What political recession?

As the US midterm elections draw nearer, more money than ever is flooding into the critical battlegr

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Blame democracy and the closeness of the race. Blame the Supreme Court "Citizens United" ruling, which opened the floodgates to corporate funding. Blame the sheer passion whipped up by the Tea Party and others incensed by Barack Obama's policies.

Whatever the cause, this midterm election looks like turning into the most expensive in history, with 40 per cent more cash in the mix than in 2008. Be prepared to see a lot of big numbers. Millions of dollars are being splurged every day – by both sides.

The vast bulk of that cash is piling up behind Republican candidates in key Congressional and gubernatorial races across the country. So, who's supplying the funds?

The former White House chief of staff Karl Rove's American Crossroads project has raked in tens of millions of dollars from billionaire businessmen and others – although the law allows American Crossroads, as a tax-exempt, non-profit-making group, to keep the names of individual donors secret. The group has bought ads worth roughly $14m in some of the most critical battleground states, attacking Senator Barbara Boxer in California, as well as Democratic House representatives in New York, Ohio and Indiana.

Rove has also set up another high-spending group called Crossroads Grassroots Policy Strategies, together with a GOP operative, Ed Gillespie. They've proved highly successful in raising cash, too: last week they pulled in more than $13m in just a few days. Their goal? To raise $65m in total this year.

That cash certainly isn't going in the bank: the two groups, together with a couple of other Republican-leaning organisations, have spent more than $33m on political advertising so far.

Now Crossroads has announced an even bigger $50m joint strategy, this time in combination with two further conservative groups – the American Action Network and the Commission for Hope, Growth and Opportunity – to blitz the airwaves in a huge spending surge for the last three weeks of the campaign.

On the business front, the US Chamber of Commerce has raised enough to fund a $75m ad campaign, mostly targeted at the Democrats. The Centre for American Progress reports that some of the donations come from multinational companies based in the US, as well as groups originating in India and Bahrain, though again the details of donations to the chamber remain hidden.

But when the White House tried to single out the chamber for using foreign money to finance its ads, its president, Thomas Donohue, hit back.

"It's sad to watch the White House stoop to these depths and try to salvage an election," he wrote. "It won't work. Nor will the chamber be silenced."

And another name from the past has emerged as a major force behind the Republican fundraising effort: Fred Malek, who was deputy head of Richard Nixon's notorious Committee to Re-elect the President. Now a venture capitalist, the 72-year-old founded the American Action Network this year, and chairs its operations. The network is led by the former Republican senator Norm Coleman, who lost by the narrowest of margins to Al Franken in 2008, and it has been ploughing millions of dollars into campaigns supporting dozens of GOP House and Senate races. Malek has also been instrumental in raising cash from wealthy donors to the Republican Governors Association, which is expected to raise a record amount in this election year.

In total, according to analysis by Wesleyan University in Connecticut, ad spending on House and Senate races has reached $200m. That's almost double the amount spent during the same period in 2008.

Not that the Democrats are short of a cent or two. Take away the outside funding, and they've been outspending the Republicans by a margin of 1.5 to one. Now they're starting to shift some of that cash towards their most vulnerable candidates, fearing not just the loss of the House, but losing control of the Senate as well.

In the face of Sharon Angle's unexpected surge in Nevada against the Senate leader, Harry Reid, the Democrats plan to spend more than $2m in the last weeks of the campaign. That's even though the Tea Party-supporting grandmother has proved to be the fundraising star of the GOP, raking in an astonishing $14m in the past three months.

The White House has led warnings about foreign-funded attack ads by the right, but the Hill newspaper reports an investigation by the Centre for Responsive Politics, showing that the Democrats managed to raise more than $1m from groups affiliated with foreign companies. Although there is nothing illegal involved – parties are allowed to raise money from US subsidiaries, or American employees of corporations based abroad – it has inevitably attracted Republican cries of hypocrisy.

There are some who contend that money almost never influences the results of elections (in which case, it's funny that so much is spent by so many in pursuit of so few undecided votes . . . ). But the former labour secretary Robert Reich disagrees, warning that there's "a record amount of secret money flooding our system", while those at the top grow ever richer, and the public grows ever more angry and cynical. "We're losing our democracy to a different system", Reich says. "It's called plutocracy."

Felicity Spector is chief writer and American politics expert for Channel 4 News.