Money in Politics

  1. Congressional & Presidential Elections
  2. Special Interest Groups
  3. Mega-donors

A data-driven profile on major sources of campaign financing for U.S. Congressional & Presidential elections and their influence on outcomes.

“We make a living by what we get, but we make a life by what we give.” Winston Churchill, Prime Minister of U.K.

It’s the most wonderful time of the year: 2022 U.S. Midterm Elections! At least, it is for those who are more politically inclined. The thought of picketing, protesting, bumper-stickering, Facebook posting, impassioned debating, strawman arguing, or fervently advocating for a candidate who I barely know with a (D) or (R) next to their name is gut-bustlingly comical to a quintessential centrist like myself. Nevertheless, the sanctity of our democracy rests squarely on the shoulders of a well-informed electorate, who cast their votes into the ring once every two years in the hopes of finally vanquishing the other half of the country. The relentless barrage of campaign ads in my social media algorithm really had me wondering: what is the impact of the money on our political system?

The 2010 landmark Citizens United v. Federal Election Commission (FEC) Supreme Court decision lingers deep in the crevasses of my mind. I was a mere sophomore in high school drowning in AP course curricula at the time of the ruling and, thereby, wholly unfamiliar with its case details. Shortly before the 2008 Democratic primary elections, a conservative nonprofit called Citizens United poured advertising dollars into the promotion engine of a 90-minute documentary called Hillary: The Movie. The primary was an especially heated battle between the former First Lady & political heavyweight Hillary Clinton and the spry up-and-comer Barack Obama. Given that the film was highly critical of the Clintons, it could have conceivably shifted voter sentiment, although I have yet to meet a single person who has actually seen this documentary. Nevertheless, the Federal Courts flagged the move as a brazen violation of the 2002 Bipartisan Campaign Reform Act, which prohibits corporate entities from making “electioneering communications” within 30 days of a primary or 60 days of an election. Upon thorough review, the Supreme Court voted in a 5–4 decision in favor of Citizens United, declaring that certain forms of third-party promotion constitute free speech and are thereby protected by the 1st Amendment of the U.S. Constitution. Despite the relatively modest influence of third-party promotion, an outpouring of criticisms flooded the public discourse and inadvertently conflated the ruling with a souring of campaign financing as a whole. The then candidate Barack Obama rebuked the decision as, “giving the special interests and their lobbyists even more power in Washington, while undermining the influence of average Americans who make small contributions to support their preferred candidates”.

Twelve years after this ruling, the economic curses released from Pandora’s proverbial box ought to have left their scars in publicly available campaign finance data. Indeed campaign contributions to both political parties have risen since 1990, although it is largely a continuation of the uptrend that had existed prior to the 2010 ruling (Fig 1). Contrary to the popular belief that the post-Citizens-United legal environment permits corporate participants to indiscriminately inject funds into political races, the Federal Elections Committee (FEC) certifies a revised set of campaign contribution restrictions every two years. Only as recently as 2020 have total contributions broken out to unprecedented heights, with a four-fold increase in contributions to the 2020 Biden campaign relative to the 2016 Clinton campaign ($3.2 billion vs $800 million) and a countervailing five-fold surge in contributions to Republican Senators ($714 million vs $136 million). Throughout the years, the coinpurses of each party have swelled in lockstep. When one grows larger the other responds in kind, resembling the systolic and diastolic heartbeat of a lively civic society.

Figure 1

However, this information did little to satisfy the full extent of my curiosity about campaign financing. Are tales of kleptocratic flirtation with a political takeover well founded or is the entire affair an indulgent narrative born of the news media’s flare for the dramatic? Does outfunding the other party have any bearing on election outcomes? Who are these shadowy “special interests” and what exactly do they brood about in their presumably smoke-filled rooms?

U.S. Congressional Elections

The bicameral assembly of lawmakers that constitute the U.S. House of Representatives and the Senate are a critical, but often overlooked facet of our governing apparatus. Unlike Presidential elections, which utilize state appointed electors to collectively act as a pass-through entity for determining our nation’s highest public office, congresspersons are nominated in a direct election. In other words, the ‘popular vote’ is functionally irrelevant in the case of presidential elections, but it is the sole driving force of congressional elections. While the president signs off on finalized versions of federal legislation, its details are largely crafted through workshopping, debating, and iterating in the hands of House & Senate appointees. As such, its impact on our government ought not to be underestimated.

The House of Representatives is composed of 435 elected officials, who represent all 50 states in proportion to the size of each state’s respective population. More populous states like California, Texas, Florida, and New York wield more voting power than sparsely populated states like Alaska or the Dakotas. Since 1990, the partisan majority has swung in a periodic fashion from Democratic in 1990–1994 (Clinton era), to Republican in 1994–2006 (early GW Bush era), to Democratic in 2006–2010 (late GW Bush era), to Republican in 2010–2018 (late Obama era), to Democratic in 2018–2020 (late Trump era) (Fig 2, left). The balance of funds bears a striking resemblance to the left-right balance of power, with the financially superior party typically clinching a majority in the chamber (Fig 2, right). Special interests 1 — voters 0, right? Not so fast.

Figure 2

Upon closer inspection, one can gather that the balance of funds lags the balance of power by exactly one election cycle. For example, despite the Republicans outfunding Democrats by $112 million in 2018, the House violently swung from a 47 vote GOP majority to a 36 vote Democrat majority. The exact same phenomenon occurred in 2006, 1994, and 2020. Every single time the House flipped to the opposite party, the incumbent party held the financial upper hand, with zero exceptions (Fig 3, yellow). Furthermore, every time the House flipped, net contributions also flipped during the subsequent year, showing that sentiment in the donor base also shifted with the tides. Donor sentiment is rarely at odds with voter sentiment — in fact, they more often tend to move in the same direction. This illustrates the limitations of campaign financing. Major shifts in voter sentiment are too powerful to be parried by bottomless ad spend (ie. keeping Obama in check in 2010, keeping Trump in check in 2018, keeping GW Bush in check in 2006). However, there is just cause to believe that outspending the other party in the House allows the dominant party to maintain their majority when they are well liked in the D.C. fashion show.

Figure 3

The U.S. Senate is an entirely different story. This chamber is composed of only 100 elected officials, with each of the 50 states being equally represented by two elected officials. The margins between the majority and minority parties are typically razor thin. Furthermore, Senators have 6-year terms, whereas House reps have fleeting 2-year terms. For these reasons, the Senate environment requires a far greater degree of collegiality and long-term, bipartisan coalition building than the House does. Accounting for the fact that incumbent reelection rates in the Senate frequently surpass 75%, it’s hard to imagine that a majority of 2–4 votes held by bright eyed, bushy tailed newbies have any material bearing on shifting legislative outcomes. The balance of funds throughout the years fluctuates between the two parties, with the magnitude of net funds raised often being much smaller than that of the House of Representatives (Fig 4). The balance of power roughly resembles that of the House with notable exceptions during the Trump era.

Figure 4

Indeed, financing appears to have a vanishingly small impact on which party holds a Senate majority, with more anti-correlated outcomes (yellow) than correlated outcomes (blue/red) since 1990 (Fig 5). In this regard, the Trump era truly is an extreme example of voter sentiment prevailing over money flows. In 2018, the Republican majority widened from 4 to 8 seats, despite the fact that Democrats outfunded Republicans by a record $293 million (Fig 4). Shaken by the fury of Democrats, Republicans outraised the folks in blue by a staggering $483 million in 2020 in order to fill the coffers for the 2022 midterm elections. In light of these findings, it comes as no surprise that establishment GOP congresspersons who initially decried Trump’s supposed desecration of American Conservatism during the 2016 elections suddenly became Trump loyalists after 45th President took the oath of office. The 2018 Senate upset speaks to the vast influence that the Faith & Flag Conservatives + Populist Right (collectively, the ‘Trump base’) have over election outcomes, despite a blatantly obvious widening between them and the Progressive Left and a lesser known internal rift between them and moderate Conservatives.

Figure 5

It is evident that passionate voters are the most powerful force in winning Congressional elections and the Democratic establishment would do well to get wise to the fact that disenfranchising, antagonizing, and discounting the pleas from large swaths of the country is not the path to a more perfect union. Whether you agree or disagree with President Trump’s political platform, his Chief Strategist — and likely chief architect of the entire administration — Steve Bannon recognized a key issue that paved the path to a populist upset: the economic disempowerment of the working class & middle class in the wake of the 2008 Global Financial Crisis. In an interview with Frontline, Bannon describes his upbringing in the working class town of Norfolk, Virginia in the 1950s — an idyllic time in history when his father attained employment at AT&T as a lineman, established a nuclear family & owned a home as a young man, worked his way up to middle management after 51 years of service, and saved up for retirement through his AT&T stock distributions and compound interest provided by bank saving rates. In those days, working class people trusted institutions because they were well taken care of and could reasonably achieve social mobility if they were good householders. Bannon contrasts this with the post-GFC economic environment in which bank savings rates are less than 1% per annum (an impediment to “the 5,000 year Western tradition of saving up for retirement”), home ownership is less attainable on an age-adjusted basis, pension funds are depleted, and public schools are underfunded because interest rates on municipal bonds are too low to be attractive to investors. These fundamental changes to the economic trajectory of America’s working class eroded trust in institutions and the “establishment”, resulting in a populist groundswell.

Don’t believe Steve Bannon? I don’t blame you, but outspoken Democrats who grew up in a midwestern upbringing have noted a similar phenomenon. As was telegraphed in Michael Moore’s Fahrenheit 11/9, working class Americans in his hometown of Flint, Michigan were certainly not met with the saintly graces of neo-liberal utopianism during their water crisis — is it really that surprising that this critical swing state didn’t choose team blue in 2016? On the other hand, progressive ideals that aspire to a more fair & just society are, in principle, enticing. Yet, a question weights heavily on the hearts & minds of voters across the nation: is the progressive utopia intended for everyone? Or is it reserved only for the coastal professional–managerial class (PMC)? Indeed, this question lies at the core of a breakaway faction of PMC intellectuals, recently dubbed as the ‘New Right’. Even bleeding heart liberals will openly acknowledge the subtle disenfranchisement of Bernie Sanders within Democratic National Committee (DNC) and the resulting cognitive dissonance within his left-wing populist base.

Alternatively, it could be the case that Republicans and Democrats have more commonalities than differences—a shared desire for education, social & economic stability, low cost of living, and freedom to live ones values. As the 17th Century English poet John Milton remarked in Paradise Lost, “the mind is its own place, and in itself can make a Heaven of Hell and a Hell of Heaven”. Alas, human nature hasn’t changed much in hundreds of years. While there is certainly a need to reconcile partisan tensions, it is encouraging to see that the outcomes of Congressional elections aren’t as beholdent to money flows as were feared following the 2010 Citizens United vs FEC ruling. In fact, small contributors (<$200) account for a widening proportion of funds for cohorts in both parties and chambers since 2008 (Fig 8, red). Meanwhile, PACs and large contributors (>$200) have seen a diminishing or stable commensurate of donations, with the exception of House Democrats (Fig 8, yellow & blue).

Figure 8

U.S. Presidential Elections

Campaign contributions appear to play an even smaller role in filling the post of President than they do for Senators. As alluded to earlier, these are indirect elections that follow a system known as the electoral college. The results are at the behest of 538 electors, who are independently appointed by each state according to laws & procedures that are unique to each state (winner-take-all, congressional district method, popular vote within state, popular vote within district, legislative selection, hybrid system). The popular vote does not have a direct mechanistic link to election results, despite frequent displays of ‘denial as a defense mechanism’. However, the Framers of the Constitution did have a few logical motives for putting in place an indirect election:

  1. Choice of the president should reflect the “sense of the people” at a particular time, not the dictates of a faction in a “pre-established body” such as Congress or the State legislatures, and independent of the influence of “foreign powers”.
  2. The choice would be made decisively with a “full and fair expression of the public will” but also maintaining “as little opportunity as possible to tumult and disorder”.
  3. Individual electors would be elected by citizens on a district-by-district basis. Voting for president would include the widest electorate allowed in each state.
  4. Each presidential elector would exercise independent judgment when voting, deliberating with the most complete information available in a system that over time, tended to bring about a good administration of the laws passed by Congress.

The U.S. President holds an unprecedented level of unilateral influence on the State, since they do not have to deal with the vicissitudes of ascertaining a ‘chamber majority’ as is the case in Congress. For this reason, the Framers painstakingly deliberated on the risk that the public could be manipulated and worried that a popular vote could introduce instability to the system. They didn’t see Russian bots coming, but they did effectively prepare for it by observing the broader phenomenon of bottom-up ‘madness of crowds’ events like the 1630’s Dutch Tulip mania and top-down propaganda offensives by malicious actors. As stated by 1940's Supreme Court Justice Robert H. Jackson, “a small number of persons, selected by their fellow citizens from the general mass, will be most likely to possess the information and discernment requisite to such complicated investigations”. In an incredibly prescient display of statecraft, the Framers designed the electoral college to add robustness to the governmental system by making it immune to a misled public.

It then follows that the outcome of Presidential election ought to be less prone to outside interference. Regardless of the boisterous fanfare that befalls the news flow every four years, the balance of funds seldom reflects the balance of electoral votes (Fig 7). With the exceptions of the 2020 Biden campaign and the 2008 Obama campaign, net contributions for presidential elections are lower in magnitude than that for either Congressional elections, demonstrating the tightness of these races. Despite the fact that Democrats have outfunded Republican presidential nominees almost every year since 1992, GOP presidents have managed to forge a path to victory on a number of occasions.

Figure 7

The correlation between net contributions and net electoral votes is very weak (Fig 8). Paradoxically, the Democrats outfunded the GOP in each of the three races in which Republican presidents were nominated since 1992. In 1996, the only year in which Republicans garnered a superior level of funding, the Democratic incumbent Bill Clinton was re-elected. For all intents & purposes, it seems the Framers succeeded in insulating U.S. Presidential elections from undue influence for almost 250 years and counting since the ratification of the Constitution.

Figure 8

Special Interest Groups

The U.S. democratic process allows for more than the public interest to be represented. Special interests groups (SIGs) represent a specific business sector (ex. oil & gas), a specific ideological view (ex. pro-choice abortion stance), or a unified worker base (ex. unions). While they aren’t able to vote, they are allowed to financially back a politician whose platform aligns with the sensibilities of the group. These groups have placed bets on Congressman and Presidential candidates of both parties throughout the years, with $283 million in net contributions to Democrats and $117 million to Republicans in 2022 (Fig 9). Similar to previous data, SIG contributions have steadily increased over the years with an exceptionally explosive support for the Biden campaign in 2020.

Figure 9

Importantly, their political stances are not entirely black and white — or blue and red, rather. Most special interests donate large sums of money to both political parties every year. They likely distribute these funds in a strategically targeted fashion to specific candidates, but unfortunately public disclosures don’t allow that level of granularity to be known. Nevertheless, we can ascertain whether a SIG leans more to the right or left by looking at their net contributions to one party or the other since 1990 (Fig 10).

Figure 10

Labor unions, law firms, and tech/telecom/media industries have been net donors to Democrats every year and agriculture, construction, energy, and transportation have been net donors to Republicans every year. Collectively, these represent the SIG donor base of each party — committed capital that will always be in favor of their party. If one considers only these base contributors, Democrats have had a larger special interest financial base than Republicans every year since the 1990 (Fig 11, left). However, healthcare, defense, ideology, finance, university/nonprofits (NPOs), and misc. businesses flip flop between left and right from year to year (Fig 10, yellow). When one takes into account these variable contributors, the surplus in key years of Republican dominance flips to the right (Fig 11, left). What does this mean? Republicans heavily rely on variable contributors to compete with Democrats.

Taking a closer look at how the spending patterns of variable SIGs deployed funds throughout the years, it becomes clear that healthcare, finance, and misc. business were key constituencies that fueled the 10-year run of Bush-era Republican financial superiority from 1996 to 2006. However, these exact same constituencies flipped in 2020 and became heavy net contributors to Democrats during the Biden versus Trump Presidential Election. At the same time, ideology-based donors infused the Democrats with a whopping $862 million in 2020 and $130 million in 2018, after decades of donating a meager average of $19 million per year to Democrats throughout the previous two decades. Separately, the finance industry and misc. business cohort became significant net contributors to the 2012 Mitt Romney campaign ($362 million) and Republican Congresspersons during the subsequent 2014 Midterm Elections ($186 million). While Romney currently attends the post of Senator from Utah, it is notable that he had an extensive involvement with Boston Consulting Group (BCG) and Bain & Co. as a management consultant, even co-founding the spin-off private equity investment firm Bain Capital. There is no doubt that he was able to rally his contacts in the industry to support his candidacy for President and, although he did not succeed in this end, it was a very tight race up until his choice of running mate, the RNC, and President Bill Clinton’s riveting speech at the DNC.

Figure 11


Among the top 10 individual donors of each party, there are a few names that consistently donate in support of one party or the other (Fig 12). Unsurprisingly, most of these folks are business owners or fund managers. Like with Special Interest groups, it is unclear which particular candidates that contributions are being directed to — only the political party is indicated, so it is prudent take these results with a grain of salt.

Figure 12

Michael Bloomberg (Bloomberg LP) and Tom Steyer (Farallon Capital) have been the top individual donors for the Democratic party since 2014, despite their more public run for the Democratic Presidential nominee in the 2019 primary elections. Fred Eychaner of Newsweb Corp. as well as fund managers Donald Sussman (Paloma Partners), Jim Simons (Renaissance), and George Soros (Soros Fund) also tend to consistently back the left. Top right-wing donors include Sheldon Adelson (Las Vegas Sands), Richard & Elizabeth Uihlein (Uline), Joe Ricketts (TD Ameritrade) and fund managers Charles Schwab Jr. (Charles Schwab), Ken Griffin (Citadel), and Robert Mercer (Renaissance). This makes me very curious as to what the dinner table conversation is like between Renaissance managers Jim Simons (top Democratic mega-donor) and Robert Mercer (top Republican mega-donor). Notable 1- or 2-time donations include the Trump-era tug-of-war between Dustin Moskovitz (Facebook), Steve Schwarzman (Blackstone), Isaac Perlmutter (Marvel Entertainment), and Josh Bekenstein (Bain Capital), Jeff Yass (Susquehanna), Reid Hoffman (LinkedIn), and Karla Jurvetson (activist & wife of Steve Jurvetson of Draper Fisher Jurvetson). Jeffrey Katzenberg (Disney & Dreamworks) and Irwin Mark Jacobs (Qualcomm) also backed President Obama’s re-election in 2012 while Peter Thiel (Clarium Capital, Founders Fund & PayPal) took the other side, backing Mitt Romney.

PACs are wide-ranging in their size and scope, but constitute a notable proportion of campaign contributions (Fig 13). Their spending patterns less resembles individual donors, being that they often finance both sides. Like special interest groups, we can estimate their political bent by looking at their net contributions and seeing if they consistently lean towards towards one party or the other. The consistently Democratic PAC base is much larger than the consistently Republican PAC base. Workers of all varieties as well as some companies are represented here and contributions can fluctuate widely from year to year.

Figure 13

View interactive graphs here.


Congressional & Presidential Elections

Special Interest Groups