THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.
MODERATOR: Good afternoon, and welcome to the Department of State Foreign Press Center’s briefing with Dr. Ray La Raja on election financing. My name is Gini Staab, and I’m the moderator this afternoon. As a reminder, this briefing is on the record. After the briefing we will post a transcript and the video of this briefing on our website, which is fpc.state.gov. For those of you joining us on Zoom, please take a moment now to rename yourself with your full name and your press outlet.
Our distinguished briefer today is Dr. Ray La Raja, who is a professor of political science and the associate dean for program innovation at the College of Social and Behavioral Sciences at University of Massachusetts Amherst. He is co-author of Hometown Inequality: Race, Class, and Representation in American Local Politics. He previously co-authored Campaign Finance and Political Polarization: When Purists Prevail, which was the winner of the Virginia Gray Best Book Award from the American Political Science Association State Politics and Policy section. He’s co-founder and co-director of the UMass Poll, which conducts public opinion research in Massachusetts and the United States to inform policy making.
Before Dr. La Raja’s opening remarks, one quick reminder. He is an independent subject matter expert, and the views expressed by the briefers not affiliated with the Department of State are their own and do not necessarily reflect those of the department or the United States Government. Their participation in Foreign Press Centers programming does not imply endorsement, approval, or recommendation of their views.
With that, I’d like to invite Dr. La Raja to make some opening remarks.
MR LA RAJA: Thank you, Gini. I’m delighted to be here. Let me just share my screen. I’m going to say a few words, talk for about 10 minutes, and then we’ll have some questions.
Okay, I think everyone can see that. So again, I’m delighted to be here, and I’m guessing you’re going to be encountering these issues of campaign finance while reporting on U.S. elections. Let me just point out a few unusual aspects about U.S. campaigns that might be surprising to many of you. First of all, there’s no limits on political spending in the United States. So under the First Amendment of the U.S. Constitution, as interpreted by the Supreme Court, you can’t tell any group, any individual for that matter, how much they could spend in politics. This means there’s no laws that limit political spending.
Now, note – I’ll say a little more about this – there are contribution limits, how much you can give to a party or candidate, but the implications of no spending limits are pretty profound. Without ceilings politicians have an incentive to raise a lot of money, and then additionally many groups get involved because they can spend unlimiting.
Now, the second point is that almost all financing at the federal level comes from private sources, okay? There’s some limited public funding for the party conventions, but the major candidates don’t use public funds. They just – they used to use them in the past, but they’re – elections are so expensive now that they don’t even bother using them because there’s too many limits. Third, spending from independent groups is increasing rapidly, and I’ll say more about this in a moment, but this goes back to point number one because it’s far easier to raise money and spend it with no contribution limits.
Okay, let me talk to you about the sources of financing in U.S. politics. This stuff might not be too surprising. Parties can give money to candidates; they can run ads for the candidates; they can help mobilize voters like in other countries. Then there’s something called PACs. It stands for Political Action Committee. These organizations are sponsored by corporations, by labor unions, by advocacy groups, and they collect money and give it to politicians, okay. Then there’s the individual donors. They can give unlimited amounts to as many candidates and parties as they want. Now, there’s contribution limits on them, but they can give to many different candidates and committees.
And then finally, there’s what I mentioned earlier, these independent committees. And these groups are independent. Why? Because they do not contribute to campaigns. Instead, they spend the money directly to help a candidate; they run ads. Now, the key thing here is they can’t talk to the candidate or the party. They’re independent, because if they do talk to them that counts as a contribution, which is limited. So you already see some nuances here, okay? And I’ll say a little bit more. A lot of these independent groups, there’s a name we use called super PAC. Why super? Because they could spend as much – they can raise and spend as much money as they want.
So I’ll say a little bit more about the limits on contributions to candidates and parties. So individuals under the federal law, they can give up to 3,300 per election, okay. So that means if I want to give money to someone in the primary and the general, I give them 6,600 for both. By the way, if I have a spouse, I could – she could give the same amount. If I have children, they could give the same amount. So this thing – these things can escalate. Usually it’s just the one person. They can also give 41,000 to a political party. Most of this money from individuals, not surprisingly, comes from the same urban geographic areas in the United States which have a lot of wealth. That includes New York, L.A. – Los Angeles, Washington, Chicago, and other major cities throughout the country.
Now, the next – I should say generally that Democrats, for those of you who follow this, get most of their money from unions, from lawyers, from the entertainment industry, and to some extent from Wall Street. Actually, Wall Street gives to both sides. Republicans from corporations, especially from extraction industries like oil, manufacturing, mining. And the modern industries like big tech – Google, Apple – they tend to split their donations, maybe slightly more these days to Democrats.
In terms of political action committees – so they can give $5,000 to each candidate per election. So if I’m the – for instance, the CEO of General Motors automaker, okay, they can donate. They have a committee that can donate 5,000 to a candidate, okay, after I’ve given maybe – I’ve given 5,000 to the PAC and then the PAC can in turn give 5,000.
Now, there’s a term you might come across called bundling, and this is allowed, and that is a common practice to kind of – not – it allows someone to raise a lot of money from their rich friends and collect the money, and then they get credit for collecting all this money. So if I’m an investment banker, I have a party, I invite my professional associates over; each of them at my party, they – by credit card or personal check they give – they give – they write it and then I turn over that money to the politician.
There are no contributions from foreigners allowed except if you are a non-citizen resident. If you have a green card, you may contribute. So, but no money from any foreign entity or any foreigner who doesn’t have that.
Some questions about transparency. I don’t know how well you can see this, but there are very good sites in the United States to check who gives money and who receives money. This happens to be a website you might want to use: OpenSecrets. You can look up the name, the occupation, and how much was donated and where these people live. So I could look up to see my neighbors, how much money they gave to – and which party they gave to. So it’s very good to understand individual and group contributors. So this happens to be Michael Bloomberg. It looks like Michael Bloomberg gave quite a bit of money to certain PACs in this case. But I highly recommend using this site, or the Federal Election Commission has a site. This one’s a little bit easier to use, but the Federal Election Commission is very comprehensive.
Okay. What about the rules on spending? As I said, there are no limits on how much you can spend. The Supreme Court in the United States has ruled that although contribution limits are justified – that is, to prevent corruption, so the politician has no – there’s no exchange – you’re – they’re – we’re allowed to put contribution limits on – you can’t limit how much they can spend. That would be a violation of the First Amendment because, the argument goes, you need money to express yourself in modern society.
So there was a decision called Citizens United v. the Federal Election which really was a continuation of a previous court decision. It wasn’t really that new, but it really put an exclamation point with the Supreme Court saying, no, you cannot – you cannot limit any group’s right to free speech. It’s a very controversial decision. Most of the people on the left oppose it, and most of the folks on the right support it.
Okay. To get a sense for the sources of money and changes over time, this figure comes from my own research and it shows large donors. That’s the top line in olive green. They typically give the most. Now, large donors – anyone who gives over $200 to a candidate is considered large. Now, if you look at the red line, this has really changed in the United States. This is the recent surge in small donors. These are the citizens who give less than – $200 or less to a campaign. And the amounts they gave even surpassed the large donors in 2020. So some people might say, well, this is a good sign that more campaigns are being funded through smaller contributions, and some politicians were very good at this, including Donald Trump; Joe Biden actually gets a lot of small donors as well; and people like Bernie Sanders, people who definitely know how to attract a crowd.
So the blue line, however, is something – what we refer to as independent spending. These are the super PACs, and look at how they’ve really gone up. And as I said, why “super”? Because they have no limits on their spending and a lot of wealthy groups and people now give to these organizations. They can’t give to politicians; they can spend on their own. Okay. So again, that’s the distinction, and we can talk about that in the Q&A.
The surge in the – in this independent spending without limits is one reason why we see such an increase – this is showing the increase over time from 1998 to 2020. So in the 2020 elections, there was almost 15 billion in spending, okay – that’s both Congress, the blue; president race is the yellow. I – it’s going to be hard to predict what 2024 is. I imagine it’s going to be even higher, maybe close to 20 billion, again, because it’s so easy to raise and spend money, and critically the stakes seem so very high for so many people.
So of course, there’s the presidency, which people – there’s a lot of tension around that between the two sides. But Congress is so close together; it could flip to either party. So I guarantee you there is going to be a lot money spent on not that many races, because not that many contests are competitive. But the few that will determine the control of the United States are going to have millions and millions spent on them.
Finally, a quick word just about enforcement. The Federal Election Commission regulates money in politics for federal elections. There are six commissioners, three from each of the two major parties. And for that reason, actually, it makes it very challenging sometimes to arrive at some enforcement decisions, because they often disagree three to three, so there’s some what we call deadlock. So enforcement is not always very strong in these cases, and that’s why – for instance, we might talk about this in the Q&A. Can someone like Trump spend money on legal expenses? That should be adjudicated, usually by the Federal Election Commission initially, and I’m not sure we’ll get an answer from them.
Terms you might hear as you go forward is things like joint fundraising committee. These political committees – basically a lot of committees sign up with this committee, and the donors write one large check or give one large amount – almost up to a million sometimes – and then that gets – after the check goes to the committee, it gets spread out to the committees that ask for it.
So for example, Trump has a joint fundraising committee called Trump 47 – 47th president he wants to be. It raised almost $1 million from a single donor; it does this for several donors. The money gets distributed to Trump’s official campaign committee, okay; the Republican National Committee, the Republican Party and its satellite state parties – a lot of it goes there; and then finally, the Trump super PAC called Save America, okay.
So the first 3,300 as a contribution goes to his campaign, and then the next 5,000 will go to the PAC, okay, and the rest to the Republican Parties. Now the Save America PAC is interesting, and someone asked about contributions to pay for his legal fees. It’s not really clear, to be honest. Lawyers are really trying to figure this out. A candidate campaign must only spend money on campaign-related activities, legal fees that apply to the campaign. And in some cases that are – that Trump is facing are not related to the campaign. The ones related to challenging the results of the 2020 election, I can imagine that being used with this campaign. Others, not so much, like the case involving top-secret documents found at Mar-a-Lago. But some argue – and the Trump campaign is doing this – that the PAC, the PAC that Trump has, the super – they have more ability to spend on non-campaign-related activities. So that is very much a gray area. It’s not clear, and the Trump campaign is kind of pushing limits.
So I’ll tell you what. Let me stop there. There was one other question actually about spending in the last election. Maybe I’ll show this slide. This slide shows how much – how many millions, almost billions, spent on advertising in the United States in the last election, 2020. So broadcast TV, almost $1 billion. That was 55 percent of total. And then the question was how much digital. And almost a quarter of money is now spent on digital, online. That’s a big increase, okay, since the last time. So I wanted to point that out. I’m – I know TV spending is going to go up as well as digital as a new form.
So let me stop there, and then I’d love to take your questions.
MODERATOR: Thank you, so much Dr. La Raja. And now, as we open it up for questions, if you have a question, please click on the raised hand icon at the bottom of the screen, and we’ll call on you. Please ensure that your name is changed to be your full name and your press outlet. And we look forward to hearing from you.
So let’s see. See here. Do we have some questions? How about some that we can – that were submitted in advance. So how does the state regulate financing of political campaigns and parties in general, and how does the state ensure transparency in political party fundraising?
MR LA RAJA: So I just laid out a few – I think one – okay. So the cornerstone of American regulation is transparency, okay – you can spend as much as you want, but we want to know who’s spending it. And so I pointed out that website that shows who’s giving money. So if you’re reporting on this, you can find out exactly who gives money to Trump, who are the biggest donors to his political campaign. You can find out what industries they represent. You can find out where they’re – what state they’re from. So that’s pretty good.
One change, however, is there is a group of organizations that do not have to report their donors. And I won’t get into the technical details, but they – because they’re considered social welfare or educational associations, nonprofits, they’re allowed to have anonymity with their spending as long as they don’t spend more than 50 percent on politics. So that has become a vehicle for some – not all, for some – to give money unlimited without revealing who they are. The challenge comes in, of course, because we don’t know who these folks are, and these groups may often give to the super PACs – again, which doesn’t spend. So American campaigns used to be extremely good at keeping track of donors and who is giving it, but it’s become a little bit harder now. And that is one problem.
But by and large, the system runs on that principle of transparency, limited contributions, and again, unusual for many of you to hear this, but absolutely no limits on how much you can spend in any campaign. If I was a rich – if I was Elon Musk, I could spend my entire fortune on running for president if I wanted to. Not to say that Elon Musk would win, but that’s how it goes.
MODERATOR: Thank you. Andrew Buncombe, please. You can unmute yourself, ask your question.
QUESTION: Thanks, sir. Thanks for doing this. I had a question, please. One apparent seeming contradiction of what you’re talking about is that when you – when one speaks to voters, and even when you listen to politicians, they all say they think there’s too much money in politics, and yet spending is at an all-time high. I know there was an effort by John McCain and Russ Feingold to put some limits on 20 years ago, but why do you think there have not been more attempts to address this? Thank you.
MR LA RAJA: Yes, thanks for your question. There have been several attempts. The challenge for people who want to reform and put limits in place is how the Supreme Court interprets the First Amendment, and the Supreme Court has argued in their statements and – that the government shouldn’t be involved in adjudicating how much you can spend on politics. They don’t want to give that authority to anybody in the government.
So their concern is corruption. They have argued at the Supreme Court level this is the – you can prevent someone from giving a million dollars for a candidate because it potentially corrupts the candidate. But if the group spends and says vote – vote for Ray La Raja, okay, or vote for Elon Musk, and they – as long as they don’t talk to me or to Elon Musk, they don’t see that as corrupting.
Okay, now, some of you may say, oh, of course the candidate’s going to feel some gratitude towards anybody who spends money on their behalf. But the Supreme Court wanted to set a very bright line. So reformers have bumped up against this First Amendment issue time and time again, and it’s allowed a lot of these independent groups to spend money unlimited.
You’re right that Americans don’t like this much spending. They’re trying to come up with reforms that enable more public financing, reforms that might increase the number of small donors. I mean, I think it’s rather extraordinary – I don’t think you find this in other nations – how many people give a small amount of money to politicians. So that is one hope, but I have a feeling that it’s never going to end the very, very large donations that are allowed under the First Amendment.
MODERATOR: Thank you. We have another question,. Can you please explain a little bit more about the PACs, the super PACs, and the independent committees, and the differences between them?
MR LA RAJA: Sure. So the traditional organization is the PAC, okay. That was set up back in the 1970s post-Nixon Watergate scandal, because the president’s campaign committee had a lot of funds that were – no one knew where they were coming from; some came from corporations. So they set up these laws that say listen, corporations and unions can’t give money. If they want to give money, they have to give through committees, and these committees can be funded by individual contributions that are limited. And then the committees, the political action committees, can then give a limited amount to politicians. Right now that limit is 5,000 per election. That’s a PAC, a political action committee.
They don’t usually give to presidential campaigns. They like to give to members of Congress. Presidential campaigns are usually supported almost entirely by individual contributions and then these outside spending groups.
Super PACs, as the name implies, can do a lot more, except make contributions. Under this First Amendment jurisprudence, they can spend as much as they want and a court – not the Supreme Court, below them – said well, if they are not a corrupting entity, then why should they have any limits at all on how much people can give to them? So that means there’s no limit on how much a super PAC can receive. Again, if I was a billionaire – and some of them are doing this – I can give $50 million to a super PAC that can then use that money directly on an ad. Okay, so that’s a super PAC.
Super PACs are part of this group I’m calling independent spending groups. They dominate that category. There’s a few others that I mentioned, some that some people call dark money groups because you don’t know who the donors are. But by and large, most of those groups are super PACs, okay. So I hope that clarifies these outside groups.
MODERATOR: Thank you so much. Alexandra Filippenko, please unmute yourself and ask your question.
QUESTION: Hi, hello. I’m Alexandra Filippenko. We’re looking into Russian nationals donating into U.S. political campaigns, and I want to – I’m not sure if we can speak about exact issues, but back in October 2023, Newsweek reported on a group of Russian nationals that were able to donate to Mike Johnson’s campaign by funneling the money through a U.S. company. The company was run by an American, but it was – 88 percent was owned by three Russian nationals.
So when Johnson’s team learned about it, according to the report of Newsweek, they sent the money back. And I don’t know if the report was accurate, but what – was anything done after 2018 to prevent similar situations and cases? Thank you.
MR LA RAJA: That’s a really good question. I don’t know what was done in that case. However, no politician, certainly no incumbent in office wants to be caught getting money from a foreign entity for their campaign. That would be the kiss of death in their next campaign.
Now, can foreigners somehow get money into the system? I suppose through some of these dark money groups that I mentioned. Again, there are very heavy risks and penalties for doing that. I haven’t seen evidence that – I mean, it’s definitely – that’s something on people’s minds, but I haven’t seen significant evidence that there is much if any foreign money making its way in here. Now, it gets complicated with multinational companies, of course, but that’s why you have to set up a political action committee through which you give money, and only people who are citizens or non-citizen residents can give to those political action committees.
The Justice Department gets involved in these cases, and they have teeth unlike – the Federal Election Commission has less investigatory powers, so on issues where foreign – foreigners try to give money in campaigns, that’s an issue for the Justice Department.
MODERATOR: Thank you. On a related question, do you know, is there a certain way to ensure that the money comes – that the money raised comes from 100 percent legal sources, even in the case of PACs or super PACs?
MR LA RAJA: So one thing that – the way enforcement works in the United States is it relies on what we call third-party enforcement. So if I’m a candidate and I’m running against Jenny, I am going to scour her campaign finance records. I’m going to go to the Federal Election – I’m going to see where she’s getting her money and if I see something that doesn’t look right, I am going to advertise that in my campaign or I’m going to – and I’m going to file a complaint with the Federal Election Commission. So a lot depends on the rival candidate wanting to use that information against the candidate they’re facing off again. The Federal Election Commission does some audits, but certainly they can’t do audits of every candidate.
And then there’s – the other group that’s very important are investigative journalists who look at these records, see where the money’s coming from, and then if they can’t account for how much is being spent, they’re like, “Well, where is that money coming from?” So journalists play a very important part in the American enforcement system by raising issues and pointing them out to the authorities.
MODERATOR: Thank you. One more question: What do you think of the effects of the lack of limits on super PAC contributions? Is there real independence between the campaign and the super PACs?
MR LA RAJA: This is a very interesting question. There’s been a lot of research here. The truth is – okay, so there’s two layers here. First, if I’m a candidate, I want to control the money because that lets me – or the party. I want to control the money because I can send out my message, I can move the funds around as I need it. But that said, I do appreciate if a campaign is going to support me with their independent spending.
And some – what’s increasingly happening is the candidate or the political parties will signal to these groups this is our campaign message and these are the people we are targeting. And so they will put up on their website a – some information that is very helpful to these outside groups. And it’s perfectly legal as long as you’re making it public to everyone, but the ones who will use this information are these campaigns.
But the legal separation is very critical. There have been instances where a consultant works for one candidate and then her partner, he works for the independent spending operations. They live in the same house, okay, but they are not allowed to talk about the campaigns together whatsoever. Seems – it’s a funny situation, but that has happened before, okay. But of course, there are ways to figure out how to place the best ads. So independence is not as independent as the law seems to say it is.
MODERATOR: Thank you. Next question: It appears that President Biden has raised significantly more funds than Trump in the last quarter. Are there statistics that explain the substantial difference? Does this indicate that Biden has garnered more support than Trump or does it reflect a greater fundraising efficiency?
MR LA RAJA: So the first thing is whoever is in the White House always has an advantage. They can start earlier, and usually, incumbents win. So you could look at these numbers as suggesting that the big money is betting on Biden. That’s one way to look at it.
The other – the other thing that people are concerned about is: Is Trump going to use my donation and spend it on his lawyers for his legal fees? So many big spenders who would normally give to Trump right away are – don’t – they want the money spent on the campaign and they’re not convinced that he won’t be spending it to pay for his legal fees in Atlanta or other places. So I think that’s holding him back right now.
But the difference between them – and also I should point out the Republican National Committee is way behind as well. Again, partly that’s due to the fact that Trump is not the president anymore, but it’s also due the fact that people think, “If I give to the Republican Party, they’re going to spend it on Trump’s legal fees.” So that is a problem I didn’t anticipate for him, but it’s certainly weighing down on him. As the election heats up I imagine there’s going to be a lot more money going there, but it’s going to be contingent – I’d keep an eye on those legal cases if – that will shape donors’ preferences in how they give their money. They might start giving – my guess is more of the money is going to go to independent groups that Trump doesn’t have control over, and they’ll be spending on this election.
MODERATOR: Thank you. Kiyoshi, please unmute yourself and ask your question. Kiyoshi Ouchi?
We’ll come back to him. Okay, so the next question: How can foreign nationals who are U.S. permanent residents with green cards donate to candidates?
MR LA RAJA: Well, it’s legal to do so. They’re here as residents; they’re paying taxes. They can’t vote, obviously, but they can do this, and they can do it the way every – the way American citizens can. They give a limited amount to their favorite candidate and they give to the political parties; they can give to Political Action Committees. But the status of having a green card enables them to participate. I don’t know how usual that is in other countries, but I guess there’s a certain sense that this person is here long term and they have a legitimate interest in participating in politics. Again, they don’t get the right to vote. Some would say that it’s more influential to give money, but that’s the way they decided this, so.
MODERATOR: Thank you. Kiyoshi, if you’d like to write out your question, that would be great too. And in the meantime, there’s another one. There appears that some people can use campaign financing to launder money into countries. How does the U.S. check that, and how can a country like Ghana learn from that?
MR LA RAJA: So I wouldn’t know how they – how the laundering would work in the U.S. context, so maybe you could explain that to me a bit in your message. But – how it works in Ghana. But there are much easier – I shouldn’t say much, but there are other ways to launder money in the U.S. through businesses and such that probably present less of a risk. I have not seen cases of money laundering in the – I have seen cases where – this is what comes up sometimes, that you have what we call straw donors.
A – let’s say a businessperson wants to give money to a politician, but the politician – but he can only give a limited amount, okay. And so what that businessperson has done and sometimes in the past is tell the employers, “I want each of you to give a contribution to this politician, and I will give you extra money in your paycheck.” That is absolutely forbidden. It’s been tried before in the past; people have been caught and put in jail for that. So – but that is – that’s the kind of trying to get around the system by using what we call straw donors, fake donors who are being paid to give donations.
MODERATOR: Thank you. Another question: Is it usually the candidate spending the most money who wins the election, or not necessarily?
MR RAJA: No, that’s not necessarily true that the – I mean, it happens to be that way because the people who win the most in Congress are the incumbents and they usually can raise the most money. But in the presidential elections it’s much less true because – Donald Trump is a perfect example when he ran against Hillary Clinton. She spent much more than he did, the reason being is because partly folks like yourself give so much attention to the candidates that spending becomes less important. So the more that the media focuses on the contest that – what politicians call free media – of course, they want good free media – that makes the difference.
But – and the more you spend, the less it matters. There’s a – economists call diminishing marginal returns, okay. So after a certain point it’s not going to make such a big difference. So there have been cases where billionaires spend money to win their election – in California this happens all the time – and they lose. They lose a lot of money and they don’t even come close to winning. So yeah, there was one woman who ran for governor, and she used to be head of a big Silicon Valley firm, and she spent tons of her money and she lost even though she outspent everyone else. So that doesn’t always help.
Politicians want the money to be able to fight back. The way elections work is if there’s a big difference in spending, that could – you need to be able to respond to your rival, and – but if it’s parity, it doesn’t really matter so much.
MODERATOR: The next question. So if a politician gets elected with a donated fund and if the elected politician passes a favorable bill, presumably to those donors, would that be lawful? Don’t they get in trouble with such a practice?
MR LA RAJA: Yeah. Yeah, that’s the classic question we call the quid pro quo. Is the politician doing something in exchange for money? So my colleagues have spent years researching this and they have not been able to identify how money directly impacts a vote in Congress, okay? It’s been very hard to do that. What they usually find is donors give to politicians who agree with them. So if I am – if I don’t want guns to be regulated, I get a lot of money from the National Rifle Association. They say, oh, Ray La Raja, he’s our man because he won’t – he’ll pass legislation to prevent gun regulation, so they give me money, they support me. That’s what’s going on most of the time.
What the research tends to show that if I give money, I get an audience with the – certainly, politicians spend so much time raising money that they tend to meet with donors at events, and what happens is they spend a lot of time with these folks that hear about their problems and their issues. So that is a form of influence that I think is happening in the United States. Whether they actually vote on a specific bill, it’s hard to prove, although sometimes it seems self-evident to citizens who are watching this process. It doesn’t seem so good. And that’s the argument people make for having public financing of elections so politicians don’t have – they spend so much time raising money. If you’re a member of Congress, your first year, you could spend 10 – more than – 10 to 20 hours a week raising money for your next election.
MODERATOR: Thank you. So do you have a sense of how U.S. spending on elections compares with other OECD countries?
MR LA RAJA: So I don’t have the data on all the OECD countries, but I do know that there was an election in France just before Biden. Macron spent 47 million or something for his two elections, and Biden spent 25 times that amount for his election. So it’s pretty much – the election, it is pretty much off the charts in terms of how much we spend on elections.
There’s a lot of reasons for that. First of all, it’s a big country. I mean, if you look at it in terms of per voter spending, it’s not that far out of line, even though it’s still out of line. Economists often say the way you determine election spending, if it’s too much, you should look at it in comparison to the gross domestic product, the GDP. So spending on politics is like consuming other goods, and in that respect, the United States as a percentage of GDP is not out of line with other OECD countries, I don’t think. So it depends on how you frame it. Certainly in terms of total amounts, yeah, it looks like we are off the charts compared to other countries, yes.
MODERATOR: Thank you. Next question. What happens to the leftover money that the PACs and the super PACs put into a campaign, if there’s anything left over?
MR LA RAJA: Yeah. Well, the worst thing – if you lose a race and you have leftover money, people will shame you, because they say you didn’t put all into it. So – and that’s happened to a few politicians.
So typically there’s – typically, the parties and the candidates often go into debt, so it’s the other way, and then they have to raise more money to pay those debts. They overspend and they take out loans. Some politicians put – they take out a new mortgage on their home to raise money, so it’s usually the other way. But for members of Congress who don’t have very challenging races, they hold onto that money for a future race. They might want to – if you’re in Congress, if you’re in the House of Representatives, you might want to run for the Senate, so you accumulate a war chest in order for you to do that.
The other thing that people don’t know much about but this happens a lot in Congress, is you use the money in Congress that you have left over to make friends with your colleagues. So that means if I have $1 million in my account and I’m a U.S. representative and I don’t face a – I will give it to a colleagues who’s facing a tough election, and that she will feel indebted to me, maybe, and maybe when I want to run for the leadership in the House of Representatives, they’ll remember that. So it’s a form of currency within the legislature, and someone who – and some politicians even help – this is more controversial, but there’s a politician in the U.S. House of Representatives named Alexandria Ocasio-Cortez who was in the left wing of the Democratic Party, and she wants to change the party, so she funds challengers in primaries against sitting members of Congress. She doesn’t do that – she hasn’t done that recently, but if there are several people in a race, she will fund the person who’s the most progressive, the most left. And that gives her both influence if these people win, and it’s a challenge to the party leadership as well. So that’s how this leftover money gets used.
Oh, did they want to know about spending? You’re not supposed – you can use it for other campaign-related – you can’t use it for personal use, by the way. If you retire and you have money in your account, I will say that a lot of times politicians, you can give that to a nonprofit and – when you retire – you can give it back to the political party or to your colleagues, but you can’t use it to buy a new home, okay – you can’t use it for personal use, okay?
MODERATOR: Thank you. So can you explain more about the charity money that you mentioned previously? Does money that comes from churches or other religious entities, is that included in this category?
MR LA RAJA: It’s plausible that it could be, but we don’t know. Churches, they will lose their tax-exempt status if it’s found out that they’re spending directly on contributions to political – to candidates and political parties. What they can do is raise issues. They can – their individual members of a congregation – and this happens a lot – give money to candidates. But the church will lose its nonprofit status if it engages directly on a campaign. Now they could plausibly, in a scenario, give to these dark money groups. You could – I could see a group that wants to stop abortion, for instance, and so maybe a church gives million dollars to this nonprofit, and this nonprofit spends less than half their money on campaign ads against candidates. That’s a scenario that’s possible and that – I have to say that’s up to you all to figure out who’s doing that, because it’s very hard under the tax laws of the United States to find out.
Now, there’s a reason why these nonprofits are anonymous, and that is because of fear of retaliation. Many nonprofits are – express views that most Americans might not like. They might express – they might want communism, they might want – in the past it was civil rights leaders who needed to have some anonymity who was donating to these organizations, or they would be retaliated against – lose their jobs if they – if people knew they were affiliated with the civil rights or communism or something like that.
So that is the basic reason why there’s anonymity, so people can participate without having retaliation. That’s the logic. Now, some of these vehicles are now being used to hide identities of people who are very wealthy, so that is a problem.
MODERATOR: Thank you. We have a few more questions. What is your view on how much money is spent on campaigning? Is it out of control?
MR LA RAJA: So that’s always a challenging question. So my concern with money in politics is it’s so maldistributed. I mean, there are other underlying problems. I don’t think there’s enough competitive races in the United States. I would like to see more competition. And part of that reason is the way voters are distributed in the country, and some places are just – in the rural areas they tend to be more Republican, in urban areas – and so we don’t – for those of you who are in proportional representation countries, you don’t have that issue as much because the candidates are not tied to a specific district. So I would like to see the money distributed to have more competition throughout the country.
I also think that money can help challengers beat office holders, so there’s research that shows it’s not so much the sitting officer holders who need the money; it’s the people who want to challenge them, because they need to get their names out there. They need to get name recognition, okay, so it can have that positive effect in a country where you’re competing for attention with so much – with your – with so much advertising for commercial products. And the parties at the local level aren’t that strong in mobilizing voters, so we rely heavily on politicians doing this. And as you know, some of you know, local reporting in the United States is not as strong as it used to be, so a lot of voters don’t get much information about local campaigns, and so politicians have to spend more money.
But do I think there’s too much money, it’s too – yeah, it concerns me that politicians have to spend so much time raising it. I don’t think that’s – should be their job. I think that’s really a very problematic area for so many reasons. I’d rather them be spending time with their constituents, working in the legislature to figure things out, so I do think it’s an issue.
MODERATOR: Thank you. And our last question for today: As a candidate, if I borrow money from a bank and subsequently lose, am I eligible for forgiveness of those borrowed funds?
MR LA RAJA: Well, you’d probably have to ask a lawyer about this, but no. The bank is going to want that money back. They’re going to be, like, we don’t care if you were running for U.S. Senate from New York or wherever, you took out a loan and you have to pay it back. So what usually happens – this happened to Ted Cruz, the senator from Texas. He took out a big loan in his first race and he had to pay it back. Now, if he lost, I don’t know what he would have done. I know his wife is an investment banker. She probably has a lot of rich friends and maybe they would have helped pay off the loan.
But he won the election. And if you win the election, all of a sudden you have a lot of new friends. And so he just had more fundraisers to pay off the loan, so that’s what they do. If you lose, you’re in a much tougher situation. Maybe if you – the party could help pay off their loans, but most donors do not want to pay off a loser, because it doesn’t really feel that they’re supporting the cause.
MODERATOR: Thank you so much, Dr. La Raja. Do you have any concluding remarks?
MR LA RAJA: No. I’m delighted to see so many people that are interested in this subject, because I have to say I’ve been studying it for over 20 years, and it’s still confusing to me and it’s changing so rapidly. So if you feel confused, you’re in good company with experts, because we’ve been doing this for so long. So I appreciate you looking into this.
MODERATOR: Our great thanks to Dr. Ray La Raja, our esteemed briefer of today, for your expertise and your time. Thank you to all the journalists who have attended today. As a reminder, a transcript and video link will be posted on our website at fpc.state.gov, and this concludes our briefing for today. Thank you for joining us.
