There have been any number of criticisms of the Citizens United case and the Super PACs that have emerged as a result: they allow corporations and the rich to shape public debate and they provide no accountability, allowing for influence peddling and potential foreign influence. But I wonder if anyone has looked closely at their effect on the economy.
First, there is a reason PACs buy TV ads. It’s the same reason retailers do: they work. On Super Tuesday alone, GOP candidates spent just shy of a $100 million, much of it on TV ads. It’s hard to know to what degree spending will accelerate during the general, but let’s say it comes out just short of a total of, say $4 per each household in the US. (That’s lower, by almost an order of magnitude, than some are predicting.) That’s not, in the whole scheme of things, that much money. It’s, say, a dozen B-1 bombers. It’s probably not much more than our daily burn in Afghanistan.
What I wonder, though, is how all this TV ad spending affects the cost of advertising. If we can take a guess at the total spend on TV ads during the campaign, it will almost certainly outstrip the annual spending on television advertising for soda, for example (pdf). As a result, this makes local TV advertising–particularly in contested markets–more scarce, and drives up prices.
Leaving aside whether we can spend our way out of the recession as consumers, it does seem like retail sales have an effect on the health of our economy. So it’s a double whammy. Some consumers are clearly donating to these super PACs–although it will be interesting to see how much of Obama’s ad buys are also being paid for by large donors this time around. And the businesses are presumably donating millions of dollars into these funds. They are then faced with increased costs for TV ad buys–and probably mitigate this by buying fewer ads and spending more on advertising. This works its way into their product pricing structures. So the consumer donates to these PACs, and then finds that they are paying for the TV ads they are seeing, but they also are (already) paying for the ads they are seeing for retailers. Although most Super PAC money is coming from Wall Street and various parts of the service industry rather than manufacturers or retailers, those donations also end up ultimately coming out of the consumer’s pocket.
Leaving aside the pernicious effect of election spending on public discourse, it’s a great way to put the brakes on economic recovery.