Romney, Huntsman and the Utah economy: how the 2012 election will impact the state.

• Author: Gochnour, Natalie
• Position: Economic Insight

Every summer brings a boatload of economic news and events--oil prices, the summer job outlook, hurricane season, national park visits and so the list goes. This summer Utahns will also notice an abundance of media attention on the Beehive State as two prominent presidential candidates with Utah ties begin their quest for the presidency. The economic impact of these candidacies on Utah is worthy of reflection.

The media has reported that President Obama's reelection campaign and political allies will spend about a billion dollars to secure four more years in office. To be competitive, the republican candidate will need to spend a similar or larger amount to overcome the power of incumbency. We're talking about numbers twice as large as the 2008 presidential elections--to date the most costly in history. It's a little hard to fathom.

This money doesn't just appear out of thin air. So where does it come from? It is privately raised from individuals, political action committees and corporations. Said another way ... elections are funded by the American economy. We all pay something--either directly or through higher prices--to finance these campaigns.

So how does this affect the Utah economy? Utahns and Utah companies both contribute to and receive payments from presidential campaigns. Some companies with a presence in Utah, like Goldman Sachs and Microsoft, are large contributors to these campaigns. With the exception of the money that comes back to the state in payments for services, donations from Utahns leak out of the state and are spent elsewhere. Utahns donated a cool $5.5 million to the Romney campaign during his 2008 presidential bid. Romney recently raised more than $10 million in a single day of fundraising. In economic terms, these donations are no different than a one-time federal tax increase. It takes money out of savings, consumption and investment in Utah and moves it elsewhere.

Of course, some of the money comes back. A handful of Utahns will be directly employed by the major campaigns. Many Utah companies will sell their wares to campaigns, starting first with the big winner, the media, which receives a boost from political advertising. The economic impact extends through the economy into legal work, graphic design and printing, even the U.S. Postal Service.

What makes 2012 different for the Utah economy is that we have close ties to not just one, but two candidates vying for the GOP nomination. Mitt Romney and Jon Huntsman...