Money Race Could Decide the Midterm Elections

Even before the sour economy forced many households to cut back on superfluous expenses, only a tiny fraction of Americans gave money to political candidates. But the impact on the political process of those who do give is, simply put, enormous. It's part of a trend that looks to continue and even exacerbate the outsize influence of the relative few wealthy enough to contribute regular large sums to those seeking office in the November elections. [See how much your member of Congress has raised.]

All told, from donors large and small, for expenses ranging from television ads to paper clips, the 2010 elections will cost an estimated $3.7 billion, according to experts. At this point, Democrats hold a slight overall edge in fundraising over Republicans for contests in the House and Senate. That margin is small but significant in a year when the public's opinion of Congress, and the two political parties in general, is at a historic low. Then again, in first-quarter fundraising, Republicans held an advantage over Democrats in a handful of pivotal Senate races, including Pennsylvania, Florida, Ohio, and Illinois—important bellwethers for what could be a "throw the bums out" election year.

The election is still several months away, of course, and the vote could yet end either in landslide or photo finish. Still, the so-called money race has often been a strong indicator of which candidate will eventually triumph at the ballot box. Individual donations will be key, but so too will funding from political action committees and other outside sources. One potentially key though as-yet-unknown variable will be the recent Supreme Court decision giving corporations the right to spend money to support or oppose candidates. [See which industries donate the most.]

Both parties face challenges. For Republicans, the main task is how to capitalize on the unpopularity of the party in power while at the same time unifying their own fractured base of voters and donors. The sluggish economy and the prospect of increased taxes, coupled with their objections to President Obama's healthcare legislation, are obvious points of emphasis in their pleas to donors. But though recent polling shows voters unhappy with Democrats, just as many say they are unhappy with the GOP. Moreover, many conservatives have loudly bemoaned the Republican National Committee's prodigal spending and its inability to muster more from donors. By the end of May, the Democratic National Committee had $15 million in cash-on-hand, while the RNC had $12 million.

Part of the problem has been conservative supporters dividing both their time and money between traditional Republican candidates and those backed by the more conservative Tea Party groups. While creative tensions between the Republican Party and its more activist right-wing doppelganger may rally voters to the polls, they also threaten to divide a finite pool of donors between Tea Party-backed upstarts and GOP stalwarts—not to mention scaring off independent and moderate voters, poll watchers say. In the U.S. Senate race in Florida, for instance, Tea Party-backed Marco Rubio pulled both likely GOP votes and funding from sitting Republican Gov. Charlie Crist, who later decided to run as an independent. Meanwhile, in Pennsylvania, former Rep. Pat Toomey, another Republican favorite of the Tea Party, has already secured a war chest of several million dollars for his U.S. Senate race, ensuring a competitive campaign in the fall against Democratic primary winner Joe Sestak for the seat currently held by Republican turned Democrat Arlen Specter. But whatever the impact of the duplication of effort, conservative voter enthusiasm and the well-documented history of midterm election losses for the ruling party both suggest GOP gains. [See where Sestak's campaign cash is coming from.]

The Democrats, for their part, are looking to hold the line at the polls and have one big advantage, incumbency. Incumbents are becoming harder and harder to oust from office, election statistics show, a fact of which big campaign donors, often looking to back a winner, are all too aware. Over the past four decades, the average re-election rate for a sitting congressional representative has been north of 94 percent. Sitting senators also enjoy a large advantage over challengers, though by less substantial average margins than in the House, according to statistics compiled by the Center for Responsive Politics.

The advantage that a sitting politician brings to an electoral contest stems from many things. Gerrymandering that can concentrate voters of like mind within the district boundaries is one. Others include name recognition and the ability, for Democrats this year, to call in a sitting president to appear at campaign events and fundraisers. Obama was unsuccessful in frenzied late efforts to help Democrat Martha Coakley defeat Republican challenger Scott Brown, who secured Ted Kennedy's former Senate seat in this year's Massachusetts special election, but the president has crisscrossed the country ever since, helping Democrats top off campaign coffers for November contests.

All of this contributes to an enormous advantage for incumbents of both parties in the money race. In 2010, that trend is all but certain to play an important role. In House races, incumbents have already outraised challengers by more than 4 to 1. Senators enjoy a more than 8 to 1 fundraising advantage over their challengers.

The midterm elections will also be the first since the Supreme Court ruled that bans on corporate spending on political ads are unconstitutional. How the controversial decision will affect the election is one of the wild cards about which political operatives can only speculate. If the decision triggers a vast influx of corporate money into this year's vote, as some expect, it could turn much of the conventional money-in-politics wisdom on its head.

A windfall or a wash? Corporate cash could favor Republicans, the traditional ally of big business and generally lower taxes. On the other hand, it could favor Democrats because they are the majority party and thus statistically more likely to hold their elected offices and, with them, control of the congressional committees overseeing so much legislation and regulation that corporate donors hope to influence. Or, in the end, the expected influx of corporate cash could be a wash, not significantly influencing the election one way or the other.

And yet, despite all the hand-wringing over corporate contributions and the impact of the Supreme Court decision, most of the campaign cash still comes from a very few individuals. In the 2008 elections, of the more than 220 million adults in the country, fewer than 0.6 percent of them donated sums greater than $200 to politicians. A mere 0.13 percent of adults gave sums larger than $2,300, according to federal elections data. The limit for an individual donating to a federal campaign is $2,400 for the primary and $2,400 for the general election.

As in past elections, individual donations will be central to electoral contests. Thus far in the 2010 cycle, individual donations make up the majority of the candidates' war chests. The average Democratic candidate running for Congress, for instance, has already collected more than $250,000 from individual donors, compared with less than $200,000 from political action committees. The average Republican, meanwhile, has pulled in just over $140,000 from individuals and $60,000 from PACs.

In the Senate, the reliance on individual contributors is even more pronounced. The average Democrat has netted nearly $1.3 million from individuals and $300,000 from PACs, while Republican candidates averaged $750,000 and $160,000 respectively, according to campaign finance disclosure statements.

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• See which industries give the most to Congress.