Evan Hoffins
Mrs. Straub
AP Economics
5 April 2016
The Economics of Elections
With presidential primaries underway, most Americans have been thinking hard about their favorite candidates and who they want to represent our country as the next President. While it is easy to get caught up in the politics, debates, issues, and promises that these candidates publicize, many people forget about the economic impacts of the massive presidential elections that occur every four years.
The funds raised by politicians each election are massive, and possibly much greater than most realize. In the last election in 2012, the total money spent was more than 6.2 billion dollars, an impressive figure considering how the 2008 election raked in around 5.2 billion and the 2004 election a cool 4 billion (“Money Behind..”). If this trend continues, this year’s election will cost around 7 billion dollars!
So what happens with all that money? A good portion of it is spent on campaign promotions like commercials, radio advertisements, and mailed flyers or posters, while some of it is simply spent on campaign expenses such as staff members’ salaries or flights to and from campaign cities (Curry). All of these forms of spending campaign money are beneficial to supporting the economy. Commercials and radio advertisements provide a source of income for media companies both big and small, stimulating both local economies and big corporations and increasing the aggregate demand of the economy. Similarly, the printing industry sees greater demand for posters and printing opportunities, and so do airlines in charge of transporting campaign staff and other public volunteers to various events on the campaign trail. Because of the election, millions of dollars are spent toward wages for campaign staff that are kept employed by the election. It is reported that Hillary Clinton spent over 20% of her campaign funds on staff payroll alone (McLaughlin par. 1).
It is also important to note, however, that not all of the money being donated to campaigns is being utilized for what we expect. A good sum of money is actually just being saved by candidates in a sort-of “reserve” that is only used in case it is absolutely needed. This amount saved can be anywhere between 50 to 100 million dollars (Curry). This saving has the potential to be harmful to the economy, depending on what the candidates do with it. If the candidates simply save the money by some sort of private means, and not deposit it in a bank, then the money is simply taken out of active circulation, and does so at the cost of those supporters who contributed the funds to the cause. However, if the money is deposited into a bank account, then that bank can lend that money out as loans and further contribute to the welfare of the economy by increasing the money supply due to the multiplier effect.
For most of us, these details do not affect our voting decision, but considering that many citizens are financial contributors to their political parties, it may be enlightening to further understand where their donation money is really going.
Works Cited
Curry, Tom. "Where Does All That Campaign Money Go?" Msnbc.com. 2007. Web. 03 Apr. 2016.
McLaughlin, Seth. "History Is Repeating Itself: Hillary Blows through Millions to Pay Massive Staff." Washington Times. The Washington Times. Web. 03 Apr. 2016.
"The Money Behind the Elections." Opensecrets RSS. Web. 03 Apr. 2016.
Poll Booths. 2016. Web. 3 Apr. 2016. <http://mynewsla.com/wp-content/uploads/2014/11/16-9-Poll-booth.jpg>.
This was a very insightful post, kind of like a behind the scenes for the political race. I think the biggest beneficiaries from elections in general are the cable news networks like Fox News or CNN. These networks receive millions of viewers during each of the primaries and Presidential debates.
ReplyDeleteI thought that this post was very interesting speaking that the election is such a hot topic right now. I never would have guessed that so much money was spent on the payroll. It almost seems ridiculous that they spend so much money on travel, it makes me wonder if there is a more efficient way to get their word out. It would be interesting if you would research alternative travel costs to cut the predicted $7 billion dollars for next years election. Overall, great article!
ReplyDeleteI thought that for this being a current issue with Voting, people would want too know about what goes on about how they are actually funding their campaigns. I agree with that this would effect mostly people that are financially contributing to whom they support in a positive way. They aren't just giving it to someone that will potentially just use all of that money, but to someone that will use it carefully and responsibly. This would be a great subject to go ahead and teach for the students that are about to Vote for the first time. This is because when you vote you often think of where is all that donations going and that this could explain that and could be a gate way to knew discussions about voting.
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