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Crony capitalists rule, and Cantor’s defeat won’t change that

Rick Newman
Senior Columnist
Daily Ticker
Crony capitalists rule, and Cantor’s defeat won’t change that

Republican strategists may have heartburn in the aftermath of the stunning Tea Party defeat of House Majority Leader Eric Cantor (R-Va.), who plans to resign his leadership post as of July 31. But crony capitalists have little to worry about, despite some breathless pronouncements that their days are numbered, just like Cantor's.

Political analysts are characterizing the victory by previously unknown challenger David Brat as a kind of protest vote against economic elites and the legislators who do their bidding. That may be. Cantor was a campaign Goliath with $5.4 million in donations to spend on the campaign, compared with Brat's scant $200,000. As an influential member of Congress, Cantor is certainly well-connected with the business lobby, which has supported him generously. Here are Cantor’s top 10 political donors for the 2013-2014 campaign cycle, according to the Center for Responsive Politics:

Source: Center for Responsive Politics

Financial firms, Virginia-based companies including Altria (MO) and Dominion (D), and many other corporations will obviously lose an important friend when Cantor’s term ends.  But those firms, like hundreds of others, strategically spread their campaign contributions around so any one political surprise doesn’t disrupt their business needs. True crony capitalists have many cronies, on both sides of the aisle.

To pick just one big donor, individuals and PACs associated with Goldman Sachs have spent nearly $1 million in the current election cycle supporting at least 210 members of Congress, according to the Center for Responsive Politics. Republicans such as Senators Mitch McConnell (Va.), Tim Scott (S.C.) and John Cornyn (Tx.), along with Cantor, have gotten the biggest donations, but Goldman donates to a roughly equal number of Republicans and Democrats. Many big donors follow a similar strategy, which makes sense for companies seeking favors from Congress, since Democrats control the Senate and Republicans control the House.

Stronger influence

If anything, the influence of corporate money on political outcomes has gotten stronger, not weaker, on account of two Supreme Court decisions during recent years that have struck down limits on political donations. That has allowed billionaires — most of them businesspeople — to give even more money to favored candidates. The resulting arms race for political money forces the candidates themselves to spend more time selling influence — er, raising funds — lest they risk being outspent by an upstart challenger.

The idea that voters will revolt against this cozy arrangement is wishful thinking, at best. Campaign spending reaches new heights during every presidential election cycle and will probably do so during this year’s midterms as well, thanks to the assist from the Supreme Court. What that money buys is saturation media presence for the best-funded candidates, and sophisticated campaign ads that subtly smear underfunded challengers. In some races, it's hard for voters to even learn the names of challengers.

Above all, the money flowing into politics favors incumbents, since they’re in the best position to return the favor to donors and push legislation or policy that’s important to their patrons. Goldman, for instance, has given about $950,000 to incumbent members of Congress this election cycle, and just $85,000 to challengers. Cantor is the rare exception of an incumbent who lost despite a 27-to-1 financial advantage largely because he took voters for granted and didn't campaign vigorously.

The bond between economic and political elites has become so tight, in fact, that it may threaten the meritocracy America is supposedly known for. “America’s claims to being a democratic society are seriously threatened,” Martin Gilens of Princeton and Benjamin I. Page of Northwestern wrote in a provocative study earlier this year. Economic elites, they found, are often able to pull the strings needed to get policy outcomes that favor them. Ordinary people, by contrast, have virtually no power. “The general public has little or no independent influence” on policymaking, Gilens and Page found.

There will always be surprise elections in which a complacent incumbent gets bushwhacked by an overachieving challenger, as happened to Cantor. But there’s virtually no sign of a nationwide revolt against incumbents and their Big Money patrons. Voter turnout these days is modest and certainly not near levels that would suggest widespread anti-incumbent fervor. The grassroots Occupy movement petered out and even the Tea Party, aside from the Cantor takedown, seems to be in retreat.

The Big Money, meanwhile, has diversified its investments in Washington influence peddlers and developed many backup plans should cronies such as Cantor depart. New friends are easy to find when you’ve got something they need.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.