The champagne glasses are clinking in the bar of the Ritz-Carlton.
A stone’s throw away, at a large sports stadium in downtown Charlotte in North Carolina, the Democratic convention is in progress. Bill Clinton is giving a speech in a few hours. But here in the bar, it seems as if the after party has already begun.
Of the tens of thousands of politicians, consultants, strategists, journalists, and underpaid interns that have come to North Carolina this week, the absolute cream have met at the Ritz-Carlton. Here stay the very important convention guests: the senators, the lobbyists, the artists, and the most famous television presenters. In the elevator, a hotel-cleaner says wide-eyed that she just ran into Scarlett Johansson.
At the bar, the old White House chief of staff Bill Daley stands beside Charlie Crist, former governor of Florida. A short distance away, famous TV host Charlie Rose – the US’s Claes Elfsberg – sips a glass of white wine.
But most of the affluent and influential old fellows sitting in leather armchairs in tailored cashmere suits and drinking single malts – I don’t recognise them at all. The ones that act like the real kings in the Ritz-Carlton are neither politicians nor strategists. They are fundraisers.
During the Democratic convention, the Ritz-Carlton is a hub for those who finance the presidential election campaigns.
“This year, ”Valley money” is bigger than ”Hollywood money,” says one of the old fellows, referring to the fact that the Democrats now pull in more money from IT millionaires in Silicon Valley than from the movie moguls in Hollywood.
I’m making small talk with one of the Obama campaign’s regional directors when he excuses himself:
“Sorry, but I have to run and suck up to some donors now.”
In a palace-like room on the hotel’s 18th floor, I meet Noah Mamet, a so called “bundler” for the Democrats. In the election campaign, it’s the bundlers who coordinate the donations from large networks of affluent friends and acquaintances. They’re the ones who have drawn in the real money for this election’s presidential candidates.
When Noah took care of the campaign finances for Richard Gephardt, the Democrat’s former leader in the House of Representatives, he brought in 238 million dollars for the Democrats in Congress. Since then, he’s had consulting roles for, among others, Madeleine Albright and Mikhail Gorbachev, as well as a series of firms largely working with renewable energy in California. During Obama’s campaign, he has established himself as one of the election year’s key-people when it comes to financing. He has, amongst other things, arranged a luxury fundraising dinner in Beverly Hills together with Will Farrell. On Obama’s website, you find Mamet in the exclusive little club that has drawn more than 500 000 dollars a quarter to the campaign. There are around 30 of these heavyweights, like Vogue editor Anna Wintour, and the movie producers Jeffery Katzenberg and Harvey Weinstein.
The Democratic National Convention week is stressful for Noah. His long experience in campaign finance means that he’s come to know the entire party’s elite. While we’re running around at the Ritz-Carlton, he doesn’t take his eyes off his iPhone for more than a few seconds at a time. He’s constantly stopped by well-known Democrats who want to have a quick chat – everyone knows Noah and knows that he can be the factor that helps or hinders their next election campaign. As soon as a senator or governor is mentioned in conversation, Noah says, “Oh, he’s a great guy”. When I tell him which part of town I’m staying in, he says with recognition that senator Chuck Schumer lives nearby, “Oh, great guy! Good friend of mine!”
This evening, Noah is preoccupied with planning one of the convention’s big, private parties that’s taking place high up in the hotel’s spectacular penthouse. In a beautiful, stripped-back room is an elegant, little pool illuminated by a sickly-green sheen in which three swimmers turn beautiful, synchronised pirouettes. Round about sit the donors and their wives, drinking champagne. Outside the panoramic window is Charlotte’s charming skyline in the sunset.
In 2002, Mamet arranged the biggest ever political fundraising event in American politics until then: an extravagant gala at the Kodak Theater in Los Angeles (where the Oscars are held) with Barbra Streisand as host. They made 6 million dollars.
But now times are different. Today, 6 million dollars is quite a normal amount for a week’s intensive fundraising for Obama.
After altered laws on campaign financing, money has streamed into the presidential election like never before.
Noah has of course personally benefitted from this, but even so he looks a little troubled when we discuss the development:
“I think that it’s a little worrying, the way it works now. It concentrates power with a few billionaires who can control the whole election”, he says.
If there’s one thing he’s proud of in this year’s Obama campaign, it’s not the total amount of money he’s pulled in (which is estimated to reach just past 2008’s total of 745 million dollars), but the number of small donations from normal Americans. It’s reckoned that donations will be brought in from over 3 million Americans, which is distinctly more than in 2008.
“All the small donations from ordinary people are a way for us to counter the hundreds of millions of dollars that Karl Rove and his companions pull in”, says Mamet.
The well-known strategist Karl Rove, who was George W Bush’s senior advisor, is one of those who have made sure that the Republicans and Romney have a big economic advantage in the 2012 election.
By election day in November, the Romney campaign is likely to have spent twice as much money as the Obama campaign.
A large amount of the Republican’s money comes from a few billionaires. They’re coordinated by Karl Rove, among others, who’s now established the extremely well-financed group American Crossroads, and also industrialist brothers Charles and David Koch who run lobby-group Americans for Prosperity.
The largest donations come from single individuals, like casino-mogul Sheldon Adelson who has a fortune worth over 20 billion dollars, and Texas billionaire Harold Simmons who has built himself a fortune on the end-storage of nuclear waste.
Together, these wealthy Republicans have spent more than a billion dollars in an attempt to get Romney to win the presidency. This is appreciably more than the whole of the record-breakingly expensive Obama campaign of four years ago. And nearly three times more than Republican John McCain’s presidential campaign in the same year.
The news site Politico writes, “The Republican’s campaign finances are like nothing we’ve seen before in American politics.”
For Romney, the hundreds of millions of dollars from Karl Rove and the Koch brothers have made possible the widespread advertising campaign in the ten most important states that hold the balance of the vote.
In August 2012, independent conservative organisations, the so-called Super PAC groups, spent nearly 40 times more on TV commercials than the Democrat’s corresponding groups. During the autumn, these conservative groups have put more than a million dollars a day exclusively into TV-commercials in the ten states that decide the vote.
When Republican Newt Gingrich lost the party’s primary to Mitt Romney earlier this year, he explained, a little dejectedly, his defeat with the fact that he didn’t have access to as many affluent donors as Romney; “I only had one billion. Romney had 16.”
How could the US, a country founded on ideas of limiting just such a concentration of power, get a political system where the entire democratic process has been captured of a couple of hundred white-haired old men with unbelievable amounts of money?
When you look into the influence of money in today’s Washington DC, it sometimes appears that Randolph and Mortimer from the comedy Trading Places have taken over the capital’s entire power structure.
To a certain extent it’s like this: The lobby and campaign industry has grown explosively in Washington since 2000. Lobbying alone now turns over more than 3 billion dollars a year, and the election campaign of 2012 runs up an even higher bill; at the time of writing, it’s predicted that 3.2 billion dollars will have been spent by November 6th.
By comparison, George W Bush spent just a tenth of this to win the presidential election in 2000.
The background to this radical shift in political financing is two fresh rulings from the Supreme Court, which have removed many of the previous restrictions on how businesses and wealthy, private individuals are able to fund political campaigns.
In 2012, this is most visible in the form of the so-called Super PAC groups that make it possible for businesses and private individuals to spend unlimited sums on political campaigns.
Businesses now have the same rights as individuals to spend money on political messages. On, for example, costly advertising campaigns just before an election.
Harvard professor Lawrence Lessig writes about money’s new influence over politics in his book Republic, Lost, “We have created an engine of influence that seeks not some particular strand of . . . ideology . . . We have created instead an engine of influence that seeks simply to make those most connected rich.”
What do they expect, these billionaires who fund the political election campaign?
In a free-speaking interview with the New York Times, one of Romney’s most generous donors Kenneth G Langone – founder of the store chain Home Depot – said that he saw his investment in Romney’s campaign almost like start-up capital for a new IT company.
In order to convince Langone that his economic support wouldn’t be money wasted, Mitt Romney visited him in his generously-sized apartment on Park Avenue, New York.
“I look at him just like I’d look at a guy who comes here and pitches his start-up business. I’m investing in a person”, said Langone, who’s invested at least a million dollars in Romney’s campaign in 2012.
According to a study by the New York Times, no previous presidential candidate has spent so much time with affluent donors as Mitt Romney. During 2011 and 2012, he has regularly invited billionaires from Wall Street to private dinners at his holiday homes in New Hampshire and California, where his wife Ann Romney offers home made cake. It’s not exceptional to take in a million dollars a dinner.
At the beginning of June, Mitt Romney spent a weekend in the Hamptons, the exclusive beach community outside New York, where he attended a dozen dinners at which guests paid 40 000 dollars to eat with the governor. Over this weekend, he managed to take in 11 million dollars.
In the reports of Romney’s Hampton weekend, the get-togethers often sound like scenes from Tom Wolfe’s novel The Bonfire of the Vanities, a classic satire on the narcissistic culture of ’80s’ Wall Street.
Ronald Perelman, MD for make-up company Revlon, arranged an excessive, expensive party at his country house, The Creeks, in Southampton. The New York Times reported on a long queue of tooting BMWs, Ferraris, Porsches, and Mercedes from which impatient billionaires asked for the VIP entrance. The staff of The Creeks, in shorts and white polo shirts, could only answer, “Sorry, but all the guests are VIP guests this weekend”.
To the tune of a covers band playing country artist Jimmy Buffet’s Magaritaville – unofficial soundtrack to wealthy-America’s summer weekends – one of the colossally wealthy guests explained that everyone at the party would be voting for Romney, except the servants, who don’t understand the economy. It was only natural that rich Americans should get behind Romney, she suggested, because they understand how the American system functions. She worried, on the other hand, about the “ordinary person”, who isn’t smart enough to understand how good Romney’s politics would be for them: “But my college kid, the baby sitters, the nails ladies — everybody who’s got the right to vote — they don’t understand what’s going on. I just think if you’re lower income — one, you’re not as educated, two, they don’t understand how it works, they don’t understand how the systems work”, said the Romney donor to the New York Times.
Thanks to this kind of guest, Mitt Romney succeeded, during the summer of 2012, in breaking all previous political financing records. In June alone, he pulled in 106 million dollars – till now, the most that any political candidate has got in a single month.
Earlier in the summer, at the end of May, Romney was at a similar fundraiser in another of the USA’s wealthiest areas – the coastal strip of beach neighbourhoods that lies directly north of Miami, Florida.
At a dinner at the home of risk capitalist Marc Leder in Boca Raton, where guests had paid 50 000 dollars a head, Romney got a question on why so many voters seemed to stubbornly support Obama.
There isn’t much hope for the country’s less well-off half in his answer, “There are . . . 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it . . . [M]y job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”
When a secretly-filmed video from the dinner was made public in mid-September, Romney’s controversial statement became national news. The video rotated constantly on news channels, it was watched by millions on Youtube in just the first 24 hours, and several weeks later it was thought to have harmed Romney in the polls.
The Democrats maintained that the video revealed who Mitt Romney “actually” was. The truth was more that Romney was just doing what he does best; he adapted to the surroundings and said what he thought the audience wanted to hear.
Of course, the millionaires and billionaires who’d paid 50 000 dollars for a dinner with Romney in Boca Raton wanted to hear just that, that a large part of the US population, and especially the “nails ladies” who vote for Obama because “they don’t understand how the systems work”, are hopeless cases. There is therefore no point in spending tax money on them. Better to move the money to Swiss bank accounts, the Cayman Islands, Bermuda, or other tax havens, as Romney himself has done.
It’s an opinion that I’ve often heard from the conservative elite when travelling round the USA and interviewing Republicans. A conflict is painted between those who are “productive” and those who “live off the state”.
That this idea has taken such a hold in the Republican party establishment rests on the fact that a handful of extremely rich people now set the party agenda. It is a concrete consequence of money’s role in politics and the economic elite’s unimaginable influence over the presidential candidates.
Barack Obama hasn’t shown the same enthusiasm as Romney and the Republicans have for the new campaign economy.
After the ruling which made it possible for businesses and organisations to spend as much as they wanted on political campaigns, Obama said that he couldn’t “think of anything more devastating to the public interest”.
Although he has long been critical of the role of money in politics, Obama himself hasn’t really lived up to his promise to do something about it.
During his first campaign for president, he originally promised to only accept the official funds that all presidential candidates receive, but changed his mind on seeing that he could attract nearly twice as much as his rival, John McCain.
In the same way, during this election he has long been critical, above all, of the Super PAC groups. For a long time he refused to encourage supporters to donate to the Super PAC group which has been working for his election, because he considered himself to be, by principle, against this type of campaign financing.
But eventually Obama changed sides, even on this question, after campaign chief Jim Messina explained that he could otherwise lose the election. During a violent quarrel at Obama’s headquarters in Chicago at the end of 2011, Messina went up to a large notice board and wrote “800 million dollars” in capitals. This was the amount that it was expected the Republicans would pull in from Super PAC groups and independent organisations – now calculated to be appreciably more.
Despite the large amounts that Obama pulled in four years ago, he has become sceptical of giving “bundlers” and fundraisers admission to the White House, which has been the custom of previous presidents.
Bill Clinton, for example, would allegedly have offered generous donors the chance to stay the night in the historic Lincoln bedroom.
George W Bush indirectly sold meeting time in the White House for around 50 000 dollars, via conservative lobbyists like Ralph Reed, Grover Norquist, and the subsequently prison-sentenced lobbyist Jack Abramoff.
Obama has, on the other hand and with a few exceptions, refrained from inviting in bundlers and donors to the White House for private meetings. Not even George Soros – last decade’s largest private donor to the Democrats – has got a private meeting at the White House.
The price of Obama’s cool handling of his wealthiest donors is that many of them have stopped giving him money.
Obama has continued to have strong support from two of his three financial strongholds: Hollywood and Silicon Valley. Hollywood stars, like comic Bill Maher and actor Morgan Freeman, have put their million dollars into the Obama campaign. When George Clooney arranged a dinner for Obama in Hollywood at the beginning of the summer, the record amount of 15 million dollars for an evening was pulled in. He even has strong financial support from New York’s celebrity elite, like Anna Wintour, Sarah Jessica Parker, Jay-Z, and Beyoncé.
However, he has lost some of his support from the financial sector.
During 2012, Wall Street billionaires have streamed over from Obama to Romney.
This is partly because many on Wall Street have been sceptical of Obama’s financial reforms, which lead to increased regulation of the financial sector. Obama has promised to raise taxes for those Americans who earn over 250 000 dollars a year, as well as raising capital gains tax.
But the biggest reason that Obama is losing Wall Street’s vice-presidents is said to be something else, more personal. They don’t think that Obama has shown them due respect.
In Democrat fundraising circles, there’s talk of how Obama has been unwilling to apply himself to what’s called “donor maintenance”, to suck up to the donors.
A finance mogul who donated to Obama in 2008 but has refused to give the campaign money this year, explains why in an interview with The New Yorker:
“You have to suck up! . . . I don’t understand why Obama won’t do it. People want to be kissed! They want to be thanked!”
Another Hollywood Democrat says that Obama, “doesn’t have enough respect for the donors’ egos”.
They’ve taken their wallets and walked across to Romney’s fundraiser.
For the billionaires that finance the modern election campaigns in the US, donations aren’t just about political idealism, they’re also about something else, more abstract – to be able to feel more meaningful and powerful, like a player in the political chess game.
In Don DeLillo’s novel about New York’s financial world, Cosmopolis (recently filmed by David Cronenberg), one of the characters says “Money has lost its narrative quality the way painting did once upon a time.”
Formerly, rich men could explain why they’d become rich – they started a factory, they manufactured something, they invented a new software program, or a certain type of car. Today, many of the very richest Americans have much more difficulty explaining their wealth to those around them. For these new Wall Street billionaires, this is distressing. They feel themselves misunderstood by ordinary people and by Obama, who has refused to invite them round for cake.
At the time of writing, we don’t know who’ll win the election.
If it’s Obama, he is likely to try to repeal the current campaign finance laws. But if he loses there’s no chance of such reforms; Romney is hardly likely to want to change the system that has helped him. Indeed, the Republicans have already begun preparing an offensive to relax campaign finance regulation even further.
In which case, much points to 2012 as a model of future American elections. When even George Clooney’s 15 million dollars will soon pale into a relatively meaningless amount.
Martin Gelin | is a journalist and author. He thinks that Newt Gingrich is the most unconstrainedly hypocritical politician in US history.