What is the effect of the money spent in American political process on the American economy?

In this thread, I joked that the $1B being spent by the Republicans would be quite an economic stimulus. But is it a joke? Does the money spent during the various political campaigns have a stimulus effect? Conversely, that money has to come from somewhere, be it higher prices for goods and services or lower wages. Is that a significant effect?

Yes and no. A lot of the money raised (both sides) comes from wealthy individuals. Another large chunk comes, in small amounts from millions of Americans. I would say the money spent by the candidates is the most beneficial. It is spent on printing and signs, rent for campaign offices in every decent-sized city, aircraft charter and other travel, phone rentals, wages for campaign workers (someone has to man the phones all day, not everyone is a volunteer or can afford to skip their paycheque for 6 months for a cause). The money sdonated by the rich - ok, the private jet charter business is down a bit. For the small donatoins - it’s disposable income - maybe liquor or movie ticket sales drop a bit…

the SuperPAC money is probably less useful. It’s mostly spent on mailings, TV ads, and phone campaigns; a lot less widely distributed in a lot fewer locations - mostly a few head offices, I suppose. The media owners and TV producers will get rich.

The downside of all this, is it comes in spurts, so to speak - nothing for 3 years and 3 months, then 9 months of steadily accelerating spending, then nothing again. Nobody’s going to run out and buy a house or a brand new car, knowing they have a campaign job only for the next 6 months.

Stimulus effect money is money that would not be spent otherwise. It’s that qualifier that gets forgotten.

It’s not effectively different from the arguments for building a sports stadium. Proponents always talk about the money that will be spent on games, food, parking, merchandise, surrounding businesses, etc. Academic studies always show that this money would have been spent anyway, usually on other forms of entertainment. A small, concentrated number of people do benefit; a larger, diffuse and mostly unidentifiable number of people lose smaller sums.

The U.S. GDP is approaching $15,000 billion. Adding 1 billion to that is better than nothing but barely so. You need to put several percent of 15 trillion into the economy to have a real stimulus. At best you can hope that the PACs will spend money that otherwise would have gone elsewhere - foreign investments, say, or saved and not spent at all. More probably, most of that sum is just being diverted from other current spending. Some people benefit, but it can’t be called a stimulus to the overall economy.

Not all spending is equal.
If I pay someone to dig a hole and then fill it in, the effect on the economy is mildly negative (no wealth has been generated, or lost, and labor has been tied up effectively doing nothing).

I would WAG that a lot of the effort of political campaigning is ultimately wasted labor, and that $1 billion spent on an election is only a fraction as beneficial for the economy as investing that sum in business or infrastructure. I don’t know how one could quantify it though.

The effect of all this money is to direct the tax savings of the wealthy to focus a significant portion of the human resources of the American economy away from more productive endeavors.

This is the point that always gets me. With the stakes so high, why is so little money spent on the election?

There are several answers to this.

Most of them get down to one of two cores: either how do you spend the money or what is the money spent buying you?

The former is determined by a basic truth. The presidential election will be determined by a few percent of voters in swing states. There is very little point in spending money in California or New York. Both are so solidly Democratic that no amount of money will change that. All the money goes to states like Ohio or Florida, where the outcome isn’t certain. Even in those states, the core base will vote reliably. Some effort is needed to motivate them and ensure they will come out, but the bulk of the money goes to persuade those who can be persuaded. Outright bribing is frowned on, and causes problems if found out. That leaves ads, billboards, canvassers, phone banks, and the like. The amount that can be spent on these is somewhat limited. People are already complaining that too many political ads are running. People don’t like to be called constantly. They don’t like people coming to their door regularly. Overdoing the campaign can turn off some of the potential voters. Until somebody comes up with a new technique for swaying voters, we’re about maxed out at spending on influencing the few swing votes.

And for what? The President has great influence but little actual power. Congress passes bills, after all. The system is already set up to benefit the wealthy and powerful in innumerable ways. If they need specific bills that would benefit them, spending much smaller amounts on lobbyists and donations to Congress has been shown to work wonderfully well.

Buying a government is a mostly pointless exercise. Presidents always disappoint the extreme wings of their parties. Congress is more flexible, but targeted spending produces more bang for the buck than wholesale. Even if you wanted to spend money across the board, most states are too small to spend more than a few million in no matter how outlandishly you’d want to paper the walls with money.

The U.S. is the largest economy ever seen and politics is a very tiny slice of it. The latter doesn’t control the former, no matter what the extremes on both sides seem to think. Diminishing returns is a higher law than Congress.

As I recall, the previous congressional election spent 8 billion dollars. The economy did nothing in response, perhaps declined. But, correlation is not causation…
Frankly, it’s the dig a hole and refill it scenario, as no trade capable goods are produced or exchanged, only political nonsense (as politicians are QUITE well documented to rarely, if ever, follow through on their campaign promises).
To be blunt, the party sticker is really the REAL difference between the parties, as ALL follow their campaign contributor majorities and the wise invest in the campaigns of BOTH parties.
For a historic example, see the career of Theodore Roosevelt. Noting the later years.

It’s precisely because the stakes are so high that elections should be cheaper.

In an ideal world the electorate would vote based on a sober consideration of the issues, policies and candidates and it does not cost much to make available the necessary information for people to make that decision.

What’s expensive is running “(Political) American Idol” for a year: a spectacle of jingoism and misinformation where the objective is to get voters who vote with their gut to “have a bad feeling” about the other guy. And to remind your core base that the world will end if the other party gets into power.

A bit high, apparently.

The economy absolutely did not decline from 2010 to 2011, though.

Presidents actually follow through on a majority of their campaign promises. People only tend to remember the ones they didn’t. But I’d like to read your documentation.