Already an Oligarchy: Corporate Dominance Negates Democracy

By Jake Johnson

American elections have long been fueled by corporate money.

In the election of 1904, on the heels of the Gilded Age, Theodore Roosevelt was accused of bowing to the influence of railroad magnates and insurance giants in an effort to shore up his campaign coffers; Eugene Debs would later write that “Theodore Roosevelt was made president by the industrial captains and the robbers in general of the working class.”

Roosevelt did eventually, in the face of concerns about his geniality toward those he later called “the malefactors of great wealth,” put in place restrictions on corporate contributions, but they were tepid and easily subverted. Far from receding into the distance in response to Roosevelt’s forceful rhetoric, corporate influence only continued to expand.

In 1931, John Dewey remarked in an essay for the New Republic that both parties had “accepted the gospel truth of the doctrine that prosperity descends from above” and that they “committed themselves to the policy of alliance with big business.”

“Masses of voters have been more than apathetic; they have been jaded,” Dewey added. “They have lost all confidence that politics can accomplish anything significant.”

It is striking how well these comments map onto today’s circumstances.

Dewey noted that much of the public had “accepted the cynical belief that the parties are dominated by big business.” Cynical beliefs often have the advantage of being accurate, and this case is no exception.

We have entered what many have termed a new Gilded Age; each year, campaign contributions flowing from billionaires and corporations to not-so-independent super PACs grow in number and size, even as America’s two dominant parties are more fervent than ever in their insistence that they, alone, represent the interests of the general public.

“The $6.3 billion record set for election spending by presidential and congressional candidates in 2012 has been surpassed by at least a billion dollars,” the New York Times editorial board noted,  “driven by affluent mega-donors whose insider heft with politicians grows with each seven-figure check they write.”

The rapid growth of the Republican money machine has been well-documented, and its effects have been quite as one would expect: Although the GOP is now contending with what Michael Kazin calls the “racial-nationalist strain of American populism” empowered by the rise of Donald Trump, the ultra-wealthy’s stranglehold on the party’s ideological bent remains firm.

But the emergence of the Democratic Party as the preferred bank account of many corporate hot-shots, celebrities, and billionaire “philanthropists” has been, if not surprising, quite impressive.

“Democrats had built the largest and best-coordinated apparatus of outside groups operating in the 2016 presidential campaign, defying expectations that conservative and corporate wealth would dominate the race,” observed Nicholas Confessore and Rachel Shorey in the New York Times. “More than two-thirds of the total money that groups supporting Mrs. Clinton had raised — $133 million — came from just 30 families.”

“Clinton,” Politico‘s Shane Goldmacher notes, ” built the biggest big-money operation ever”; the Democratic nominee’s “club” of bundlers, he adds, “had expanded to the point where Clinton would struggle to fit all of [them] into a single ballroom.”

It is with this context in mind that Bernie Sanders and Elizabeth Warren, appearing together at a rally in Colorado, warned that “if we do not get our act together, this country is going to slide into oligarchy, where a handful of billionaires will control the economic and political life of this nation.”

Though such words are refreshing given the usual platitudes about the robust nature of American democracy, they don’t go far enough. Plenty of research suggests that the “slide into oligarchy” has not only already begun, but is quite close to completion.

Well-known is the 2014 study conducted by Martin Gilens and Benjamin Page, who argued that “average citizens’ influence on policy making…is near zero.” And when policies favored by “average citizens” are enacted, it is “only because those policies happen also to be preferred by the economically-elite citizens who wield the actual influence.”

Given these facts, Gilens and Page conclude, “America’s claims to being a democratic society are seriously threatened.”

working paper by Thomas Ferguson and several of his colleagues at the Institute for New Economic Thinking bolsters this conclusion.

Referring to corporate cash as “political system’s equivalent of crack cocaine,” the paper examines the effects of fundraising on the outcomes of congressional elections. The findings strongly suggest that the United States has, as the authors put it, “entered a Post-Democratic age,” in which “the relations between money” and the outcomes of congressional elections “are well approximated by straight lines.”

“In our new Gilded Age,” the authors write, “many features of the political landscape point so obtrusively to the dominance of the superrich that the real state of affairs is hard to miss without special training.”

Such training has frequently surfaced throughout this election year, particularly as Democrats adjust to their newly-adopted role as corporate influence denialists: They have suggested  —  conveniently, given the numbers cited earlier — that corporate money does little to alter their positions on the issues. Courting the nation’s wealthiest, they insist, is simply a practical necessity.

They have also taken on the role of reflexively defending American democracy from those who would dare to question its legitimacy. Trump’s claim that the political process is “rigged” has been denounced fiercely by Democrats and Republicans alike.

In one obvious way, they are right to reject Trump’s line: The notion that American elections are rigged by dead people, or by illegal immigrants, or by poor minorities, as Trump has been quite explicit in suggesting, is nonsensical, not to mention paranoid and bigoted.

But the fact that Trump is wrong about who does the rigging does not mean that he is wrong that elections are, in fact, rigged. As the research of Gilens, Page, and Ferguson suggests, it is people like Trump — and, indeed, people like Hillary Clinton — who are rigging elections in the interests of their own class, the super-rich.

(It is also necessary to mention the point made by Ari Berman: That “voter suppression” — which is imposed from above — “is a much bigger problem than voter fraud.”)

Unlike the United States’ extensive record of undercutting (and, in many cases, utterly destroying) democracy overseas, subversion of the democratic process at home takes a more subtle form — a silent coup, a thorough gutting of the process over a period of decades.

As wealth and income have become tightly concentrated at the top, so has political power: Ever-lenient campaign finance laws — thanks, often, to an increasingly corporatized judiciary — have allowed business giants to flood campaign coffers with cash, and to flood Washington with lobbyists. So much so, in fact, that Lee Drutman, writing for The Atlantic in 2015, could assert without exaggeration that “corporate lobbyists conquered American democracy.”

This system, cultivated over a period of decades, has been remarkably reliable in its ability to send forth candidates that are at once appealing to the business class and appalling to much of the population, not least because of the necessity of endless fundraising. With few exceptions, the most notable being Bernie Sanders, the only candidates that can mount effective presidential campaigns are those who are already rich and those who are willing to reach out to the oligarchs.

Most Americans, according to a Pew survey, believe that the “[h]igh cost of presidential campaigns discourages good candidates,” and this view is reflected in voting patterns. As the New York Times reported in August, “Just 14 percent of eligible adults — 9 percent of the whole nation — voted for either Mr. Trump or Mrs. Clinton” in the primaries.

Voter disaffection, as Thomas Ferguson and Walter Dean Burnham noted in 2014, has soared in recent years, indicating widespread contempt for a political order shaped by the wealthiest and unresponsive to the rest.

“Increasing numbers of average Americans can no longer stomach voting for parties that only pretend to represent their interests,” Ferguson and Burnham wrote. “They crave effective action to reverse long term economic decline and runaway economic inequality, but nothing on the scale required will be offered to them by either of America’s money-driven major parties.”

In short, the obvious rejoinder to Sanders and Warren is that the United States is already, in effect, an oligarchy; corporate money is not merely an element of the process, it is the driving force.

A political system so thoroughly captured by organized wealth cannot, with any seriousness, be called democratic.

How Money Won Trump the White House By Thomas Ferguson, Paul Jorgensen, and Jie Chen

“Dark money” is a term used to describe political spending by anonymous donors through nonprofits, which don’t have to disclose the names of the people giving them contributions. Thanks to a series of Supreme Court decisions around the end of the last decade, these organizations are now often used to fund political ads at key moments of campaigns. According to a working paper by Thomas Ferguson, Paul Jorgensen and Jie Chen published by the Institute for New Economic Thinking this week, dark money was mobilized on behalf of Trump in the final weeks of the campaign at an unprecedented scale.

“What happened in the final weeks of the campaign was extraordinary,” the authors wrote.

“Firstly, a giant wave of dark money poured into Trump’s own campaign — one that towered over anything in 2016 or even Mitt Romney’s munificently financed 2012 effort … The gushing torrent, along with all the other funds from identifiable donors that flowed in in the campaign’s final stages should refocus debates about that period.”

At the beginning of November, nearly $13 million worth of dark money was spent supporting Trump, compared to roughly $6 million worth of such funding for Romney at the same time in 2012, according to the authors’ review of FEC and IRS data. Source: IBTimes

Trump’s unprecedented move to register as a candidate for the 2020 presidential election on his first day in office blurs the line between groups spending in support of the president’s agenda and those supporting his re-election. Unlike their forerunner, Organizing for Action, which did not exist as a 501(c)(4) until after President Barack Obama’s re-election in 2012, political nonprofits have been active since the onset of President Trump’s first term as he’s taken on the roles of both candidate and president.

Groups like the 45 Committee that were established during the 2016 election have spent multiple millions of dollars on ad campaigns during Trump’s first 100 days in office. Trump’s supporters also include new names like Great America Alliance and Making America Great, whose operations and funding sources are still largely opaque though they’ve spent plenty backing Trump; they will not have to file reports with the IRS until next year, and even then won’t have to publicly name their donors — just some of the benefits of the 501(c) tax status.

The nonprofits have publicly jostled to be the Trumpian counterpart to Obama’s OFA; but these groups have much more in common with each other—and the “swamp” of political insiders his campaign promised to “drain”—than initially meets the eye.

In late January 2017, former House Speaker Newt Gingrich and former New York City Mayor Rudy Giuliani announced their “newly-formed” political nonprofit devoted to promoting President Donald Trump’s agenda: Great America Alliance. Two Republican political operatives who are now in charge of the group, Ed Rollins and Eric Beach, as well as its executive director, Dan Backer, also ran a super PAC supporting Trump in the 2016 presidential race called Great America PAC.  Great America PAC raised and spent millions in the last election cycle—but also became embroiled in several controversies.

The super PAC mistakenly published emails and cell phone numbers of hundreds of donors, became caught up in a fundraising scandal for attempting to funnel money from a foreign donor into the U.S. presidential election, and parted ways with a political operative convicted of falsifying campaign records in a prior election. Blasted as a “big-league scam,” Great America PAC was accused by many of being a scam PAC. Nevertheless, the group raised over $28 million during the 2016 cycle and spent over $26 million. Great America PAC paid more than $4 million to Beach’s firm, Frontline Strategies and Media, making the PAC the firm’s top-paying client that cycle.

In 2014, ADI reported raising $600,000 from a fundraising campaign using in-person solicitation conducted by Frontline. The same year, ADI received $250,000 from Judicial Crisis Network and $350,000 from Wellspring. Frontline Strategy’s $600,000 fundraising push—which matches the total amount donated by the Wellspring and Judicial Crisis Network—accounts for more than 90% of ADI’s revenue of $652,829 in 2014.

Much of this can be traced to two influential families of mega-donors: the Ricketts and the Mercers. Beyond just the money they bring to the table, members of each family have taken strategic roles in nonprofits as well as firms those groups hire.

Although the Mercers originally spent millions backing Sen. Ted Cruz (Texas) in the 2016 Republican presidential primaries, when Cruz suspended his campaign they quickly directed their super PAC to support Trump, becoming among the first major donors on the “Trump train.” Ultimately they spent around $20 million on behalf of Trump. The Mercers also leveraged the power of Cambridge Analytica, a firm that uses secret psychological methods to more effectively influence voters, to help the Republican nominee. The Mercers are investors in the firm.

After the election, Robert Mercer’s daughter Rebekah joined forces with top Trump campaign advisers to form America First Policies. But a power struggle followed the emergence of more pro-Trump nonprofit groups in the unstable ecosystem, leading Rebekah Mercer to leave America First Policies for another new pro-Trump nonprofit called Making America Great. There she joins ally David Bossie, whom she helped elevate to become Trump’s deputy campaign manager last year.

As alliances continue to shift between factions, this tangled web of groups churning money from secret donors into the pockets of consultants doesn’t appear to be draining the swamp. Seems more like everyone’s dived in. Source: OpenSecrets

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