Obama's Internet Money Machine and the Future
A friendly warning to everyone (including myself) who is celebrating the unprecedented success of the Obama money machine: be careful what you wish for.
There are many factors in the perfect political storm that is forming around Obama: outrage at the Iraq war, generational shifts in key American communities, and the extraordinary charisma of the candidate himself, among others. But none is more important than the arrival of such a fresh and appealing political persona right at the moment when Web 2.0 social networking has matured to where it is a viable political tool. As a result, the outsider candidate is awash in a pile of cash that dwarfs anything the country has ever seen, a sum not even dreamed of by even the most callous and corrupt insiders of old: over a quarter of a billion dollars so far, and he is two months away from even being declared the nominee. Sources in the Obama campaign are saying the campaign may bring in $100 million more in June alone.
From the outset, pundits had predicted this might be the first US presidential campaign in which the sum total of money raised by all candidates topped $1 billion. Take the curve of Obama's fundraising over the last few months and project out through November, and it appears that Obama could raise a billion dollars by himself!
Among Obama supporters, like myself, this has been celebrated as an Internet-driven turning of the tables on the kind of money politics that has dominated America for so long. 1.5 million people have given Obama money, and nearly half of them have made donations of $200 or less. (All these small donors -- who the campaign is in regular contact with via email -- can legally give much more, which is one reason why it might not be that far-fetched to extrapolate his current fundraising curve for 5 more months.)
Surely this sort of opening-up of political campaign financing has to be counted as a huge victory for democracy, right? All those years of hype about the democratic potential of the Internet are finally coming to fruition.
There is another side to this, however, that I think it is important to keep in mind: national American politics is now going to be much more expensive than it has ever been, by a long shot.
Some perspective: in 2004, GW Bush raised $367 million, a historic record. Obama will raise more than that before the convention.
Or look at it this way: just under half of Obama's contributions have been in amounts of $200 or less. For demonstration purposes, let's say that the average small donation was $100. If you do the math, that works out to small donors giving Obama $70 million, leaving big donors responsible for $200 million. With luck someone with better data than I have will respond to this blog with more detailed numbers. Whatever the actual numbers are, it will work out that the huge majority of Obama's money has come donations over, not under, $200.
Yes, this is a wonderful thing that the Internet has democratized political financing in an unprecedented way. What is even better, the fact that the progressive guy figured out the new money regime first may catapult him from freshman senator to the White House, opening one of the most exciting chapters in American political history.
But it is not insignificant that in the process, vast sums of money are flooding into the political arena. Remember that until we suddenly found ourselves on top, most of us Obama supporters thought it was crucial to make American politics less expensive, not more.
What will be the real long term impact of all this on American politics? I don't know, and I think anyone who claims they can see into that crystal ball needs to calm down. When the smoke has cleared, I think we will find that, as is so often the case, new technology once widely adopted, won't make anything better: rather, it will take our same old problems and play them out again, with slightly different dynamics, but on a much larger scale.
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Excellent article. I also am concerned that because we have more money this time, we are abandoning the Federally Funded campaign route.
I prefer the money be made this way. But, I think campaigns need to be capped. I find it insulting & degrading tha the "most money" wins, especially while millions of Americans are suffering in poverty. Let the best candidate win!
You are so correct! We still need public funding of campaigns. Just because our guy is the current surfer on the wave of internet money, doesn't mean a Fascist can't do the very same thing. In a similar vien...? I do not understand how the Republicans can hand all the new Executive power on to a Democrat..
For me, a consistent small donor, it is not about the totality of the dollars, it's about me as an INDIVIDUAL who for the FIRST time have been involved in the process in a real way. I feel as though, for the first time, the politician is truly concerned about what I think and need, and has reached out to ME personally. So if the "process" is institutionalized insofar as campaign financing is concerned, there should be no doubt about the future...a
To OSTERTAG: What the majority of people in the USA want ot know is where did all those huge contributions come from? I, as an American Citizen, wonder just how much came from lobbyists, foreign countries, his guilty friends in Chicago, from terrorists organizations and how much came from people with yearly incomes of less that $40,000. People in this country who make an average income of around $20,000 to $30,000 have NO MONEY TO contribute that type of money, even to the Salvation Army. As stated many times before, BARACK HUSSEIN OBAMA has bought and paid for this position.
What a shame, if he is disappointed!
The names of contributors are reported to the government, as required by law. Conduct your research and get the FACTS.
The donations are coming from people like me who will be going to a fundraiser for Barack Obama that will be in Detroit and the tickets starts at $1,000 up to $4,600 and the event is sold out. The room will hold 3,000 people. That is where he is getting his money from....
How about fighting your ignorance with the sword of truth? All the info you want is available through the FEC. Stop letting fear cloud your mind and step up and taking a little personal responsibility for your education.
I only made $13,000 last year and I contributed to the Obama campaign twice for $25 each time.
"If you do the math, that works out to small donors giving Obama $70 million, leaving big donors responsible for $200 million."
If the number of small donors is not known, your math makes zero sense, but your primary point, in my mind, is that some unknown percentage of that ¼billion dollars raised, thus far, is fed into the infotainment machine (in the form of AdBuys), feeding an incredibly corrupt industry that's long been in bed with incumbent power.
Incumbent power won't fix what it deems unbusted. Obama had my vote the moment he mentioned the appointment of a cabinet level Chief Technical Officer. What's broke needs fixing, but getting elected comes before fixing a broken system.
Thank you Mr. Ostertag for stepping back for the big picture. Discounting for now the broken Democratic Party primary process, the way America elects it's wannabe leaders (who so so rarely are) is broken. Celebrating big money in politics is like wanting to purchase a Hummer for your next "green' vehicle. Outdated. Outmoded. Out of shape.
Actually there is nothing broken about the Democratic Party primary process. Everyone thinks its great until they find themselves suddenly needing the rules to change. The time to make a rules change is not in the middle of the process but in the three years in between. Florida and Michigan had their chance to wor with the DNC to find an equitable solution of when to hold their primaries. In Florida's case at least they were dragged into it by being presented with either keeping the election valid and having paperless voting machines or invalid and with a paper trail. Tough choice to make, but if they had actually approached the DNC before the vote was cast perhaps Terry McAuliffe would have found some way of working with them.
Whyyyyyy does the presidential race have to be so long and expensive. Can't we just have like a dozen parties and candidates to choose from, and have it over with in less than 90 days? The amount of money they need to raise is obscene.
I have had quesions about the enormous cost of this campaign, where both Clinton and Obama spent money with reckless abandon, and raised the cost thus far by several notches.
At the same time, when it is said that Obama has 1.5 million contributors, and they've contributed an average of less than $200, and that they can contribute lot more - are you sure?
Not everybody is in a position to contribute the maximum of $2300, and is waiting to do that. For many, $200 is a lot of money to spend on a political candidate.
OTOH, if this is a once-in-a-lifetime opportunity for you to see a black candidate compete and win, you may be motivated to contribute, as they say, till it hurts.
What is the fairness in getting your contributors whipped up in a frenzy, and making them contribute beyond their means? Does Obama feel an obligation to tell his supporters - hey, we have enough. Stop sending the cheques for a while, and buy things necessary for yourself and your family!
I believe the maximum is $4600, $2300 for primary, and $2300 for general.
Sen. Obama's base is pretty solidly middle class with a lot of outliers in the working class population and some representation of upper and upper-middle class. The request for donations from his campaign (as they were for Sen. Clinton's in the last two to three months of her campaign) are for generally $25-50.
A LOT of working class people can afford to spend an extra $25 every couple of months. That is a family of four opting to eat at home instead of stopping at McDonald's.
Great article and excellent comments. It is, indeed, the source of the money that matters, not the amount. In fact, most cammpaign reform, as I undertand it, focuses on bringing light to this factor.
The double-edged sword of Bob's implication that there should be less money in politics is that the business-centric media controls the messages placed on their mediums, and they effectively color the campaign in favor of "their candidate", whoever that may be. If we limit campaign financing too much, these forces will have a more significant role in framing the debate and, utlimately, influencing public opinion.
It seems best to place rules to manage the contributions such that only those who can vote in the election can contribute to candidates (i.e. no corporate or union or other organization should be allowed to contribute). AND, that contribution should be limited, as it is now, so that the impact of each individual contributor is more democratic.
Obama has the right message and vision for what we need, today. No wonder people who are scraping by will scrape up a few bucks here-and-there to invest in their future.
Bob, you have not taken into consideration that a good percentage of the small donors are not just one time donors. Like myself I give $100.00 a month. When he has hit a rough spot I have given something up and made another donation or larger donation.
Several of my friends have given up a night at the movies, Starbucks, magazines, another pair of shoes in order to give more each month.
For the first time we, who cannot write the big checks, are an important part of the process. We are simply responding to his message that we all have to make some sacrifices because it is truly "The fierce urgency of Now!" There is too much at stake and we all have to be involved and we are.
There's a big unspoken question when it comes to political campaign finances ... where is this money going and how effective is it?
In Obama's case, I know a lot of it is used to put actual people on the street campaigning - which is much more effective than media placement, seeing as word of mouth carries a trust factor that mass media cannot match. The only reason to place media ads is to get to voters who cannot be reached otherwise.
So, maybe the big campaign bucks will be going into gas tanks this year and not so much into the media bank accounts!
The issue was never about the amount of money involved in campaigns, but the source of the money. Bush famously referred to his donors as the "haves and the have-mores". He lined up donors who were not only able to donate the maximum, but who could donate even more through family members and employees, all without feeling a pinch. The millions he raised was done through a very small number of people. Obama, by contrast, is raising money through a much wider range of people in much smaller dollar amounts. His method requires reaching more voters and getting more people involved, while the Bush method relied on reaching the elite and thrived on disenchantment of the masses. If more people being involved in the election process means more money being raised, then I'm all for more money.
I am just thankful that it is the candidate I am supporting who can benefit from this new world order. I have no doubt if it had been the Republicans who had first benefited that protests from the Democrats would have been met with accusations of sour grapes and further reform would get no where while the Republicans milked the system year after year. In a position of power, Democrats will have an opportunity to institute true campaign reform. including constitutional amendments, if necessary, to bring sanity to the process.
You may be interested in this site:
http://www
See Bob Ostertag's Profile
Thank you.
Aren't you confusing donor with donation? Half of all DONATIONS may be under $200, but many of us are giving MULTIPLE donations. I've made 10 myself, none greater than $70, but they come to about $500. When Obama's people quote the figures on the average DONATION, they're not talking about the aggregate donations per donor, are they? They're talking about the average amount of EACH contribution from EACH donor, aren't they?
If this is so, doesn't it completely alter the numbers here--placing much more weight on the under-$200's?
If I've misunderstood, can someone please undunce me? TIA.
See Bob Ostertag's Profile
Good point, PennP, but note that my estimation was based on the campaign reporting of 1.5 million individual donors, not donations.
As I said in the post, to really break it down I would need access to more data than I have. But please note my main point: (1) that yes, the internet is democratizing the funding of campaigns in a big way, and this is wonderful, and (2) in the process a situation is being created where in order to run for president you need to raise a half a billion dollars or more, which may come back to haunt us.
Thanks for the reply, Mr. Ostertag. I hear you about the money. But with this election, my feeling was, whatever it takes. If we have to pony up half a billion to stop a $4-trillio
Also, it may not be fair to look at this particular race as representative of future races. Obama is attempting what amounts to a reconstruction of the party, and that takes heaps of resources--time, people, as well as moolah. I consider his candidacy and presidency vital to the country, so I have no hesitation about supporting it all. At a certain point, I realized that I just like giving this guy money. Money is my way of saying, "Yes, yes, yes!"
Last, I believe this direct participation creates a sense of personal investment and connection with each other. Thanks to the Internet, the virtual-community aspect can develop among people who are physically isolated or can't communicate in conventional ways. This is truly democratizing, IMO. It also seems unprecedented--but if it's not, or if there are parallels with other once-new means of mass communication or interaction, please correct me--or do another piece if the topic interests you! :)
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