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Elections as stimulus

The amount of money in American elections is mind-boggling:

House and Senate candidates have already shattered fundraising records for a midterm election and are on their way to surpassing $2 billion in spending for the first time, according to new campaign finance data. To put it another way: That’s the equivalent of about $4 million for every congressional seat up for grabs this year.

Ezra Klein shows how this can help the economy:

Dan Gross wants to see us holding elections every year, or maybe every two years. But it’s not because of the salutary effect they have on democracy. It’s because of the stimulative effect they have on the economy:

Every four years, when Michael Bloomberg runs for Mayor, the Big Apple is transformed into a winter wonderland where it’s Christmas all year round — at least for the consultants, ad salespeople, canvassers, caterers, and hangers-on whom the mayor employs. In 2009, Bloomberg injected $102 million into the city’s economy in order to win a third four-year term for a job that pays him only $1 per year.

No wonder the city’s leaders decided to overturn the law limiting a mayor to two terms. Having Bloomberg run for re-election is like staging a Super Bowl, NBA All-Star game, and World Series.

Meg Whitman is doing Bloomberg one better. In her bid to replace Arnold Schwarzenegger as California’s governor, the former EBay CEO has already plowed $140 million into the Golden State’s stricken economy. One can only hazard a guess as to how much higher California’s unemployment rate (12.4 percent in September) would be without Whitman.

In Connecticut, where I live, another CEO is having an even greater proportional impact. Former WWE CEO Linda McMahon through mid-October had spent more than $41 million of her own money on a Senate campaign — about $25 for every voting age adult in the state. McMahon is single-handedly boosting Connecticut’s office and retail vacancy rates by renting out storefronts, and has saturated the airwaves with ads the way Starbucks has saturated Seattle.

Self-funders are only part of the equation. With political passions running high in recent years, millions of citizens have made small donations. Sharron Angle, who is challenging Senate Majority Leader Harry Reid, raised a stunning $14 million in the third quarter, mostly from small donors.

Then there’s corporate money. In the past two years, America’s CEOs have become a bunch of Scrooge McDucks. Unwilling to hire and slow to boost dividends, they hoard cash and loosen purse strings only for overseas expansion (or CEO compensation). But now that it’s easier to make big donations without having to disclose them, corporations are getting involved in politics in a big way. The U.S. Chamber of Commerce has hit up members to fund tens of millions of dollars in campaign spending. Bush adviser Karl Rove, eager to get back into the game, set up American Crossroads, which has raised tens of millions of dollars from corporations and other donors.

Surely some economist somewhere has done a study investigating whether high-cost elections stimulate local economies, right? It seems like a perfect natural experiment.

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