In a democratic republic such as ours, there is a fundamental notion of political equality, a concept that each person’s vote and beliefs matter just as much in the political process as the next person’s. This concept works in theory and is something that all countries should strive to move closer to, but it does not and never will work in practice. The wealthy have always had a larger than equal share of political influence. As one political scientist observed, “Votes count, but resources decide”. In America, political inequality is getting worse. In addition to the traditional ways that the wealthy have been able to gain influence, new changes such as Citizens United have allowed the already influential to gain even more power.
The most common way that the wealthy gain influence and access is by campaign contributions. According to the Federal Elections Commission, people can give up to $123,200 biannually during the 2013-2014 election cycle to federal candidates, parties, and coordinating political action committees. This is an amount that the wealthy can give easily, but that the average citizens could never dream of giving. By giving large sums money to campaigns, the wealthy can buy access to a politician that is unattainable to everyone else. Even this high limit on aggregate campaign contributions may come to an end after the Supreme Court decides the upcoming case of McCutcheon v. Federal Election Commission.
Although the amount that can be given directly to candidates and parties is an already large sum of money, it is dwarfed in comparison to what can be spent as independent expenditures. Due to the recent Court decision of Citizens United v Federal Elections Commission, individuals and corporations can donate as much money as they want to “Super PACs”. Super PACs are political action committees that don’t officially coordinate with the candidates that they help. One example of the influence of these Super PACs comes from Sheldon Adelson. In the 2012 election cycle, he gave $91.8 million to various conservative Super PACs. This amounts to more than the total given in the 2012 election cycle by all of the residents of Alaska, Delaware, Idaho, Maine, Mississippi, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont, and West Virginia – combined. The existence of Super PACs has given wealthy people like Adelson an undue influence in government.
Although Adelson choose to allow his political donations to be public record, he could have just as easily given that $91.8 million without anyone but the recipients finding out about it by giving it to a 501(c)(4). The Tariff Act of 1913 defines 501(c)(4) organizations this way (www.irs.gov/pub/irs-tege/eotopici03.pdf): “Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare” (emphasis added). In 1959, the Internal Revenue Service unilaterally decided, without authorization from Congress, to change the plain meaning of the law from “exclusively” to “primarily”. According to the IRS regulations, “An organization is considered to be operated exclusively for the promotion of social welfare if it is primarily engaged in activities which in some way promote the common good and general welfare of the community” (emphasis added).
Prior to the IRS’ rewriting of the law, political organizations did not qualify for 501(c)(4) status. Post-1959, groups like Crossroads GPS, Organizing for Action, and Tea Parties are able to hide their donor lists from the public under the guise of promoting the “social welfare” with a slim majority of their funding. It is possible that after 54 years of ignoring the plain meaning of a law, the IRS may soon be forced to once again only recognize 501(c)(4)s that are exclusively engaged in social welfare. Congressman Chris Van Hollen, Democracy 21, Campaign Legal Center, and Public Citizen recently filed a joint lawsuit in the United States District Court for the District of Columbia that, if successful, would force the IRS to follow the law.
Aside from directly donating money to fund 30-second campaign commercials, there is another way that the wealthy are able to influence what the masses think. By gaining control over the media, the rich can manipulate what is discussed in the news to make it fit their agenda. One example of this is the media empire of Rupert Murdoch. The media entities that Murdoch has gained control of throughout his career include the New York Post, San Antonio Express-News, Fox News, and The Wall Street Journal, as well as several other media sources. Murdoch has used the opinion sections of his publications numerous times to broadcast his own views to the public. He even slants the hard-news portion of his media in favor of policies he supports. Murdoch is not the only person who does this, as controlling the media is a common way the wealthy try to control public opinion.
Another reason why the plutocrats have more power in government is because they disproportionately make up the composition of congress. As of 2011, the median net worth of all Americans was $120,000. The median net worth of members of congress during that same time was $912,000. While the ratio of Americans who were millionaires was one in 22, the ratio of members of congress who were millionaires was nearly one in two. The 10 richest members of congress had a combined net worth of $2.8 billion, and all 10 of them voted for the extension of the Bush tax cuts which allowed them to keep more of their own money and satisfy the interests of those that bankrolled their campaigns. The rich members of congress have no idea what the middle class is like because they are so disconnected by their wealth.
Political inequality is not always a bad thing. On issues where both the wealthy and the masses would be helped by a particular government action, the wealthy can move swiftly to force Congress to act for the benefit of all; whereas the same governmental action may have taken more time had there been political equality and the wealthy not having the clout that they currently possess. More often than not, however, the wealthy and the masses are at odds on issues of public policy. One of the policy issues where the wealthy and the masses disagree on is how important lowering the deficit is. According to a poll conducted by the Economist (cdn.yougov.com/cumulus_uploads/document/xbqkxc7r1n/econTabReport.pdf) in September of 2012, people making over $100,000 annually are over twice as likely as those making less than that amount to say that the government’s deficit is the most important factor affecting their vote. The middle and lower classes are more concerned with more pressing issues that affect them on a daily basis.
Due to the fact that the wealthy are overly obsessed about the size of the federal deficit, and due to them having an oversized level of influence over government, the upper class’s policy preferences have been causing the economy to recover at a slower rate than it could have. Austerity is ruining the economy for the 99%, while the 1% is enjoying the lower deficit that they wanted. From the Congressional Budget Office:
CBO expects that economic activity will expand slowly this year, with real GDP growing by just 1.4 percent. That slow growth reflects a combination of ongoing improvement in underlying economic factors and fiscal tightening that has already begun or is scheduled to occur—including the expiration of a 2 percentage-point cut in the Social Security payroll tax, an increase in tax rates on income above certain thresholds, and scheduled automatic reductions in federal spending. That subdued economic growth will limit businesses’ need to hire additional workers, thereby causing the unemployment rate to stay near 8 percent this year, CBO projects. (emphasis added)
The federal government is not the only level of government where the influential are affecting the policy area of government deficits. At the state level, the wealthy are also pushing for austerity as the way to close the deficit. In Illinois for example, The leader of the state's most powerful business group even bragged about asking Moody’s, Fitch Group, and Standard and Poor’s to downgrade Illinois’ bond rating as a way to punish the state for not doing enough about the pension crisis. The following is the relevant quote from Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago:
[M]e and some of the people that make up the Civic Committee…did meet with and call, in one case it was in person, a couple of calls to Moody’s, Fitch and Standard & Poor’s, and say, ‘How in the hell can you guys do this? You’re an enabler to let the state continue. You keep threatening more and more and more.’
And I think now we’ve backed off, because we don’t want to be the straw that breaks the back, but if you watch what happened over the last few years, it’s been steadily down. Before that, it’s been the blind eye, and that’s a whole different topic, as you know, about how the rating agencies act and don’t act. That’s more in your field and stuff. It has been irresponsible. We have told them that we thought they were being irresponsible, but we stopped that a couple months ago. I do know that we suggested that they talk to the governor, the governor’s staff to see if he could give them comfort on where the state was going, and I think that’s one of the reasons why we’re really close now. I hope we’re close.
The wealthy members of the Civic Committee were able to do what the average citizen could not: they lobbied to have their own state’s bond rating downgraded because they didn’t get their way on a policy issue. It is impossible to know for sure whether the lobbying efforts were successful, but it is plausible that Fitch’s downgrade from an A rating to an A- rating that occurred on June 3rd of this year, as well as Moody’s downgrade from an A3 rating to an A2 rating that occurred three days later, were the result of the lobbying done by Fahner and the Civic Committee. These downgrades hurt, rather than help, the state’s financial situation, but the Civic Committee wanted it anyway as a way to make a political point.
Whether it is with ownership of the media, direct campaign contributions, independent expenditure “Super PACs”, or anonymous contributions to 501(c)(4)s, the system is set up in a way that allows economic inequality to translate into political inequality. Whether it is at the federal or state level, the wealthy’s obsession with the deficit has caused them to enact policies and decisions that end up hurting the economy even more. The growing level of political inequality is dangerous for our country because it causes fewer and fewer Americans to be able to have a role in the direction of our country.
