How political ads became more valuable than gold

David Lebedoff is an author, a former University of Minnesota regent and an attorney practicing in Minneapolis. He is a source in MPR's Public Insight Network.

Even though the Hillary Clinton-Jeb Bush presidential election of 2020 is still some months away, and the outcome difficult to predict, it is clear to analysts at all points of the political spectrum that the nature of recent campaigns stems primarily from events occurring eight years ago, in 2012, though their impact on the future was not then fully foreseen. Today, of course, with the benefit of what far too many commentators coyly refer to as "2020 hindsight," we can all agree that the Obama-Romney contest set the course that has so transformed our nation since.

The root of the change was campaign finance. The Citizens United case, prior to the onset of the 2012 contest, permitted unlimited and anonymous expenditures in future campaigns. The effect was as if a dam had burst, and the unleashed floodwaters washed away all previous forms of campaign discourse except for television commercials, though surely not because these represented high ground.

One other factor played a role as well. The sophisticated analysis of voter preference, so greatly enhanced by the computer, permitted targeting undecided voters with a precision undreamed of in the past.

There were only seven or eight states that really mattered. All the others were safely red or blue. So the great flood swirled in only a few places, but there the waters rose to alarming levels.

The effect of Citizens United on campaign expenditure had been somewhat foreseen, but not its impact on the economy. By October of 2012 it had become clear that no venture in America was remotely as profitable as owning a television station in a swing state. The rising tide lifted all advertising rates. Efforts to keep political advertising airtime costs at or below regular commercial rates were subsequently found to violate the First Amendment rights of Super PACs, and the refusal of the Supreme Court to review this decision allowed television stations to charge political advocates whatever the market would bear.

There seemed to be no ceiling on such charges. The consequence of soaring political fees was the displacement of much regular television programming, including, in states where the race was tightest, the evening news.

Wall Street acted with alacrity to cash in on the bonanza being reaped by swing-state stations. Sophisticated new financial instruments were developed that allowed the purchase of options on the revenue increase of selected local stations. These proved immensely profitable to the small number of investors permitted to participate. When it was discovered that some of these investors were in fact major Super PAC contributors, who controlled not only the content but the placement of their ads, there was denunciation on the floor of the House. In some cases heavy fines were eventually levied on the investors, though no criminal penalties were applied to brokers or advertisers.

With polls showing that increased advertising had only made the election closer in the swing states, the use of commercials increased to the point at which all regular programming ceased until November.

The owners of swing-state stations, even those with remote locations and limited range, had achieved a level of wealth unmatched even by oil tycoons and Silicon Valley entrepreneurs. The Forbes 400 list by now has been completely transformed, the first 27 names being residents of Ohio and Florida. Carlos Slim is no longer the richest man in the world. A consortium of station owners in Virginia, Wisconsin and Colorado are now lending enormous sums to China. A Spanish-language cable magnate has just purchased Abu Dubai. For those who can somehow obtain them, shares in swing-state stations are regarded as investments preferable to gold (the price of which has subsequently plunged).

With so little time left until the 2020 election, the polls show the candidates separated by less than one-third of a percentage point in four of the critical states. The closeness of the race has not only raised last-minute advertising rates, but has quite naturally caused almost unbearable tension among partisans in both parties. After all, the president has the power to appoint Supreme Court justices.

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