6.4.5  The Impact of Money in Politics

(This is an archived extract from the book Patterns of Power: Edition 2)

Like anyone else, wealthy individuals and businesses have several ways of influencing politicians by persuasion and the force of arguments:

·      They can work through economic interest groups, for example by advertising or lobbying, as described in the previous section (6.4.4).

·      They can participate in consultation, as described later (6.5.3).

If they feel that that neither of these mechanisms is sufficient, they can also use their economic power to put pressure on politicians – as already described (  But businesses and wealthy people can also use money to exert pressure directly on politicians and political parties by making political donations – which is the subject of this section.

Politicians need money in democratic societies and one obvious source is from donations – which may be entirely legal.  Donations can give rise to questions, though, as to what the donors receive in return:

·      A wealthy individual might seek to tilt the tax system for personal reasons, for example, by making it clear that donations are linked to the recipient’s support for particular policies.

·      The construction company Brown & Root, for example, made substantial contributions to Lyndon B. Johnson's election campaign and subsequently received large contracts.[1]  The company was acquired by Halliburton, which has made large contributions to the Republican Party and which benefited handsomely from contracts after America’s 2003 invasion of Iraq.[2]  These companies prospered during the period of office of the politicians who received the donations; it is not clear whether their donations had an impact on their being awarded these contracts (or on wider policy issues) – but businesses normally only spend money for shareholders’ benefit.

These examples illustrate how wealthy individuals and corporations might use their money to gain an advantage over other people in wielding influence on politicians and political parties.  Such practices unbalance political negotiations – and may lack transparency if the donations are covert.

Corporations can also influence the politicians by influencing the media, without needing to own them (in a power relationship which does not appear in the diagram at 6.4.1, due to the limitations imposed by a desire for clarity in a 2-dimensional representation).  It has been alleged that “massive corporations exercise extraordinary political and economic power” in “the American media landscape”.[3]

Freedom of speech has been used as an argument to allow corporate financial contributions to political campaigns and other interest groups.  In the Citizens United case, the Supreme Court ruled that limiting such contributions would “chill” free speech and that they should therefore be allowed.[4]  This judgement apparently ignored the wider issue of the health of American democracy,[5] where corporate contributions appear to conflict with everybody's right to equal representation – a state of affairs which has been described as a form of corruption.[6]  It has had a major impact on American election results,[7] and on voting in the legislature to protect the interests of the super-rich.[8]

© PatternsofPower.org, 2014                                                 

[1] On 30 March 2003 The New York Times published an article entitled The Nation: Friends in Deed; In the Company of Vice Presidents, A Big Texas Contractor Prospered.  The article focused mainly upon the connection between Brown & Root and Lyndon B. Johnson, though it also mentioned the connection between Halliburton and Dick Cheney (Halliburton bought Brown & Root in 1962).  The article was available in May 2014 at http://www.nytimes.com/2003/03/30/weekinreview/nation-friends-deed-company-vice-presidents-big-texas-contractor-prospered.html?pagewanted=all&src=pm.

[2] Halliburton made substantial political donations to the Republican Party during the election campaign and presidency of George W. Bush.  It then received substantial federal contracts. A brief report on this was published under the title Halliburton Gave $4 Million to Politicians and Received 600 Percent Gain.  The report was available in May 2014 at http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2530603.

In June 2006 a report entitled Dollars, Not Sense: Government Contracting Under the Bush Administration was published by The United States House Of Representatives Committee On Government Reform — Minority Staff Special Investigations Division.  One of its findings was related to Halliburton:

"The single fastest-growing federal contractor between 2000 and 2005 was Halliburton. In 2000, Halliburton was the 20th largest federal contractor, receiving $763 million in federal contracts. By 2005, Halliburton had grown to become the 6th largest federal contractor, receiving nearly $6 billion in federal contracts."  (p. 5)

This report was available in May 2014 at http://www.halliburtonwatch.org/reports/waxman0606.pdf.

[3] Jean-Philippe Tremblay's film Shadows of Liberty made serious allegations about the power of corporations over the American media.  In order to advertise the world premiere on 24 May 2012, the LSE published a brief description of the film on its website at http://www2.lse.ac.uk/publicEvents/events/2012/05/20120524t1900vSZT.aspx, where a podcast of the ensuing discussion was also available in May 2014.

[4] The October 2009 ruling on Citizens United V. Federal Election Commission was available as a “slip opinion” in May 2014 at http://www.supremecourt.gov/opinions/09pdf/08-205.pdf.   It will later appear in a bound volume on the same website.

[5] In Is Democracy Possible Here? Ronald Dworkin made this point about the undemocratic impact of large financial contributions from corporations:

“Parties made rich by the contributions of great financial interests have an enormous advantage in the competition for votes, and new and poor political organizations are for that reason alone at a usually fatal disadvantage.” (pp. 128-129)

[6] Lawrence Lessig wrote a book entitled Republic, Lost: How Money Corrupts Congress – and a Plan to Stop It, which was published in October 2011 by Twelve, Hachette Book Group.  In April 2014, the book’s website was at http://republic.lessig.org/.

[7] John Nichols and Robert W. McChesney wrote an article entitled After 'Citizens United': The Attack of the Super PACs, which described the impact of the extra television advertising which the increased funding had made possible.  This article appeared in the February 6, 2012 edition of The Nation, and was available in May 2014 at http://www.thenation.com/article/165733/after-citizens-united-attack-super-pacs#,

[8] It has been pointed out that "Tax cuts for the wealthy between 2001-08 cost the U.S. Treasury $700 billion"; this is one of several observations on how the wealthy have improved their tax position in recent years, as reported in an article entitled Skinning America: How the Tax Code Favors the Rich, which was available in May 2014 at http://www.cbsnews.com/news/skinning-america-how-the-tax-code-favors-the-rich/.