Why Is Money Important in Elections?

In politics, money matters. That’s why politicians spend so much of their time not just trying to woo voters, but also raising money. In the 2012 presidential election, President Obama, the Democratic Party and supportive outside groups raised more than $1.1 billion in his victorious campaign; his Republican rival, Mitt Romney, his party and backers raised even more, $1.24 billion. This money is largely spent on advertisements, especially on television, which offer candidates the chance to take their case directly to voters without any media filter.

Candidates for office -- whether for the presidency, Congress or local offices -- generally raise money from a few different sources. The Supreme Court has ruled that candidates can spend as much of their own money as they wish on their campaigns, which enables especially wealthy individuals to self-finance campaigns. They also raise money from other wealthy people. Sometimes these wealthy donors give for ideological reasons; other times, they may hope that their donations afford them prestige, power or access to elected officials. In addition, organizations and interests groups -- which sometimes form political action committees (PACs) -- donate to or spend money on behalf of favored candidates. Finally, some candidates successfully raise smaller amounts of money from large groups of people: In 2012, for instance, Obama garnered donations from 4.4 million people, and raised more than $500 million online, much of it in small dollar amounts.

In federal elections, there are no limits on how much money candidates can spend. There are, however, restrictions on how much parties, PACs and individuals can give. Individuals, for example, can give each candidate they choose up to $2,600 per election. PACs that support several candidates can give a maximum of $5,000; those that support just a few candidates can only give $2,600 per cycle to each one.

There are also independent expenditures that PACs and other outside organizations may make. These are not direct donations to candidates, but rather expenditures made on their behalf, either in support of a candidate or to attack his or her opponent. There is no limit on how much these outside groups can spend in this way.

Campaign expenditures enable candidates -- and groups that support them -- to reach out to voters directly, through expensive television advertisements as well as campaign literature. Candidates also use these donations to hire staffers and create campaign organizations that help to both persuade voters to support the candidate and to make sure that voters actually get out and vote on Election Day.

Many political scientists argue that people and the media often overestimate the impact of money on campaign success. But that doesn’t mean money isn’t very important. As the eminent political scientist John Sides has written, “The major debate is not over whether money matters, it’s over the relative impact of incumbent and challenger spending.” Campaign spending does not, for instance, persuade Democrats to convert to Republicans, or vice versa. But it does enable candidates to educate voters on positive aspects of their candidacy and personality, as well as negative aspects of their opponents. In congressional races especially, this helps challengers offset the incumbency advantage, or the benefit that current officeholders have in seeking reelection due to voters’ familiarity with them through casework and local media appearances.

Writing in "The New Republic," political scientist Jonathan Bernstein says: “More generally, campaigns and campaign spending are only one of the things that affect how we feel about the candidates, which (remember) is only one factor in determining how we vote.”