How the “Pyramid of Money” corrupts US democracy

The architecture of “winner take all” elections magnifies the pernicious effects of privately financed campaigns

As we near the cusp of November’s elections that will decide whether a Democratic or GOP majority will take over Congress, let’s talk about…money. Specifically, money in politics.

One of the most discussed political reforms of the last thirty five years has been campaign finance reform. Many experts and reformers blame much of what ails our democracy on the pernicious effect of private money in politics. In the 1990s, tales of the Keating Five, the Lincoln Bedroom, and Buddhist temples became the stuff of political legend. In the 2000s, House majority leader Tom DeLay was convicted of campaign and money-laundering violations and lobbyist Jack Abramoff went to jail over influence-peddling and bribing various members of Congress. In 2016, the 10 most competitive Senate races with almost $1 billion in expenditures saw “dark money” groups outspend all candidates and political parties combined, providing 55 percent of total expenditures.

With each new election the candidates set records for spending, reaching nearly $15 billion in the 2020 election cycle – larger than the budget expenditures of 12 states -- and is predicted to break new records in the midterms this fall. Such spending has created a widespread perception of cronyism, corruption, and a “pay-to-play” political system marinated in money. Supreme Court rulings such as Citizens United, Buckley v. Valeo and others have blessed it all, with the Black Robes’ counterfeit jurisprudence opening the floodgates by equating money with political speech.

So campaign finance reform is crucially important. But other pieces of evidence suggest that all of these big spending numbers may dazzle and distract us from recognizing another equally toxic source of the democratic crisis that American’s are facing.

For example, though campaign finance reform, especially public financing of campaigns in places like Arizona and Maine, have created more contested races, there is scant evidence that it has led to more competitive races. Or has resulted in more points of view being elected, such as those from minor parties or independent candidates, or racial minorities and political moderates. Campaign spending inequities are not the cause of the many lopsided one-party districts, which allows everyone from FairVote, Charlie Cook’s Political Report and party strategists to predict which candidates will win 90% of the U.S. House district races this November. They not only can predict who will win, they can tell us the margins of victory. How is that possible? Do they have a magic crystal ball?

No, it’s because the overwhelmingly dominant factor in who wins and loses all but the closest legislative elections is not campaign spending inequities but partisan residential demographic patterns in red and blue America, combined with district-based, winner-take-all elections. Liberals predominantly live in urban areas, conservatives in the rural areas, with suburbs being the toss-up areas, and those residential patterns largely determine who wins. The partisan tilt of each district can be fairly easily determined by tracking the presidential vote in each district (and with another non-campaign spending factor being the power of incumbency, which bestows name recognition on officeholders). In this November’s election, all but about 40 district races out of 435 are so skewed that the dominant party has as much chance of losing as a snowball melting at the North Pole.

Wait a minute, you think…but the winners usually have a lot more campaign funds than their challengers – isn’t that the reason why they win?

No, it isn’t. Quite the opposite. In most legislative elections, money follows electoral success, not vice versa. The money goes to candidates who donors know will win, because the partisan demographic tilt of the districts guarantees that result. By betting on the sure horse in each race, donors are buying access and influence—but not elections.

Sensationalized headlines over campaign spending confuse cause and effect, and cloud our understanding of how our democracy really works and how to repair it. And that confusion exaggerates our expectations of how much campaign finance reform, as well as other worthy reforms such as redistricting commissions, really can accomplish within our winner-take-all electoral system.

Look at a state like Arizona, which passed a type of public financing called “Clean Money” over 20 years ago. Yet the partisan residential patterns undermine many of that reform’s best effects. Liberals and Democrats are more numerous in the southern areas around Tucson, while conservatives and Republicans dominate the rest of the state. The only way to make winner-take-all districts more competitive and make voters more powerful would be to draw districts like narrow bands extending vertically from south to north, like the teeth of a fork. However, such districts would both look ridiculous and break up communities of interest, such as geographic regions and racial minorities.

This shows one of the severe trade-offs of winner-take-all districts: you can have competitive elections or representative results, but it’s pretty difficult to have both. Unfortunately, campaign finance reform and redistricting commissions do little to counter these realities. Demography is destiny, in Arizona as well as in many other states.

The Pyramid of Money

To understand the true role that private campaign funding plays in our elections, it’s important to understand what I call the Pyramid of Money. Democratic Speaker of the House Nancy Pelosi represents the district in which I live in San Francisco. This is a heavily Democratic city, there is no chance that a Republican candidate could ever beat Pelosi or any other Democrat here. Pelosi won her last election with 78% of the vote, she does not have to spend a dime on her own reelection. Neither does Republican minority leader Kevin McCarthy, who won his last election with 64% of the vote. It turns out that most legislative districts are like that—naturally tilted for one party or the other.

Nevertheless, the Big Money queens and kings like Pelosi, McCarthy and others raise huge sums for their own reelections. Why? Because they funnel the money into “party-building activities,” mostly to finance colleagues in the handful of hotly contested races. In the process, they buy themselves influence among their peers, as well as important party leadership positions. Think of it as a pyramid structure with each party’s kings and queens sitting at the top. These party fat cats target the flow of money to the predictably tight races, hoping to win a majority of seats for their team. The rest of the safe-seat incumbents, along with the lobbyists, lawyers, allied political action committees and high roller donors, fill out the lower levels of the pyramid, funneling money into its labyrinth, where it is directed by party leaders skilled in the art of deception. It’s a well-oiled operation.

The Pyramid is so welded into our political system’s framework that it can take bizarre forms. A few years ago, Republican leaders set a new low bar -- they explicitly tied the reward of leadership positions and chairmanships of powerful committees to those incumbents who raised the most money for the party. Since committee chairs have near-dictatorial powers to set committee dockets, dole out pork and establish the national agenda, this quid pro quo debased government to a whole new level of political patronage and crassness.

But keep in mind, the GOP leadership was only able to do this because most incumbents don’t need to spend a dime on their own re-elections. And that’s because of the “winner take all” district-based system in which most incumbents live in safe, non-competitive districts due to natural partisan demographics (in a few states, such as Pennsylvania, Michigan and North Carolina, redistricting abuses also have added a sinister twist).

The Pyramid of Money symbolizes the shape and flow of private money in our political system. The fact that a lot of candidates receive chunks of money from various lobbyists, corporations, and special interests, as well as boosts from various PACs and super PACS, while definitely a toxic relationship that needs to be disrupted, is not proof that these politicians have been “bought.” Oftentimes the donors and politician-recipients are part of the same Pyramid team, because they have the same beliefs and legislative priorities. One is the point person in the legislature, the other is the point person for raising the money needed to win elections. When you want to understand the crucial dynamic of how money works, don’t think of candidates receiving briefcases of bribes from shadowy lobbyists. Think of the Pyramid of Money, with its octopus arms redirecting money between the private and public sectors to the handful of battleground races that will decide congressional majorities.

The infamous case of former House majority leader Tom DeLay and lobbyist Jack Abramoff, who both were convicted of various campaign finance violations, illustrates the point. In one brazenly revealing comment, DeLay said, “No one came to me and said, ‘Please repeal the Clean Air Act.’ We say to the lobbyists, ‘Help us.’ We know what we want to do, and we find the people to help us do that.” The lobbyists and special interests today follow the lead of political leaders, not vice versa. DeLay got what he wanted, which was large donations to grease his political machine, and Abramoff got what he wanted, personal favors for his businesses and clients. They scratched each other’s backs, each playing their respective roles in the Pyramid of Money.

So the Pyramid is the problem, with its one-party fiefdoms and kings and queens sitting atop the slush pile, directing the show. The Supreme Court’s Citizens United decision, as bad as it is, is made even worse due to the perverse dynamics unleashed by the basic architecture of our winner-take-all political system. Even with strong campaign finance reform, breaking up the pyramid will be very difficult as long as we are using a winner-take-all system in which most legislative seats are lopsided, one-party strongholds, and invincible incumbents can funnel their campaign funds to party leaders and their super PACs.

If we don't understand the dynamics of how our political system works, we will miss the mark when we try to reform it. To overturn the pyramid, we need not only to plug the holes that Citizens United has ripped open, we also need to reform the winner-take-all, district-based electoral system. Proportional voting methods, such as the type that would be implemented by the Fair Representation Act currently pending before Congress, would produce more contested and more competitive races. It would open up elections to new voices and new ideas, and give voters a lot more choice. It would create a vibrant dialogue between the political center and the margins, allowing new parties to act as the laboratory of new ideas and better ensure that policies are enacted with the support of a majority of Americans.

When combined with public financing of campaigns and free media time for candidates and parties, these reforms would topple the Pyramid of Money and revitalize US democracy.

Steven Hill @StevenHill1776