By Election Day this November, the Center for Responsive Politics reports, candidates for the White House will have raised and spent over $1 billion. But political campaigns today aren’t just expending mega millions. These campaigns are actually creating mega-million fortunes — for the political consultants who run them.

We have more, in this week’s Too Much, on Presidential politics as a colossal millionaire-making machine. And we also zero in on a holiday that, by rights, only plutocrats ought to be celebrating.

Tell-a-Friend

Too Much archive

Search Too Much

Subscribe 

The 24th-richest person in the world, Russian billionaire Mikhail Prokhorov, has just unveiled plans to launch a new magazine, with companion Web site and TV station, for his nation’s awesomely affluent. The new mag’s name: Snob. The new magazine’s top staffer, Andrei Shmarov, explained last week that Russians see a snob as “a ‘self-made man,’ a person who has earned the right to snobbishness.” And what did billionaire Prokhorov do to earn this right? In the early 1990s, he parlayed political connections into monopoly control over Russia’s nickel deposits, one of the world’s richest mineral stashes . . .

Nearly 5,000 people packed the upstate New York fieldhouse of Colgate University last week to hear the Dalai Lama, the long-exiled Tibetan spiritual leader. Most of the onlookers likely expected the Dali Lama to speak about the political convulsions that have shaken his country — and sparked worldwide protests against China’s hosting of this summer’s Olympic Games. But the Tibetan head of state chose to talk instead about the essentials of happiness. Earlier this year, speaking at the Indian Institute of Management in Ahmedabad, the Dalai Lama made plain that he considers equality one of those essentials. In a lecture on ethics and business, the Dalai Lama described himself as a Marxist monk who “believes in distribution of wealth among the people of the state.”

Consumer goods giant Colgate-Palmolive also believes in distributing wealth — to the denizens of the company’s executive suites. Retiring Colgate-Palmolive CEO Reuben Frank took home $16.6 million in salary and awards of new stock in 2007, his last year on the job. He did even better by old stock. Frank last year realized $148.7 million exercising stock options he had collected in previous years — and another $31.9 million from a stock award that vested before 2007 ended. Frank's CEO successor, Ian Cook, pulled in $11.4 million last year as Colgate-Palmolive’s top executive understudy . . .

New York City budget officials are now estimating that the local financial industry will be shedding nearly 20,000 jobs over the next year and a half. But movers and shakers at that industry’s top end are still consuming full speed ahead. Three New Yorkers have purchased Italian yachts costing over $8 million since January, and demand for Rolls-Royce Phantom convertibles, news reports indicate, has been running so strong that the cars are now fetching $200,000 over the $465,000 sticker price. Notes David Monn, an event planner who specializes in black-tie soirées for Manhattan’s super-swells: “When times get tough, the smart spend money.”

Seattle hasn’t yet accumulated as many “smart” people as Manhattan. Still, you have to give local deep pockets credit. They’re doing their best to close the cross-country gap in conspicuous consumption. The city's El Gaucho steakhouse, notes Seattle Times columnist Danny Westneat, is now selling a $480 cocktail, and coffee is running $15 a cup at one Pioneer Square shop. This creeping Manhattanization has Seattle magazine commentator Knute Berger longing for the days “when Seattle had less money and tended to hide what it had as a hat tip to egalitarianism.” Back in the old days, says Berger, “non-rich people weren't forced to overpay for the basics (like housing), and it was easier to have fun on a budget — partly because everyone else was on a budget, too.”

Inequality
by the numbers

CEO pay:
the scorecard

Good reads
for your bookshelf

Quote of the Week

“You’d never know it from watching television news, much less reading the questions asked of our politicians, but over the last quarter century the portion of the national income accruing to the richest 1 percent of Americans has doubled. The share going to the richest one-tenth of 1 percent has tripled, and the share going to the richest one-hundredth of 1 percent has quadrupled.”
Eric Alterman and George Zornick, Think Again: The Boys in the Bubble, Center for American Progress, April 24, 2008

New Wisdom
on Wealth

Fiona Hanson, City high-flyers are paid too much, argues Archbishop of Canterbury. The Times (London), April 26, 2008. The UK's leading cleric blasts the “disproportion between what people are earning and what they appear to be worth.”

Dan La Botz, Who Rules Cincinnati? A veteran historian presents a compelling portrait of contemporary plutocracy at the local level.

Presidential elections, the New York Times noted in a recent analysis, “have become gold mines for the small and often swaggering band of media consultants who dominate modern campaigns.” Count Robert Shrum in that merry band. In 2000, Shrum pocketed about $3 million in fees from the Gore campaign. In 2004, Shrum and his partners waltzed off with $6 million for producing ads for John Kerry.

The biggest consultant hired gun of the 2008 race: Mark Penn, Hillary Clinton’s chief strategist and pollster until last month. Penn collected, before his exit, almost 9 percent of the $138 million the Clinton campaign had spent through February.

Penn, a consulting superstar since the Bill Clinton years, has repeatedly claimed that his expenses justify his multimillion hauls. Penn surely does have expenses. But his political consulting career has just as surely not demanded much in the way of selfless personal sacrifice. Five years ago, Penn shelled out $5.1 million for a Georgetown mansion in Washington — and then invested another small fortune building an underground garage beneath it.

What do consultants actually do to make so much money? They certainly do not display much intellectual brilliance or originality, notes Larry Sabato, a University of Virginia researcher who has written widely on the impact of consultants on the political process.

“They’ve all worked on dozens of campaigns together,” explains Sabato. “They have formula campaigns, formula ads. They even transfer slogans.”

What consultants may lack in strategic originality they make up for in shameless profiteering. Top consultants typically take a cut — usually from 5 to 15 percent  — of whatever the candidate spends on the services they convince their candidate to buy.

“The more the candidate spends on TV advertising, the more the consultant cashes in,” as journalist Tim Dickinson explained earlier this month in Rolling Stone, “And that compensation is hidden from public scrutiny: Federal campaign reports reveal only what a campaign spends on ads, not how much the consultants skim off the top.”

Such fee arrangements can create real conflicts of interest. Tony Coelho, a long-time Democratic Party political insider, blames Al Gore’s 2000 defeat on consultants who insisted on running ever more TV ads when the campaign would have been far better served by funding grassroots outreach efforts.

The campaigns of this year’s two remaining Democratic candidates say they’re avoiding the consultant pay dynamics that have created these sorts of problems in the past. Both the Clinton and Obama camps are paying their consultants by flat fee, not as a percentage of what they spend to place their ads on TV.

But these flat fees, analyst Tim Dickinson points out, have been set so high that consultants are still reaping windfalls. If the Clinton campaign, for instance, were to end up spending $200 million on ads, consultants will pocket $9 million in fees, the same fee total that the Kerry campaign paid consultants in 2004.

In other words, notes a New York Times analysis, even with the new flat fees, “media consultants in both parties will continue to be paid handsomely for their work in the 2008 campaign.”

The flat fee “solution” to consultant profiteering also doesn’t get at the single most serious “conflict of interest” problem with today’s elite political consultants: their class bias. Contemporary celebrity consultants don't just steer candidates to expensive TV ads. They steer candidates away from policies and pitches that make America’s rich uncomfortable.

And this should be no surprise. Elite consultants like Mark Penn have become both personally rich themselves and the executives of media firms with beaucoup Fortune 500 corporate clients. Election after election, consultants with this class bias press candidates to shy away from any stance that might pose too specific a threat to America’s most wealthy.

The inevitable end product of this pressure: campaign drivel. Consultants, notes Rolling Stone’s Dickinson, “have made sure that the Democratic message comes across as little more than a fuzzy, focus-grouped drone about child tax credits, prescription-drug plans, and the “fight for working families.’”

The solution to all this?

“Forget what Shakespeare said,” quips the University of Virginia’s Larry Sabato. “First, kill all the consultants.”

A more reasonable course? Try telling the candidates who get your contributions that you want to know how much consultants are skimming off the campaign expenditure top.

Better yet, tell the candidates who seek your contributions to tax the rich.

Political consultants will never ever whisper those three little words into any candidate’s ear. The rest of us need to make sure that candidates hear them.

Aviva Aron-Dine and Robert Greenstein, Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens. Center for Budget and Policy Priorities. Washington, D.C.

Tax Freedom Day — the phoniest holiday of the year — came and went last week, and, once again this year, newspapers from coast to coast gave the day headlines. News stories and op-eds straightfacedly described Tax Freedom Day, an annual PR event foisted upon America by the right-wing Tax Foundation, as “the point in the year that the average American stops working to pay for all the federal, state, and local taxes.”

Americans on average, reporters and columnists went on to tell their readers, will this year work 113 days to pay their taxes, over triple the 35 days Americans spend to buy their food.

Pretty scary stats — and all bogus, as the Center on Budget and Policy Priorities documents in the latest edition of the group’s annual analysis of the statistical games the Tax Foundation plays.

Here’s the basic scam: The Tax Foundation calculates the “average” tax burden by first dividing total tax receipts by total national income. That arithmetic does indeed provide a figure for the national tax burden, but this national burden has nothing whatsoever to do with how much average Americans pay in taxes.

Why the discrepancy?

“Suppose four families with incomes of $50,000 each pay $2,500 in taxes — 5 percent of their income — while one wealthy family with income of $300,000 pays $90,000 in taxes — 30 percent of its income,” the Center explains. “Total income among these five families is $500,000, and the total amount paid in taxes is $100,000.”

Off of these numbers, the Tax Foundation methodology would cite 20 percent as the average tax burden. But this 20 percent figure, notes CBPP, “is highly misleading as an indicator” of what most families are actually paying in taxes.

Why does the Tax Foundation persist in this misleading? For anti-tax ideologues, Tax Freedom Day continues to serve a real purpose. The annual Tax Freedom Day PR blitz exaggerates what average Americans pay in taxes and, in the process, stokes up an anger that lawmakers can then manipulate into tax cuts for the rich people who bankroll the Tax Foundation. 

The real villain in all this? Don’t put all the blame on the Tax Foundation. The anti-tax ideologues there are just doing what comes naturally to apologists for the awesomely affluent. The real villain here may be the media. They give Tax Freedom Day the spotlight. They ought to know better.

Stat of the Week

U.S. households making over $1 million a year, says a new report from the Joint Economic Committee of Congress, make up just 0.3 percent of the nation’s total households. But this elite group last year received about 20 percent of the total benefits from the Bush administration tax cuts of 2001 and 2003.

Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org.