Bernie Sanders’ success with small donor funding has turned some of the old rules of American politics on their head. Not only is a high proportion of small donor contributions seen as proof of grass root support, it’s now seen as an indicator that a candidate can operate free of obligation to big money backers. The darling of “smart” Democrats, Pete Buttigieg, has filed reports with the FEC that show that over 64% of his contributions thus far are below $200. That percentage is lower than that of Bernie Sanders and Elizabeth Warren. As Lambert pointed out, his small donor haul stand in stark contrast to that of corporate-friendly Kamala Harris, at 37% and Ann Klobuchar, at 35%.
Buttigieg is a corporate wet dream: McKinsey, Rhodes Scholar, military service, and his thin record in South Bend looks awfully accommodating to commerce, with Buttigieg touting displacing 1000 families in the name of prettying up the city as an accomplishment. He’s picked up big Obama bundlers as well as endorsements from former ambassadors, which in the US are patronage positions. Buttigieg looks like he was packaged by Burson Marsteller. So how do you square that with his small donor results?
We queried Thomas Ferguson, Paul Jorgensen, and Jie Chen, who have worked intensively on political contributions, about Buttigeg’s donor data. They responded, recalling that the Obama campaign had encouraged large donors to break up contributions into smaller amounts to support a myth of strong backing from ordinary voters. Even if you give over $200 to a candidate in a year and therefore have your donations reported in your name, those donations are not aggregated. For instance, if you gave $750 in the form of 5 donations of $150 each, they would likely be listed as 5 donations of $150 in your name, and not $750 by you as a donor. As you can imagine, for outsiders to attempt to put together how many unique donors there are is an huge and fraught exercise, even before getting to the fact that donations by the same donor might have variant renderings of their name (John Smith, John Jay Smith, John J. Smith, J.J Smith) even before you get to errors (Jon Smith) and deliberate attempts to muddy the data.
And it is pretty much impossible to track the source of donations laundered through the party. The maximum individual donation to a political party per year is now $200,000. Contributors can earmark portions of their donation to Congressional and Presidential candidates. The FEC does not require the parties to report on donations over $200 to particular candidates laundered through them, nor are the individual campaigns required to obtain and report this information.
As Ferguson discussed in more detail below, Buttigieg’s donations are “barbell” shaped, meaning the total amount is clustered on the small end and large end, with relatively little resulting from mid-sized contributions per donor. The barbell pattern is not unusual, but it is far more typical of Republicans than Democrats.
One possibility is that the small donor percentage will drop over time. For instance, in other parts of the country, current and former mayors running for higher office often pull in a lot of small donations early on from people in or connected to their town, like the cement company in a neighboring state that has contracts. But another possibility is that Buttigieg’s small donor results may not seem to be, particularly given his use of Obama operatives, who used tricks to make it appear that he more little guy backing than he really did. And if that was seen as a worthwhile goal in 2008, the pressure to look man-of-the-people-ish is even more acute now.
Among Democratic candidates, the desire to show their independence from corporate funders has become so widespread that once-powerful interests like Wall Street are feeling neglected. From New York Magazine:
It would appear from the outside to be happy days on Wall Street. Banks smashed previous profit records in 2018, taxes were down, stocks were up, and few people in power in Washington were talking about tightening regulations. But the arrival of Alexandria Ocasio-Cortez was seen on Wall Street as a tremor portending a broader earthquake on the left. Indeed, there has been no greater mobilizer of wealthy centrists than her primary win in June. In July, a few hundred gathered in Columbus, Ohio, to find a policy platform that would defeat both Trump and Sanders….
Meanwhile, parts of the Democratic field were doing the same, with most candidates focused on building Sanders-style small-dollar, email-driven fund-raising machines. (Sanders raised $10 million that way in just his first week as a candidate.) “It’s kind of stunning how a bunch of these people running for president haven’t gotten ahold of [a list of top past contributors] and said, ‘What can I do to get this person?’ ” fumed a hedge-fund honcho out of the loop for the first time in two decades. “It’s sort of basic political IQ.”
“Everyone wants to seem relevant,” one prominent investor told me. But for the first time he or any of his friends could remember, “we’re just not fucking relevant. We’re not that big of a deal anymore. None of us!”….
Those candidates still reaching out to Wall Street have mostly done so underground, visiting the homes and offices of wealthy donors while adamantly demanding secrecy — at least seven candidates privately auditioned for a group of 16 leading Obama donors in D.C. in February.
But Barack Obama successfully cultivated both myths, that his campaign was significantly funded by small donors and that he was a “hope and change” agent who would shake up the system so as to benefit ordinary people. Neither was true. The Obama campaign directed large donors to break up their contributions so as to appear to come from more voters.
And as we know, Obama threw his weight behind the established power structure. He gave the financial services industry a second post-crisis bailout in the form of a “get out of liability almost free” card in the form of the so-called National Mortgage Settlement of 2012. Obamacare legislation was written by a health care lobbyist and Big Pharma and health insurer stocks rose when it was passed. Income and wealth inequality continued to widen under Obama, with black wealth taking a dive due to the Obama Administration’s refusal to pressure mortgage servicers to make mortgage modifications, particularly when many borrowers had only missed a payment or two or would have been viable on a modification that would have lost investors less money than a foreclosure.
By e-mail, Ferguson, Jorgensen, and Chen summarized their findings on Buttigieg:
You asked us about the size distribution Mayor Buttigieg’s presidential campaign fundraising, so we took a look.
My colleagues and I have worked up it up in the table below. We can’t tell you, without a lot more work, exactly who most of these people are. The individual listings do sometimes reference major employers, including a fair number of banks, but we know from experience that many entries for employers are incomplete.
The lesson we take away is that stories about a mountain of small funds propelling the campaign are half-truths. We know, because one of us has seen emails, that candidates are going around asking for contributions of even one dollar, so they can build up their list of small donors. When total contributions reach $200, though, the donor’s name is supposed to be reported. That’s untestable at the moment, though we think in time we may be able to check at least some claims. We believe most of the time that injunction is obeyed.
There are some anomalies in the data; some contributions go way over the legal limit. We assume those will eventually be returned or otherwise ironed out of the data. Such things happen in listings.
In the donor distribution below, you can see the other half of the facts that don’t come out in the news accounts. The distribution is really a barbell – bulging at the top and the bottom. These are fairly common, though usually on the Republican side, as our International Journal of Political Economy essay on 2012 discussed.
Note Buttigieg’s recent announcement that he intends to return contributions from lobbyists. Obama made similar pronouncements but did not follow through. See, e.g, https://www.politifact.com/truth-o-meter/statements/2012/jan/04/barack-obama/barack-obamas-campaign-says-they-dont-accept-lobby/ and https://www.commoncause.org/media/sadly-president-obamas-fundraising-from-lobbyists-is-more-of-the-same/
It will be interesting to see whether campaign follows through; news reports claim that major Obama donors are flocking to the campaign.
The campaign’s sanctimonious claim that it does not accept donations from corporate pacs is, of course, just as hollow as similar claims advanced by so many other Democratic candidates. That grand gesture is worthless, as we have explained in detail.
It’s too soon to reach any conclusions about Buttigieg’s backers. But his emulation of Obama and the important role Obama funders and operatives have assumed in his campaign says that the campaign’s claims about its money sources bears close scrutiny.