by Bruno Marques Schaefer*
Reviewed by Matheus Lucas Hebling
The relationship between elections and money is complex and involves a series of predispositions about what we consider to be politics and politicians. The relationship between economic power and political power is sensitive, and since at least the turn of the 19th to the 20th century, it has been the subject of research in the Social Sciences. Discussing elections and money matters because election campaigns are not free; relationships between donors and politicians can lead to paid compromises later, and resource flows indicate power relationships.
In this sense, my goal is to address the challenges in discussing the relationship between money and politics; to trace a brief history of the regulation of this relationship in Brazil; where the country stands, in the world, concerning its model of financing politics; and, finally, discuss some considerations about the current model of financing politics.
The financing of politics can be seen as a market relationship, where we have supplied on one side and demand on the other. This analogy is not new, but it is helpful. On the demand side, we can consider candidates and parties that depend on resources to get elected. The mechanisms that link one thing to the other can be diverse, but we have to keep in mind that money is important for the purchase of campaign material, payment of employees, and advertisements on social networks, among others. In other words, we have two variables: money and votes. And some mechanisms link them so often (but not always) more expensive campaigns get elected.
On the supply side, we have the resources that are available (legally) to parties and candidates, both at election time and in day-to-day political work.
So we have supply and demand, a market in which resources are demanded, and we have specific sources of donors. In the Brazilian case, the changes in regulations of electoral and party financing have been the reaction to unexpected events or crises. And there is the regulation of supply.
Until 1993, Brazil’s legislation on political financing prohibited corporate donations to parties or candidates. The scandal that followed the election of Fernando Collor de Melo led to a new law. The realization that the presidential election campaign had used corporate resources to get the candidate elected was a catalyst for the Brazilian legislative to change its mind, allowing corporate donations (Law No. 8.713, 1993), forbidden during the Military Dictatorship.
In 1995, there was new legislation on political parties allowing corporate donations to these organizations. And in 1997, another law specific to elections was passed.
From 1993 to 2015, we had on the supply side to parties and candidates, private resources from companies, individuals, self-financing, and public resources (through the Party Fund). This last point is the most controversial. It is worth remembering that the Party Fund was created in 1971, i.e., during the military dictatorship.
With this configuration, the main share of funds for elections came from a few companies. According to data gathered by Mancuso, 70% of the resources used in electoral campaigns came from contributions from legal entities, with some companies, from some specific economic sectors, being the most relevant. For example, civil construction. We had a few companies donating a lot of resources to several candidates. If we look at the accounts for presidential candidates, for example, we see that companies donated to all candidates that had a chance of winning. That is, without ideological criteria.
The relationship between the supply of resources to parties and campaigns and the demand from the latter can generate a series of problems when it is based on certain promiscuity. For example exchange of favors between donors and political agents. The topic is complex and subject to regulation around the world, and we have seen, here, how problematic it has been.
In Brazil, the option, again, was the regulation of supply. In 2015, a Supreme Court decision declared unconstitutional corporate donations to campaigns and parties, in the wake of the Lava-Jato corruption scandal.
The consequence, on the one hand, was the strengthening of other sources such as resources from the candidates themselves (self-financing), individuals, and, above all, the increase in public resources for electoral campaigns. In the first case, we saw in 2016 the election of self-financed candidates, such as João Dória (PSDB-SP), in the second, donations from businessmen who now start to transfer resources via individual tax numbers (CPF) and not business tax numbers (CNPJ), and in the third, the increase in the Party Fund and the creation of the Special Fund for Campaign Financing (FEFC), respectively. The FEFC was created in 2017 and has been the subject of controversy ever since.
Today we see that the financing model for Brazilian politics continues to be mixed (that is, private and public resources), but now without contributions from companies, and with greater participation from the State (around 70% of the total).
The regulation of supply did not fall with the same weight on demand. On this side of the relationship are candidates and parties. Campaigns are expensive around the world, but in Brazil, they can be even more expensive for several reasons, the electoral system and the size of the districts being some of them. A candidate for state deputy, for example, runs for election against candidates from other parties besides his colleagues (given the open list aspect), in an entire state (which is the electoral district).
The main measure to try to decrease the number of resources, in the last years, was the establishment of a spending cap for campaigns. This has reduced the resources needed to get elected, but improvements are still required.
The Brazilian case, compared to other countries, presents particular characteristics. In the case of corporate donations, Brazil is part of a minority group that prohibits these groups from participating directly in the financing of politics. According to data from IDEA (Institute for Democracy and Electoral Assistance), most countries do not prohibit companies from contributing directly to parties; however, the minority includes important cases such as the United States, Canada, France, and Portugal, among others.
In the case of public funding, Brazil is in the majority group. Most countries provide for a portion of their budget to be allocated to parties and/or electoral campaigns.
The difference in Brazil is the amount of these resources (in 2022 it was more than five billion reais), as well as the dependence on these amounts. Brazilian parties survive almost exclusively on public resources. Since 2015, on average more than 90% of everything the parties raise comes from the federal government’s budget.
This number is also frightening when we consider that in Brazil more than 10% of the voters are affiliated with some political party. However, few donate to them. This denotes, on the other hand, the absence of an effort by the organizations to find other sources of income.
One must also consider how these amounts are distributed. This is where a bottleneck in the legislation comes in. The National Executives of the parties have discretionary power, and enormous freedom to determine how the funds are distributed: to which candidate’s money will be sent and to which states or municipalities. According to many specialists, this freedom is not supported by article 17 of the Brazilian Constitution. In other words, the parties should have the autonomy to organize themselves, but public resources should be used according to a series of criteria and principles that, very often, are not followed. Public resources, in this case, may serve to maintain regional or national leadership, undermining mechanisms of internal democracy and the very legitimacy of the organizations.
Having exposed this data, it is important to consider that we are dealing with the legal resources that circulate in the campaigns. They are declared to the TSE. Although these values tell something about the Brazilian elections, they do not tell the whole story. Other resources can be considered in the analysis.
In 2022, for example, the two best-placed presidential campaigns declared 130.5 million reais (Lula-PT, elected) and 105.5 million reais (Bolsonaro-PL, defeated). The amounts are close to the spending ceiling for the position (133 million) and show differences concerning their origins. While for Lula most of the donations came from public funds, for Bolsonaro the funds came from private donors, especially large businessmen. Beyond the official statements, however, it is necessary to consider the expenditures that the incumbent (Bolsonaro) made throughout the election, through the federal government—reducing the ICMS tax rate on fuels to reduce the price of gasoline, increasing the Brazil-aid, paying aid to taxi drivers and truck drivers, etc. All measures aimed at reelection cost an estimated 20 to 80 billion Reais, depending on the calculation. This use of the machine, despite not being a direct campaign expense, denotes the complexity of the relationship between political and economic power.
Finally, the data from this relationship itself needs to be available to the population. The normative angle here is essential, but we also have to pay attention to the effect of any reform. Brazil is witnessing a reformist anxiety that ends up hastening changes. We don’t even wait for one change to take effect to produce others.
The problem we see is that the political system is experiencing a crisis of legitimacy. That is, the electorate does not trust, or evaluate well, its representatives. Measures such as the increase of public resources tend not to help this evaluation. However, we do not know to what extent funding is an issue for this same electorate. More research is needed in this regard.
Bruno Marques Schaefer is a Ph.D. in Political Science (UFRGS) and a researcher at the EL22 Elections Project of NUPRI-USP and Imakay Research Hub. The Portuguese version of this article is available here.