By Powell Nielsen

The United States Supreme Court decision Citizens United versus FEC resulted in the overturning of Austin versus Michigan State Chamber of Commerce thus banning any prohibitions on independent expenditures by corporations. Namely, expenditures directed toward political campaigns, candidates, and Super PACs. This controversial decision resulted in corporations having the same rights as individuals, and therefore a powerful hand in influencing the United States’ domestic and foreign politics.

The upcoming presidential election will once again provide some of the most powerful financial institutions in the world with the ability to influence the future of American domestic politics and America’s future relationship with the international community. The election, according to most recent polls, places former president Donald Trump to once again face off against current US president Joe Biden in an election that could lead to civil unrest, domestic insecurity, and international repercussions. Both candidates and their parties carry polarizing platforms that have divided the American public and have been a cause for concern for the international community since the highly publicized January 6th insurrection and subsequent indictments of Donald Trump. Regardless, while the specific voting bases and politicians may have power, funding from large financial institutions and connected individuals arguably holds similar influence. From media mogul Rupert Murdoch to JP Morgan CEO Jamie Dimon, large donors heavily influence campaigns, platforms, and policy. Both the Biden and Trump campaigns have generated large amounts of donations exceeding 1 billion USD, with Biden’s campaign being the largest funded US presidential campaign in history. This article will articulate the role of these powerful private institutions in influencing the American political realm, while also analyzing the role of business leaders and their impact on previous elections and policies. Furthermore, I will attempt to understand how the role of financial institutions and their CEOs may affect the upcoming US presidential election. Finally, I caution against the morality of wealthy private donors and private corporate involvement in the domestic campaigns and politics of the United States. Citizens should understand that due to Citizens United v. FEC, not every vote is created equal, and the citizen has far less influence on the policies that their government representatives pursue.

Financial firms have always played a role in elections, one of note is Blackstone, a firm engaged in everything from private equity to real estate. Co-founder, Steven Schwarzman is known to donate large sums of money to universities, Olympic organizations, and hospitals. More pertinently, he has donated to American right-wing political campaigns.  Public records show that he has donated roughly 33.5 million to special interest groups supporting Republicans in the past 2020 election cycle, including 3 million USD to Trump’s America First Election PAC, made in January 2020. Blackstone is an influential company having a market cap of 153.63 billion. Currently, Schwarzman has pledged $7 million to Israeli aid in a company-wide email with Blackstone president, Jonathon Gray. In the domestic realm, Schwarzman has donated upwards of $37 million in the past three years to Republican candidates in both the House and Senate and their super PACs. Ranking number 8 on top individual contributors to all federal contributions between 2021-2022, Schwarzman has certainly made his mark on domestic politics in the United States. Furthermore, Schwarzman was chairman of President Donald Trump’s President’s Strategic and Policy Forum. Forum members also included BlackRock CEO Larry Fink and JP Morgan CEO Jamie Dimon. The forum forwarded their individual views to the president on policy issues affecting economic growth, job creation, and productivity. Should we allow for such high levels of individual influence in our domestic political realm? Is it a breach of individual liberty to regulate how much an individual can spend on a political campaign, even if said individual already holds so much power in the private sector? I would argue that while domestic law places little limitation on an individual or corporation’s ability to spend, the American public needs to take a hard look at the equitability of the wealthy having free access to buy political influence where others cannot. Specifically, Schwarzman has contributed heavily to US representatives Mike Carey, Jason Smith, Tim Sheehy, and Ted Cruz, all of whom won their respective campaigns. While the respective races all came down to the individual voters, one could postulate that the generous donations from Schwarzman contributed to the overall wins. Interestingly, one of Blackstone’s competitors, Blackrock, has also donated large sums of money to other political campaigns. 

BlackRock, with CEO Larry Fink, has avoided large campaign donations in the past but has begun to change that practice. There has been a change in BlackRock’s political donation practices since the end of Trump’s presidential term. In January of 2021, BlackRock donated roughly $647,000 to congressional campaigns. Is competition in the private sector also moving to the public sector as political donations? Perhaps it is in BlackRock’s interest to compete with companies like Blackstone in the political realm as well as the financial realm. Interestingly, individual donations from Schwarzman dwarfs corporate donations from BlackRock. Fink, however, has avoided major donations with his name on them. Perhaps stones are bigger than rocks, regardless, other larger financial institutions also play a key role in domestic politics perhaps dwarfing Schwarzman’s role.

Financial institutions have always played a large role in US politics, policymaking, and economic practices. JP Morgan & Co, a much larger institution than Blackstone, has had decades of experience traversing the political and private realm with carefully placed donations to support their economic goals. Prior to the 21st Century, JP Morgan himself assisted the US economy in the panic of 1893, bailing the US government out of $65 million. Recently, in the 2019-2020 election cycle, JP Morgan spent roughly 1 million on campaign donations with 60% going to Republicans and the rest to Democrats. However, in the wake of the January 6^th riots, JP Morgan froze all donation money to republican candidates signaling their political interests and possibly influencing some of their recipients in condemning the riots and supporting the election win of Joe Biden. While JP Morgan & Co. does not donate nearly the same amount as Schwarzman, their voice and influence may be further reaching due to its $509 billion market cap and long history. Furthermore, CEO Jamie Dimon has been outspoken about his political leanings in his 2021 annual letter to shareholders claiming that “partisan politics is preventing collaborative policy from being designed and implemented, particularly at the federal level.” Furthermore, Dimon has asserted that “money sent to Washington often ends up in large wasteful programs, ultimately offering little value to local communities…while we need good government, it is not the answer to everything.” Corporations are ultimately run by people with personal interests, biases, and deep pockets granting them political power which the average citizen cannot attain. Ever since the Citizens United vs. FEC Supreme Court case, these corporations have had the same rights as people to participate in the political realm in nearly every way except for casting a physical vote. The individuals running these organizations can utilize both their voice and their wallet in service of their special interests regardless of the needs and wants of the constituents the congressional representatives serve. Most recently, some of these individuals have even tried their hand at becoming Commander-in-Chief themselves, like Michael Bloomberg and Tom Steyer, some succeeding, like Donald Trump. 

Bloomberg, who ran in the 2020 election under a democrat platform spent over a billion dollars on his campaign, not to mention the $150 million which went to other Democratic campaigns and causes. Steyer on the other hand poured $342 million into his campaign in the 2020 election cycle along with $73 million to left-leaning causes and voter registration efforts. Meanwhile, Charles and Helen Schwab attempted to avoid direct donations to Republican candidates donating millions of dollars to committees and super PACs supporting Republicans for Congress. They even donated $1 million to the Republican National Committee for lawyer fees and putting on the RNC convention. I question the equitability of the current position of the business elite in domestic politics. Their role may overshadow the voices of average citizens most affected by the policies of the congress members who represent their interests. It does not seem fair or right to allow the most powerful private individuals to have greater influence in the political arena than any other citizen. However, one could argue that both Bloomberg and Steyer lost to Joe Biden despite their deeper pockets, and perhaps, the American public ultimately does hold the power when it comes to determining who will represent them. 

This is simply a brief overview of the influence of financial institutions and powerful private sector individuals engaged in the American domestic political realm. Monetary influence also comes from private businesses engaged in other fields outside of financial markets wielding incredible power via their vast resources. Furthermore, the American media, managed by private individuals, perpetuates specific political narratives and upholds those views in their private donations to political campaigns. Regardless, financial institutions do have a right to be entangled in American domestic politics and will continue to be major players due to the decisions made by the Supreme Court and the willingness of the American public to continue to allow such institutions to play such large roles in supporting candidates who may spend more time satiating the desires of their donors over their voting bases. Looking toward the upcoming 2024 presidential election, voters should become more aware of who and what is donating to political campaigns, super PACs, and special interest groups. Much of the narrative on both sides of the political spectrum tends to regard the system as broken, and the candidates that they support as a lesser of two evils. To reconcile this, I would assert that there needs to be some serious reflection done by the American public regarding how private institutions influence and possibly control the democratic experience which is the United States of America.

Photo by Getty Images via Unsplash

The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.