How Wealthy Capitalists Control American Politics: $108 Million Spent on North Carolina Senate Race Between Hagan and Tilis, 2014

After the most expensive U.S. Senate race in history, North Carolina voters were set on Tuesday to choose between Democratic incumbent Kay Hagan and Republican Thom Tillis in a matchup that will help decide majority control of the chamber.

More than $108 million has been spent on the contest, according to the nonpartisan Sunlight Foundation. Yet the candidates remained nearly before Election Day, with the RealClearPolitics poll average showing Hagan up by just 0.7 percentage point.

Hagan, 61, is seeking a second term in a polarized state that has leaned more heavily in favor of Republicans since she beat Elizabeth Dole for the seat in 2008.

Political analysts say Hagan has run a strong campaign, tying Tillis, speaker of the Republican-led North Carolina House, to unpopular legislative actions that she argues have hurt women, education and the middle class.

Tillis, 54, has fired back by linking Hagan to the "failed policies" of Democratic President Barack Obama, who has become increasingly unpopular in the Tar Heel state, which he won in the 2008 election but narrowly lost in 2012.

At a polling site in Winston-Salem on Tuesday, several voters said they were disappointed by the partisan gridlock in Washington and the state legislature's handling of public education.

"I'm really super frustrated with the North Carolina legislature," said Beau Dancy, 58, a general contractor and a Democrat.

He said he voted for the incumbent, but added, "it was more of an anti-vote on (Tillis) than a positive vote on Hagan."

North Carolina saw record early voting for a midterm election in the state, with overall turnout up 20 percent over the 2010 midterm, according to the State Board of Elections.

The uptick was possibly fueled by the race's competitive nature and anger toward the state government, political scientist Michael Bitzer said on his "Old North State Politics" blog.

Registered Democrats cast nearly 48 percent of early ballots, compared to about 32 percent by Republicans and about 20 percent by unaffiliated voters, state data showed.

African-American and unaffiliated voters posted big increases in early voting participation over 2010, up nearly 45 percent and 43 percent, respectively.

Republicans are poised to make major gains and possibly recapture control of the U.S. Senate on Tuesday in midterm elections that could serve as a public referendum on President Barack Obama's job performance.

Millions of Americans will cast ballots to elect 36 senators, 36 governors and all 435 members of the House of Representatives in campaigns influenced by Obama's low job approval rating, partisan gridlock in Washington and a U.S. economy that is not growing widely enough to help many in the middle class.

Republicans are expected to pick up seats in the U.S. Senate, but polls show eight to 10 races are still toss-ups and it is unclear whether they can gain the six seats they need to control the 100-member chamber for the first time since the 2006 election.

The battle for control of the Senate also could extend beyond Tuesday night. Senate races with multiple candidates in Louisiana and Georgia, where the winner must get more than 50 percent of the vote, could be forced into runoffs in December and January, respectively.

Seizing the Senate would give Republicans, who are expected to build on their majority in the House, complete control of both chambers of Congress.

That would constitute the most dramatic political shift since Obama entered the White House in early 2009 and would complicate his last two years in office, perhaps forcing him to make more concessions to his Republican opponents than he would prefer.

The White House tried to play down the prospect of sharp changes in strategy by the president after the election. White House spokesman Josh Earnest noted that many of the contested Senate races where Democrats were in trouble were in states Obama lost to Republican Mitt Romney in the 2012 election.

"It would not be wise to draw as broad a conclusion about the outcome of this election as you would about a national presidential election simply by virtue of the map," he told reporters.

Democratic senators are battling for re-election in tough races in Alaska, Arkansas, Louisiana and North Carolina, all won by Romney in 2012. Democratic Senator Mark Udall also is in a tight race in the swing state of Colorado, and the fight to replace retiring Democratic Senator Tom Harkin in the swing state of Iowa is a toss-up.

Republicans are in tight races to retain their seats in Georgia, where Senator Saxby Chambliss is retiring, and Kansas, where an independent is challenging Republican Senator Pat Roberts.

Republican Senate Leader Mitch McConnell of Kentucky, who polls show has a slight edge over Democratic challenger Allison Lundergan Grimes, would replace Democrat Harry Reid as Senate majority leader if Republicans win the Senate and he hangs on for re-election.

"Obviously, we intend to be a responsible governing Republican majority, if the American people give us the chance to do that," McConnell told ABC News on Monday.

Obama's low public approval rating of around 40 percent made him a political liability in some states on the campaign trail, where his last campaign appearance was on Sunday in Philadelphia. He stayed in Washington on Monday and met with Federal Reserve Chairwoman Janet Yellen.

Obama will face pressure to make changes at the White House if his party loses the Senate. A Reuters/Ipsos poll showed 75 percent of respondents believe the administration needs to "rethink" how it approaches major issues facing the United States (bit.ly/1ph8sLs). Sixty-four percent said Obama should replace some of his senior staff after the election (bit.ly/1rTVVbb).

But a White House official doubted there would be a major shakeup no matter what the outcome on Tuesday.

"We're talking about votes in a bunch of states that didn't vote for the president," the official said.

Outside groups bought virtually all the ads that one Charlotte TV station has aired in North Carolina's hotly contested Senate race, and nearly half of the dollars they spent haven't been reported to the Federal Election Commission. That's the conclusion of a Sunlight analysis of all the ad orders received through mid-June at Raycom Media's WBTV channel 3, located in the state's most expensive media market.

The race between Democratic Sen. Kay Hagan and her Republican challenger, state House Speaker Thom Tillis, has attracted an enormous influx of money that is either impossible to trace to its source, or never reported to the nation's campaign finance watchdog. Or both. Two of the nation's biggest sources of undisclosed campaign money have combined to spend more than $10.5 million in the North Carolina Senate contest: Americans for Prosperity for at least $7 million and Crossroads GPS more than $3.5 million.

The undocumented campaign spending is perfectly legal: Federal law allows political groups incorporated as nonprofits to keep their donors secret. And ads can mention candidates in the most favorable or unfavorable terms without ever being reported the FEC as long as they don't "expressly advocate" a vote for or against a candidate, and don't run within the month prior to a primary election or two months prior to a general election.

Such ads amount to more than 65 percent of the Republican spending at WBTV. Here's an example of one of the North Carolina ads that didn't have to be declared to the FEC:

Such under-the-radar campaign spending can be quantified only by an analysis of TV ad buy contracts. Two years ago, the FCC required broadcast network affiliates in the nation's 50 top TV markets to begin posting those contracts online; the Sunlight Foundation's Political Ad Sleuth makes them searchable. This week, the database will expand ten-fold as an FCC order mandating all of the nation's 2,000+ broadcast stations to begin online posting of political ad buys takes effect Tuesday.

Between the start of 2013 and June 17, WBTV had received orders for 4,086 political ads at a total cost of $3.8 million. About $3 million of that spending backs a candidate for Senate — either Hagan or Tillis.

Some of that $3 million includes ads booked through November; it's expected that both candidates will order significant airtime at the end of the race but haven't done so yet. This analysis, however, only includes Senate ads that had started airing by June 17, which represents orders for just over $2 million altogether.

The first buys Sunlight examined went up Oct. 30, 2013 — more than a year before Election Day.

The ads "just started coming in much earlier than in previous years," said WBTV's national sales manager, Patti Goodnight. "It's been a constant drumbeat, really, since the first of the year," added Goodnight. She also noted that the outside groups "took a little time off for the primary," a fact that highlights one of the peculiarities of outside spending: Because groups have to report even "issue ads" that mention or depict candidates if they air within 30 days of a primary or 60 days of a general election, many outside groups tend to stop advertising during that period.

Here are six key takeaways:

1. Dark money is still a Republican game

Roughly 65% of WBTV ad dollars spent by Republican groups haven't been reported to the Federal Election Commission. The dark money share is even higher when you consider the fraction of ads paid for by groups like the U.S. Chamber of Commerce that report money spent to the FEC, but don't report their donors. Only 27% of Tillis-allied ads were underwritten by named donors. Those were paid for by the American Crossroads super PAC, and ran during the month before the May 6 primary.

In the above, "disclosed" refers to buys that were reported the FEC. Some of the "disclosed" ads were paid for by groups that do not reveal their own donors.

Among Hagan allies, the ratios were flipped: 77% of ad buy dollars were disclosed to the Federal Election Commission. And 69% of buys came from groups that disclose their donors.

The only left-leaning groups that didn't disclose their spending to the FEC: The League of Conservation Voters, whose $76,700 ad buy ran from Nov. 21 through Dec. 4, and the Southern Alliance for Clean Energy, whose $126,000 buy aired Mar. 24 through April 13. It appears, however, that the clean energy alliance should have reported some of the spending to FEC, because some of those ads aired less than 30 days before the election.

2. Republicans lead spending in Charlotte, but not by much

Ads from Republican-allied groups (excluding about $16,000 in ads from two Republican primary candidates who lost) amounted to $1.14 million; Democratic spending — which includes two ad buys from Kay Hagan for $52,250 — came to $890,025. Marketwide estimates, which weren't available for all buys, pointed to a similar breakdown among all Charlotte broadcasters.

*The 60 Plus Association reported one of their two buys to the FEC

3. Coordinated attack

Outside groups can't coordinate with the candidate — but they can talk to each other. Despite a lengthy list of ad placements by multiple groups, there was remarkably little overlap by those playing on the same side. Among the anti-Hagan forces, Americans for Prosperity, Crossroads GPS, American Crossroads and the U.S. Chamber of Commerce never had ads running at the same time. Similarly, on the Democratic side, ads bought by Senate Majority PAC, Patriot Majority PAC and League of Conservation Voters never overlapped.

4. What hard money?

Tillis' allies spent more than a million dollars at WBTV, and more than ten times that statewide. The candidate's campaign committee, however, spent nothing at WBTV. Hagan's campaign had just begun to air ads, with the first round going up June 10.

Candidates are guaranteed the lowest unit price beginning 60 days before the election, so it makes sense for them to wait to begin booking ad time, especially if there are other groups advertising on their behalf.

5. Republican-allied groups making Cadillac buys

Sort the 42 ad orders by gross cost per ad spot, and the top 14 orders are all from conservative groups. The priciest order, per spots, is from Americans for Prosperity and includes two 30-second spots for last December's New York Jets vs Carolina Panthers NFL game at $12,000 an ad. The exception, however, is the group known as the 60 Plus Association. Targeting an older demographic is considerably cheaper.

6. More to come

Thus far only three groups have significant purchases in the final months — the most important part of the race — at WBTV. Crossroads GPS booked July 1-13 and July 22-31 for about $200,000 apiece throughout the Charlotte market.

We can guess at how much spending this represents statewide based on buys that have been disclosed, though of course, the fraction spent in Charlotte depends on the voters targeted. The U.S. Chamber of Commerce's $900,000 buy boosting Tillis from April 30 to May 6 translated into a Charlotte market total of $279,000, for instance. And on the other side of the aisle, the Patriot Majority PAC's roughly $300,000 buy Feb. 25 through March 10 amounted to just under $95,000 in Charlotte. (WBTV's fraction of Charlotte spending appears to range from 19 to 54%, but is typically around 35%, according to documents).

The National Republican Senatorial Campaign and Democratic Senatorial Campaign Committee each have advance reservations for the final stretch of the race. The DSCC has already booked from Oct. 16 through Nov. 3, a seven-week stretch ending the day before Election Day, for about $2 million in the Charlotte market. The NRSC, however, so far has not committed to Tillis all the way through Election Day. So far the GOP Senate campaign committee has reserved only Sept. 2 through Oct. 13, a six-week stretch, for $1.2 million.

Presumably both sides will get considerable help from outside groups down the stretch, though they've avoided buying time thus far. "If they squeeze the market it doesn't help the candidate," said a Democrat-affiliated ad buying source.