Political Campaign Spending: Millions Spent, But Why?

Political campaigns are costly affairs, with billions of dollars spent each election cycle in the United States. The 2024 election cycle has already seen unprecedented fundraising and spending, with political campaigns collecting around $8.6 billion for the House, Senate, and presidential elections. This includes money from political action committees (PACs), individual candidates, and party committees. The previous election cycle in 2020 also saw massive spending, with campaigns raising over $9 billion. This money is used to influence voters through advertising, lobbying, and other activities, and the sources and amounts of this funding can vary, with some coming from dark money sources that are not disclosed to the public.

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Spending by political action committees (PACs)

Political action committees (PACs) are tax-exempt 527 organizations that pool campaign contributions from members and donate those funds to campaigns for or against candidates, ballot initiatives, or legislation. They are typically formed to represent business, labor, or ideological interests. PACs are also known as "connected PACs" or "corporate PACs" and are established by businesses, non-profits, labor unions, trade groups, or health organizations. They receive and raise money from a "restricted class", generally consisting of managers and shareholders in the case of a corporation or members in the case of a non-profit organization, labor union, or other interest groups.

Federal law formally allows for two types of PACs: connected and non-connected. Judicial decisions added a third classification, independent expenditure-only committees, which are colloquially known as "super PACs". Super PACs can receive unlimited contributions from individuals, corporations, labor unions, and other PACs. However, they are not allowed to coordinate with or contribute directly to candidate campaigns or political parties.

During the first 12 months of the 2024 election cycle, PACs raised $3.7 billion and spent $3.1 billion, according to campaign finance reports filed with the Federal Election Commission. PACs and other political committees contributed $35.8 million to Democratic party committees and $33.1 million to Republican party committees as of December 31, 2023.

Presidential campaign spending

Presidential campaigns in the US have become increasingly expensive, with candidates and their parties spending billions of dollars in recent elections. The money is used for various activities, including advertising, rallies, and other efforts to influence voters.

Campaign financing in the United States comes from a variety of sources, including small and large individual contributors, political action committees (PACs), super PACs, and dark money groups. Individual donors who contribute $200 or less are considered small contributors, while those who give more than $200 are classified as large contributors. Political action committees (PACs) are organizations that pool donations from individuals, businesses, or other groups to support candidates or causes. Super PACs are a type of independent expenditure committee that can raise and spend unlimited amounts of money as long as they do not coordinate with the campaigns they support. Dark money groups are typically non-profit organizations that are not required to disclose their donors and can spend unlimited amounts of money on political campaigns.

During the 2020 election cycle, the Democratic and Republican parties combined raised almost $2.7 billion, a significant increase from the $650 million raised in the 1992 cycle. The first few months of 2024 also saw a substantial amount of money being raised and spent on political campaigns. Between January 2023 and April 2024, US political campaigns collected around $8.6 billion for the 2024 House, Senate, and presidential elections. Over 65% of that money, approximately $5.6 billion, came from PACs. Individual candidates have drawn over $2 billion, while party committees raised just over $929.9 million. The 2024 campaigns have spent approximately $3.9 billion of the total funds raised as of April 2024.

The Federal Election Commission (FEC) enforces restrictions on money spent on political campaigns and requires all expenses to be reported through a monitored bank account. The FEC also prohibits the use of campaign funds for personal expenses. Despite these regulations, there has been extensive criticism of the influence of money in US politics, with concerns about the disproportionate influence of wealthy donors and the potential for legalised "money laundering" through donations to state party committees.

Congressional campaign spending

Spending on political campaigns in the US has been on an upward trajectory, with billions of dollars spent on federal elections, including Congressional and presidential races. The 2020 federal election campaigns, for instance, attracted a total spend of $14.4 billion, with $5.7 billion going towards the presidential election and $8.7 billion for congressional races.

Sources of Congressional Campaign Funding

Congressional campaign funding comes from various sources, including individual candidates, party committees, and political action committees (PACs). PACs are private interest groups that raise and spend money to support candidates and influence elections. They can represent industry groups, labour unions, or individual companies.

Factors Influencing Congressional Campaign Spending

Several factors come into play when determining how much is spent on congressional campaigns. One critical factor is the type of election and the candidates involved. For instance, presidential elections tend to attract more spending than congressional races.

The political affiliation of the candidates also plays a role, with Democrats reported to have outspent Republicans in recent election cycles. The stage of the election cycle is another factor, as spending tends to increase as the election draws closer.

Regulation of Congressional Campaign Spending

The Federal Election Commission (FEC) enforces restrictions on money spent on political campaigns, and all expenses must be reported through a monitored bank account. However, critics have argued that loopholes exist, particularly regarding soft money and super PACs. Soft money refers to funds used for "party-building activities" rather than supporting specific candidates, and it is not subject to federal contribution limits.

Super PACs, or political action committees, can substantially influence the political environment, and their spending is not limited in size or source. This has led to concerns about the potential for super PACs to work closely with specific candidates, creating a loophole in campaign finance regulations.

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Spending by political parties

Political parties in the US are required to submit financial returns detailing their inflows, outflows, expenses, and other financial information. This is to ensure transparency and compliance with regulations. These financial returns provide valuable insights into the spending of political parties during election campaigns.

During the 2024 election cycle, political parties have been actively fundraising and spending significant amounts of money. In the first 12 months of this cycle, from January 1, 2023, to December 31, 2023, political parties received $684.5 million and spent $595 million. This includes the Democratic National Committee (DNC) and the Republican National Committee (RNC), as well as their respective state and local committees.

The sources of funding for political parties vary. For the 2023-2024 election cycle, individuals were the largest source of federal funds for party committees, with Democratic and Republican party committees receiving substantial amounts. PACs and other political committees also contributed significantly to both Democratic and Republican party committees. Additionally, transfers were made from House candidate committees to their respective national congressional party committees.

Political Action Committees (PACs) play a significant role in campaign financing. PACs are organizations that collect and spend money to influence political campaigns. They can be traditional PACs, which have contribution and spending limits, or super PACs, which emerged after the Citizens United v. FEC decision and can spend unlimited amounts on political advertising without directly coordinating with candidates or parties. During the 2023-2024 election cycle, PACs reported total receipts of $3.7 billion and disbursements of $3.1 billion.

While there are regulations in place to monitor and restrict spending in political campaigns, there are also loopholes. One notable loophole is "dark money," where the public is unaware of the sources and amounts of money being spent. In the 2020 election, over $1 billion in "dark money" was spent at the federal level, with a significant portion coming from opaque political nonprofits and shell companies.

Spending by super PACs

In the United States, a political action committee (PAC) is a tax-exempt 527 organization that pools campaign contributions from members and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. An organization becomes a PAC when it receives or spends more than $1,000 to influence a federal election and registers with the Federal Election Commission (FEC). Federal law recognizes two types of PACs: connected and non-connected. However, a third classification, independent expenditure-only committees, are colloquially known as "super PACs".

Super PACs can spend unlimited amounts of their funds on independent expenditures in federal races, which are ads expressly advocating for or against a specific federal candidate's election. Unlike traditional PACs, super PACs can solicit and accept unlimited contributions, including from unions and corporations, to fund these independent expenditures. A key condition of super PACs’ ability to accept contributions in unlimited amounts is that the money cannot be used for direct contributions to candidates or for “coordinated” expenditures with a candidate.

Despite this rule, illegal coordination is common between both Democratic and Republican-affiliated super PACs and candidates, largely due to the FEC’s refusal to enforce the rule. The FEC has never fined a super PAC for working closely with a candidate. Secret spending groups, sometimes referred to as dark money groups, are most often nonprofit organizations that claim tax-exempt status. These groups can accept unlimited contributions and are not required to publicly disclose their donors. Under federal tax law, these groups are permitted to spend on elections, but election spending cannot be their “primary purpose”.

In recent years, spending by super PACs has increased dramatically, prompting heightened scrutiny. In some cases, a super PAC has received the majority of its funding from one or more of these money groups, leaving voters with no clue as to the source of the funding. This fosters a political culture of secret influence by wealthy individuals and special interests. Even if super PACs publicly disclose their contributions and expenditures, funneling donations through these groups enables the true sources of election spending to remain secret.

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