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Fact check: Is hard money a larger share of political spending than outside money?

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April 14, 2016
By Humberto Sanchez

In a March 8, 2016, op-ed in The Los Angeles Times, Nick Penniman and Wendell Potter argued that money raised by federal political candidates from individual donors, known as hard money, makes up the lion’s share of campaign spending, while independent expenditures by outside groups like super PACs (not in coordination with a campaign), amounts to a small share of campaign spending.[1]

Campaign spending by outside groups has garnered increased attention since January 21, 2010, when the U.S. Supreme Court ruled in Citizens United v. Federal Election Commission (FEC) that political speech is protected by the First Amendment and therefore corporations or unions, as "associations of citizens," can engage in unlimited political spending not controlled by or coordinated with candidates or their campaigns.

The ruling roiled Democrats, including President Barack Obama, because they believed it would open the door to a wave of satellite spending by allowing corporations and the wealthy to spend unlimited amounts, independently from a candidate or campaign, to influence elections.[2] Hillary Clinton and Bernie Sanders have called for overturning the Citizens United ruling as a central way to reform the campaign finance system.[3][4] But some Republicans, including Ted Cruz and Sen. Mitch McConnell (R-Ky.) have praised the Citizens United ruling because they believe restrictions on campaign finance are restrictions on free speech.[5][6]

So we wondered if Penniman and Potter, who authored Nation on the Take, a book on campaign finance, are correct: does hard money make up most of the campaign spending, and satellite spending only a small share?

Background

For the Center for Responsive Politics (CRP), which publishes FEC data at OpenSecrets.org, the term for satellite spending typically takes the following forms: independent expenditures, electioneering communications and communications costs.[7]

Independent expenditures are funds spent on political advertising in support of or against a particular candidate. An independent expenditure comes from outside a candidate's own election organization and is not coordinated with a particular candidate's campaign, authorized candidate committee or political party committee. Generally, there is no limit placed on independent expenditures.[7]

Electioneering communications are advertisements "that do not expressly advocate the election or defeat of a candidate, but that are nevertheless aimed at influencing the outcome of an election," according to a study by the Ohio State University Moritz College of Law. Although an electioneering communication does not expressly advocate for or against a candidate, it does refer explicitly to a candidate. Such advertisements are broadcast within the 60-day period preceding a general election or the 30-day period preceding a primary.[8]

Communication costs are costs which apply primarily to unions, trade groups and other member organizations. Such groups "can communicate with their members and stockholders on any subject, but when the communications expressly advocate the election or defeat of a clearly-identified federal candidate, the directly-associated costs have to be reported to the Federal Election Commission," the Ohio State study noted.[8]

Satellite Spending Data

Penniman and Potter pointed to data from CRP that said that total spending on the 2014 midterm elections totaled about $3.7 billion. Of that figure they point out that spending from outside groups, excluding party committees, totaled about $560 million and made up about 15 percent of the total election spending, while spending by the candidates totaled about $1.5 billion and made up over 40 percent of the total. The remaining spending included roughly $1.5 billion by the parties and "other" spending tracked by CRP.[9] In 2010, the only other midterm since the Citizens United decision was handed down, total spending was $3.63 billion and satellite spending, excluding party committees, totaled $309 million, or 8.5 percent. Candidate spending in 2010 topped about $1.8 billion, or roughly 50 percent, according to CRP.[10][11][9]

Figures provided by the Campaign Finance Institute (CFI) put non-party independent spending in 2014 at 25 percent, still a minority of total spending. Candidate spending was 64 percent. In 2010 non-party independent spending was 10 percent and candidate spending 77 percent.[12][13][14][15]

Outside Money Follows Competitive Races

One significant reason for the difference between the level of hard money and outside money spent has to do with rarity of competitive congressional races. In a study of House races between 2004 and 2014, Verbatim found that 10 percent of the races were open, meaning there was no incumbent running. Spending by outside groups tends to be reserved for competitive races. And since there are fewer competitive races there are fewer opportunities for outside money to go and help make a difference in the outcome of a particular race, according to experts.[16]

"The great bulk of congressional races are not competitive and there is no particular reason for a super PAC or a 501(c)(4) or a party committee to spend money on [non-competitive races]," said Richard Skinner, a campaign finance expert with the Sunlight Foundation in an interview with Ballotpedia.

In the first edition of Ballotpedia’s battleground study, we identified 26 truly competitive House races in the 2014 cycle, according to certain criteria, including margin of victory and years of incumbency. One reason for so many noncompetitive races in Congress is that incumbents typically hold an advantage over their challengers. According to CRP, a House member had a 95 percent chance of being re-elected in 2014 and a Senator had an 82 percent chance in the same cycle.[17]

Control of the Senate has been in play in recent cycles and satellite spending has increased in Senate races, according to a study by the Brennan Center for Justice. The study, which used the term satellite spending to refer more broadly to all expenditures reported to the FEC made by anyone other than the candidates themselves, including by parties, showed that satellite spending on Senate elections has more than doubled since 2010, the year Citizens United was decided.[16]

Conclusion

In a March 8, 2016, op-ed in The Los Angeles Times, Nick Penniman and Wendell Potter argued that money raised by political candidates from individual donors, known as hard money, makes up the lion’s share of political spending and that spending by outside groups, like super PACs, which have no limits on individual contributions they can receive, only amounts to a relatively small share of the money-in-politics issue.[1]

We wondered if Penniman and Potter are correct: does hard money make up most of the campaign spending, and satellite spending only a small share?

We found the claim was true. But according to one study by the progressive Brennan Center for Justice, the level of satellite spending during midterm cycles appears to be growing given the data from the two midterm cycles that have occurred since the 2010 Citizens United decision.[16]

That jibed with data and analyses from the FEC and CFI. In the 2014 cycle, satellite spending represented between 15 and 25 percent of total spending while candidate spending amounted to between 40 and 64 percent. In 2010 it comprised between 8 and 10 percent and candidate spending totaled between 50 and 77 percent. Future midterm cycles could see the level of satellite spending grow further.[9][10][11][12][13][14][15]

Also, several experts noted that satellite spending is attracted to competitive races, so the level of spending would likely fluctuate with the number of competitive races in any given cycle and the chances of changing party control in the House or Senate.[16]

See also

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Sources and Notes

  1. ↑ 1.0 1.1 The Los Angeles Times, "Op-Ed Citizens United is only 15% of the political cash problem," March 8, 2016
  2. ↑ CNN, "Gloves come off after Obama rips Supreme Court ruling," January 28, 2010
  3. ↑ The Briefing, "Hillary Clinton’s Proposals to Restore Integrity to American Elections," accessed March 25, 2016
  4. ↑ Bernie 2016, "Getting Big Money Out of Politics and Restoring Democracy," March 25, 2016
  5. ↑ National Review, "Campaign Finance Reform Is an Assault on Free Speech," May 2, 2014
  6. ↑ The Hill, "Senate GOP blocks constitutional amendment on campaign spending," September 11, 2014
  7. ↑ 7.0 7.1 OpenSecrets.org, "Total Outside Spending by Election Cycle, All Groups," accessed March 25, 2016
  8. ↑ 8.0 8.1 The Ohio State University Moritz College of Law, "The New Soft Money: Outside Spending in Congressional Elections," accessed September 22, 2015
  9. ↑ 9.0 9.1 9.2 OpenSecrets.org, "Overall Spending Inches Up in 2014: Megadonors Equip Outside Groups to Capture a Bigger Share of the Pie," accessed March 25, 2016
  10. ↑ 10.0 10.1 OpenSecrets.org, "The Money Behind the Elections," accessed March 25, 2016
  11. ↑ 11.0 11.1 OpenSecrets, "Total Outside Spending by Election Cycle, Excluding Party Committees," accessed March 25, 2016
  12. ↑ 12.0 12.1 Campaign Finance Institute, "House Campaign Expenditures: Major Party General Election Candidates, 1974-2014 (full cycle, net dollars)," accessed March 23, 2016
  13. ↑ 13.0 13.1 Campaign Finance Institute, "Senate Campaign Expenditures: Major Party General Election Candidates, 1974-2014 (full cycle, net dollars)," accessed March 23, 2016
  14. ↑ 14.0 14.1 Campaign Finance Institute, "Non-Party Independent Expenditures in House and Senate Elections, 1978-2014," accessed March 23, 2016
  15. ↑ 15.0 15.1 Campaign Finance Institute, "Political Party Contributions, Coordinated and Independent Expenditures for Congressional Candidates, 1976-2014, In Nominal Dollars," accessed March 23, 2016
  16. ↑ 16.0 16.1 16.2 16.3 Brennan Center for Justice, "Election Spending 2014: Outside Spending in Senate Races Since Citizens United," accessed March 23
  17. ↑ OpenSecrets.org, "Reelection Rates Over the Years," accessed March 23, 2016

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