Why rich political donors are wasting a lot of money – Rick Newman/YahooFinance
Sheldon Adelson, the casino magnate, is a self-made billionaire whose knack for business has helped him amass an enormous $28 billion fortune, according to Forbes. His winning percentage in politics, however, is far below his success rate in business.
Adelson and his wife Miriam have become political megadonors, giving roughly $100 million to federal candidates and groups supporting them during the last two election cycles, including failed presidential candidate Newt Gingrich in 2012. Only 56% of the candidates backed by Adelson won during those two cycles. That’s slightly better than the odds of winning a coin toss, yet it’s far below the reelection rate for incumbents, which exceeds 90%. And the winning percentage of candidates backed by political-action committees Adelson gave money to was just 42%, the worst performance among the 10 biggest megadonors in politics today.
Money has been flooding into politics during the last five years, an era in which corporate money seems to be dominating political activity and rendering ordinary voters irrelevant. The 2016 elections are likely to be the most expensive yet, with the Democratic and Republican parties each poised to spend billions, much of that ponied up by rich donors hoping to put their favorite pols in office. Billionaire industrialists Charles and David Koch provoked alarm among some democracy watchers earlier this year when they pledged to raise $900 million from their network of America’s richest families to help elect conservative candidates in 2016.
With so much concern about democracy for sale, Yahoo Finance set out to ask a basic question: Are rich donors buying election results? We scrutinized thousands of federal records on campaign donations in presidential and congressional campaigns in 2012 and 2014, and came up with this simple answer: no. Among our findings:
* Wealthy donors of both parties often back losing candidates, partly because they align themselves with strident left- or right-wingers who have a hard time winning over mainstream voters.
* In many races, there’s a huge amount of money on both sides, with big donors essentially canceling each other out.
* Contrary to conventional wisdom, liberal spending groups have backed a higher percentage of winning candidates during the last two election cycles than conservative groups, perhaps because Democratic President Barack Obama won the White House in 2012, contributing to other Democratic victories.
* Much of the money flooding into politics is spent on political ads that aren’t that effective and sometimes have no discernible effect.
* External factors such as the economy or national political trends are still far more decisive in federal elections than campaign donations.
Two recent Supreme Court decisions—Citizens United in 2010 and McCutcheon in 2014—make runaway spending possible, by allowing donors to give unlimited amounts to so-called super PACs and by eliminating limits on how many candidates donors can give to. “Outside spending by a tiny number of mega-rich donors has played an increasingly important role in each federal election since Citizens United,” the Brennan Center for Justice Analysis wrote in a report earlier this year. Academics Martin Gilens and Benjamin Page warned recently that the increasing influence of “economic elites” in politics threatens to undermine democracy itself. Even politicians complain about incessant fundraising that can take up half of every workday in Washington.
Nobody disputes that record amounts of money are pouring into political races. But the return on investment to big donors appears to be less than the fretting over the health of democracy suggests. “The money going into super PACs is not determinative in most elections,” says political scientist Adam Bonica of Stanford University. “Whether these donors give as shrewdly to politicians as they run their businesses is probably a resounding ‘no.’”
Yahoo Finance conducted its analysis by determining the “winning percentage” for the 10 biggest political donors—the percentage of candidates they gave money to who actually got elected. We also calculated the winning percentage for about 100 political-action groups—including super PACs—that received money from big donors during the last two cycles. (Full details on our methodology are at the end of this story). Here’s how each of the 10 biggest donors fared: