The hillbilly and the billionaire

Peter Thiel (Photo by John Lamparski/Getty Images)

Right-wing billionaire Peter Thiel has donated $10 million to a super PAC formed to support Hillbilly Elegy author J.D. Vance, who is considering a run for U.S. Senate in Ohio. Thiel's massive donation illustrates the impotence of the nation's campaign finance system. 

Vance became a bestselling author with Hillbilly Elegy, which was adapted into a movie on Netflix. Vance is a conservative but his book became popular with readers on the left and right as an unofficial guide to Trump's appeal among working-class whites. Vance describes his modest upbringing in Middletown, Ohio and his mother's roots in Kentucky. The New York Times described the book "as a cultural anthropology of the white underclass that has flocked to the Republican presidential nominee’s candidacy."

But while many readers found Vance's personal stories informative, his policy prescriptions are formulaic and familiar. Vance, who went to Yale Law School and runs his own venture capital firm, believes that the solution to the problems afflicting the poor in Appalachia is hard work. According to Vance, there are "far too many people awash in genuine desire to change only to lose their mettle when they realized just how difficult change actually is."

Vance also engages in stereotypes about people receiving welfare that have existed for decades. The problem with the working poor, Vance claims, is that they spend their money on "giant TVs and iPads," instead of planning for the future. "There is no government that can fix these problems for us," Vance concludes. 

This anti-government philosophy is likely one explanation for Thiel's large contribution in support of Vance's candidacy, which is not even official. Thiel, the co-founder of PayPal and a member of the Facebook Board of Directors, historically engaged in politics as a libertarian. In 2009 essay for the Cato Institute, Thiel complained "there are no truly free places left in our world" and advocated "new technologies" that could "create a new space for freedom." He suggested constructing floating cities in the ocean, escaping to space, or creating online communities "not bounded by historical nation-states."

In the same essay, Thiel said that "[s]ince 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of 'capitalist democracy' into an oxymoron."

Although he did spend some time investing in floating cities, Thiel remained engaged in politics. In 2016, Thiel endorsed Trump on the final night of Republican National Convention and donated $1.25 million to Trump's campaign. He embraced Trump's brand of nationalism, including his trade war with China. It's unclear how any of this is consistent with Thiel's libertarian philosophy, although some have speculated his attraction to Trump was based on Thiel's interest in "transgressive ideas."

Thiel has a right to his views, even if they contradict each other. But his $10 million donation to Protect Ohio Values, the super PAC supporting Vance, is evidence that the campaign finance system is completely broken. Money will always influence politics. But the campaign finance system is supposed to provide some guardrails. Instead, billionaires like Thiel are able to spend virtually unlimited sums in support of a candidate. It doesn't have to be this way. 

What Citizen's United did not change

In 2010, the Supreme Court, in its decision in Citizens United v. FEC, struck down limits on independent political expenditures by corporations, labor unions and other groups. But such unlimited spending is only permissible if it is actually independent of a candidate.  The Brennan Center's Wendy R. Weiser explained the court's reasoning: 

The Supreme Court has long held that outside campaign expenditures coordinated with a candidate can be "treated as contributions," because "[t]he ultimate effect is the same as if the [spender] had contributed the dollar amount [of the expenditure] to the candidate." Citizens United did nothing to change that. When the Supreme Court struck down limits on how much outside groups could spend in federal elections, it did so on the assumption that these groups would operate independently of candidates. The Court reasoned that the absence of "prearrangement and coordination" would "undermine[] the value of the expenditure to the candidate" and alleviate the danger of quid pro quo corruption or its appearance.

As a practical matter though, there has been no enforcement of the rule that counts coordinated expenditures as direct contributions subject to limits. So candidates are personally fundraising for "independent" super PACs that are organized to support their campaign. And super PACs are run by former aides of the candidate, produce B-roll footage for the campaign, and run ads featuring the candidate. The result is that individual limits on campaign expenditures are "virtually meaningless."

That's why most major candidates for President have a super PAC, usually run by a longtime associate, operating on their behalf. Thiel has no issue donating $10 million to a Super PAC because he knows it will have nearly the same impact as a direct contribution to Vance's future campaign. 

A modest proposal

The For The People Act, also known as HR 1, includes provisions that would curb coordination between campaigns and super PACs. First, the bill specifies that "any expenditure...which is made in cooperation, consultation, or concert with, or at the request or suggestion of, a candidate, an authorized committee of a candidate, a political committee of a political party, or agents of the candidate or committee." This would, at the very least, prevent candidates from making appearances in ads for a Super PAC supporting their campaign. It also makes clear that a Super PAC that republishes material produced by a campaign is making a direct contribution to the campaign. 

It also creates a new category of a "coordinated spender." All expenditures by such an entity would be considered coordinated with the candidate. This category includes entities established by: 

Any person who, during the 4-year period ending on the date on which the person makes the payment, has been employed or retained as a political, campaign media, or fundraising adviser or consultant for the candidate or committee or for any other entity directly or indirectly controlled by the candidate or committee, or has held a formal position with the candidate or committee (including a position as an employee of the office of the candidate at any time the candidate held any Federal, State, or local public office during the 4-year period).

It would also apply to super PACs run by immediate family members. This would prevent the common practice of longtime aides moving from a Congressional office or other entity controlled by the candidate to run an "independent" Super PAC.

None of these provisions would eliminate the influence of money in politics. But they would provide some modest limitations on coordination between super PACs and candidates, making contributions to super PACs somewhat less valuable.