Life sometimes imitates art. Life also sometimes imitates political cliché. The cliché in this case: the notion that tunnel-vision political reporting has reduced campaigns for American public office to nothing more than mere “horse races.”
This year, in the struggle for the Republican Presidential nomination, that “horse race” analogy has essentially become a literal reflection of reality.
The real horse racing industry follows a simple time-worn pattern: A wealthy connoisseur of horse flesh buys a thoroughbred. The wealthy connoisseur keeps racing that thoroughbred until the connoisseur loses interest.
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In the current GOP Presidential “horse race,” we see the exact same pattern. Wealthy connoisseurs of political talent pick a candidate. These wealthy connoisseurs then keep that candidate racing until they lose interest.
Foster Friess, a billionaire mutual fund executive, hasn’t yet lost interest in Rick Santorum. Friess has personally bankrolled the “super PAC” that has enabled Santorum to stay in the primary hunt.
Sheldon and Miriam Adelson, the billionaire casino mogul couple, haven’t yet lost interest in Newt Gingrich. The Adelson family has single-handedly supplied $10.5 of the $12 million that has gone into the super PAC that’s keeping Gingrich in the nominating race.
Mitt Romney, meanwhile, is leading that race, but only because he has more billionaires on his side than anyone else. Four of these billionaires from the hedge fund industry — Paul Singer, Julian Robertson, Robert Mercer, and John Paulson — have each contributed $1 million to the cause of Mitt.
In all, the super PAC run by Romney cronies has collected $1 million from 10 men of immense means, $2 million from one other, and at least $100,000 each from almost 40 additional politically inclined super rich, more than enough to fund the $17 million TV ad campaign that bounced Romney into the nomination lead.
This White House horse race isn’t going to end, of course, until November. By that time, news analysts are predicting, total spending on the 2012 Presidential race will have likely reached over $2 billion, making this year’s election the most expensive in the history of the known universe.
Super PACs — quasi “independent” committees that can accept donations of unlimited size — will do the bulk of that spending. These super PACs, the Los Angeles Times noted last week, are now playing a larger role in politics than the candidates’ own personal campaigns, mainly because candidate campaign committees can accept no donation larger than $2,500.
A string of court decisions have made that $2,500 limit a dead-letter elsewhere across the political landscape. Wealthy individuals and the corporations they run can now contribute as much as they want to political committees that maintain a nominal “independence” from the campaigns of the candidates they support.
These super PACs do have to disclose their donors, and the latest disclosures came last Tuesday. But the disclosures now required leave a good chunk of the campaign finance scene in the dark. Super PACs have been setting up subsidiaries that can qualify for nonprofit status so long as less than half their money goes to politics. These “nonprofits” don't have to reveal their donors.
The bottom line: The wealthy are shoveling even more of their loot into politics than the disclosures that came out last week indicated. In effect, says Campaign Legal Center policy director Meredith McGehee, we have entered “a world of unlimited money in politics.”
In this world, she adds, “those who can marshal enormous amounts of wealth” can “drown out the voices of the average Americans.”
Those who do this marshaling, for their part, never fail to emphasize the nobility of their political engagement. Take, for instance, Harold Simmons, the Dallas billionaire who has dropped $8.6 million into super PACs backing an array of rich people-friendly candidates and causes over the last year.
"Mr. Simmons is a passionate conservative, and he has been for quite some time,” his spokesman, Chuck McDonald, told the press last week.
MacDonald went on to add that Simmons — a leveraged buyout king now worth an estimated $9.6 billion — has no specific policy agenda in mind when he’s making his contributions. He simply believes “in conservative ideology.”
This conservative ideology that has Simmons so passionately committed just coincidentally meshes up quite nicely with the huge payoffs deep pockets like Simmons can ensure themselves via victory on election day.
Just one political decision alone — the tax treatment of so-called “carried interest” — can make an annual difference of tens and even hundreds of millions of dollars for Simmons and his fellow billionaires. Consider the biggest superstar in the hedge fund firmament, Romney-backer John Paulson, a Wall Street whiz who pocketed $4.9 billion in 2010 and another $3.7 billion in 2007.
Most of Paulson's hedge fund income comes as “carried interest” subject to just a 15 percent federal capital gains tax rate, a tax rate well below the 35 percent top marginal rate on “ordinary” income.
In other words, the preferential tax treatment for carried interest all by itself saves hedge fund types like Paulson $20 million on every $100 million in carried interest income they collect.
Republicans in the Senate, with some Democratic help, have repeatedly blocked attempts to repeal this preferential treatment over recent years. But the Democratic senator who has been the most pivotally hedge fund-friendly, Chuck Schumer of New York, now says he’ll vote to repeal the carried interest loophole.
That makes the occupant of the White House all the more important to wheeler-dealers like John Paulson and his friends.
“Of course these guys are going to give a million dollars,” as U.S. senator Al Franken from Minnesota noted last week. “What a bargain — what a bargain to give that to a candidate who they know will veto a bill that makes the carried interest subject to the top” income tax rate.
All the major GOP candidates have so far pledged their fealty to the cause of keeping carried interest exempt from the ordinary top tax rate. That shouldn’t shock anyone, given last week’s super PAC campaign contribution disclosures.
What should shock? That America’s billionaires — given how much at tax time the 2012 horse race could cost them in carried interest income alone — aren’t giving super PACs even more than they already have.