The money game: who’s funding the US election?

Mitt Romney was on the offensive on Friday night, hitting back at attacks on his business record at Bain Capital that have threatened to dominate the entire narrative of the election campaign.

In a series of television interviews, the Republican demanded an apology from President Obama, after his campaign team claimed Romney might have commited a crime, by giving wrong information about how long he spent at the firm.

“It’s ridiculous”, Romney told Fox News: “And of course, it’s beneath the dignity of the presidency and of his campaign”. But Romney has been left running to catch up on the issue, after the Boston Globe revealed that he was listed as CEO and chief shareholder in Bain until 2002 – covering three years when he said he was no longer running the company.

The Democrats have focused their attacks on that period, accusing Romney of being in charge of mass lay-offs and bankruptcies at companies which had been taken over by Bain. Their latest ad is more cheeky – featuring a soundtrack of Romney himself, trying to sing ‘America the Beautiful’.

We hate big money. Even our own. Paul Begala, Democratic consultant

It might only be July, but the tone of most of the campaign ads being pumped out around the clock in the handful of swing states that could decide the outcome appear to be overwhelmingly negative. That isn’t just because it’s close: it is all down to the vast sums of cash being poured into the fight. This, then, is the year of the mega-donor.

Take a look at the latest figures: last month the Romney campaign raised $105 million, way more than Obama’s haul of $71m – prompting another urgent email from the president to his supporters. “I will be the first president in modern history to be outspent in his re-election campaign”, he warned, appealing for donations of three dollars or more.

Obama outspent

Three dollars won’t get him very far, though, not in the face of the vast resources rolling into Republican coffers: 32 billionaires are contributing to Romney’s camapign, according to Forbes, including the casino mogul Sheldon Adelson who, now his favourite Newt Gingrich is out of the race, has just dropped off a couple of $10 million cheques, and says he’s willing to donate a total of $100 million to the Republican cause.

Even that is small change compared to the billionaire brothers Charles and David Koch: they have pledged to give an eye-watering $400 million by the time the election rolls around in November. There’s also Texas billionaire Harold Simmons and his wife, who have spent $20 million on Republican groups, and other tycoons including the Wyoming investor Foster Freiss and another Texan, Bob Perry.

By contrast, the biggest single donor to the Democrats this time around is thought to be the film mogul Jeffrey Katzenberg, who’s given $2.3 million. That seems positively penny-pinching compared with conservative coffers.

The sheer amounts being raised and spent are mind-boggling: the reason it has all got so out of control date back to 2010, and the Supreme Court’s infamous Citizens United ruling. That meant outside groups were allowed to advocate for or against a candidate: and in came the groups known as SuperPACs, groups actively lobbying for a candidate who could raise unlimited sums of cash from individuals, corportations, unions – whoever.

Unlimited cash

Enter the Republicans’ not-so-secret weapon: President Bush’s former chief of staff Karl Rove, who created the fundraising juggernaut, American Crossroads, which set out to raise at least $300 million for the election. But in another stroke of genius, Rove also set up a sister organisation, Crossroads Grassroots Political Strategies.

It was created under a different clause of the US tax code, as a “social welfare” organisation. Donations could be tax exempt, and just as importantly, the identity of donors would not have to be revealed. Hedge fund managers, venture capitalists, Wall Street bankers: all giving to the Republican cause in complete anonymity.

President Obama, like most Democrats, had been highly critical of the Citizens United ruling, and did not bother to disguise their distaste for SuperPACs. The Democratic political consultant Paul Begala, in Newsweek, commented dryly: “We hate big money, even our own”. But in the real world, where money means business, team Obama were in danger of being left seriously behind.

In 2008, millions of small-time donations from grassroots supporters across America helped Obama smash all previous fundraising records. But according to a new book by the Washington Post’s Chris Cillizza, campaign chief Jim Messina realised that this time, things had to change, “We can’t afford for the work you’re doing in your communities, and the grassroots donations you give to support it, to be destroyed by hundreds of millions of dollars in negative ads”, he told supporters.

In the face of such a disparity in fundraising, a SuperPAC was set up to support Obama, called Priorities USA. Still dwarfed by the Republican financial juggernauts, it has set out to raise $100 million for the campaign, seeking out some mega-donors willing to support the presidential re-election fight.

Attack, attack, attack

Depressingly, the vast majority of those millions, on both sides, are being spent on attacking each other. Since April, just over half the amount spent by the Obama team has been on negative ads, while around two thirds of the Romney ads are negative.

As for Priorities USA, it has splurged some $10 million on a single message: attacking Romney’s record at Bain capital, with claims that he was responsible for outsourcing jobs abroad, closing down companies and sacking workers. The superPAC’s founder, Bill Burton, says there is evidence that voters are listening to that message: “What Romney thinks is an asset is his biggest liability. We are seeing erosion in views of Romney’s character.”

You can spend all the money in the world, if you’ve got a bad product, it doesn’t matter. Harvey Weinstein

A Reuters/Ipsos poll this week shows the former Massacussetts governor is lagging behind Obama by some six points in the race for the White House: a signal for an even fiercer fightback by the GOP’s big-money supporters, and a fight that can only get nastier, and more personal.

As yet, few of the rich Democrats who have proved generous in the past have appeared willing to write those sought-after million dollar cheques, but the party does not seem worried. Yet. On the Rachel Maddow show, the movie tycoon Harvey Weinstein insisted that supporters wouldn’t shell out money if they didn’t have to, depicting the Romney campaign as a lost cause. “You can spend all the money in the world, if you’ve got a bad product, it doesn’t matter.”

But as the Republicans amass their $800 million war chest in readiness for the battle to come, the tone of those urgent emails from the Obama camp, appealing for cash, any cash, reveal a fear that is not that far from the surface.

Under-raised and underspent: could the man with the most powerful job in the western world really be the underdog? Welcome to the world of campaign finance, 2012. Not the world you’d like, but the world you have – where the cost of political success? Priceless.

Felicity Spector writes about US affairs for Channel 4 News