Campaign Cash Trickles Down to Small Biz

Small businesses seep up campaign money during the primaries.
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Brace yourself -- we've still got 10 months of election hoopla to go.

But lost in that frenzy of big money is some very good news for small businesses: Some of that campaign cash eventually trickles down.

Campaigns have to raise ever more staggering amounts to make it to the end of a two-year ordeal. Hillary Clinton has already raised $90 million, with Barack Obama's $80 million war chest not far behind. Mitt Romney is the leading Republican money man, with $63 million.

Not surprisingly, broadcast TV companies such as


(CBS) - Get Report



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rake in much of that money as candidates fight it out in a never-ending loop of campaign commercials.


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television analyst John Blackledge estimates that $2.2 billion will be spent on political ads for the 2008 presidential race -- almost four times what was spent in the 2004 election.

But as early states like Iowa and New Hampshire become increasingly important, more campaign cash is making it down to the small businesses lucky enough to be on the front lines.

Five Seconds of Fame

Think of all those staged photo ops you've seen on


; the candidate hanging out with locals at a folksy diner, or gathering with undecided voters at a café over mugs of cappuccino.

Restaurants and coffee shops with the right local flavor get national exposure -- and a nice PR boost.

"The big winners are eateries and bakeries in towns like Des Moines or Manchester," says David Swenson, an associate scientist at the Iowa State University economics department who has studied the economic fallout of campaign spending.

"They'll boom for about a 12 day period before a primary," he explains.

"In the smaller towns, it's hit-and-run campaigning -- no one stays long enough to have much of an effect."

Stay Awhile

But campaigns support small businesses in other, less obvious ways.

Take the ever expanding campaign season: For most of us, this election seems to have gone on forever -- Barack Obama made his first visit to New Hampshire a full two years before the election.

Campaigns and news organizations were already setting up offices in Iowa and New Hampshire last summer.

For local businesses, this could be a windfall. Every $10 million in visitor spending, Swenson found, supported about 200 jobs in Iowa, mostly in the service sector.

As each new candidate set up their own campaign infrastructure, more out-of-towners arrived looking for places to stay and eat. They went to the local barber for haircuts, picked up necessities at the town drugstore, and ran up bar tabs during late night strategy sessions.

Still Small Change

Small businesses account for more than 97% of all employers in Iowa, according to Andy Warren, state director of the National Federation of Independent Business, Iowa.

Undoubtedly, these businesses made some money off the caucus circus.

Swenson estimates that all the campaigns combined spent about $50 million that directly impacted incomes in Iowa.

$50 million sounds impressive -- until you realize it's only .04% of Iowa's total economy. So outside the service industry, primaries don't seem to make a significant economic dent.

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.