The Most Expensive Election in History

Diana Dwyre
Department of Political Science

The 2008 election was extraordinary for many reasons. The election of our nation’s first African American president and the transformation of the political map in a number of regions are developments that will keep political scientists busy for a long time. This was also the most expensive election in history, and in virtually every case, those who spent the most money won. Over $5 billion was spent by candidates, parties, individuals, political action committees, and other groups for the 2008 elections, according to the Center for Responsive Politics, and much of that money was raised and spent in novel ways.

Since 1976, public funds have been available to viable presidential candidates for their primary and general election campaigns. Some of the goals of the public financing system are to level the playing field among candidates and to reduce the potentially corrupting influence of big money in presidential elections and governance. Participation in the public funding system is voluntary, and candidates may receive public funds for the general election if they agree to refrain from raising additional private money. Recently, a number of candidates have declined to take public funding for their primary runs (George W. Bush in 2000, John Kerry and Howard Dean in 2004, and eight of the top candidates for their party nominations in 2008). However, 2008 was the first election that a major-party candidate, Barack Obama, declined to take public funding for the general election campaign.

The major-party candidates were entitled to just over $84 million in public funds for the 2008 general election (after the party conventions). John McCain took the public grant. McCain had some serious fund-raising difficulties earlier in his campaign, but he was doing well going into the GOP convention. However, as the co-sponsor of the 2002 McCain-Feingold campaign finance reform bill that passed after many years of effort that often put him at odds with his own party, McCain may have felt obligated to utilize the public funding system. Indeed, he bitterly attacked Obama for breaking his promise to accept public funds if his GOP opponent did.

Obama’s fund-raising broke all records. As of Oct. 27, Obama had raised $639 million compared to McCain’s $360 million (according to the Federal Election Commission). While McCain impressively outdid George W. Bush’s 2004 fund-raising total of $270 million, McCain was clearly at a financial disadvantage against Obama, a disadvantage that might not have been so large had McCain not taken public funds or if Obama had. This election may mark the end of the presidential public funding system and therefore also the loss of a tool to fight corruption.

However, Obama raised as much as half of his money from small contributors who gave him less than $250, and much of it was raised on the Internet. Such small contributions are generally not thought to be potentially corrupting, for the cost of influence is considered to be much higher. Obama’s success in raising so much in small donations has been praised as a positive development, one that could decrease the relative need for and influence of large contributions from wealthy interests. Yet Obama, McCain, and their parties raised plenty of money from large donors as well. For example, the major financial industries gave millions: Goldman Sachs contributed over $4.9 million, Citibank gave $4.2 million, and JPMorgan Chase & Co. contributed $4.1 million (Center for Responsive Politics). Most of their contributions went to the Democrats.

Many campaign finance experts predicted that 2008 would feature a flood of campaign ads, direct mail pieces, and phone calls from 527 groups (named after the section of the Internal Revenue code that governs their activities). These groups can raise and spend unlimited amounts of money with little regulation. The infamous Swift Boat Veterans for Truth of the 2004 election was a 527 group. They are not party or candidate organizations, and they tend to deliver more negative messages than parties or candidates, who might suffer a backlash from voters. These groups played a smaller role in the 2008 election than they had in 2004, probably because they are now required to disclose the names of their contributors. Yet some of the money that used to go to 527s moved to other types of nonprofits, namely 501(c)3 and 501(c)4 groups, that allow more cover from disclosure and regulation. This is a troubling development, as big money is finding new ways to take cover from public scrutiny.

One last observation. Remember that evil soft money that was banned by the 2002 McCain-Feingold law? That was the money that the parties collected in unlimited amounts from corporations, unions, and super-rich individuals to fund their voter mobilization efforts. Soft money was seen as too close to a quid-pro-quo relationship between the parties, candidates, and their financial benefactors. Some warned that the end of soft money would be the end of the political parties. Yet, first in the 2004 and even more so in 2008, the parties raised more in smaller, regulated contributions than they did when they had soft money, particularly the party committees that support candidates for the House and Senate. While there’s still a lot of money going to the parties, it is fully disclosed, raised in limited amounts, and its use is regulated.

As the final campaign finance reports are filed in the coming months, we will see the full extent of these new developments. Campaign finance reformers in Congress are already busy crafting legislation to reinvigorate the presidential public funding system, and we are sure to see calls for more regulation of 501(c) groups as well. Stay tuned.