Soft Money in Economics
With each election cycle rolling around every 4 years, the various political parties, especially the Republican and Democratic parties, are setting new records for campaign contributions and raising higher and higher amounts of money toward their goals. It seems elected officials spend more and more time on fundraising and less time on working for the people they are sworn to serve! Now what is wrong with that picture? Does the phrase “We have the best government money can buy,” mean what it says? If it did, our nation would be in serious trouble. Only ¼ of 1% of the people give 80% of all campaign contributions. These special interest groups and wealthy individuals are controlling the people’s government. Whether the issues are concerned over the military, education, Medicare, or Middle East issues, individuals like you and me have little or no say in what should be done to correct the situation. Soft money and the whole campaign finance reform issue is a very big concern to our economy. Yes it does have a more political stance then an economic stance but it will affect the regular hard working families of our nation.
Have you ever taken the time to actually read the U.S. tax codes? If not, you are very lucky. It’s a huge mess and hardly readable, but there is a reason why you can’t read it. Former Sen. Wyche Fowler (D-Georgia) once said, ” [E]very single interest that comes to you has got a special private interest where they are seeking to get subsidized, through the tax code…” Tax bills are a good place to hide those special legislative favors congressmen and women receive when they are elected. With the money donated from insurance industries, health professionals, and law firms and a huge amount of special interest groups, the resulting factor ends up being a tax system skewed toward big-money interests. How will this affect your standard of living? Well…lets look at the something everyone has problems with and that is oil and gas prices. The gas industry is a very generous industry for politicians and in turn very prosperous in reaping the benefits. In the ’98 election cycle, gas companies gave over $22 million in soft money contributions. This huge contribution gave gas companies a long list of tax breaks created by a Congress that is supposed to be the best money can buy. One of their tax breaks is a “percentage depletion” deduction. It allows companies to deduct a flat percentage of their gross revenues but because this is not based on actual costs for their property, companies will often deduct more than their actual costs. In all, these tax breaks cost over $3.2 billion a year, according to Citizens for Tax Justice. Wow! When will these gas prices go down?
This is just only a small portion of the pie. The mining industry, the computer industry, cable companies, phone companies, the list goes on and on. Money coming from these groups risking the chance of using that money in order to maybe build up their company instead donating it to political parties reaps a greater benefit from their opportunity cost.
As college students, money is probably the most sought after necessity. So who takes advantage of our dilemmas? Credit card companies of course. Now the way they get to you is often by paying off your college or university. One example is MBNA American Bank, one of the credit card giants, funded a career center at Georgetown University and has also funded a grant for a cultural arts center. End result leads to MBNA getting a list of student names to market their cards.
In politics, that’s the whole idea with the process of soft money and how special interest groups get what they want. By “showing them the money,” candidates are able to have the necessary funds to win their election. With the money pouring out from these credit card companies to these congressmen and women, these same companies end up benefiting from their opportunity cost with credit laws and regulations making it easier for credit companies to collect money from people in bankruptcy, while making it even harder to climb out of their debt.
The economy is very much affected with the campaign finance issue. Emptying our wallets for the benefit of both politicians and huge companies and industries. This leaves us with a lower disposable income and a leakage of money out of our economy because of the huge amount of money being donated not maximizing the usage of that money. Instead it gets pocketed to those campaign officials. Wealthy individuals and corporations having interests in politics that affect taxpayers, students, and families are having a huge influence on these political parties and this needs to be dealt with right away.
Soft Money in Economics