Lois & Clark Forums Forums General Discussion Off Topic Are America's richest paving the way for Obama?

Today's USA Today quotes New York Times and says this:

Obama breaks spending record. He has, up till now, spent about twice as much money on his campaign as McCain has spent on his. Where has Obama got all that spending money from?

Some part of that money, I must admit, could be illegal. Mind you, I'm not saying that it is, but I really don't feel confident enough to say that not even a small fraction of it is. So, yes, some of it could be illegal. But if Obama is outspending McCain so handsomely - if Obama may have twice as much money to spend as McCain, and certainly at least 30% more than McCain - then where did all that extra money come from? I simply refuse to believe that 30% or more of Obama's money could be illegal. Come on, people, you surely don't believe that that much of Obama's money could come from illegal sources and the public would still not have a clue that that was the case?

No, I'm sure that by far most of Obama's money must come from legitimate donors. Which begs the question, who has that much money to give away, and why would they give it to Obama?

Correct me if I'm wrong, but it seems to me that it is rich people in Ameirca who contribute most of the campaign money to politicians. Which means that if a politican does not appeal sufficiently to America's most affluent citizens, he or she will not receive enough money to be able to launch a successful Presidential campaign. In other words, a person who can't find favour with the rich will not get the financial means necessary to be elected President.

Now it appears that Obama has received much more campaign money than McCain, and in my opinion that has to mean that America's richest have decided to support Obama rather than McCain. But how can that be? Aren't the richest supposed to be Republicans?

On September 5 this year, Conservative writer David Frum wrote this article in the New York Times. Frum argued that as inequality grows in America, its citizens increasingly drift away from the Republican Party. This is particularly true in ares where rich and poor people live in comparative proximity. Frum wrote:

Because in the "unequal" parts of the United States it is not just the poor people who vote Democratic:

Indeed, Frum claims that the very richest Americans are far more Democratic-leaning than the nation as a whole:

The very richest Americans are those who have benefitted by far the most from George W. Bush's tax cuts. The very richest are those whose income has risen sharply during Bush's presidency. And yet they turn away from Bush, asking for a Democratic President instead.

If Obama has very much more money to spend than Obama before the November election, I take that to mean that those who can afford to give a lot of money to presidential candidates, the very richest Americans, have chosen to support Obama over McCain. I find that interesting.

Ann

Two-three decades ago, maybe. These days they trend much more liberal. So you're working from a false premise. Remember, these are the people who can employ fleets of lawyers to avoid paying taxes. They're also the ones who like to think of themselves as better than "ordinary" Americans, and believe they are the natural ruling class, which the Democratic party enables.

PJ

Actually, I believe it's almost exactly the opposite, Ann.

As I understand it, the bulk of Obama's cash came from the fact that he was extremely savvy with a fundraising campaign on his website.

Rather than go for the usual large donations from vested interests and rich donors, much of his cash (though not all) came from large quantities of small amounts from ordinary Americans - certainly not the richest in any sense of the word. A few dollars here and a few dollars there mount up when enough people are giving. And apparently a huge amount did.

He also benefited from not signing up to accepting public funding - which meant that he didn't have to legally accept a limit on donations, but could raise as much as he liked.

McCain, otoh, did accept public funding and has therefore been stuck with only being able to raise cash up to a certain limit - which has left him badly trailing Obama in the money stakes.

All entirely legal - just one candidate being more cunning than the other really. I suspect that many more candidates - Republican and Democrats - will be fundraising to Obama's model in the future.

LabRat

The federal spending money is something like 84-6 million. Obama said he was going to accept the federal - matching - money which would limit his fundraising to that amount, just like McCain promised to do - and then did.

There is a limit as to how much an individual can donate to a campaign - under 10G total [I think it's more like 3G but I don't have time to look it up right now]. There are ways around that - of course - like fundraisers [the Barbara Steisand concert comes to mind] where they're not donating to the campaign but rather paying 10G for dinner [or whatever it was] with the proceed going to the campaign.

That said, I think many of the 'rich' trend Republican, but many of the 'ultrarich' are Dems and those are the one you see getting the publicity. Of course - being a millionaire isn't what it used to be... [Not that I'd mind being a millionaire, mind you, but the buying power isn't there anymore - decamillionairs are where it's at ].

GTG
Carol

Is advertising really that important to a presidential campaign?

I don't understand why each candidate would spend the equivalent of a small countries entire economy just on getting votes...
It seems like such a waste when there are bigger issues money of that capacity could be spent....

Is the margin of undecided voters that large? Or does their budget also include encouraging people to vote as well... it's not compulsory to vote in the US is it...

It's just mind boggling the $$ injected in just to see one person elected....

Thanks for everybody's comments. Special thanks must go to LabRat, who set me straight about where Obama's money is coming from!

Ann

“Barack Obama was the only major presidential candidate this year to completely reject contributions from The Washington lobbyists and special interest PACs that have dominated our politics for years,” the Obama site says of the persistent online criticisms of its fundraising.

“Instead, this campaign has been owned by the more than 3.1 million everyday Americans who have donated in small amounts.”

Not so, according to campaign finance records. Nearly half of the $600 million raised by Obama to date has come from wealthy donors and special interests. Obama's allies months ago dropped their ad linking Republican rival “Exxon John” McCain to Big Oil after it came to light that Obama had taken far more money from Exxon-Mobil than McCain.

“The Obama campaign has complied fully with federal election law,” claims the Obama site, “including donor eligibility and contribution disclosure requirements.”

However, one giant loophole the politicians wrote into the law allows contributions in amounts of $200 or less with no donor identification. Obama claims that $300 million in campaign funds was given by these small donors, and he won’t release their names and addresses.

McCain has released his whole donor database, including those who have contributed less than $200.

Critics argue that the other half of Obama’s campaign haul — the part not raised from big corporate donors and special interests — came in a small flood of anonymous donations that might be foreign or corrupt, or both.


http://www.newsmax.com/headlines/obama_smears_fact_check/2008/10/20/142379.html

Why do you say so? Have you seen any evidence of this?

I have no evidence whatsoever that any of Obama's money is illegal. This is what I said:

All I said was that I don't know enough about Obama's money to be sure that none of it is illegal. But I'm certainly not saying that I know (or have a reason to suspect) that any of his money is!

Ann

Found a related article:

...

The rest of the article goes into more details.

Now, before you say it -- this is not proof. Newsmax is certainly not even pretending to be unbiased, and I usually take their stuff with a grain or two of salt. But there's a solid base for suspicions.

It's the bizarre amounts contributed that gets me. I've not donated much, but it's always been like, $50, $100, $35, whatever. Not $132.86. Who does that?

PJ

Newsmax had originally reported about half of Obama's donations were from small amounts from ordinary persons. Turns out it is MUCH less than that.

Newly released campaign finance records show that of the $600 million his campaign has raised overall, one-quarter has come from donors who gave $200 or less. According to the Washington Post "That is actually slightly less, as a percentage, than President Bush raised in small donations during his 2004 race"

From the New York Times Politics Blog, The Caucus

Donor Patrol: Obama’s Online Site Accepts More Fakes

Erika Franzi, a 36-year-old mother of four, had been following recent news reports examining how people using obviously fake names had made thousands of dollars in contributions to Senator Barack Obama’s presidential campaign without being detected.

So this afternoon, sitting in her family room at her home in Weaverville, N.C., while her two-year-old was watching “Sesame Street,” Ms. Franzi got on her laptop to conduct an experiment. She used her debit card to make a $15 donation to Mr. Obama’s campaign.

Ms. Franzi, who described herself as conservative and preferring Senator John McCain over Mr. Obama, used the name “Della Ware” and entered an address of 12345 No Way in Far Far Away, DE 78954. Under employer, she listed: Americans Against Obama; for occupation, she typed in: Founder.

To her surprise, she said, her contribution went through in “fewer than three seconds.” Then, in order to be fair, she repeated the experiment on Mr. McCain’s Web site, entering the exact same information. Three times, she said, she received the message: “We have found errors in the information that you submitted. Please review the information below and try again.”

[A] New York Times analysis of campaign finance records looking for obvious anomalies in donor information quickly found more than a dozen contributors to Mr. Obama using obviously fictitious name. This was a tiny fraction of Mr. Obama’s donor pool, but it appeared from the analysis that Mr. McCain had far fewer apparent fake names among his donors.

The main problem, according to Ms. Franzi, seems to be that Mr. Obama’s Web site apparently does not require that the donor’s information match the information on the credit card making the contribution, while Mr. McCain’s seems to have stricter standards.

Another first-person account -- I like the fake info he/she came up with, especially the email addy

My comment: I'm told that the software to process these transactions almost always includes the safeguards, so the Obama website team almost certainly hacked the code to disable them.

Powerline comment:

PJ

Oh, it is. It really is. I can't tell you the number of studies that have shown advertising means a whole lot more than debates and a whole load of other campaigning techniques. The only other more effective means is by personal interactions--which, obviously, is limited by things like sleeping and so forth

Not that I don't find it reprehensible. I actually get sick over the thought of starving children who could be fed by the amount of money we spend in elections. But, when you consider that the US is one of the major world forces (if not *the* major one, for better or worse), the election matters a whole lot--and we have a gigantic country to cover--all of which means an insane amount of spending.

The main reason why Obama has significantly outspent McCain is his refusal to take public financing. He's the first person in history to do so. President Bush did not take public financing for the primary campaign in 2004, but promised to take public money for the general election and did so, restricting himself to the same amount as John Kerry could spend, despite the fact that he could easily out-raise just about anyone on the planet.

The significance is that for those who take public financing, they are restricted to the $84 million given to them by the Treasury. They are not permitted to raise ANY funds for their campaign from any other source. By forgoing public funds, Obama was permitted to raise any amount of money he could. In October alone, he raised $160 million, twice what McCain could spend.

Any money donated to the McCain campaign following the convention had to be turned over to the RNC. The RNC was permitted to raise as much money as it could and had roughly $120 million on hand at the end of the convention. The drawback is that only a very small portion of that money can be coordinated between the national party and the candidate, so in effect, McCain was locked in at $84 million and could raise no more. Likewise, the DNC could raise unlimited sums as well.

It's a political axiom that Democrats always outspend Republicans in presidential campaigns. Along with the free advertising they get from the sycophant media, it's a wonder why Republicans ever win elections. Even John Kerry said back in 2004 that the media was worth 15% to him. That 15% extra still wasn't enough to unseat President Bush. Imagine if the media were actually unbiased. Then Democrats would never win any elections in this right-of-center country.

Obama had originally promised he would take public financing for the general election, but reneged on his promise when he figured it would give him a significant advantage over McCain. McCain, knowing he would be outspent tremendously, refused to break his promise to take public financing and was hamstrung for it, knowing Obama would blow him away in terms of spending power.

Federal election law also requires all donations above $200 to be reported publicly for anyone to see while any smaller amounts can be hidden from disclosure. McCain, well known as an advocate for campaign finance reform and being the co-author of McCain-Feingold campaign finance law, has disclosed ALL of his donations, including those not required by law. Obama, OTOH, has kept his donations hidden whenever possible. It was also reported just last week that Obama's campaign was accepting donations from pre-paid anonymous debit/credit cards.

And yes, America's super-rich are mostly liberal Democrats, as are those on Wall Street. I don't know why people find that strange even though the stereotype is that rich people are all Republicans. They certainly aren't by any stretch. Most of the CEO's I have ever heard of are Democrats with notable exceptions like Carla Fiorina, former CEO of Hewlett-Packard and Herman Cain of Godfather's Pizza. The CEO and Chairman of the company I work for are big-time Democrats, billionaires both. Most of the super-rich on the Forbes list are Democrats, including Bill Gates or Steve Jobs or Warren Buffet. Just looking at Congress, the richest people in the House and Senate are invariably Democrats with only a few exceptions.

Those who are Republican leaders tend to be rather poor in comparison. Ex-Speakers Dennis Hastert and Newt Gingrich, for instance, were a college basketball coach and history professor, respectively, who made very little money. Ex-majority leaders Dick Armey and Tom DeLay were also poor by comparison, with Armey being an economics professor and DeLay being an exterminator. Meanwhile, we have the ultra-rich Diane Feinstein, John Kerry, Ted Kennedy, Nancy Pelosi, and Herb Kohl (of Kohler faucets fame). Ex-Majority Leader Bill Frist was a rare, rich Republican. He was pretty wealthy after being one the foremost heart surgeons in the country, ironically having saved the life of Colonel David Petraeus before either of them were known in political circles after Petraeus had been accidentally shot and nearly killed in a training accident in Tennessee.

The richest presidents of the last hundred years were mostly Democrats with the exception of naval officer and peanut farmer, Jimmy Carter. Carter, along with Reagan, were the two poorest presidents of the last century. The richest were John F. Kennedy, Franklin Roosevelt, and Lyndon Johnson.

Why are the ultra-rich so liberal? There are a number of theories, but none I could prove. I have my ideas related to elitism and old money. "Country Club Republicans" are also rather liberal, with the likes of Gerald Ford and George HW Bush. Those guys tended to be very rich old money, not self-made like Bill Frist or Senator Tom Coburn, another doctor. Keep in mind the liberal Gerald Ford appointed the most liberal member of the current Supreme Court, Justice John Paul Stevens. Poorer ones like Ronald Reagan and George W. Bush tended to be more conservative.

The fact that the very rich tend to be liberal also explains why Democrats tend to raise money primarily from very large donations while Republicans tend to get most of their money from small donations and why the Democrats always have a financial edge.

Newsmax has no more credibility than The Onion.

Here's an interesting tidbit to come out of the exit polls.

The 6% of the population making $200,000 or more voted for Obama 52-46, the exact margin of victory Obama had Tuesday.

McCain won 3 out of the 4 middle class income categories.

This tracks with past elections where Democrats get support from the very bottom and very top of the income categories while Republicans get their support from everyone in between.

Another thing that came out of the Rasmussen exit polls showed that 41% of all voters identified themselves as conservatives, only 23% as liberals. The surprising thing was that 20% of the self-described conservatives voted for Obama.

Rasmussen also shows that 51% believed that the media was campaigning for an Obama victory while only 7% thought the media was for McCain.

Not my theory, but I'll come back to mine in a bit.

What, George H. W. Bush is rich old money and George W. Bush is not? You mean Papa Bush disinherited his boy?

Sorry, Roger. Couldn't resist.

I'm going to be serious again. Here's my theory about why the rich often favor the Democrats. Let's return to the opinon-piece by David Frum that I quoted in my first post in this thread. In his column, Frum said that Americans really don't like inequality, at least not the glaring kind of inequality, and when they see that sort very uneven distribution of wealth in their own home town or home district, they get decidedly uncomfortable. Frum didn't say so, but I think he was implying that when Americans see inequality displayed so very blatantly before their very eyes, they actually feel that the American dream isn't working. And in recent years, again according to Frum, Americans living in 'unequal neighbourhoods' conclude that the economic theory of the Republican party, supply side economics, isn't working. Supply side economics is supposed to bring wealth to everyone by selectively cutting taxes for the rich, but those who can see inequality grow all around them after supply side economics has been implemented often conclude that Republican economics really favors only those who are already very well off and selectively disadvantages the disadvantaged.

It is no wonder that those who are poor and find themselves getting poorer would distance themselves from a party whose economic politics seems designed to make life even harder for them. But what about the really rich? Why would they disapprove of a party which selectively pampers them?

Here's is what I think. It's just a theory, of course. However, I believe that many of those who are rich are smart and talented people who are interested and curious about the world around them. I think many of them are contemplating their own place in America and, possibly, the world. And I think that many of them are intellectually honest enough to actually reject supply side economics. I think they understand that cutting taxes for people like themselves will not make low- and middle-income people better off. I think they admit to themselves that they don't always use their 'tax bonus money' so wisely, and they probably know other rich people who also don't put their tax return to the best possible use. I think these rich people may even conclude that selective tax cuts for people like themselves may actually make life harder for people less fortunate than themselves.

Okay, but is it a problem for the rich if poor people get poorer?

I think that many rich people believe that it is a problem. I said earlier that I believe that many rich people are smart and curious individuals who contemplate their own place in the world. I think that many of them conclude that if a lot of poor people get even poorer, that may lead to tension and unrest in the society whose well-being they themselves depend on for the generation of their own wealth.

In other words, I think a lot of rich people favor a society that works well for everybody over one that gives themselves the best possible tax breaks, because they believe that the well-being of others will give themselves the best chances to prosper. I don't think that these people worry very much about the taxes they have to pay. They probably know that they are doing all right anyway. A fraying society is a bigger problem to them than the obligation to pay slightly higher taxes.

David Frum said that Washington DC is one of the most unequal places in the United States, and it is also the most overwhelmingly Democratic part of the United States. Well, he was right about that. In the 2008 election, no fewer than 92.9% of the voters in the District of Columbia voted for Obama! Now that is what I call a landslide.

Ann

There are elements of what you say that might be true. A lot of people who experience success also experience guilt that they're doing better than others. A lot of super-rich see what they have and feel guilty they have so much. That's natural. What they ought to do in that case is to give of themselves to others, rather than having government force others to give of themselves against their will. I, for one, give quite a lot to various charities. But it's MY choice to give to those charities, not because I am being forced to give.

But Frum does make a lot of bad assumptions. For instance, the poor don't always get poorer. In the Bush Administration, we've had some hard economic times due to many factors like external attacks or natural disasters in which case the poor always do worse since the richer people usually have fallback positions or nest eggs. And you cannot prove that supply-side economics cause bad times when the Reagan Administration is clear proof that it doesn't. Reaganomics dragged us out of the horrid Carter era of tax and spend economics.

As for the poor, the one fallacy that no one ever takes into account is upward mobility, which is the easiest to do in this country. In most countries around the world, people do not easily change income groups. In the United States, it's routine. The statistics do not tell you that the poor of last year are the same as the poor of this year.

In the Reagan Administration, for example, minority families gained a lot with many poor moving out of their economic status into higher income groups. Other poor will always be there to take their place, like teenagers and kids coming out of college or illegal immigrants. Everybody has to start somewhere, you know.

The statistics also fail to take into account the vast amounts of illegal immigration in this country. The illegals are factored into the income groups, but are generally locked into the poorest of the poor because it is technically illegal for them to work in this country.

I would love to see a study that takes those factors into account: upward mobility and illegal immigration.

A second fallacy is that inequity is a bad thing. John F. Kennedy once said about tax cuts that, "a rising tide lifts all boats." As long as everybody gets more money, has the opportunity to move into higher income groups, there is nothing wrong with inequality. Economics teaches about the old equity versus efficiency argument. Equality is always gained at the loss of efficiency, and vice versa. If the income gains are higher at the top, who cares as long as everybody gets a bigger piece of a growing pie? I certainly don't envy the millionaire next door who runs his business, employs hundreds of jobs, and does very well for himself and his family. If he or she worked hard to get their wealth, they deserve to enjoy the fruits of their labor.

America's poor are actually fairly well off compared to much of the world. Our poor have places to go home to, TV's, cars, air conditioning, microwave ovens, etc.

Those who care more about equity sacrifice efficiency. That's why Americans are better off, economically, than every other country in the world. That's why everybody's flocking to come here and not to Mexico or China. People instinctively understand that if the opportunities are there, they will do well for themselves if they put forth the effort and have a little bit of luck on their side. In other countries, the opportunities just aren't there. Or there is no incentive to go anywhere.

Here, jobs are generally at-will, which means an employer can terminate an employee for virtually any reason except for discrimination. Many who lose their jobs often find better jobs or even find the incentive to run their own business. I see success stories like that all the time. In Europe, for example where people are more concerned with equity than efficiency, it's virtually impossible to fire anyone. So not only do employers resist hiring employees leading to chronic high unemployment, but no one has an incentive to go out and do better for themselves.

There's a very good reason the US dollar is rising these days. People have finally figured out that even in the midst of a financial crisis, American businesses and even banks are better off than those elsewhere. The Euro and pound are being beaten down now because people have realized Europe is worse off than we are, and not just because of the American financial crisis. We've also had pretty good growth for quite a while while Europe stagnates permanently under its welfare programs.

As an aside, I was in Sweden just this last August where the dollar was trading at barely 6 kronor/dollar and even briefly dipped into the fives. Today, the dollar is trading at 7.8992 kronor/dollar, the highest it's been since I started going to Sweden almost annually fifteen years ago. That shows the resiliency of the American economy.

These reasons are why people want to come to America. Not because outcome is equal in all cases. No one can guarantee equal outcome. But equal opportunity can be guaranteed to the best of our abilities. Equal opportunity is the key to having everyone be better off, not equal outcome, which is impossible.