Written May 3rd, 2020
North Carolina Insurance Commissioner Wayne Goodwin
Money has always been essential to democratic politics. Political parties must have access to funds to play their part in our political process. That being said, money has never been an unproblematic part of the system. This year, the chairman of the N.C. Democratic Party, Wayne Goodwin, is seeking election once again as N.C. Insurance Commissioner. This is a role he held from 2009-16 before being defeated by the current commissioner, Republican Mike Causey. Money played a role then and it certainly does now. According to their latest campaign finance reports, both politicians have accepted large contributions from interest groups and political action committees...even the same ones. This election cycle, Goodwin only has two contributions from PACs. One is a large, national organization, NCSFAA PAC INC (State Farm), and the other is a smaller, statewide organization, the N.C. Dental Society PAC. The latter donated only to Goodwin, but State Farm’s PAC contributed two donations of $2,000 to BOTH Goodwin and Causey’s campaigns in what appears to be an arbitrage bet.
Arbitrage betting is a gambling term for playing both sides, possible when there is a discrepancy between odds that allow for a profit to be made by covering all outcomes. Politically speaking, how does this gamble manifest itself in the 2020 race for N.C. Insurance Commissioner...and what do PACs have to gain?
PACS; MONEY IS SPEECH.
In its simplest terms, insurance is a means of protection from financial loss. These laws and regulations are established individually by each state and North Carolina is one of few states where the government official is elected, not appointed. So, it is of no surprise that this quadrennial election draws the attention of political action committees from around the country and is of great financial interest to many. Federal multi-candidate PACs are legally allowed to give $5,000 to a candidate or candidate committee per election (primary, general or special), and it seems that both candidates are playing within the rules. Each has received multiple, thousand-dollar donations from PACS but have remained under the $5,000 maximum contribution from a single group. Causey has interestingly received triple the donations from PACs than Goodwin, intimating that PAC contributions might be a form of straight-party support.
A Political Action Committee, or PAC, is a popular term for a political committee organized to raise and spend money in hopes of influencing election outcomes. PACs typically represent business, labor or ideological interests and they are allowed to do so according to the landmark United States Supreme Court case concerning campaign finance, Citizens United v. Federal Election Commission (558 U.S. 310, 2010). The Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political communications by corporations, including nonprofits, labor unions and other associations. But this doesn’t mean you have to be happy about it.
In a 1999 study, the University of Virginia's Center for Survey Research conducted two statewide surveys of Virginia registered voters for the Sorensen Institute's Project on Campaign Conduct, with financial support from The Pew Charitable Trusts. According to the first survey, 71% of participants found it fair to attack candidates for taking money from special interest groups. Tom Guterbock, the Academic Director of the Center for Survey Research at UVA, thinks the same public mentality holds true 20 years leader.
“Political scientists have researched how people view negative messages in campaign ads. They view some attacks as being fair, others they reject as being unfair attacks. If a candidate points out that their opponent is taking money from an industry PAC when they should be seen as independent, that is clearly a fair attack,” says Guterbock.
Interestingly, there has not been any such “fair” attack made by either candidate, despite PACs apparent conflict of interest. And when examining the contributions to both Goodwin and Causey in their most recent campaign finance reports, there are several mysterious donations labeled under “Other Political Committee Contribution.” Regardless of the Citizens United v. Federal Election Commission controversy, it seems that candidates on both sides of the political aisle are guilty of accepting money from interest groups.
SHOW ME THE MONEY
Taking a look back to 2016, Wayne Goodwin, an attorney who served in the North Carolina General Assembly and joined the Department of Insurance in 2005 before election as commissioner in 2008, was most likely as surprised as anyone when he was defeated on Election Day. Mike Causey, a retired insurance agent, presumably beat Goodwin on the Republican coattails of Donald Trump.
When looking at PAC contributions specifically, this outcome is even more surprising. Running for re-election after two successful terms, Goodwin received 60 donations from PACs in 2016. In comparison, Causey received a mere 21 contributions. Interestingly, this was not the first time Causey ran for public office. He had previously sought election to the U.S. House to represent the 6th Congressional District of North Carolina in 2014 but was defeated in the Republican primary on May 6, 2014. Causey was also an unsuccessful Republican candidate for his current position as North Carolina Commissioner of Insurance in the 2012 elections. Yet despite all odds, Causey became the first Republican to hold this position in North Carolina state history in 2016.
Jumping to 2020 in the current election cycle, Causey, now running for re-election, has only received eight PAC contributions so far. Goodwin has had two contributions, a far fall from the 60 he received in 2016. Of these is a large, national organization, NCSFAA PAC INC (State Farm), and the other is a smaller, statewide organization, the N.C. Dental Society PAC. The latter donated only to Goodwin, but State Farm’s PAC contributed two donations of $2,000 to BOTH Goodwin and Causey’s campaigns.
INFLUENCE AND AFFLUENCE: What can PAC donations do?
The powers granted to the insurance commissioner differ in each state, but insurance PACs clearly want some influence. The purpose of the insurance commissioner is to maintain fair pricing for insurance products, protect the solvency of insurance companies, prevent unfair practices and ensuring availability of insurance coverage. To accomplish these goals, each state grants several powers to insurance commissioners which often include: the approval of rates, financial examinations of insurers, company licensing of agencies, agents, and brokers, and monitoring and regulating claims handling.
What would a PAC gain from donating money to two different candidates running for the same office? Christopher Magee, from the Department of Economics at Bard College in Annandale-on-Hudson, NY, attempts to answer this question in his academic work, “Why Do Political Action Committees Give Money to Candidates? Campaign Contributions, Policy Choices, and Election Outcomes.” He believes that political action committees (PACs) give campaign contributions to candidates for two main reasons. Magee writes, “Either the contributions are intended to influence the actions taken by winning candidates once they are in office, or they are intended to affect the outcome of the election...a PAC can manipulate government policies either by buying policies directly from legislators or by buying elections. In the latter case, the PAC attempts to sway the election in favor of the candidate whose views are most in line with that of the PAC.” Magee’s essay concludes that political action committees give money to challengers primarily to affect the probability that the candidate is elected. In addition, some evidence is also presented that political action committee donations to incumbent campaigns are given for an influence motive. Although consistent with the conventional wisdom, contributions received by incumbents did not raise their likelihood of winning the election. Magee writes, “Most campaign contributions to incumbents appear to be given to gain services that elected officials can provide influencing the legislative agenda rather than to affect the candidate’s policy stance.” In his study, only campaign contributions in national defense spending raised the probability that incumbents running for re-election would support the interest groups’ preferred policy positions and contributions flowed more readily to members of committees with control over legislation important to interest groups. Especially with interest groups, when PACs give to candidates competing for the same office they are ensuring that they have a positive relationship with whoever wins the election. Groups like these might prefer one party over the other, but recognize that they need supporters on both sides of the aisle to achieve their aims. By contributing to both candidates in a close race, such groups increase the odds that their strongest allies will be elected but run the risk of backing losers and seeing their donations go to waste.
On the other side, for businesses and ideological organizations that are on the fence between the two parties — healthcare companies, for example, or ideological PACs representing the interests of specific groups — the choice is much harder. The N.C. Dental Society PAC is one of the most active and effective PACs in the state and their contribution to Goodwin appears to be politically motivated. According to their website, the N.C. Dental Society PAC “gives the dentists of North Carolina a united voice in the state so that we can allow our views to be heard.” Surprisingly, they donated only to Causey’s campaign in 2016 and have now switched sides. If down-ballot races are increasingly decided by who wins the White House, this desertion may signal a changing of the tides for the 2020 presidential race. Opposite of the national State Farm PAC, the N.C. Dental Society has a personal connection to what happens within their state. They are contributing locally and to a candidate that they care about. After what some might call a failed presidency and Republican term, they may have strong motivations for donating blue.
SO, NOW WHAT?
Money has always been essential to democratic politics and contributions from PACs and other interest groups have always had an impact on election outcomes. Because they are spending large sums on a candidate’s campaign, the candidate will support laws and regulations that help those companies, even if they hurt the people who they are supposed to represent and vote on the behalf of. If we know who is supporting candidates we can make a change and, in the end, we, the voters, are the ones who decide who gets put in a position of power. On November 3rd, Mike Causey and Wayne Goodwin will face off again. Money may be speech, but you have a voice too. Who will you vote for?