Thursday, February 7, 2008

Political Fundraising

A topic in the current presidential election that I don't believe has received enough attention is the shift we're seeing in how the candidates raise funds.  Over the past few decades,  most political funds have come from the so-called "masters of the Rolodex" who use their social networks to put on elaborate, $2000 a person, fundraising events.  Additional funds come from PACs, Unions and businesses.

The 2004 Presidential race saw the beginning of the online fundraising phenomenon.  Howard Dean led the fundraising pace early, driven by small contributions from individuals online.  Dean's candidacy died with the famous scream in Iowa, but online fundraising persevered.  Today, it has been taken to new heights by Senator Barack Obama who raised $32 million dollars from hundreds of thousands of online donors during the month of January.  Reports indicate that only 3% of his donors have maxed out the $2,300 annual limit, compared to 70% for Senator Clinton, who raised $14 million in January.  Senator Clinton has recently got into the act, however.  After stories got out that she had to loan her campaign $5 million and her staffers had to go without pay for a month, Senator Clinton raised $3 million online in one day.   It now appears that online donors will play a key role in keeping Senator Clinton's campaign going through the coming months.

The obvious question is, what does this shift mean?  If money translates into influence, then you would expect the power of PACs and those well heeled few with vast social networks (not to mention those wealthy enough to plunk down $2,300) to go down.  Indeed, fighting back against the "status quo" of special interests is a key theme of the Obama campaign.  (Disclosure:  I support Senator Obama)  If the special interest influence is declining, you would think that something would fill the void.  Senator Obama would say that the online donations will give him the freedom from special interests to seek out the best solutions to our problems, which I believe to a degree.

However, I must also believe that Senator Obama's views will be shaped in part by those who give to his campaign.  Exit polls indicate that Senator Obama is the favorite of the "liberal-elite" (Chris Matthews calls them "white wine sipping urbanites"), whereas Senator Clinton is chosen by blue collar workers.  This doesn't surprise me as you would think that wealthy individuals would be more likely to make political donations of any kind, let alone online.  Polls also indicate that of all democratic primary voters, 55%-60% are college graduates, versus only 21% in 2004 and 27% in the general population.  Again, college graduates would have the discretionary income necessary to make more political donations.

Could Senator Obama's online donors be fundamentally changing the demographics of the primary electorate?  Are we trading one set of elites for another, albeit broader, set?  How is this going to shape policy?  While Senator Obama does put fighting for equality at the center of his campaign, as any Democrat should, he also includes many abstract themes like changing the mode of discourse and ethics reform.  These, along with a focus on the environment and green energy as a top issue all seem to appeal to his demographic.

Kinda makes me wonder how Al Gore would have done if he had had online fundraising.  It should have been a no-brainer for him, he did invent the Internet after all.

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