Russel Sage Foundation

This feature is part of an ongoing RSF blog series, Work in Progress, which highlights some of the research of our current class of visiting scholars.

In recent years, a growing body of social science research has attempted to track and measure the influence of money in politics. One prominent study in 2014 by RSF grantees Martin Gilens and Benjamin Page found that while corporations and wealthy individuals exert significant influence on policymaking, the estimated influence of the average citizen today is nearly zero. And in their most recent book, Democracy in America?, Gilens and Page argue that extreme economic inequality has further deepened the divide between policymakers’ agendas and the interests of most Americans. “If you simply look at how often ordinary Americans get policy changes they want, you see that they are frequently thwarted,” the authors told the Washington Post in January. “Even big majorities—60 to 80 percent of Americans—get the policy changes they want only about 40 percent of the time.”

At the Russell Sage Foundation, visiting scholar Jana Morgan (University of Tennessee) is currently studying how economic inequality has shaped the priorities of policymakers, focusing on the influence of wealthy voters on the congressional agenda. In a new interview with the foundation, she discussed her ongoing research, including how looking at the legislative process—rather than just legislative outcomes—can help us better understand how money shapes politics.

Q. Some of your current research investigates the ways that money influences the congressional agenda. Why has it been difficult for social scientists to measure exactly how money influences policymaking? What are some differences between the policy concerns of the upper class and those of the lower and middle classes, and how do you measure legislators’ responsiveness to these policy preferences?

Morgan: Most people, including social scientists, have an intuition—a sort of gut feeling—that money has a profound influence on politics and policymaking. We complain about all the money in campaigns and elections, about how elections can be “bought.” We talk about the ways wealthy people and corporations have direct pathways to policymakers and point to various anecdotes of access and influence. Donald Trump’s friend Carl Icahn makes millions unloading stocks as tariff policy shifts, and it just confirms what we already believe about the ties between money and politics. And people with resources seem to behave in ways that support this conventional wisdom— they spend millions on advertisements to help elect their preferred candidates, they invest considerable resources lobbying legislators, and they donate large sums to campaign coffers.

Yet, political scientists haven’t been able to uncover much systematic (that is, quantitative) evidence that all this money that floats around our political system really matters. We have some evidence that money provides donors access to politicians and the policymaking process, but in terms of outcomes, we don’t have much. And of course, our gut says this must be wrong. We must be looking in the wrong place or doing the wrong sort of analysis.

Our team—Chris Witko, Nate Kelly, Peter Enns and I—conducted a study where we started asking, “Where should we be looking for money’s influence on politics? Why can’t we find the robust systematic effects that we expect to observe?” And we came to realize that most of the existing research has focused on the observable outcomes of the political process—bills passed, roll call votes, etc. But as a field, we have largely overlooked how these bills come to the floor, how roll call votes are held on certain issues and not others. We were taking the agenda as a given.

Upon realizing this, my coauthors and I began to wonder if the agenda-setting process might be a crucial stage where we might observe the influence of money in the political system, as opposed to looking exclusively at outcomes. Our essential arguments are: 1) that money shapes which issues become problems to be solved, while others remain ignored; and 2) that economic power allows wealthy individuals and corporations to play an integral role in constructing what come to be seen as the “best” policy answers to those problems.

To explore how the policy agenda itself is constructed and articulated, we focus on legislative speech. Speech reflects a less filtered, more comprehensive picture of policymaking priorities within Congress, and it captures essential currents of the policymaking agenda. By listening the what legislators are talking about, we can learn how they are spending their time, which policy issues they want to call to attention, and which legislative actions they endorse or oppose. Plus, legislators’ speech sends messages to other policymakers and the public about their priorities, exerting important downstream effects as well.

To assess whether money shapes legislative speech, we focus on the potential set of issues that might appear on the economic policymaking agenda. From this set of issues, we use a three-step process to identify the economic priorities of upper class interests versus lower and middle class interests: 1) evaluating the nature of issue to assess which economic group would be most impacted by the problem, 2) using existing academic research to determine whether issues are prioritized by upper versus lower/middle income interests, and 3) identifying interest groups associated with each sector and consulting their websites and published policy positions to conform whether they identify a particular problem as a priority. This procedure allowed us to classify issues as lower/middle-class priorities (such as inequality), upper class priorities (such as the deficit), priorities of both groups (such as growth), and priorities for neither group (such as productivity).

Then for each issue priority we identify, we use text analysis of the Congressional Record to isolate legislative speech pertaining to the problem. The basic logic is that the more an issue is discussed in Congress, the more prominent a place the issue has on the legislative agenda. We expect members of Congress who receive more funding from upper class interests in the previous election cycle to talk more about upper class economic priorities in the subsequent legislative session; whereas members who receive more funding from lower class interests will be more likely to discuss lower class concerns. Evidence from simple count models as well as difference-in-differences analyses lend support to these expectations. Sources of campaign funding shape the issues that get onto or stay off the Congressional agenda.

Q. What does studying financial deregulation in the 1990s tell us about how campaign contributions helped to either mobilize or demobilize legislators?

In addition to the quantitative analysis that I outlined above, part of the project involves cases studies of money’s influence over the agenda within specific policy domains. What our study of financial deregulation illuminates is that the finance sector leveraged both structural and relative power to shape the timing and the outcomes of (de)regulatory policymaking.

By structural power, I mean the privileged position that business, especially finance, holds in contemporary capitalist societies. Because politicians rely on private firms to create positive economic conditions that ensure incumbents’ reelection, these companies’ interests carry considerable weight in the policy process. Relative power, on the other hand, refers to the ways competing interests leverage their resource to influence the give-and-take of the policy process. As finance has gained an upper hand within the economy and amassed incredible wealth, its relative power has also expanded vis-à-vis other groups, such as labor or consumer interests.

We can observe the significance of finance’s structural power in both the timing of financial deregulation and in the speech of legislators. With regard to timing, multiple observers and analysts of the deregulation process have demonstrated how action on financial modernization was stymied in the legislature for much of the 1990s primarily because banking, securities, and insurance were engaged in turf battles surrounding the reform. But once the three groups aligned their goals, reform action was swift. A unified finance sector could not be rebuffed.

Congressional proponents and opponents of deregulation also emphasized the structural power of finance in their speech. For example, in 1999, Republican Representative John Boehner called the financial services sector “the irrigation system for our economy” and stated, “By allowing for the quick and efficient flow of cash and capital it provides the fuel that the rest of our economy needs to grow.” Democratic Senator Charles Schumer advocated deregulation as “vital for the future of our country.” And Democratic Senator Paul Wellstone—one of eight senators who voted against the repeal of the Glass-Steagall Act—lamented that the financial sector’s influence was “felt at a systemic level.” If financial conglomerates continued to grow unchecked, he warned, “government officials and members of Congress will be prone to confuse Citigroup’s interests with the public interest if they don’t already.”

Beyond the power that finance exerted due to its important position within the U.S. economy, finance enjoyed increasing relative power vis-à-vis competing economic interests during the 1990s, encouraging not only Republicans but also most Democrats to accept the deregulatory agenda.

Democratic reliance on the finance sector for campaign donations escalated significantly in the late 1980s and into the 1990s. Democratic reliance on insurance alone increased more than eightfold, and contributions from insurance, commercial banks, and the securities sector contributed between 5 and 11 percent of Democrats’ campaign receipts over the course of the 1990s. These patterns point to increasing entanglement between finance and the Democratic party during the 1990s as deregulatory efforts ramped up. As Representative Maurice Hinchey of New York noted in 1999, the deregulatory efforts were “a brilliant billboard for campaign finance reform. Seldom before has so much money been spent by so few for the detriment of so many.”

We can observe the influence of finance on the actions of individual legislators as well. For example, Representative Newt Gingrich received significant funding from financial sector interests, particularly from insurance – the last of the three major financial sector groups to embrace deregulatory reform. Gingrich, from his position as Speaker, had the power to control the legislation that would be considered in the House, and when the House Banking Committee passed a deregulatory bill in the 1995 Congress, Gingrich had the opportunity to bring financial deregulation to the House floor for debate. But insurance remained staunchly opposed to the bill as they feared the competition they would face from banks under its framework, and Gingrich, along with other “friends of insurance” in the House blocked the bill’s advancement to the floor. However, Gingrich’s tune changed in 1998 when another reform attempt passed committee in the House, now with the blessing of the insurance sector. With insurance lined up behind the bill, Gingrich brought the measure to the floor and painstakingly guided it to a favorable vote (though ultimately this version of the bill died for lack of support in the Senate).

Together both aggregate and individual-level evidence suggests that the growing influence of the financial sector played an important role in shaping the legislative agenda concerning deregulation.

Q. If legislators are indeed more responsive to the policy preferences of the upper class, how might middle- and lower-class citizens make their concerns known? Is there a way to advocate for new policies that somehow break the connection between money and congressional attention?

The evidence we have uncovered suggests that both structural and relative power favor wealthy interests within our current system. Moreover, as inequality has risen, upper class interests have been able to leverage more and more resources to shape the agenda, heightening power inequalities. Our study points to one economic strategy for combatting this concentration of power and two political economic ones. The economic strategy would be to reverse the rising tide of economic inequality, leveling the playing field somewhat in terms of money resources to shift the balance of relative power back toward lower class interests, at least to a degree.

However, it is highly unlikely that this economic approach could be successful without transforming the political systems and structures that have allowed these economic inequalities to persist in the first place. Two possible strategies for accomplishing such a transformation come to mind.

The first involves identifying and leveraging power resources other than money in order to combat the differential allocation of economic resources. Money is an important resource in politics, but it is not the only one. Organizing through social movements and political parties that actively advance lower and middle-class interests has the capacity to counter-balance some of the power differentials generated by reliance on economic resources alone. Labor organizers, living wage activists, immigrant rights groups, and the many other entities that advocate for lower/middle-class interests must build mobilizational capacity. As they do so, these groups may reinvigorate the significance of organizational, as opposed to just financial, capacity within our political system and enable the emergence of a more effective opposition to wealthy interests.

The second strategy for breaking the connection between money and the congressional agenda would be to reduce the capacity of wealthy interests to use their financial resources for political ends and strengthening the ability of lower and middle-class interests to leverage the sorts of mobilizational resources where they have historically had the advantage. Presently, our legal system grants considerable rights and power to use money as a form of free speech, while at the same time other forms of speech, especially protest, are encountering growing limitations on the scope of conflict and the range of legally permissible strategies.

To break the connection between money and politics, we must question the logic of money as speech. We must also advance an agenda that reinvigorates the rights and political capacity of marginalized groups in society. Organizations from labor unions to Black Lives Matter, from the felon enfranchisement movement to immigrant advocates have faced mounting legal and political challenges to their ability to organize, protest, and even exist. Successful mobilization to counter the power of money alone will require active critique of these methods and reassertion of the rights and inherent value of all members of our political community, not just the wealthy.