Trickle-Down Election Economics: How Big Money Can Affect Small Races

    Democrat Zephyr Teachout has challenged backers of her Republican opponent in the race for an open seat in New York’s 19th Congressional District. (Digital Media / CC-BY-2.0)

At a press event in Kingston, New York, a Hudson Valley community about 90 miles north of Manhattan, the local Democratic congressional candidate, Zephyr Teachout, earlier this month called for a debate. But not with her Republican opponent, John Faso.

Instead she issued the challenge to two high-rolling hedge fund bosses who back him.

“These two New York City billionaires, Paul Singer and Robert Mercer, have put $1 million together into the super PAC supporting my opponent,” she said. “The voters deserve to hear directly from the billionaires backing John Faso about what they expect to get from him in Congress.

“When someone writes a $500,000 check they don’t do it out of the goodness of their heart, continued Teachout, a Fordham University law professor who literally wrote the book on political quid pro quos: In 2014, her Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United, laid out a strong argument for what she calls “prophylactic” anti-corruption laws that focus on preventing the circumstances that give rise to corruption rather than prosecuting it after the fact.

“These are people probably trying to buy power, and voters should know who they are and what they stand for,” she said in Kingston. “I’m challenging Paul Singer and Robert Mercer to put your mouth where your money is and debate me directly, not through your mouthpiece.” Her supporters echoed her, reversal of the familiar adage: “Put your mouth where your money is!” they chanted.

Teachout’s race for New York’s 19^th Congressional District, an open seat, highlights two important factors that are easily overlooked in a year when most of the political attention will be focused on the incendiary presidential race between Hillary Clinton and Donald Trump:

• First, the importance of the so-called “down-ballot” races for seats in the US Congress and state legislatures.
• Second, the likelihood that massive amounts of outside money, some of it untraceable to its source, will be brought to bear to sway the outcomes.

Although New York is not expected to be a presidential battleground this year (the state’s historically Democratic tilt making Clinton, who represented New York for two terms in the US Senate, the odds-on favorite to beat Manhattan real estate mogul Trump), the respected political handicapper Charlie Cook rates five of the state’s congressional races as tossups: the 1^st, the 3^rd, the 19^th, the 22^nd and the 24^th Congressional Districts. Three of those contests are for seats opened up by the retirements of incumbents. Only one of the seats is currently occupied by a Democrat.

In addition, the chance of winning decisive control of the state Senate, where the political balance has been teeter-tottering between the two parties, will raise the stakes in a number of close contests for seats in the legislature’s upper chamber.

New York political battlegrounds tend to cluster: competitive state legislative races often overlap with those for the US House. What follows is a closer look at a couple of the hot spots, along with the issues and the money that could impact the outcomes:

Hudson Valley

The 19^th District spans the width of the Hudson Valley, from Connecticut and Massachusetts to Pennsylvania, but was drawn to leave out cities including Poughkeepsie, Newburgh and Beacon to the south, and Albany to the north, though it extends below and above them on either side. Teachout and Faso are vying for the seat currently occupied by retiring Republican Rep. Chris Gibson.

Endorsed by Bernie Sanders, Teachout garnered hundreds of thousands of dollars in donations from the senator’s campaign email list, but she expects that to be far outstripped by the outsider funders backing Faso. “What are Paul Singer and Robert Mercer doing spending basically three times the cost of most people’s houses on a Hudson Valley race?” she asked.

Singer, a Republican mega-donor who refused to take part in the Republican National Convention because he opposes Trump, spent more than $5 million backing Marco Rubio’s unsuccessful bid the for the GOP nomination; fellow hedge fund manager Robert Mercer, spent some $11 million on a super PAC backing the Republican presidential bid of Sen. Ted Cruz of Texas. Between the two of them, the financiers provided the lion’s share of the more than $900,000 the super PAC dubbed New York Wins, spent to submarine Faso’s Republican primary opponent,the pro-Trump Andrew Heaney.

“The dynamic we see in these state Senate races are billionaires from Greenwich, Connecticut and Park Avenue giving half a million dollars to try to swing a state Senate race in the Hudson Valley,” says Michael Kink of Strong Economy for All, a coalition of labor and community groups. “There are just not a lot of billionaires in these areas and the idea that the billionaires are funding these elections suggests that those policies are not going to benefit the vast majority of people in those areas.”

Several competitive state Senate races overlap with or border the 19^th District. The 46^th Senate District is currently occupied by Republican George Amedore, the vice president of a construction company. He’s being challenged this year by Sara Niccoli, a town supervisor from the town of Palatine. She lives on the farm where her husband grew up. When she ran for local office, Niccoli says, “I was sure I wouldn’t win because I’m a Democrat and it’s a very Republican town, but I really got into it, I loved knocking on doors and talking to people around the community and so I won.”

In local elections, Niccoli notes, there was often only one person on the ballot, on the Republican line. “You could either vote for that person or no one, or write in someone.” For her, that was unacceptable. In deciding to run for the state Senate, what motivated her was the disparity between her daughter’s school and those in wealthier districts.

Education is key to these races because a lot of the big money flowing into them comes from charter school backers, who push for Albany’s continued funneling of public money to privately run charters, most of which are located in New York City. Paul Singer gave $500,000 each to two super PACs, New Yorkers for a Balanced Albany and Balance New York, in 2014. Balance New York spent heavily to elect Amedore that year. (Charter school money is often bipartisan; Gov. Andrew Cuomo has benefited from it in the past.) New Yorkers for a Balanced Albany, founded by the corporate education reform group StudentsFirst, also targeted Democratic state legislative candidates in 2014.

Meanwhile, the public schools are suffering, and not just in New York City or in communities of color. Niccoli isn’t the only one seeing that. “You have lots of tiny rural districts around the state and those school districts have a lot of poverty, a lot of need and very little money locally,” says Billy Easton, executive director of the Alliance for Quality Education, a labor-affiliated organization.

Running a competitive race with small dollars, Niccoli says, “is just nonstop work — it’s telephone calls and emails and letters to everybody who I’ve ever met in my entire life. I will always always remember the person who says ‘yes, I really want to support your campaign but I’m just waiting for my SSI check to come in, I’ll give you $5.’ I think that’s as it should be in some ways; campaigns should be funded by regular people, experiencing life in their communities. They should not be funded by big corporations who establish multiple LLCs.”

The LLC loophole is one of the most common complaints from those who would reform Albany. Lawrence Norden of the Brennan Center’s Democracy Program describes how it works: “The Board of Elections currently classifies limited liability companies (LLCs) as individuals rather than ‘corporations’ or ‘partnerships,’ as they are treated under federal law. While most corporations can give no more than $5,000 every year, each LLC can give at the much higher limits permitted for individuals. Worse still, individuals with multiple LLCs use them to evade contribution limits entirely. And since LLCs need not disclose the identities of their members or officers, we often don’t know who is behind these sums of money.”

Norden cites the example of a single developer who used 27 different LLCs to donate over $4 million to PACs. He donated more than $1 million to both Gov. Cuomo and the state Senate Republican Campaign Committee.

Fighting uphill battles alongside Niccoli are Terry Gipson and Chris Eachus in the 41^st and 39^th Districts, respectively. Eachus knows the public school fight firsthand, as a retired teacher at Newburgh Free Academy in Newburgh, New York, a small, poor city with a large population of Latino and black residents. Newburgh was one of several small cities named in a recent lawsuit known as the “small cities” case, challenging New York’s funding for public schools and its failure to live up to the 2006 Campaign for Fiscal Equity ruling. He’s challenging 88-year-old William Larkin Jr., who is running for his 14^th Senate term. Eachus ran in 2012 against Larkin and says he was outspent 3 to 1. “Everybody wrote that district off and it was a mistake, it would’ve been a different outcome I think if people had paid attention,” Easton says.