Taking advantage of relaxed campaign finance laws, a cadre of deep-pocketed donors are spending gobs of money to bankroll super PACs, a phenomenon that is reshaping the modern election cycle.
It is a select group. The top 100 individual super PAC donors make up just 3.7% of those who have contributed to the new money vehicles, but account for more than 80% of the total money raised, according to data from the Center for Responsive Politics.
And just the top 46 donors have given a total of $67 million, or two-thirds of the $112 million in individual gifts to super PACs this cycle. Membership in this select group requires a $500,000 minimum donation.
So who are these folks?
Donors who have given in excess of $500,000 are a rather homogenous group who represent narrow swaths of American industry.
Titans of the financial services industry are well represented, as are energy executives and hoteliers. Almost all are men. Racial minorities are few and far between. So far, the vast majority of their contributions have been made to conservative groups.“We’re looking at a singularly weird phenomenon,” said John Dunbar, the managing editor for politics at the Center for Public Integrity.
Dunbar argues that super PAC donors can be grouped into general categories based on which presidential hopeful they favor.
The super PAC that backs former Bain Capital CEO Mitt Romney primarily attracts big donors from Wall Street — specifically private equity and hedge fund players.
John Paulson, the hedge fund manager who generated returns of up to 600% by betting against mortgages in 2008, has donated $1 million to Romney-affiliated super PAC Restore Our Future.
Executives from Tiger Management, Bain Capital, and a smattering of other firms have made sizable contributions as well.
“The financial sector is one where there’s a lot of money, and it’s a sector with which Romney is very familiar, so it’s not surprising that it would be a big source of contributions,” said Viveca Novak of the Center for Responsive Politics.
The donations to the pro-Romney super PAC top out around $1 million. Bigger individual donations have gone to the super PACs backing Newt Gingrich, Rick Santorum and Ron Paul.
Las Vegas Sands CEO Sheldon Adelson and his family have spent more than $15 million to support the pro-Gingrich committee Winning Our Future.
Adelson and his wife Miriam donated $5 million last month, or nearly 90% of the super PAC’s haul for February. With the Gingrich campaign struggling to raise funds, it is not a stretch to say that Adelson’s generosity has kept the former House speaker’s candidacy alive.
Silicon Valley venture capitalist and PayPal co-founder Peter Thiel has donated $2.6 million to the Ron Paul super PAC. That’s 70% of all money the group has raised. Rick Santorum has backers of his own.
“We’ve had a small group of donors maintain the viability of certain candidates,” said Paul S. Ryan, an attorney at Campaign Legal Center, which supports election law reforms. “It’s an Alice in Wonderland situation. It defies logic.”
Critics argue that the eye-popping size of donations from individuals raise important questions about their motivations and the ability of the wealthy to influence candidates and the election.
“American elections are funded by a very narrow range of special interests, and that has the effect of making our democracy look a lot more like a plutocracy,” Ryan said.
The floodgates of unlimited spending were opened by the Supreme Court’s Citizens United ruling, which placed individuals and corporations on equal “free speech” footing when it comes to independent campaign spending.
The high court’s decision allowed super PACs to raise unlimited sums of money from corporations, unions, associations and individuals, then spend unlimited sums to overtly advocate for or against political candidates.
Thomas Mann, a senior fellow at the Brookings Institution, said that it is difficult to discern the motivations of super-wealthy donors. Are they driven by ideology, economic interests, or some combination of the two?
Harold Simmons, who played a central role in the development of leveraged buyouts and corporate takeovers, offered some insight into that question last week.
Simmons has given $18 million to conservative super PACs this cycle, and has pledged millions more. In an interview with the Wall Street Journal, he displayed a deep unhappiness with President Obama, calling him a “socialist.”
At the same time, Simmons’ current business interests would benefit greatly from less government regulation of certain industries, and he told the WSJ that if Republicans do well in November, “we can block that crap [regulations].”
“So which is it?” Mann asked. “He may be a good businessman, but if he can make a comment like that about Obama, I’d say his ideology overwhelms his self interest.”
To date, conservative super PACs have far outpaced fundraising efforts by Democrats. “The pool of billionaires who can throw tens of millions into the game — and are inclined to do so — is concentrated on the right,” Mann said.
Democrats are trying to close the gap. In a sharp reversal, Obama’s reelection campaign has signaled they will begin using administration and campaign aides to fundraise for Priorities USA Action, a super PAC backing the president.
Obama campaign manager Jim Messina said the decision was a reaction to massive fundraising posted by super PACs supporting GOP presidential candidates.
After registering anemic fundraising totals for months, the strategy seems to be working for Priorities USA Action, as the group brought in a $2 million donation from DreamWorks Animation CEO Jeffrey Katzenberg and $1 million from comedian Bill Maher.
Analysts expect Democratic donations to pick up as the general election approaches and Republicans settle on a candidate.
In the end, the most notable affect of super PACs might not be on the presidential race, but rather on Congressional elections.
Mann and Dunbar both expressed worry about the use of super PAC money in House and Senate races, where relatively small amounts of money can have an outsized impact.
“An individual donor and a super PAC could go off to some district in Kentucky and just completely destroy some candidate because he doesn’t favor what’s good for your business,” Dunbar said.
Charles Riley CNNMoney