Domestic Affairs

The Billionaire Bubble

It is no secret that money offers advantages to those who have it. Other than allowing for the purchase of material goods, the accrual of financial resources also increases both security and influence — a retired CEO has far greater financial freedom and omnipotence than a high school student bagging groceries at the local supermarket.

Billionaires are a prime example of this principle. With unfathomably large fortunes, they possess the funds necessary to buy anything and hire anyone. They also possess financial security to the extent that they can pursue practically any conceivable business venture without fear of considerable loss or damage.

Because of this freedom, it is no surprise that billionaires attempt to utilize their extra funds and resources to their benefit. Many attempt to shape the current political climate in a manner they see fit by supporting candidates who share their political values. Around 12.4% of billionaires reported making donations to political campaigns in 2018. The top 25 donors collectively contributed $573,892,284 to various races across the country during that election cycle alone.

While everyone should have the opportunity to financially support campaigns of their choice, it is concerning that the wealthiest Americans have a disproportionately powerful voice in politics. The donations of those top 25 individuals accounted for more than one-tenth of the money raised by all congressional candidates, political parties, and political action committees (PACs) in 2018. Is it fair that so few people have such a great influence over political affairs? If there were an issue that united this small group, they would have the resources to significantly alter the structure of the government, regardless of the opinions of the rest of the American people.

 Whether or not the influence of the wealthy in government is detrimental to political affairs, it cannot be denied that the immense donations from these wealthy families are flooding election cycles and inflating the costs of successful campaigns. A substantial monetary donation is a significant advantage during an election. More money means more publicity, ads, and campaign events for the candidate who receives it. 

Not wanting to be outplayed, their opponents will then seek similar donations to put themselves back on an equal playing field. With each subsequent election, candidates try to raise more money than they had in previous years in order to gain an edge in the election. By continually pushing the boundaries of campaign costs, billionaires can single-handedly increase the amount of money necessary to win elections.

The bar for large donations is effectively raised each election cycle since more and more money is needed for a successful campaign. Information from the Federal Election Commission shows that from 2014 to 2016, the average cost of winning a Senate seat jumped from $16.8 million to $19.4 million. Looking farther back, the cost of a bid for Congress rose 555% between 1984 and 2012. This is far greater than the 300% increase in the U.S. GDP or the 128% increase in household income over the same period.

This discrepancy reveals that the increasing costs of campaigns are not merely the result of economic inflation over the previous decades. America is seeing an increase in substantial political donations, which in turn makes political campaigns more expensive and unrealistic without significant backing from parties and PACs. This can prevent new candidates, who may deviate from the establishment, from successfully entering the political fray, thereby decreasing diversity in political opinions and representation in Congress.

Furthermore, billionaires are not just influencing American politics through donations. In recent years, it has become increasingly common for them to directly run for office. During the 2016 election, many of Donald Trump’s supporters celebrated the fact that he was a billionaire, a supposed self-made businessman who could be trusted with leadership of the country. The fact that he was a billionaire was thought to be a novelty, and upon his election, he became the richest president in history. By no means was it expected in 2016 that all future presidents should also be billionaires. Nixon, Ford, Carter, both Bushes, Clinton, and Obama all had net worths under $100 million.

Yet some in the Democratic party saw Trump’s election and wondered if they too could succeed by making their wealth a primary element of their own presidential campaigns. Both Tom Steyer and Michael Bloomberg are candidates in the 2020 Democratic primary and have an estimated net worth of over a billion dollars. Tom Steyer has already spent over $140 million on television ads while Bloomberg has spent $375 million. Together, the two have already spent more than all of their other Democratic opponents by a significant margin — by some estimates, more than 4 times as much.

Are these ridiculous sums of money for a primary cycle effective in garnering support for the candidates? Surprisingly, both Democratic billionaires are seeing some results, although perhaps not as much as they might have hoped after Trump’s 2016 presidential campaign. Despite only being in the race for around three months and accepting no outside political donations, Bloomberg is currently polling fourth, behind Biden, Sanders, and Warren with around 10%.

Steyer has a far less impressive showing, although he has remained eligible for every debate prior prior to the primary elections, which is more than many of the more politically experienced Democratic candidates can say. He is also dramatically improving in more recent polls of certain states. In South Carolina, he reached 15%, and in Nevada he polled at 12%.

However, the point of concern is that Steyer and Bloomberg have demonstrated that billionaires are far less involved in politics than they could be. Bloomberg, with a net worth of $60 billion, could launch the most expensive presidential campaign in history and barely make a dent in his fortune. To him, dropping a billion or two on a campaign would be the equivalent of an average middle-class family taking a small vacation. And there are others richer than Bloomberg. If Jeff Bezos truly was dissatisfied with the political climate, what would stop him from running in the next presidential election? He could spend more money on his campaign than was spent in the entire 2018 election cycle if he truly felt it would help him gain the office. While money alone hasn’t seemed to work for Steyer or Bloomberg, who is to say they just aren’t donating enough?

Through their candidacies, Trump, Steyer, and Bloomberg have ironically demonstrated the true lack of participation of billionaires in politics. While the richest few are already making waves in the political sphere through their donations, there is nothing barring them from spending their fortunes trying to “buy” the presidency. If they are not kept in check, they could fundamentally upend American democratic elections by restricting participation in politics only to the exceptionally wealthy.

Perhaps the government should impose stricter limits on the amount of money that can be spent on political campaigns. The precedent that has been set of spending billions of dollars on elections every two years is highly imprudent and unnecessary. Billions are spent on failed campaigns every election cycle.The money from these donations could have been more effectively spent on humanitarian efforts, infrastructure, or scientific advancements.

Ultimately, when billionaires have the capacity to donate hundreds of millions of dollars to parties, PACs, and candidates of their choice, the political landscape is determined by a select few. Even more dangerous is the capacity of billionaires to run their own campaigns. If America isn’t careful, its democratic elections could subtly transform into a new aristocracy in which the only limit to one’s political power and influence is their wealth.

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