McAuliffe acknowledges the irony that the new law was pushed primarily by Democrats seeking to rid the system of big money. "This law did not turn out at all the way people had anticipated," he says.
You mentioned the "Law of unintended consequences?
With new law, GOP routs Democrats in fundraising
By Jim Drinkard, USA TODAY
WASHINGTON - The late-afternoon shadows are lengthening on Capitol Hill, but Wyatt Smith's workday is still in full swing. It is prime telephone time on the West Coast, and the Republican money man is dialing for a series of upcoming party fundraisers.
A breakfast in Newport Beach, Calif., with Rep. Thomas Reynolds, head of the Republicans' House campaign committee, "is going to be an intimate setting, with three congressional members," Smith tells Wendy Randall, who runs a travel services business. She agrees to buy a $500 ticket.
August is normally the doldrums for political fundraising, especially in a non-election year. But Reynolds and Republican House Speaker Dennis Hastert, motivated in part by a new law that bans larger donations to the national political parties, are holding nine such events this month. Their fundraising effort is helping to extend an already substantial money advantage their party holds over the Democrats, an edge that could affect the 2004 elections.
Two key terms in world of fundraising Hard money : Funds raised by the national political parties and candidates for federal office, Congress and president, that can be used for campaign expenses. The law limits individual giving to $2,000 per election for a candidate, and $25,000 a year for a national party committee. Donors can give up to $57,500 a year to political parties.
Soft money : Money that flows into politics outside the law's limits. It can come from wealthy individuals or the treasuries of corporations or labor unions. Because parties can no longer accept soft money, outside groups are springing up to collect it. They are telling donors that they will take on campaign tasks the parties used to perform.
Four years ago, the two parties were at rough financial parity. But under the new campaign-finance law, championed, ironically, by most Democrats and opposed by most Republicans, the GOP has built a better than 2-to-1 advantage. When the Democrats' debt is taken into account, the gap grows to 4-to-1.
The law requires the political parties to survive solely on regulated "hard money" donations, with a limit of $25,000. They must wean themselves from the six- and seven-figure "soft money" donations that they used to solicit from corporations, labor unions and wealthy individuals.
That task is proving easier for the Republicans because they have a much larger base of small donors, built up over the decades they were out of power in Washington. Democrats, on the other hand, had become more reliant on the now-banned big donations, which they reaped from labor unions and Hollywood liberals.
Democrats are scrambling to keep up under the new rules; this month, House Democratic leader Nancy Pelosi is raising money in 11 cities. The two parties' Senate campaign committees also are putting on a spate of events. Rather than focusing on traditional political money centers such as New York, Silicon Valley and Hollywood, the parties are reaching out to smaller cities such as Akron, Ohio; Beaumont, Texas; Medford, Ore., and Oklahoma City.
"There's no longer the corporate skyboxes you can sell," says Sen. George Allen, R-Va., chairman of his party's Senate campaign committee, whose affinity for sports analogies comes from his football-coach father. "You have to sell individual seats, game by game."
As a result, Pelosi says, chasing down new donations has become "my night job." Says Reynolds: "We're working twice as hard for half the money."
The law, which took effect Nov. 6, banned a source of money that had accounted for nearly $500 million in the past two years, about half of the two parties' income. The ban is being challenged in the Supreme Court, which hears arguments in September. In the meantime, it is forcing both sides to seek creative ways to make up the loss. The situation is particularly acute for the Democrats, who relied on the larger contributions for a greater share of their income.
"It's going to be a financial wipeout in 2004," says Michael Meehan, political director for the nation's leading abortion-rights organization, NARAL Pro-Choice America. It could be several years before the party recovers, he says.
"It is a tremendous blow," says Terry McAuliffe, chairman of the Democratic National Committee. "We lost about 70% of our disposable income." But McAuliffe says he's confident his party will be competitive next year. One reason: a newly created national database of 158 million names, dubbed "Demzilla," that is being mined for new donors.
McAuliffe acknowledges the irony that the new law was pushed primarily by Democrats seeking to rid the system of big money. "This law did not turn out at all the way people had anticipated," he says.
The marketing of politics
To make themselves whole, the parties are digging more deeply than ever for small and medium-size contributions. And they are enlisting the tools of modern marketing to identify new donors and shake loose their money.
Databases and copywriters are supplanting personal schmoozing and glitzy dinners. Regular donors are being asked to reach out to their families, neighbors and co-workers for contributions. Money appeals are being targeted by gender, age, geography and issue. People with big networks of friends and associates who can "bundle" contributions for the parties and candidates are the new kings of the system.
McAuliffe points to a computer on a side table in his office. "I can get on right now and ask for single women with one child who voted in the 2000 presidential election in Missouri, and six seconds later, names and addresses will pop up on that machine," he says.
The terminal is connected to a mammoth storehouse of computer data built from voter lists, commercially available databases and information swaps with environmental, women's and other groups allied with the party. Each communication with someone in the database is recorded. McAuliffe paid for the system with soft money before the ban took effect.
"We can talk to our donors about issues that they care about," he says. For a nurse, the topic might be health care; for a teacher, education; for someone who belongs to the Sierra Club, the environment. "We used to send everybody an appeal about Social Security, and young people would take it and throw it in the trash," McAuliffe says.
The search for small donors represents a culture shift for Democrats, best symbolized by McAuliffe himself. He won the Democratic National Committee chairmanship two years ago largely because of his ability to persuade wealthy Democrats to write large checks to the party. Last year, he got a single donor, Los Angeles entertainment magnate Haim Saban, to give $7 million, a record amount, to help build a new party headquarters in Washington.
"There was no better soft-money fundraiser in the land than Terry McAuliffe, and now it's a felony for him to do what he does best," Meehan says.
Gold mine or 'financial Viagra?'
No one is spending more on the mass-marketing of politics than House Republicans. In the first six months of 2003, the GOP's House campaign committee paid $23.2 million to the Akron-based telemarketing firm Infocision, which prospects for new donors.
The firm, for example, calls small businessmen with invitations to join the "Business Advisory Council" of the National Republican Congressional Committee, in exchange for a donation. The technique helped the NRCC amass $44 million in contributions so far this year, but fundraising expenses ate up the bulk of the money raised over the telephone.
To Rep. Tom Cole, R-Okla., who ran the House Republicans' political operation a decade ago, "it's a very smart expenditure." Infocision's calls yielded 230,000 new donors who can be solicited again next year, before Election Day. By targeting proven donors, the Republicans will reduce their cost of fundraising dramatically and have more money to pour into campaigns, Cole says.
But Roger Craver, a veteran Democratic direct-mail fundraiser, questions that assumption. He says donors courted through vanity appeals aren't as reliable as those giving because of devotion to a cause. "This strategy is financial Viagra," he says ? an artificially pumped-up figure that can't be sustained.
Republicans' fundraising roots
Republicans have the financial edge for at least three reasons:
?They hold the presidency as well as control of both the House and Senate. Money follows power in Washington; many donors, especially lobbyists and the political action committees of trade groups and corporations, prefer to give their money to those in position to do them favors.
?A higher proportion of the political donor class ? people with annual incomes over $100,000 ? identifies with the Republican Party, says Michael Malbin of the Campaign Finance Institute, a non-partisan group that studies political giving.
?Republicans have cultivated their small donors consistently for a generation, while Democrats' attention to small-dollar fundraising has been sporadic. Beginning in the 1960s, the Republicans used mailings to identify and tap supporters for donations ranging from a few dollars to a thousand or more. The result is that a generation of GOP partisans has been trained to give regularly to the party, and the Republicans diligently plow money into maintaining their mailing lists.
The hard-money disparity between the parties has its roots in the power balance of that time. Democrats, with a longtime lock on Congress, tended to organize around issues such as the environment, women's rights or human rights. They sent their money to groups promoting those issues.
Republicans were out of power. They sought to regain it by sending money to their party for direct political action.
"The historic residue is that Democrats have been slower to develop a donor base," Craver says.
In addition to the more intense push to raise small donations through the mail, the telephone and the Internet, both parties are going after those who can afford to give the maximum under the new law ? $25,000 to a national party committee, with an overall limit to political parties of $57,500 a year.
"We're all chasing the 25s," McAuliffe says.
"There seem to be more fundraisers, and more expensive fundraisers, than ever," says Wright Andrews, a Washington lobbyist whose fax machine spits out invitations to high-dollar events at a rate of six a day. Andrews and his wife have given $56,000 to political campaigns this year. "The system still is basically out of control," he says.
Playing the outside game
Those who study and practice political fundraising say it will be years before the Democrats are fully competitive with Republicans in the hard-money arena. Until then, the party is looking for outside help from its traditional friends: organized labor and environmental, women's and civil rights groups.
"Interest groups are the only hope for Democrats," says Ken Goldstein, a University of Wisconsin political scientist who studies political media-buying patterns.
The interest groups say the new law allows them to accept large, unregulated donations and spend them on activities that benefit candidates. That could mean identifying and turning out friendly voters, or airing ads on issues that reinforce a candidate's campaign themes. To stay within the law, they must do it all without consulting with parties or candidates.
Those who pushed for the new law say the outside groups are acting as surrogates for the political parties and thwarting the law's intent. But election lawyers in Washington have been hard at work creating new repositories for the banned money.
Groups allied with the Democratic Party are forming an elaborate election machine for 2004 that will coordinate how they reach out to voters in battleground states. The organization, America Votes, is referred to informally as "The Table" because it serves as a forum to plan political activities. Its 15 interest groups have anted $50,000 apiece to launch the organization. The group has said it plans to raise $85 million.
"It is going to do all the kinds of things the parties did before this new campaign-finance law came into effect," says Linda Lipsen, director of the Association of Trial Lawyers of America's political action committee.
The group is run by Cecile Richards, daughter of former Texas Democratic governor Ann Richards. She denies any partisan agenda, but her membership list includes the bulwarks of Democratic politics:
?Organized labor . The AFL-CIO and two of its largest unions, representing service and government workers, hope to apply their money and grassroots organizing skill to voters outside their membership. Unions have been among the largest soft-money donors to Democrats; they gave $65 million over the past two elections. This year's political budget is about $52 million, but almost none of it can be channeled through the party.
?Women's groups. One of The Table's founders is Ellen Malcolm, who runs EMILY's List, a political action committee that backs Democratic women who favor abortion rights. Also on board are NARAL Pro-Choice America and the Planned Parenthood Action Fund.
?Environmentalists . Sierra Club executive director Carl Pope also helped create the new group. His outfit and another Table member, the League of Conservation Voters, typically spend millions to promote Democratic candidates.
?Other liberal interests . The Association of Trial Lawyers of America, People for the American Way, the Association of Community Organizations for Reform Now and MoveOn.org all have joined. They bring with them grassroots memberships and organizational tools. Harold Ickes, who advised President Clinton, is forming a group to run TV ads for the Democrats and has talked with Richards about joining her organization.
Republicans are playing the outside game as well, although with fewer groups. The GOP has spun off the Republican Governors Association, once an arm of the party, so that it can accept soft money as a legally separate entity. Like the Democrats, Republican Party officials have given their blessing to new outside groups set up to collect money that can help candidates in House and Senate races.
The check's in the mail
The law's backers say they are watching closely to make sure outside groups don't create a new channel for the corrupting influence of unlimited contributions.
"There is no evidence yet that the corporations or business executives who gave the bulk of soft money are going to now send that money to outside groups," says Fred Wertheimer, president of Democracy 21, a group that pushed for the donation limits.
At least in the short run, Wertheimer and his allies say, the law is having its intended effect: eradicating million-dollar contributions and their taint of special-interest influence over the parties. They see it as a kind of tough-love discipline that will restore the health of the political grassroots.
As a result, fundraisers like the GOP's Wyatt Smith are working harder to find new sources of cash. He places a call to Mike Phillips, owner of a group of cellular telephone stores, who is working to sell $25,000 worth of tickets to a breakfast in Sacramento. The news is good: A check for $5,000 will be delivered in days, putting the goal within reach. And Phillips knows the owners of the Sacramento Kings basketball team, who might be interested.
At the end of the day, all the notes from the phone calls will go into a computerized spreadsheet. Says Smith: "Otherwise, I can't keep track of it."
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