Political donations in the PAC age

Envelope with cash addressed to Mr. Senator

TEXT OF INTERVIEW

Tess Vigeland: Well, not everyone's week was as bad as Lehman Brothers'. This week, the Obama campaign announced it raised a record $66 million in August. The McCain campaign raised $47 million. That's his best month of fundraising.

But what's the story behind those donations? Marketplace's Steve Henn has been following the political money trail for us and Steve, let me ask first: what exactly do most people expect when they make a political contribution?

Steve Henn: When you donate to a candidate, most people are donating to their election campaign fund. How it ends up being spent really depends on who you give it to and how they decide to spend their money. But if you give your money to, say, a congressional candidate who doesn't have a very tough race, the question about where the money ends up is actually much more complicated.

Vigeland: They can give that to other candidates, right?

Henn: Well, that's right: they can give it to other candidates or they can give it to their national party. Barney Frank, who's the chairman of the Financial Services Committee, gave a half-million dollars earlier this year to the Democratic Congressional Campaign Committee from his campaign fund. So he has a really safe seat in Massachusetts, he's popular in his district and because of the position he has in Congress, he can raise a lot of money and he did and just gave it to the party.

Vigeland: Is there any chance that my money could go towards, you know, a family vacation for one of these candidates?

Henn: If you're giving the money actually to a campaign account, a family vacation is unlikely, but a salary for a family member is perfectly possible and occasionally members of Congress do use campaign money for what really seem like personal expenses. One congressman from New York was paying for his gym memberships with his campaign money...

Vigeland: Well, you definitely want your congressman to be buff, right?

Henn: Well, that was his argument. He said running for office, it was important that he was trim. The FEC didn't buy that. Now if instead of giving your money to a campaign, you gave money to a Leadership PAC, it really could go to a vacation, and often does.

Vigeland: So basically, you have no idea where your money is going when you contribute to a campaign. Is that what you're telling me?

Henn: You might not, but you can look, and if you're serious about giving money to a politician, it's not a bad idea. The real avenue for abuse here are so-called Leadership PACs. These are sort-of second campaign accounts that many members of Congress raise. Now most people in America have never heard of these accounts and the vast majority never give to them, but there are almost no restrictions on how a member of Congress can spend the money that's given to a Leadership PAC account.

Vigeland: Steve, what's the difference between giving to a candidate directly and giving it to a group that supports the candidate, something like MoveOn or four years ago, you know, the Swift Boat Veterans?

Henn: It depends on the group. Generally, if you have a lot of money to spend, there are limits on how much money you can give to an individual candidate. The way groups organize themselves, they sort of found an endrun around some of the contribution limits, so you can write much bigger checks to those groups. You can also write much bigger checks to state political parties, the national parties. So if you're a serious giver, if you have serious money to spend, this is a way you can give more. But if you're just an average person who has political convictions you believe in and you want to support, I think the danger with giving to an outsider group is that they might waste your money. So it's worth taking a look at their public filings and see how much money they just burn through.

Vigeland: Is there an average amount that people seem to be comfortable giving to candidates?

Henn: Yes: nothing. This election's been remarkable in that literally millions of people have given money to political candidates and that's really never happened before. But even with that huge groundswell of participation that we've heard so much about, you're talking about two, maybe three million people who have written checks this year. That's less than 1 percent of the population of the United States. Even within that universe of people who have given this year, it's a small fraction of those people who give the most money. It's the people who are willing to write a $2,300 check and even more than that, the people who campaigns really go after are folks who have groups of friends who are willing to write $2,300 checks again and again and again. Those are the people that every successful campaign has identified, cultivated and is going after.

Vigeland: Marketplace's Steve Henn has been joining us to talk about political contributions and you. Thanks so much for your help Steve.

Henn: Oh, thanks for having me.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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