Technology TransactionsReal Estate PACs Challenged By Online Fundraising
The first round in election fundraising has produced an unusual crop of winners and losers. This has little to do with who raised what, but instead is about the matter of how business is done in Washington.
At lunch the other day in a small hotel on Capitol Hill there were private luncheons planned for two U.S. senators and a senior congressman. In the restaurant elected officials and lobbyists dined on contemporary cuisine and -- more importantly -- had a chance to see and be seen.
None of this should be surprising. The way Washington works is that you need money to promote your campaign. If you can"t promote your campaign you can"t get elected because unless you have fame from elsewhere no one will know that you exist. You can get cash from your political party, small donors and -- if you"re rich -- from your own pocket.
There"s also another way to get campaign money. You can have lunch or dinner with a nice bunch of folks in Washington who will present you with a big check, the collective efforts of many wonderful people who think you"re just terrific and who -- by the way -- hope you"ll support their effort to override pesky health regulators and offer legislation that will allow the use of swine sweat in baby formula.
Given a limited number of hours, as a candidate would you prefer 4,000 donors to give you $25 a piece or one donor who has conveniently packaged $100,000 or $1 million that you can pick-up in 45 minutes?
PAC money goes overwhelmingly to incumbents. Figures from the Federal Election Commission show that in the 2004 election cycle those in office got PAC contributions worth $246.8 million while challengers got the leftovers, a meager $22.3 million. Given this disparity does anyone wonder why incumbents win with such regularity?
There"s a place for PACs and special interests in Washington because we are each members of some community with common interests that are impacted by government action or inaction. As well, the right to petition the government is a fundamental benefit of citizenship.
There"s often a tension between special interests and the public interest and a tension between PACs with conflicting agendas. Such conflict, of course, is healthy. As Frederick Rolfe wrote in Hadrian VII, "complete agreement signifies complete stagnation. Disagreement at least postulates activity; and only by activity is The Best made manifest and approved."
The great shift in the current presidential jousting is that the main players are beginning to raise huge amounts of money online -- that is, without PACs.
None of this is an incidental or unimportant matter to those in real estate. According to OpenSecrets.org, the top 10 PACs in the 2005-2006 election cycle included the National Association of Realtors (#1 with $3,756,005 raised), the National Association of Home Builders (#3 -- $2,900,000), the American Bankers Association (#7 -- $2,747,299) and the Credit Union National Association (#10 -- $2,412,853).
In the current election cycle, huge sums have already been raised by leading candidates for both major parties: Importantly, much of the money is being raised online. The New York Times, as one example, reports that Barack Obama earned $500,000 online in a single day. (See: Obama Shows His Strength in a Fund-Raising Feat on Par With Clinton, April 5, 2007)
The emergence of Internet fundraising, first materially demonstrated by Howard Dean, is now certain to grow. Importantly, it makes politicians in all parties less reliant on PAC money and special interests.
It also creates the possibility -- swine sweat purveyors beware -- that some politicians may actually be able to author an independent thought or one reasonably related to the best interests of their constituents.
For real estate PACs -- and for all PACs and lobbyists -- the ability of candidates to quickly raise money online from hundreds of thousands of individual contributors diminishes the ability of PACs to influence elections and thus legislative choices.
The catch, of course, is that not only can candidates raise money online, so can PACs. It would not be surprising in short order to see PACs migrate online to catch smaller contributors -- and to continue their importance in Washington.
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