US election spending suffers diminishing returns

Space Exploration Technologies

Mon 16:47

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Gabriel Rubin
WASHINGTON, Nov 2 (Reuters Breakingviews) - Investment in US elections keeps rising, but the marginal returns are going down. More money has been allocated to advertising for this year's midterm congressional races than during the cutthroat presidential showdown of 2024. For individuals, companies and industries aligned with President Donald Trump, it's why-not money to offset steeper losses under a Democratic-controlled Congress.
Political candidates will spend more on campaigns this year than the annual GDP of Montenegro. TV commercials alone are set to absorb nearly $6 billion of an estimated $11.6 billion, according to tracker AdImpact. The profligacy of big spenders, chiefly SpaceX SPCX.O boss Elon Musk and cryptocurrency magnates, borders on monomaniacal, with huge sums earmarked to defeat individual state-level candidates.
Virtual-cash outlays paid off two years ago. Besides tying themselves closely to Trump, champions of bitcoin and other digital coins spent $130 million to knock off political antagonists and elect supporters instead. Unseating Senator Sherrod Brown of Ohio, then-chairman of the chamber's banking committee, was their biggest coup. It only went so far, however.
The industry's biggest legislative priority, the Clarity Act to establish a comprehensive regulatory framework, flopped. After a huge run-up following Trump's victory, the price of bitcoin has plummeted 36% from its peak a little over a year ago, to about $78,000. Fairshake, the main crypto political fund, is trying to block Brown's return, but he is polling ahead. For a $3 trillion market, the $55 million of election-related checks would be a worthwhile expense.
Musk's deep pockets are also flooding the market. Through mid-October, he had doled out a staggering $445 million on 2026 elections, making him the biggest spender in political history after wielding a financial chainsaw in Washington for Trump. Smaller billionaires on the Democratic side, including Michael Bloomberg and George Soros, have each given far less than half of that.
In Texas alone, where Musk has anchored his empire, he is providing $145 million of funding to reeling Republicans. The investment makes a perverse amount of sense: it would be the equivalent of a $36 contribution for someone with net worth of about $220,000, the US median. Given the giant government contracts Musk's companies have and the national security concerns they raise, it's easy to see why he would want to ward off greater scrutiny from skeptical Democrats.
Industries tethered to the mast of a particular political party sail dangerous waters. Most captains of industry aim to steady the course of regulatory and tax policy by navigating the full ideological spectrum. Crypto is getting the idea, supporting Democrats, too. Musk, however, risks going down with the ship.
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CONTEXT NEWS
Billionaire Elon Musk has spent more than $400 million on the US midterm elections as Democrats vow to probe his companies as well as his actions as a member of the Trump administration in 2025.
The cryptocurrency industry has spent nearly $180 million across more than 100 races this election cycle, with the most money directed at defeating Ohio Democratic Senate candidate Sherrod Brown.

(Editing by Jeffrey Goldfarb; Production by Pranav Kiran)
((For previous columns by the author, Reuters customers can click on RUBIN/gabriel.rubin@thomsonreuters.com))