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Money is essential to the proper functioning of democracy and elections, yet transparency and integrity in financing is paramount. Yuri Gripas/Reuters

US election: what are super PACs, and what role does money play in the race?

Ask most people what they think of politics in the US, and one of the first responses you might hear is that it is corrupted by the influence of money.

Super PACs (political action committees) are a concept that has become synonymous with that corruption. Many see these entities as symbols of a broken system – a system with loopholes that allow organisations to lend support to particular candidates or parties.

As the rest of the world watches the circus that has been the 2016 US presidential campaign, questions about how the elections and candidates are being financed continue to be raised – both inside and outside the US.

What are super PACs?

The idea of a super PAC is quite simple. Anyone can set one up. And so long as they are not officially affiliated with any political party or candidate, these organisations can raise donations not subject to contribution limits. This is because they are a non-party group that does not give directly to candidates.

They can also spend without limits. This is because they are spending independently of parties or candidates, although what they are spending is in support of, or opposition to, a particular party or candidate.

In effect, what this means is wealthy individuals can peddle influence through these organisations.

Spending on political communications (attack ads on TV, for example) and political mobilisation (such as get-out-the-vote campaigns) is extremely powerful.

How has the 2016 election been financed?

Democalypse 2016, as the Daily Show affectionately calls the 2016 presidential election, is a contest between two of the least-liked major party candidates in decades of US elections.

Hillary Clinton is an establishment Democrat with decades of public service under her belt. She is pitted against Donald Trump, an egotistical billionaire who has never held public office.

Trump has focused on “Crooked Hillary” and her dubious sources of financing. This includes the Clinton Foundation and her track record of “selling herself” to special interests. However, it has recently been revealed that the Trump Foundation has been allegedly misappropriating charitable contributions to pay off debts and finance campaign costs.

When Trump was still only a contender for the Republican Party’s nomination, he frequently touted the fact that he was self-financing his campaign. This, he claimed, would make him less indebted to special interest groups (which, he implied, were the funders of other candidates – both Republican and Democrat).

This is a very different alternative to going down the super PAC route. What does self-financing actually means for the quality of democratic competition in the context of American, or indeed any, elections?

In 2012, the total cost of the election cycle in the US (both the presidential and congressional elections), was at least US$6.3 billion. The 2016 election season promises to be even more expensive. Any candidate who is going to be competitive in a race that costs more than $7 billion needs to raise a lot of money. Or, in Trump’s case, have a lot of money himself to finance his own race.

Neither option currently in play seems particularly appealing: super PACs and special interest groups that can raise and spend money with little oversight. Similarly, some candidates don’t need to rely on this because they can self-finance (the purview of the very few mega-rich).

What do candidates self-financing their campaigns actually mean for the quality of democratic competition? Lucas Jackson/Reuters

What are the rules governing super PACs?

In recent years, the US has taken sometimes drastic measures to relax regulations around political financing. However, many – if not most – people fail to recognise that it still has a relatively tight set of laws governing who can give, who can spend, how much, and who needs to be told.

Over the past half a century, the regulation of political finance in the US has passed through three major waves of change. These have increasingly relaxed the regulations on party and candidate financing.

The most recent wave was sparked by the Supreme Court upholding the Citizens United challenge to the Federal Election Commission’s laws prohibiting corporations and labour unions from engaging in independent spending in elections. This decision ushered in super PACs.

Money is essential to the proper functioning of democracy and elections. However, the system of financing matters greatly to determine whether or not elections and the political system in general ensures equality of participation (both for political candidates and citizens), transparency and integrity.

However, it is not always the case that more regulation is better. Russia has some of the tightest political financing regulations in the world, but these have allowed Putin’s United Russia Party to entrench power.

An Occupy Wall Street demonstrator protests corporate campaign spending. Shannon Stapleton/Reuters

How do we achieve a fair, democratic balance?

Designing a “good” system of political financing will necessarily entail trade-offs between values such as individual freedom of expression, and equitable political competition.

The US is a perfect example of a country that emphasises individual freedoms above almost anything else. The advent of Super PACs and the influence they wield are a direct consequence of this priority, but in turn are the cause of inequitable political competition.

In considering the regulation of money in politics, perhaps most important is the notion that countries should not rely on a single policy tool to try to control money in politics. Also, the policy tools they do apply must be done in a consistent way that is enforced.

Since becoming the official Republican nominee, Trump has opened his arms and war-coffers to outside donations too. He has given up his “I’m a self-financed guy” mantle in order to become competitive in an election where his rival has to date raised more than double what he has (US$373 million versus US$165 million).

The one bit of good news in the midst of the obscene amounts of money being spent is that the US has relatively tight disclosure requirements. You can’t see necessarily who is donating to Super PACs per se. However, you can see exactly which super PACs are giving to which candidates and how much, with only a one-month delay on having this information publicly available.

Obviously, the American system is far from perfect. Yet Australians need to take a long hard look in the mirror before they pontificate over money in politics.

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