A Major Setback for the Wealthy: The Supreme Court Invalidates Campaign Limits
I’ll leave it to legal scholars to debate the merits of the Supreme Court’s decision in McCutcheon v. Federal Election Commission. The court’s decision eliminates the overall limitation on federal campaign contributions by individuals. Prior to the court’s decision, contributors were limited to contributing a total of $48,600 to all federal candidates in any two-year campaign cycle and $74,600 to campaign committees. The $2,600 restriction per candidate remains in place.
Liberals and conservatives don’t agree on very much, but they do agree that this decision is a huge win for wealthy donors, particularly those on Wall Street. Liberals and conservatives are wrong. The court’s decision is a disaster for the wealthy. Here’s why.
The Watergate era reforms made it inexpensive for the wealthy to get 100% credit for supporting either national party, or their respective senate or congressional campaign committees. In other words, they already controlled our political process without spending vast amounts of money. The existing law limited contributions to about $123,000 per election cycle, or a bit over $60,000 per year. For a CEO, investment banker, or hedge fund manager, the maximum contribution was incredibly affordable. It could be funded out of petty cash. The court has just imposed a huge political tax on the rich.
There’s a second aspect of campaign restrictions that was invaluable to the wealthy; it saved time. Time is probably the most important intangible asset on the balance sheet of the rich. Working their deals, visiting their vacation homes, and tending to their public images already consumes vast amounts of time. Prior to the Supreme Court’s decision, the aggregate contribution limit placed a lid on the number of political phone calls and fundraisers that they had to respond to. Once the wealthy donor hit the old limit, they were off the hook. Under the new law, there’s no telling how many fundraisers they’ll have to attend on the Upper East Side.
Citizens United began the process of making politics far more expensive and time consuming for the wealthy. The proliferation of PACs and Super PACs began to drive up the cost of controlling politicians. McCutcheon will drive the overall cost and number of solicitations into the stratosphere. Every Senate and House member now has a chance of getting a check from the wealthy. The political parties and their campaign committees will no long be happy with a check for only $74,600. As of yesterday’s court decision, the price of achieving elite status in the Republican and Democratic parties just went up. What do you think it will now cost to maintain capital gains treatment for carried interest?
How often do think the phone will ring? Since the sky’s the limit, the parties’ professionals will continually hound the wealthy for money. Instead of hearing from Reince Priebus, Chairman of the Republican National Committee, or Senator Chuck Schumer (D-NY) three or four times a year, poor Steve Schwarzman and Lloyd Blankfein are going to receive a never-ending stream of calls.
The wealthy already owned our political process. If I were an American oligarch, I’d invite Justices Roberts, Scalia, Thomas, Alito, and Kennedy to my hunting lodge and explain to them that this decision was a huge mistake. Then I’d hire the best legal minds to help the court find a constitutional method of re-imposing campaign limitations. Wall Street and the wealthy never want to have to pay for something that they already own.