Money Rehab with Nicole Lapin - Why Investing in Politics Pays Dividends

Episode Date: July 4, 2023

Happy birthday America! In the spirit of July 4th, we are celebrating all the things that makes America special and committing to make the changes that still need to be done. Nicole argues that one of the smartest steps we can take to build the future we want, is to invest in the politicians we think can create this future. It’s also not breaking news that America’s representatives do not reflect the composition of America. They just don’t. I recently spoke about this with Jordan Zaslow, Founder of Her Bold Move - an organization that supports female political candidates and helps them win.

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money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. it's time for some money rehab. Happy, happy birthday, America, and happy 4th of July to you, money rehabbers. I hope you're lighting sparklers, barbecuing, setting up to watch some fireworks, and all the lovely tried and true ways to celebrate.

We know that today is a day to be grateful for all things that make America an incredible place to call home. It's also a day where a lot of us can reflect on the state of the union. Again, there's a lot to be grateful for, but I certainly can't blame the folks who are thinking today, even just a little bit, about the ways we can make this country better. And this isn't a partisan thing. Both sides of the aisle feel like there's room for improvement. So at least we're united in that. America is synonymous with progress. We are the great experiment. We are the innovators, the change agents. We can celebrate all of the progress while also acknowledging that there is more to be done, especially when it comes to our money. There are countless issues at the intersection of government and money that impacts us. Everything from the student debt forgiveness that wasn't, to whether non-competes are enforceable at our jobs, to how much Social Security will actually get in retirement. And so I think one of the smartest things we can do to invest in the future we want is to invest in the campaigns of the politicians we think can create that future. I know it's a

tough pill to swallow when we get those countless calls from interns phone banking, the impulses to just hang up. I mean, I get it. We already pay oodles and oodles of money in taxes. Why give even more money to politics? Well, that's what we're talking about today. But I'll give you a sneak peek at my perspective. Investing in politics isn't charity. It's an investment that pays dividends because politicians make key decisions that affect all of our bank accounts. Let me unpack how I got here. It starts with this premise you already know. As America continues to grow and change, we want to make sure that it's growing and changing in the way we want it to. And the way that happens is through the people who represent us in government.

This is not breaking news, of course. It's also not breaking news that America's representatives do not reflect the composition of America. They just don't. I recently spoke about this with Jordan Zaslow, founder of Her Bold Move, an organization that supports female candidates in politics and helps them win. Here's Jordan. Even though I feel like we see a lot of stories and we see a lot of articles written about how women are having a moment. It was the best election in history for women,

which is all true. The last election was technically the best election for women. But that just means that now we make up 27% of Congress and that means that men make up 73 percent. And so these are the people making our legislative policy. Obviously, something needs to change so that women will be more represented in the world and in the country. Women make up only 27 percent of the national legislature, but women make up 50 percent of the United States population. This representation problem isn't unique to government, by the way. Out of the 500 biggest companies in the US, only 10% of them are run by women. And at a time when there are so many impactful decisions

being made that uniquely affect women, it is more important than ever that their voices are heard. So I asked Jordan, why are there so few women in politics? I think the word you're looking for is money. You can always follow the money. And in order for women to become more represented in government, obviously it all comes down to campaigns and then campaign finance. Because historically, whoever spends the most money in a campaign wins 90% of the time. So money is everything in politics. So there's different ways to raise that money. And obviously, the people who have their own personal wealth that they're kind of starting

off with, that's not the only way that they're benefiting from, you know, the kind of systemic flaws that exist in our current campaign setup. But it's the fact that when you're campaigning, it's like a full time job. So people who are running for office who had to, like, for example, quit their job or take a pause from their job, that's a huge financial commitment. So people who have the institutional wealth, the personal wealth and who can afford to take a year off from working or two years off from working, they have an obvious advantage. Money.

The lack of representation is, as most things are, a money problem. As Jordan mentioned, the candidate who spends the most money wins the vast majority of the time. It's a sad state of affairs that politics feels like a bidding war at an auction, with candidates just trying to outspend each other until there's a winner. It's a system we can and should change. But to be honest, it might be easier to just beat politics at its own game. As Jordan said, with a political campaign, money is normally only flowing one way. Out. This is not a lifestyle that many people can take on.

And not only will you likely have to spend your own money on your campaign, but you'll also be putting your time and energy into hitting the campaign trail. And that's a big opportunity cost problem. With all of that time going into campaigning, you might be spending less time on paid work or even completely leaving your job. When it comes to self-funding a campaign, women are at a significant disadvantage because on average, they make 82 cents for every dollar a man makes. Meaning, if a political campaign requires a candidate to invest $2 million of their own money in their campaign, a female candidate would have to work 20% longer than a

man to come up with the same money. Now, don't get me wrong. The average political candidate is not sinking millions and millions of dollars into their own campaign. Campaign financing is mostly driven by donations. But I say $2 million because that's actually how much the average winning campaign for a House seat spent in 2018. For the Senate, the price tag is way higher. The average Senate winner spent over $15 million on a successful campaign. And let that sink in. The salary of a U.S. Senator is $174,000, which is a beautiful salary. But remember, you just had to raise $15 million to make $174,000. You just had to raise $15 million to make $174 grand. Obviously, not every senator is self-funding their campaign entirely,

but if you're running for office, you'll probably need to invest some of your own money, or at least say goodbye to some other opportunities that would have made you more money. And if you don't have a comfortable financial situation, that's really hard. And I'm just talking about House and Senate races here. For the presidential campaign, these numbers snowball very, very quickly. Mike Bloomberg spent more than a billion dollars on his presidential campaign, which only lasted 100 days and he didn't even get the Democratic nomination. So if this is a money problem, how can we solve it? While there are big money players in politics, scrappy grassroots campaigns are becoming more influential and more powerful. Here's Jordan again. feeling a certain way politically and they want to get involved and they want to see change,

money can talk. And in politics, it's not that much money. Like, I think that we've seen a lot of memes about like how much money these politicians are getting to make these decisions that we're all like scratching our heads about. It's not that expensive to have influence over the political world. Jordan's right, by the way. It doesn't take that much money to influence politics. And I should mention, by design, individuals are supposed to be prevented from influencing politics with money. Individuals are limited to a maximum donation of $3,300 for federal elections per campaign. But it's an economies of scale problem. If more people gave money to support their political candidates, those people wouldn't need to give as much money to make a big impact. In other words, instead of a big group of people giving a little bit,

a little group of people could give a lot and have the same impact. Just to paint a better picture of this, let's take a look at the state with the lowest population, Wyoming. If every Wyoming resident donated $4 one time to their favorite candidate for House of Representatives, that candidate would raise $2 million and then some. But here's where the wage gap rears its ugly head again. Research shows that women make fewer political contributions compared to men, and this is a huge missed opportunity because research also shows that women are more likely to donate to female candidates. To connect the dots, this is, once again, a wage gap issue. Because if women earned at the same rate men did, maybe they'd feel more comfortable spending their hard-earned money on causes they cared about.

So let's break this cycle. Ladies, let's put our money where our mouth is a little more. I know it's easier said than done, and I also know you don't want to support a candidate just on the basis of gender. This is not a sorority after all. You want to make sure you believe in the same things. So I asked Jordan the best way to vet political candidates, and she recommended the Electing Women Alliance, which is a network of giving circles for women, which is analogous to how businesses use crowdfunding. For other resources, you can check out Vote Smart, which is a nonpartisan organization

that provides background on political candidates and their voting records. There's also factcheck.org, another nonpartisan website that analyzes and factchecks campaign ads. You can check out all of these resources in the show notes. Okay, just to recap, I told you at the top of the episode that I believe it benefits you to donate to a political campaign. And Jordan told you that's because if your candidate has more money, they're more likely to win. But there is another important reason. If you donate to a politician, they are more likely to win. But there is another important reason. If you donate to a politician, they are more likely to listen to you. I know it is not a perfect system, but money talks. And when money talks, politicians listen. I will say that if someone gave a campaign

$3,300, unless it was like the presidential campaign. If someone gave $3,300, they very likely are hearing from the campaign or the organization. And, you know, when you're a donor, you can ask questions of the organizations and the politicians that you are considering donating to. And you can make sure, you know, you can kind of hold their feet to the fire and make sure that they're doing the activity with your funds that they promised that they would. And they do genuinely, in a lot of cases, want to make sure that that donor feels heard and feels a part of the coalition that rallied behind them, that, you know, got them to this point where they're still, you know, in the race or or maybe they're they made it to the general and they're grateful for the support. Because the support is, I mean, especially for women candidates, the support is really meaningful and rare. So I don't know a lot of candidates that take it for granted.

This is a really, really important point that I think is often overlooked. If you donate to a campaign, you open up a line of communication between you and that representative. You're building a relationship. You're creating an opportunity for your voice to be heard. That is super valuable. And again, this is not a fair game. In a fair game, the rules would dictate that politicians would pay equal attention to donors and non-donors alike. But just because the game is not perfect doesn't mean we can't win. And there is another way we can support women in politics that I haven't talked about yet, which is if you're a woman, run for office. And if you've never pictured yourself as a politician, it doesn't matter. The quote real person candidate

is actually becoming more and more popular. This new and it is a new trend. It's a new trend of real people running for office. And that did not happen before for so long, for literally hundreds of years. It was like if you went to law school and you made it through the ranks of law school and you had a great pedigree, then everyone was like, oh, your next step in your life and your career is like you should run for office. But that's not necessarily the trajectory anymore. But that's not necessarily the trajectory anymore.

Now it's like a nurse practitioner saw some really crazy things in a hospital in the past few years. There was a lot of things that they probably saw that they hated and thought someone needs to be in those rooms advocating for these patients. I'm going to be the one, you know, because the people with great pedigrees haven't had that lived experience. They don't know what they're necessarily talking about a lot of the time. So they're making this policy that's affecting these real people's lives that I've seen and they're doing it wrong. So I'm going to get in there and I'm going to be the voice for the voiceless. So that's an incredible trend that's

very encouraging and very exciting. For today's tip, you can take straight to the bank. If you're a badass who wants to run for office, there are programs for female politicians that resemble business incubators. I actually heard about these for the very first time from Jordan. Here's what she said. There's also so many like training programs for women, like they could go to the Emerge program. There's the Run for Something program. There's a number of, you know, if you Google like training programs for women candidates, so many incredible institutions will pop up and you can get started with their applications online.

Definitely, I would say apply for those programs because they have great success rates. They have great numbers of women who have graduated from their programs and made it into office. And they can tell you, you know, sort of everything you can expect to get started. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.

Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself,

which is the most important investment you can make.