Tag Archives: Demos

The great American rip-off: How big-money fuels racial inequality

In the wake of Citizens United, large donors dominate the political landscape, with 84 percent of the money spent in 2014 coming from contributions greater than $200. The big money explosion is complete. In 1980 the largest political donor gave $1.72 million (in 2012 dollars); in 2012, the largest donor gave $56.8 million, or 33 times as much. It’s obvious that this big money bias favors the rich over the poor, but new research suggests it may also hamper racial equity.

As money has come to play a larger role in politics, it has opened up the political system to the abuse of a few of the very wealthiest Americans, an ascendant donor class. However, due to racialized distribution of wealth and income in the United States, this “donor class” is overwhelmingly white (see chart).

This means that campaign contributions primarily come from white donors. An AP investigation of 2012 to  super PACs and presidential campaigns finds that more than 90 percent of those contributions came from white neighborhoods. Demos’ analysis of the top 10 Republican and Democratic donors finds that, “All of these donors appear to be white.”

These biases are important; gaps on issues like the budget deficits, inequality and paid sick leave break down more strongly on race lines than they do along class lines, for example. On other issues, there are salient racial divides, and political scientists find that people of color are better represented when their representative is of the same race (white legislators, even Democrats, are not as responsive). There are therefore substantial differences between white and nonwhite opinions on important issues, and it therefore is worrying that money in politics is so skewed toward white donors.

Campaign contributions matter for access and agenda-shaping. Research shows that campaign contributions from businesses can lead to lower corporate taxes. A study of the telecommunications industry finds that political spending leads to less stringent regulation. Recently, Christopher Witko finds that campaign donors are more likely to get a government contract. In a recent field experiment, donors were more likely to obtain a meeting with a Congress member. Campaign contributions and lobbying, then, not only influence whether a policy is enacted — but whether that policy is even considered.

As Adam Lioz notes in the case studies he discusses in the Demos report, “When elected officials are dependent on corporate donors to fund their campaigns, business interests enjoy disproportionate sway over the policymaking process.” One case study is the private prison industry, which has benefited enormously from the incarceration boom. Between 1990 and 2009, the number of inmates housed in private prisons increased 17-fold (the number held in government prisons doubled). Investigative reporter Lee Fang hasextensively documented how private prisons have taken over immigration detention and lobbied extensively for stricter immigration enforcement. The largest private prisons have spent millions lobbying at the federal and state level, particularly in periods during which immigration laws were under consideration. Lioz also links money in politics to predatory lending, which disproportionately impacted people of color and was left loosely regulated because of powerful monied interests.

As noted above, one way to increase the political system’s responsiveness to people of color is to get them elected into office — but money in politics hampers progress here. A 2006 study of state legislative races finds that candidates of color raise far less money than white candidates, and the problem is worse in the South, where most blacks live. This hampers turnout: Political scientists Thomas Holbrook and Aaron C. find that in mayoral elections, “the effect of the total amount of campaign spending on turnout is notable.”

Without significant reform, the rich will gain a stranglehold on our political system. Recent developments, however, suggest that America is going in the opposition direction — from adopting proposals straight from Citigroup lobbyists to the attempt to increase the cap on donations to political parties 10 times its current limit. Over the long term, Citizens United and McCutcheon need to be overturned, but with the current composition of the court this is unlikely. There are still reforms that can be made. Congress should pass the Disclose Act to stop the flood of dark money. Lobbying regulations have been shown to increase political equality. Public financing increases donor diversity and reduces the time candidates have to spend with big money donors. National parties should do more to recruit candidates of color and working-class candidates. Same-day registration would increase turnout among the poor and people of color, which research shows would combat the big money bias in our political system. The tough part about getting these reforms passed: They have to be passed by politicians who are already bought and paid for.

That doesn’t mean there is no hope. Evidence suggests that states with lower gaps in voter turnout have higher minimum wages, lower inequality and stricter lending laws. In Connecticut, the passage of public financing allowed Dannel Malloy to make paid sick days a core part of his campaign. Lindsay Farrell of Connecticut Working Families’ saidthat public financing “allowed him to be competitive in a race at that level without compromising on an issue like paid sick days.” In Minnesota, a grass-roots organizing campaign led by TakeAction Minnesota stopped an ALEC-backed photo ID law. Someday, there may well be a politician who, like FDR, says to monied interests, “We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.”

This piece originally appeared on Salon.

Why Turning Out The Vote Makes A Huge Difference In Four Charts

For decades, the conventional wisdom in political science was that the voting electorate was a“carbon copy” of the non-voting electorate, leading two political scientists to argue that, “outcomes would not change if everyone voted.” Although the thesis was tenable in the 1980s and even 1990s, wide chasms have opened up on class lines, and therefore voting lines as well.

As Larry Bartels recently noted, “No other rich country even came close to matching [the U.S.] level of class polarization in budget-cutting preferences.” In a recent study with Bartels and Jason Seawright, Benjamin Page finds that the wealthiest one percent are more conservative than the population as a whole. Within their sample, the wealthiest tended to be even more conservative than the less wealthy participants. They find that even wealthy Democrats are more conservative on economic issues than Democrats on the whole. This comports with a vast literature finding that the wealthy tend to be more economically conservative and therefore likely to support Republicans (see chart).

Recent studies of the non-voting population suggests that wide gaps have opened up between voters and non-voters. In their recent book, “Who Votes Now?” Jan Leighley and Jonathan Nagler find that, “there are notable, consistent and substantial differences between voters and non-voters on class-based issues.” In the chart below, we can see clear differences between voters and non-voters on key economic issues.

A recent Pew study finds that non-voters are far more likely to oppose repealing Obamacare and support government “doing more things.” While likely voters were split between Obama and Romney, each with 47 percent of the vote, non-voters supported Obama by a whopping 35 points (59 percent to 24 percent).

All of this suggests that more turnout, particularly among low-income voters, would shift our political system to the left. The Median Voter Theorem postulates that democratic systems will produce policy outcomes that align with the preferences of the median voter suggests that turnout gaps as a source of policy bias toward more affluent households. Because non-voters are more economically liberal than voters, the median voter is more conservative than the electorate at large. If more low-income people voted, politicians would become more economically liberal to court the new voters. In one interesting study David Broockman and Christopher Skovron finds that politicians believe that their constituencies are significantly more conservative than they are:

conservative politicians systematically believe their constituents are more conservative than they actually are by more than 20 percentage points on average, and liberal politicians also typically overestimate their constituents’ conservatism by several percentage points

 

Such a bias should be impossible to sustain – a Republican could easily win by moving slightly to the left of his opponent. However, given that the population that votes is significantly more conservative than those who do no, it’s unsurprising. Politicians respond to voters, not non-voters. In a recent study examining party platforms, Gerald Wright and Elizabeth Wright find, “a portion of the differential responsiveness we identified stems from parties overlooking low-income constituents who are unlikely to vote.”

But the evidence is not only theoretical: a large literature shows that when low income voters turnout at a higher rate, it leads to more generous policies. William Franko, Nathan Kelly and Christopher Witko examined all 50 states over more than three decades and found that “where the poor exercise their voice more in the voting booth relative to higher income groups, inequality is lower.” In another study, Franko examined voting gaps and policy outcomes in three areas—minimum wages, anti-predatory lending laws and SCHIP (State Children’s Health Insurance Program). He finds that states with smaller voting gaps across incomes had policies more favorable to the poor. States with low turnout inequality have a higher minimum wage, stricter lending laws and more generous health benefits than those with high turnout inequality. Further evidence comes from James Avery and Mark Peffley, who find that, in states with higher rates of low-income voting, politicians were less inclined to pass restrictive eligibility rules for social benefits. Two studies by Kim Hill and Jan Leighley find shows that states with a more pronounced turnout bias spend less on social welfare.

When black voters mobilized in the wake of the Voting Rights Act, Kenny Whitby and Franklin Gilliam find, “long-term Democratic incumbents have altered their voting patterns due in part to the mobilization and empowerment of the southern black electorate.” And it’s not only policy that would be affected. Thomas Hansford and Brad Gomez studied more than 50 years of data and find that the “effect of variation in turnout on electoral outcomes appears quite meaningful.”

When voter turnout is discussed in public it is often treated as a civic obligation, rather than a means to advance individual interests. Republican candidates often denounce low-income voters for voting for the party that best advances their class interests (while at the same time supporting massive tax cuts for their rich constituents). Yet when Benjamin Page interview the rich he finds that they, “acknowledged a focus on fairly narrow economic self-interest” when discussing their engagement in the political process. In this way, the recent Lil’ Jon video, “Turnout For What,” while tacky, has reframed the voting as a means to forward political interests, rather than as a civic obligation. Since some 41 percent of non-voters claim that their vote wouldn’t matter, this message is important. It’s also important to remove barriers to voting. Research by Jame Avery and Mark Peffley finds, “states with restrictive voter registration laws are much more likely to be biased toward upper-class turnout.” In contrast, states that have adopted same-day registration and vigorously enforced the National Voter Registration Act (NVRA) have lower levels of class bias in their electorate. Research also suggests that unions are an important mechanism for low and middle income voters to engage with the political process. Attempts to disempower than should also be viewed through the lens of voter suppression.

Increasing voter turnout won’t solve the manifold ways the wealthy control the political process. However, it is an important first step toward a more equal democracy and would bring force politicians to consider the interests of low-income voters.

This piece originally appeared on Talking Points Memo

The SEC should shine a light on dark political donations from corporations

Co-Authored with Liz Kennedy.

Nate Silver has already dubbed the 2014 election as “the least important in years.” But this year’s midterms are still breaking records for at least one thing: Secret political spending.

A historically unprecedented amount of dark money has already been spent to influence the outcome of the elections. As of July 15, more than $34 million in dark money had been spent on the 2014 election cycle. That is more than 15 times the $2 million–plus in dark money spent at this point in the 2010 midterms, and three times the $11 million in dark money spent at this point in the 2012 elections.

Dark money means political spending where the identity of the underlying source of the funds is not public. The Supreme Court’s Citizens United decision in 2010 allowed new political spending from corporations, and subsequent decisions removed limits on so-called independent spending. Now, sophisticated political players who want to exercise power without accountability are channeling their political spending through 501(c)(4) “social welfare” groups that aren’t required to disclose their funders.

The price we pay for this failure of transparency is a loss of information for voters, and a lack of accountability for both the spenders and beneficiaries of dark money.

Since most outside spending comes in a flurry in the last month of the election, we can expect these numbers to keep on rising. In 2012, 60 percent of dark money was spent on or after Oct. 1. If these trends hold, dark money totals this year will certainly break the 2010 midterm record and may even surpass the over $300 million in secret spending in the 2012 elections.

On Wednesday, the U.S. Senate Rules and Administration Committee held a hearing to promote transparency in election spending. They’re considering legislation that would require all outside political spending groups to disclose their significant donors (the DISCLOSE Act), and a bill that would require candidates, parties, and PACs that are already covered by federal disclosure laws to disclose their major donors more rapidly and electronically (the Real Time Transparency Act). As Sen. Angus King (I-Maine) explained in the hearing, just knowing that “Americans for Greener Grass” paid for an ad isn’t really disclosure, because it doesn’t tell you anything about the agenda of whoever is providing the financial support for the group.

The Supreme Court was wrong when it assumed that the new corporate political spending the justices allowed in Citizens United would be disclosed to the public and to a corporate donor’s shareholders, since there are no legal requirements that corporations disclose all of their political spending.

Congress attempted to respond to the Citizens United decision and create a comprehensive disclosure system in 2010, when the DISCLOSE Act was approved by majorities in both chambers of Congress, but then failed by one vote to overcome a party-line filibuster in the Senate. Some critics argued at the time that the bill unfairly regulated corporations while requiring less disclosure from unions. As we explain in our new Demos paper, this is far from the truth. Corporations and unions face very different rules and requirements for their political spending. Labor unions must publicly disclose all of their political spending to the Department of Labor. But in the wake of Citizens United, there are many avenues through which corporations can spend money in politics while hiding their financial support for particular candidates or causes.

Both unions and corporations must disclose to the FEC any direct political spending made to finance independent expenditures and electioneering communications, but the similarities end there. Unions are required to report the money they spend not just in federal elections, but also for state and local office. Corporations are not subject to these same requirements, except in a few states that have strengthened their disclosure laws. Unions are required to report get-out-the-vote campaigns, voter education campaigns, fundraising, and any politically related litigation expenses. Corporations are not. Unions are required to disclose all donations to 501(c)(4) groups on their Schedule 17 form. Corporations are not.

Why does this matter? Corporate donors spend big: The U.S. Chamber of Commerce spent $69,506,784 on elections in 2010 and 2012, without identifying the source of those funds, and was the biggest outside spender in the 2010 elections. And according to the research of Martin Gilens, the Chamber of Commerce and other corporate donors lobby against the expressed preferences of most Americans.

In contrast, unions advocate in favor of the expressed preferences of most Americans. Gilens notes that “unions would appear to be among the most promising interest group bases for strengthening the policy influence of America’s poor and middle class.” Corporate spending and union spending aren’t just different in terms of how they are regulated, they also represent the interests of different groups. It’s time to put unions on the same footing as big corporations.

Citizens United changed the game, but the rules have not kept up. Just as unions report their spending to the Department of Labor (which posts the reports online), the Securities and Exchange Commission has the authority and responsibility to require that corporations report their direct and indirect political spending to their shareholders, who have a right to know if and how their investments are being used for political purposes. A group of legal scholars has petitioned the SEC to mandate corporate disclosures in the interest of shareholder accountability. In response to the huge support it has received, the SEC added consideration of the rule to its agenda but has sincedropped it in the face political pressure.

Congress and the SEC now have another chance to act to get this simple principle right. If not, undisclosed corporate spending will continue to poison our democracy.

Ten Questions for Gracia Hillman

Gracia Hillman, Demos’ newest fellow, is contributing to the organization’s efforts to expand the freedom to vote for all of America’s citizens. Hillman’s areas of expertise include voter engagement, voting rights, election administration, as well as the interests and rights of women, racial minorities and people with disabilities. 

From 2003 to 2010, Hillman was a commissioner of the Election Assistance Commission, serving as its chair in 2005. Her distinguished professional experience also includes having served as Senior Coordinator for International Women’s Issues at the U.S. Department of State, Executive Director of the US League of Women Voters, and Executive Director of the National Coalition on Black Voter Participation.

What inspires you to work tirelessly on voting rights?

My grandparents were immigrants to the United States in the early 1900s and there’s a large Cape Verdean community in New England, particularly in the New Bedford, Massachusetts area, because of the whaling trade. It became apparent in the early seventies while the United States was going through its major course correction on civil rights, integration and equal opportunity that Cape Verdean Americans were not being elected to office. At that time you had to go either to City Hall or to the fire station or the public library so I organized a small group of people to bring voter registration activities to public housing projects. That was my first foray into elections, and I began to realize the impediments that stopped people from fully participating in elections and also the possibilities.

What drew you to Demos?

I became familiar with Demos when I served on the U.S. Election Assistance Commission and I greatly appreciated its commitment to fairness and access to the franchise. I also have tremendous respect for Miles Rapoport who I met when he was Secretary of State of Connecticut. [Rapoport is the former president of Demos, who left in March 2014]

What work will you be pursuing as a Demos Senior Fellow?

I will be looking at election administration—the things that advocates and individuals in communities need to stay on top of potential changes to voter ID requirements or other changes officials may be contemplating. I will also be forging working relationships with people who are the chief election official for their jurisdiction, to ensure that officials will explore with the community what the impact of any potential change might be and look for new ideas that are cost effective that can work to make sure that everybody has equal access to voting.

What contemporary connection do you see between women’s rights and voting?

Elections open up a whole dialogue about getting a community engaged and particularly for low-income women. Low-income women really get the brunt of all the changes to public policy procedure and they’re left to fend for themselves. When women have access to resources and are engaged in the changes it makes the transition a lot easier. Any time the community is going to go through any change with election procedures with voting rights issues it affects families.

Tell us your thoughts about the confluence between economic and political power.

Certainly economic power affects political participation to the extent that elected officials need money to get their job and to hold onto their job. Legislators have to spend an inordinate amount of time raising the money as the cost of running for even a state legislative seat is just getting obscene. Politicians dance to a tune and individuals and groups come to the table with money more often than not for that very purpose. The little guy gets left out. Even while we resolve the situation of minimizing the influence of the big bucks we also must stop the partisan political shenanigans that prevent voting process from being fully open.

You’ve worked on the local, state, and federal levels. What’d you learn from those experiences?

One of the things that irked me throughout the 80s were nationally organized efforts to do grassroots activities. When I worked at Operation Big Vote we had a coalition model and all communities had to work on their efforts through a coalition. The coalition was convened and organized by local groups. Our end goal was not only to increase the number of African-Americans who were registered and voting but also have a model left behind so the community could continue to use it throughout time for any election.

You’ve also worked at the international level. How does your work on elections in Asia, Africa and Europe inform your understanding of U.S. democracy?

One big lesson is that sometimes simple is better. Countries that knew they had a high level of illiteracy would have to use a symbol or a candidate’s picture so that people could instantly recognize who it was they were voting for. The United States used to be hailed as a great example for voter registration and voter education activities, but now  we’ve made it so darn complicated. Other countries are more willing to use technology so that people can vote from phones or other mobile devices and the goal is to encourage people to vote, rather than restrict voting because you have to be in a particular place on a particular date during particular hours.

You worked on the Dukakis campaign for President. Dukakis is a big hero of mine. Tell me about that experience. 

At that time I had been asked to serve as Executive Director for the Congressional Black Caucus foundation and I said, “well it better be interim, because when Dukakis becomes the Democratic nominee I’m going to go to the campaign full time.” They laughed because they didn’t think he had a chance. Lo and behold it was just a really well-thought out and structured campaign. There were some blips and I think the unraveling of it was whenBernard Shaw asked the governor the question about if his wife had been raped and murdered. That put the campaign in a tail-spin and Republicans used the Willie Horton issue, the death penalty and work release programs.

You brought up Willie Horton. That raises the question of the criminal justice system and voting.

We have a criminal justice system that operates on the principle that if you’re convicted and you serve your time, that you come back and are in a rehabilitative process so you will be a productive citizen. We say that, but we don’t behave that way. For a few years I served on the board of an organization here in D.C. that serviced women who had been incarcerated and returning to their communities in D.C. Part of re-integrating into the community includes voting, so to permanently deny someone the right to vote makes little sense.

Drawing from your work at all levels, what measures do you think could be really beneficially going forward in the next decade?

We should establish uniform procedures across the fifty states, so that if you are eligible to vote in any of those jurisdictions and you move, it’s easier to get that registration transferred to the jurisdiction where you will vote. Even some states right now can’t communicate within the state agencies because the types of computer systems that are used by the individual agencies don’t communicate with each other. We have to work towards one form of voter identification that can be used and easily tracked throughout the country.

Originally published on Demos Policyshop.

How Thomas Piketty and Elizabeth Warren demolished the conventional wisdom on debt

In a 2006 “Saturday Night Live” sketch, Chris Parnell sums up the conventional wisdom about credit card debt:

“Did you know millions of Americans live with debt they can not control? That’s why I’ve developed this unique new program for managing your debt. It’s called, Don’t Buy Stuff You Can’t Afford.”

According to the prevailing story, debt is caused by lavish and irresponsible spending by poor and middle-class families. But like much “conventional wisdom,” an increasing amount of evidence belies this point. In fact, the decline of saving and the rise of debt was an almost inevitable consequence of families trying to scrape by in the face of rising inequality. This is the corollary of French economist Thomas Piketty’s now-famous observation:While capital is increasingly concentrated at the top, it turns out that debt is becoming concentrated at the bottom.

In the same “SNL” bit, Amy Poehler says, “There’s a whole section in here about buying expensive things using money you save.” This supposedly common-sense observation is mirrored elsewhere. The American Institute of CPAs runs an advertising campaign urging people to “Feed the Pig.” One such ad depicts a responsible couple studiously saving for a house, while another eats lobster, receives massages and then complains about “never having enough to put away.” Underlying both the real commercial and the satirical one is the idea that those who aren’t saving could do so, but are instead spending the money. But the evidence for this story is weak.

A more compelling story is that inequality has made it harder for households at the middle and bottom to save.  In fact, the decline in savings has coincide with a rise in income inequality (see chart). There is evidence that these trends are connected.



American households falling in the bottom third of income growth from 1999 to 2007 accounted for a full half of the decline in the overall saving rate over the same period,according to the IMF. Meanwhile, a 2012 Demos study finds that “40 percent of households used credit cards to pay for basic living expenses such as rent or mortgage bills, groceries, utilities, or insurance, in the past year because they did not have enough money in their checking or savings account.” Another 2012 study finds that “regions or periods with higher inequality are characterized not only by a more unequal distribution of saving rates but also by lower saving rates for most of the income distribution.”

One of the myths of the right has been that if the rich have more money, they’ll save and invest more as a result, thereby stimulating the economy. That is, more inequality will lead to more national saving. In fact, the data shows that inequality just concentrates wealth in the hands of the few. It also points to the important possibility that the increase in income inequality is what drove the savings rate down to begin with, by also increasing disparities in wealth.

Wealth serves as a buffer for an income shock, like losing a job or a medical emergency; it also constitutes a family’s retirement income and the means for funding children’s education. However, the rise in income inequality has been coupled with a rise in wealth inequality, meaning that wealth is increasingly concentrated in the hands of the few. Recently, Emmanuel Saez and Gabriel Zucman have shown the increase of wealth inequality in the United States (source).

This rising wealth inequality means that American households don’t have anything to fall back on in the case of a bout of unemployment or a health crisis. (One study finds that 62 percent of bankruptcies are medical-related.)

In a recent study, Amy Traub, a senior policy analyst at Demos, sought to test whether those with credit card debt were the profligates portrayed by popular culture. She used a national survey of 1,997 households to create two groups indistinguishable in terms of income, race, age, marital status and rate of homeownership. The only difference? One group had credit card debt, the other group didn’t. Traub finds that the households without debt had more assets, and fell back on them when dealing with unexpected expenses. She finds “little evidence” that “households with credit card debt are less responsible in their spending habits than households that do not have accumulated debt.” Instead, she finds that unemployment, children, lack of education, lack of health insurance and negative home equity correlate strongly with high levels of debt.

In their famous book on the subject, “The Two-Income Trap,” Elizabeth Warren andAmelia Warren Tyagi argue that slowing income growth, not overspending, is what’s driving families into debt. In an essay on Boston Review they write that,

There is no evidence of any ‘epidemic’ of overspending—certainly nothing that could explain a 255 percent increase in the foreclosure rate, a 430 percent increase in the bankruptcy rolls, and a 570 percent increase in credit-card debt.

The Warrens point to the increasing cost of education and housing. A 2000 study performed in Fresno, California, found that the most important determinant of neighborhood housing prices was school quality. The strongest evidence that the Warrens cite is that between 1984 and 2001 housing prices for those with one or more children increased at three times the rate of those without children. As families have tried to provide for the education for their children, they have increasingly been squeezed by high housing costs.

The final factor driving debt is unscrupulous practices by banking institutions.The CARD Act is saving Americans $12.6 billion a year by cutting back dodgy fees and other shady practices. But payday lenders can still prey on the poor. Traub finds that households with higher levels of credit card debt were more likely to have received financing from payday lenders. We need policies to give poor and middle-class workers more income and wealth. Increasing the minimum wage is a simple start. Incentivizing worker ownership and profit-sharing would also benefit workers. The government could give citizens a small basic income each year and it could also institute a “baby bond” policy, which would foster wealth building. On the other side, it needs to bust up concentrated and idle wealth by taxing it.

As Piketty notes in his interview with Matthew Yglesias, “My point is to increase wealth mobility and to increase access to wealth.” He aims to “reduce taxation of wealth for most people, but to increase it for those who already have a lot of wealth.” By spreading wealth to the middle class and poor, we could decrease the reliance on the “plastic safety net,” and create a strong and sustainable middle class.

Originally published on Salon.