The flurry of activity that surrounds a major election is something economists have been observing and writing about for many years. The election spending, particularly in the three weeks leading up to election day, tends to give the economy a small boost. The boost this time, though, could be larger because of the Supreme Court ruling earlier this year that allows unlimited and anonymous corporate election spending.
- Political spending on this election is considerably more than we have ever seen in the past. The total spending officially will surely be less than $10 billion, a lot for an election but a drop in the bucket in the U.S. economy. When the unreported spending is included, though, the total could be comparable to the size of the stimulus package of 2008.
- Most of the political spending comes from corporations that are otherwise mostly holding on to their cash. Some of the spending, to be sure, is coming out of the public relations or advertising budget. But much of it is money that would not otherwise be spent. An action that converts saving to spending is a more pure form of stimulus than one in which spending is converted from one form to another.
- Despite the consistent denials of the political operatives involved, it seems a safe guess that a lot of this year’s political spending is coming from outside the country. Imagine, billions of dollars pouring into the United States from other countries. This is, in some ways, the best form of stimulus — there is nothing to be paid back later. In other ways, of course, it is the worst form of stimulus — stopping to think of the implication that the country is for sale.
- Political spending goes largely to broadcasters, newspapers, and the post office — sectors currently in desperate need of funds. In all three areas, this fall, it is safe to say that the influx of political money will prevent or defer layoffs that otherwise would happen immediately.
So the stimulus that comes from all this extra election spending will be good for the U.S. economy, right? Well, yes and no. Any stimulus is good for the economy if it’s your job that’s saved, but the political spending stimulus has the drawbacks that come with political policy being engineered for the benefit of international corporations rather than the people of the country. And beyond this, it has the same drawbacks that any stimulus would have in the current recession: it diverts resources from the growth areas of the economy to the declining sectors. This eases some of the short-term economic pain, as the businesses that benefit can postpone their decline for a short time, but is basically no help at all in terms of what the economy will look like five or ten years from now.