a quarter came from slightly over 30,000 donors. Those major donors are an elite fraction of the top one percent. As Public Campaign reported in late 2013, only 1,219 people even neared or reached the $117,000 aggregate contribution limit from the 2012 cycle. For perspective, that’s only one in every 250,000 Americans. McCutcheon won’t only increase political inequity between working families and the well-to-do, but also among the rich and, as Lee Drutman dubbed them, the “1% of the 1%.”

Of course, the elite still give in large amounts—even if they don’t always reach the legal maximum. That is not true or possible for most Americans. Time Magazine reported in 2011 that over forty percent of Americans could not raise two thousand dollars in 30 days – still insufficient for a maximum contribution. Today, according to the Corporation for Enterprise Development, 44 percent of Americans (including a quarter of the middle class) are liquid asset poor. This means that they cannot quickly convert their assets and savings into $5,800 - the low estimate of the recommended amount of three months of savings. For nearly all Americans, maxing out just once, on one candidate, in one election, would deplete their entire life savings. 

Criticisms of McCutcheon, such as measurable outcomes of donations, are substantive and many. Others critiques focus on the implicit problematic social implications of the ruling. To the average citizen, the decision seems to suggest that a small segment of the population should have a dominant influence over the outcomes of American elections. Under the Roberts court this dominance grows, even though nearly four out of five Americans think there is too much corporate money in politics. (Even this vast majority, as Page and Gilens argue, can rarely overcome the wishes of the elite). No surprise, then, decisions such as McCutcheon only further alienate most voters and small donors. And it’s no coincidence that people such as Gingrich who constantly opposed social policies to attenuate inequality tout campaign finance rules favoring the wealthy. As a country, we are losing the already limp barriers to mega-donors’ excessive influence.

Now, more than ever, we need to join Prof. Gilens’ call for campaign finance reform and pass the Government by the People Act (HR 20). This federal legislation would introduce a 6-to-1 match to donations under $150, allow a $25 tax credit for smaller contributions, and simplify PAC formations for ordinary citizens. Absent reforms to shift political influence from the super powerful back to the common person, we could find ourselves permanently in a new Gilded Age. Avoiding a return to mass political and social inequality should be a top priority; and the Government by the People Act should be a primary method to do so.