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How Big Business Spent its Money – The Northwestern Business Review

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Mark Hanna, a Republican financier, once said: “There are two things that are important in politics. The first is money and I can’t remember what the second one is.” More than a century later, the Supreme Court case Citizens United v. FEC allowed for both individuals and corporations to spend unlimited amounts of money in the political arena. In this Post-Citizens United landscape, interest groups, consisting of companies and individuals with shared interests, can now shape our elections and politics through political action committees (PACs), political organizations that pool money from individuals, and SuperPACs, which can take unlimited contributions from both individuals and corporations. Notably, many Fortune 500 companies spending millions on our elections are also some of the largest employers of Northwestern alumni.

The money coming from various interest groups is a combination of donations from corporate PACs, which are directly connected to their namesake company and can give up to $5,000 to candidates, and affiliates of companies within those interest groups, usually CEO’s and upper-management types, who can give directly up to $2,700 to candidates or spend millions of dollars indirectly supporting candidates through the use of SuperPACs, which have no limitation on how much money they can take or spend on elections. If that sounds crazy to you, it’s because it is.

Some of the top spending interest groups include Healthcare, Lawyers & Lobbyists, and Labor, all of which have spent over $100 Million in the 2018 Election Cycle alone.

However, the largest interest group by cash spent in the 2018 midterm elections is the ever-so broad Finance/Insurance/Real Estate Industry, having given a combined $595 million to candidates and party organizations in 2018. Many major employers of Northwestern Alumni can be found within this giant collection of business groups, including investment banks, private equity firms, and management consulting firms. Over 80 percent of Northwestern economics majors who chose to work after their undergraduate years find employment in a company within this broad industry.

As a whole, the industry is slightly Republican-leaning, having given around $210 million to Republicans, compared to $176 million to Democrats, in the 2018 cycle.

Different sectors within the Finance/Insurance/Real-Estate industry can skew either way between Republicans and Democrats. Commercial banks, such as Bank of America and Citigroup Inc, have given twice as much to Republicans over Democrats in this cycle, while venture capital firms have done the opposite, seeing their affiliates spend twice as much on Democrats over Republicans in 2018. Regardless of political leanings, the industry as a whole gives hundreds of millions each year to candidates, helping to shape election outcomes and influence how legislation can be crafted to benefit them in the future. Money is such a strong factor in the outcomes of elections that, in the 469 Senate and House races in 2016, 445 of the winning candidates spent more than their opponents, whereas there were only 24 races in total where the candidate who spent less money won.

Furthermore, many prominent companies that employ Northwestern alumni spend large sums of money in politics, with some even having affiliated PACs with the company’s name attached. While workplaces are considered mostly apolitical, the money many affiliates of companies in financial services spend in politics would suggest otherwise, and it can be worth considering how a company skews politically when selecting a future employer.

Affiliates of Boston Consulting Group and McKinsey & Company, the first and second largest management consulting employer of Kellogg graduates respectively, have both given six-figure sums to candidates and political parties in 2018. Interestingly enough, both companies have seen large percentages of their contributions going to Democrats, making their affiliates some of the more Democratic-leaning donors of the Finance/Financial Services industry.

Meanwhile, Goldman Sachs affiliates and the Goldman Sachs PAC have given around $3.9 million this election cycle to political candidates of both parties. The Goldman Sachs PAC can give up to $5,000 to each candidate and is directly connected to Goldman Sachs management, while individual donors, mostly CEOs and upper management, are capped at $2,700, unless they utilize SuperPACs. According to Politico, Goldman Sachs has a “long history of cultivating influence no matter which candidate or party is in office,” such as being Obama’s second largest donor in his 2008 presidential campaign, and Hillary Clinton’s second largest donor in her New York senate campaigns.

One extremely Republican-leaning firm is the private equity firm The Blackstone Group, whose affiliates have given $15 million in campaign contributions to candidates and parties in the 2018 cycle alone. CEO Stephen Schwarzman has spent nearly $13 million of his own fortune in 2018, all of which went towards Republican Leadership PACs.

Some prominent employers of Northwestern Alumni not in the Financial Services Industry are Alphabet Inc, the parent company of Google, and Microsoft Corp. Having only incorporated Google in 2015, Alphabet Inc has only been active for two election cycles, whereas Microsoft has long seen its affiliates spend millions each cycle.

While the CEO contributions of other companies such as Goldman and J.P. Morgan are included in their 2018 spending, Blackstone’s Schwarzman has poured in so much money that Blackstone and its affiliates dwarf many other companies in terms of campaign contributions.

Overall, every company has its own preferences between the two political parties, but together their contributions total to hundreds of millions of dollars in political spending every election cycle. These staggering amounts of cash are a relatively new development, but a very harmful one at that. Following the Supreme Court ruling in Citizens United v. FEC companies and individuals have been able to spend an unlimited amount of money in politics through the use of SuperPACs. According to Professor Michael Kang, the William G. and Virginia K. Karnes Research Professor at Northwestern Pritzker School of Law, this case has opened the doors for “corporate electioneering”, meaning that companies, as well as individuals, can now spend unlimited amounts of money to influence the outcome of elections. Citizens United has also allowed wealthy individual donors like Sheldon Adelson, who has singlehandedly given over $100 Million in the 2018 election cycle alone, to have undue influence in elections as well. Altogether, the money firms and wealthy individuals are able to now spend in an unlimited capacity “contributes towards a hyperpolarized political system”, said the Professor, and one in which “major parties are increasingly sensitive to the needs of major donors” over those of their constituents and average Americans.

So what can be done to rectify this situation? Unfortunately, the current Supreme Court has struck down past attempts to reform Campaign Finance, so it would be difficult to cap how much money companies and wealthy individuals can spend. However, as Professor Kang recommends, the biggest change that can be made is introducing some form of nationwide publicly-funded elections. This would mean that every candidate receives an equal amount of money from the government by default, and according to Professor Kang, this “relieves them of the need to raise money”. This money candidates receive would be conditional on them turning down money from outside donors, so if the public funding is substantial enough, there would be an incentive to refuse donations from companies and wealthy individuals, minimizing their influence in our electoral process.

Many here at Northwestern want to work in finance or tech at prestigious companies. Yet these same companies see their CEOs and executives giving large sums of money which influences our political process by deciding who gets elected and swaying how elected officials vote in Congress. In our current situation, one man can spend over $100 million in one election cycle, 95% of candidates who spend the most money in their race win, and the average senator who voted to deregulate Wall Street this year has received on average over $2.5 million from the Financial Services Industry in their most recent election cycle. This is not a reality we have to accept, and serious Campaign Finance Reform offers a remedy to this problem.

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