Rick Perry’s campaign seems to be a little strapped for cash.  But, his super PACs have plenty of money. What gives?  Is this just bad management, or possibly a systemic regularity tied to the hot mess that is the race for the GOP presidential nomination?

It’s no secret that super PACs have changed the nature of the (early) election cycle.  They are currently taking in over 80% of the campaign contributions.  While this disparity is understandable (super PACs can accept unlimited donations from a single individual, whereas candidates can essentially accept no more than $5400 from any individual and $5000 from any PAC—see here), it is nonetheless striking.

Though the super PACs are well-funded, Perry’s support to date is apparently quite narrow.  Some have interpreted this as a problem with/for Perry, with which I don’t disagree, but I want to forward a different story.  Namely, I think that the narrowness of that support is at least possibly by design.  Not by Perry’s design, but rather by goals of the donors.

Super PACs are easily created and highly flexible.  They work by spending to directly affect elections, and though the ones discussed in the current media cycle are associated “with” a particular candidate, they are not bound to hold true to that association.  More importantly, as Perry’s current situation lays bare, it is actually fairly difficult for a super PAC to step in and bail out, even indirectly, a flagging campaign.  This is because of the 120 day “cooling off period” (see here) that the FEC requires before a former employee of a campaign can be “involved with independent expenditures” (e.g., hired by a super PAC). This arms-length restriction bolsters the independence of the super PACs—from the candidate(s) with which they are associated—and solidifies the sway held by a super PAC’s mega-donor.

The proliferation of super PACs is probably contributing to the bulge of GOP candidates, but the real impact of the change is not that big money is “taking over” politics.  Rather, the new wild, wild west of campaign finance has lowered the cost of entry into an all-pay auction of sorts: the evidence is clearly consistent with a story of “lots” of rich people seeking influence over the election, but the more interesting story is how these mega-donors are seeking it.  Mostly, they aren’t bidding for the same candidate’s attention.  Instead, they are jump-starting “new” campaigns.  While this might seem to imply that these mega-donors are trying to buy “their own man” into the White House, I think that it is actually better thought of as a branding strategy.  Right now, Perry’s super PACs are deploying staff and ads in Iowa (see here, for example).  Perry is polling horribly among GOP voters in Iowa (less than 1% in today’s poll—see here).  Why spend the money here?  Why spend the money on Perry at all?  Because if it works even a little, these mega-donors—and their super PAC organizations—will have more leverage bargaining with the real contenders for the nomination.

Spending money on Perry in Iowa has a great “upside” for the super PACs in terms of demonstrating their effectiveness.  Perry’s rise, if it occurs, will

1. Look dramatic—if he polls at 2%, then his support will have doubled.
2. Be nearly solely attributable to the super PACs, because nobody else is fighting for Perry.[1]

Together, Rick Perry is kind of like Atari or Polaroid—brand names that have positive name recognition but are available on the cheap—and presents a great opportunity for a mega-donor (and his or her campaign staff) to demonstrate their expertise, build their clout.  Running a campaign is hard, and the proliferation of mega-donors lays bare something that political scientists have known for a long time: money is a necessary, but not sufficient, condition for electoral success.  There’s “plenty” of billionaires who love attention and care about politics.  But, by definition, there are precious few “top campaign organizations.” Electoral politics is a competitive sport, and what matters is not how much money or talent you have, but how much more you have than your competitors.

If you’re depressed by the money in politics, take heart: there are two awesome parts of this take on the new reality.  First, these mega-donors are (at least partially) throwing their money around fighting one another. Second, the people being played hardest are the megalomaniacal politicians who are spending (a lot of) their own time running essentially “trial balloon campaigns.”  In other words, while super PACs might have at first seemed like a boon for candidates who sought relief from the constant need to raise money in relatively small increments from lots of donors, it seems now that they have the potential to eat exactly those candidates by being

1. infinitely lived,
2. legally untied to any specific campaign, and
3. operationally having a “120-day cooling off period” barrier to insulate themselves.

Super Pac-Man came out 33 years ago, the second sequel to Pac-Man.  Quoting wikipedia, the link may be deeper than simply nomenclature:

[Super Pac-Man’s] new gameplay mechanics were considered by many to be confusing, and too much of a change from the original two games. In particular, when Pac-Man transforms into Super Pac-Man, he was thought by some to be much more difficult to control.

Life imitates art, perhaps.  With that, I leave you with this.

[1] In addition, Perry’s campaign clearly isn’t going to be credited with any bump in the poll numbers, because it’s broke.  That raises other moral hazard problems (super PAC for candidate X might want to starve candidate X’s campaign) that are interesting, but I’ll leave them to the side for now.

FOX News just announced the 10 candidates who will participate in the first primetime Republican presidential primary debate on August 6, 2015. The top 10 were decided by these procedures.  Given that FOX is arguably playing a huge role in the free-for-all-for-the-GOP’s-Soul that is that race for the 2016 GOP presidential nomination, it is important to consider whether, and to what degree, FOX News “got it right” when they chose “10” as the size of the field. Before continuing, kudos to FOX News for playing this difficult game as straight as possible: the procedures are transparent and simple. Thoughthey have ineradicable wiggle room and space for manipulation, I really think this was an example of how to make messy business as clean as possible.  That said, let’s see how messy it turned out…

In order to gauge how important procedures were in this case, I examined the past 10 polls (data available here) to ascertain, in any given poll, who was in the top 10.[1]  The results are pretty striking in their robustness.  In spite of there being 19,448 ways to pick 10 from 17, the top 10 candidates in the final poll were in the top 10 of each of the 10 polls in 96 cases out of a possible 100.  Furthermore, in no poll was more than one of the chosen participants outside of the top 10.  Thus, there were 4 polls in which one of the debate participants was not ranked in the top 10, and 2 of these were the oldest pair in the series.

More tellingly, perhaps, is the fact that the smallest consistent “non-trivial debate group”—the smallest group of candidates that never polled at less than the size of the group in the 10 polls—is 3: Donny Trump, Jeb Bush, and Scott Walker composed the top 3 of each of the last 10 polls (that’s actually true of the last 15 polls).[2]

While I often like to be contrary in these posts, and I thought I might have an opportunity here, I have to say that, in the end, FOX News got this one right—the only direction to go in terms of tuning the size of the debate would have been down (to either 8 or 3, but I will leave 8 for a different post).  Given that logistics are the only real reason for a media outlet[3] to putatively and presumptively winnow the field of candidates in an election campaign, FOX News was, in my opinion (and possibly by luck), correct in setting the number at 10.

And, with that, I leave you with this.

______

[1] The oldest of these concluded two weeks ago, on July 20th.

[2] The reason I refer to a non-trivial debate group is that Donald Trump composes the smallest consistent debate group: he has held the number 1 spot in the past 16 polls. I will leave to the side the question of whether Trump debating himself would be informative or interesting.  I just don’t know if he is enough of a master debater, though I suspect that he loves to master debates.  Who doesn’t?

[3] Oh, yeah, I forgot to mention that Facebook is involved with organizing the debate. See what I did there?!?

The rise of mega-donors has been an important storyline in the unfolding drama of the 2016 presidential election (for example, see here).  The presence of these donors in the political game (or at least their visibility) is partially the result of the Supreme Court’s decision in Citizens United.  But more interesting is whether the rise of these mega-donors has caused the explosion of seemingly viable (mostly Republican) contenders for the 2016 election.

The argument that Citizens United has caused the explosion in candidates is admittedly appealing.  As Steven Conn describes this argument in the Huffington Post,

…Citizens United has created a new dynamic within the Republican Party. Call it the politics of plutocratic patrons, and at the moment it is causing the GOP to eat itself alive.

Continuing, Conn notes that the argument

works something like this: With the caps lifted on spending, any candidate who can find a wealthy patron can make a perfectly credible run at the nomination.

I’ve added the underline because this is where “the math” gets interesting.  If by perfectly credible, one means, “capable of spending lots of money,” then yes, I agree.  That was actually always true: the right of an individual (i.e., a “wealthy patron”) to buy advertisements for any political issue/candidate has never been effectively curtailed.  Rather, the right of individuals to contribute without limit to organizations that can then do so has been, in fits and starts, regulated.

More importantly, though, the fact that anyone can do so now does not mean that wealthy patrons can guarantee that any candidate can make a “perfectly credible run” at the nomination.  As Conn notes, Foster Freiss is bankrolling Santorum’s 2016 bid.     …Does anyone think that Rick Santorum is a perfectly credible candidate for the GOP nomination?

Maybe Foster Freiss.

No, Rick Santorum is not going to win the GOP nomination.   Neither is Rick Perry. Neither is Chris Christie.  Neither is Carly Fiorina.  Neither is Bobby Jindal.  Of course, I might be wrong on any one of those five.  But I will assuredly be right on at least four.  In fact, if I wanted to type enough, I could be right about no fewer than 15 people who are currently running for the GOP nomination not winning it. (Evidence?  For the latest, see here.)

Simply put, if there are 16 “perfectly viable” candidates for the GOP nomination, then I’m throwing my hat in the ring, too.  WHY NOT?

Look, a wealthy donor can get you in the media.  That is easy, to be honest, if you have the money.  To be a credible candidate, you have to have a chance of winning.  Only one can win.  Lots can spend.  In social science, we often describe this kind of competition as an “all-pay auction.” In an all-pay auction, the highest bidder gets the prize after paying his or her bid.  All of the other bidders pay their bids and don’t get a prize.  It is a stinky, foul game.  (Kind of like running for the presidency.)

In the mega-donor world, the donors are now the bidders, and we are to believe that they want to create viable candidates through their monies spent.  But this is at odds with two points, one empirical and one theoretical.  The empirical point is that these mega-donors are often successful investors and businesspeople.  The theoretical point is that, when there is a single prize, the all-pay auction should not generally see any positive bid from more than two bidders.[1]

These mega-donors have the real-world experience to understand the theoretical point.  …So what are they thinking?

Aside from misunderstanding the game (which can not explain all of the 14 or so “out of equilibrium donors” under the simplistic all-pay model), there are two immediate explanations.  The first is vanity: these donors want to play with the “big kids,” have a roll in the hay with the DC cognoscenti, etc.  While I think that’s obviously got some purchase, it is both unsatisfying and seems too simple for billionaires.

Accordingly, the second is that some or all of these donors are playing the long game with the real contenders.  You see, what the all-pay auction analogy to multicandidate elections misses (among assuredly other things) is that the auction is actually for multiple prizes—each person’s vote is (slightly) differential in value to the bidder, because if it is not bought by me then it might go to various different candidates.

To make this concrete, suppose for simplicity that a donor supported some new candidate, “Charlie,” with money spent in a way that bought a bunch of votes exclusively from nativist (anti-immigration-reform) voters.  That would hurt some GOP candidates (such as Donny Trump, who is anti-immigration-reform) more than others (such as Jeb Bush). If I, as a mega-donor, am in favor of Trump not winning the nomination, supporting Charlie might be much more effective in the multicandidate, winner-take-all game of the GOP nomination fight than simply handing that same money to Jeb. (This is because I could take votes away from Trump—for Charlie—that Jeb could not steal away himself, thus causing Jeb to win because Trump loses votes.  This is another instance of the Gibbard-Satterthwaite Theorem.)

As Conn describes the picture, I completely agree with the main point: Citizens United might very well have unleashed a beast upon the GOP hierarchy (at least for now), because it is harder for the party establishment to control mega-donors, who can now be solicited for “simple checks” by super-PACs and 527 groups.  But, I disagree that this is because the new system increases the realm of “viable candidates.”  Rather, it simply lowers the prices of diversion, smoke, and mirrors in the nomination game.

Is that good or bad?  I’ll defer for now, but I’m perfectly willing to say that it’s neither.  It just changes the game—in the end, money matters, but votes matter more.  In other words, to paraphrase Mencken, though the ways may vary according to the institutional details, donors and voters will invariably get the government they want, and they’ll get it good and hard.

With that, I leave you with this.

__________

[1] This is a blog post, so I’m being quick about this.  But the basic idea is that the contestants have some common beliefs about their (generally differing) levels of resources (or valuations of winning) and, with few exceptions, the bidder who is capable and willing to pay the third-highest (or lower) price for the prize will not bid because he or she will not willingly sustain a bid that would win in equilibrium.