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Archive for Saturday, November 4, 2006

Political system flush with cash; election likely to cost $2.6B

November 4, 2006

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— Wealthy Americans and legions of small donors are helping finance an onslaught of last-minute political advertising and a fierce voter turnout drive over the next three days, closing out a midterm election that is projected to cost more than $2.6 billion.

Candidates, the national parties and advocacy groups are pumping millions of dollars into a few dozen House and Senate contests that could rearrange the nation' political power structure.

All this money has contributed to one of the greatest saturation of political and issue ads on television. Combined with money spent on ads for governor races and scores of ballot initiatives in the states, the spending on congressional advertising will exceed $2 billion this year, more than was spent in the 2004 presidential election.

The influx of money has had its share of surprises.

The parties, particularly the Democrats, have adapted remarkably well to a 2002 campaign finance law that many thought would render them irrelevant. Democrats and Republicans have tapped a new vein of small donors, and have taken advantage of higher contribution limits to squeeze more money out of the ultra-rich.

Strikingly, the Democrats have used a late burst of fundraising to close a Republican cash advantage and to expand their hunt for competitive races. The rush of cash has also quieted an internal squabble over money between Democratic National Committee Chairman Howard Dean and the heads of the party's two campaign committees.

At the same time, challengers have raised more money, putting Republican incumbents at risk. And political action committees set up by labor, business and ideological groups have made a resurgence, raising hundreds of millions of dollars to target specific congressional races.

One thing is for sure. While the 2002 campaign finance law, known as McCain-Feingold, banned unrestricted donations from labor, corporations and the wealthy to the political parties, it did not reduce the amount of money in the political arena.

"The money would have increased no matter what," said Steve Weissman, associate director at the Campaign Finance Institute, which tracks money in politics.

Evan Tracey, chief operating officer at TNSMI/Campaign Media Analysis Group, a company that tracks political advertising, noted that candidates can now solicit twice as much money from individual contributors as they could in 2002.

"Salaries didn't double, rents didn't double, cell phones didn't double, so you have more money to go to the largest campaign item, which is paid media," Tracey said.

The pace of fundraising and spending reflects the closeness of this year's election. Democrats need a net gain of 15 seats to win control of the House and six seats to regain control of the Senate.

As of Oct. 18, the six main committees of the two national parties had raised about $770 million and House and Senate candidates had raised $1.14 billion, according to the Federal Election Commission. And they have continued to raise and spend money since.

In 38 House districts deemed competitive, Republican incumbents have raised an average of about $2.5 million each and their Democratic challengers have raised an average of about $1.6 million. More surprising is the Democratic advantage in the 14 competitive races for open House seats now held by retiring Republicans. There Republicans have raised an average of $1.8 million and Democrats have amassed an average of $1.9 million each.

In all 52 of those races the two national parties have stepped in with contributions and independent spending averaging nearly $1.4 million for Republicans and more than $1 million for Democrats. Together the parties have poured more than $5 million into each of seven of the hottest races.

The national parties have spent about $64 million in 10 Senate contests. Of those, the most competitive are races in Missouri, Virginia, New Jersey, Montana and Tennessee. Sen. Chuck Schumer of New York, the chairman of the Democratic Senatorial Campaign Committee, has been able to thrust and parry his way across the Senate landscape as new dangers and opportunities arise.

"We've been able to do just about everything we wanted: defend the blue states (and) go into the red states very strongly," he told reporters this week. "So our financial advantage is proving to be extremely helpful."

Four years ago, critics of the campaign finance law that eliminated unrestricted donations to the parties warned that the national Republicans and Democratic organizations would collapse because unlimited "soft money" accounted for half of their funds.

Instead, both parties adjusted their fundraising methods, aiming for smaller but more numerous contributors. An analysis by Anthony Corrado, a government professor at Colby College in Maine, found that 38 percent of the money raised by the parties so far has come from donors giving less than $200.

"Especially for the Democrats this is the big surprise," said Sheila Krumholz, the acting director at the Center for Responsive Politics, who first predicted the $2.6 billion in spending in this election. "They navigated the narrow straits to rebuild their machine."

With higher donation limits, big contributions are up, too. Krumholz' center calculated that nearly 130,000 donors gave more than $2,000 to candidates and parties for a total of about $780 million. At the elite level, the CRP found at least 71 individual donors who have reached the federal limit this election cycle of $101,400 in contributions to candidates, parties and political action committees.

The growth of political action committees has accelerated, but their function has shifted from simply donating to candidates to influencing elections through ads, direct mail and phone banks.

The Center for Responsive Politics predicted that PACs for the first time would raise and spend more than $1 billion. Several PACs have supplemented party spending, with some targeting congressional races before the parties swoop in with their big bank accounts. A PAC operated by the liberal MoveOn.org ran hard hitting ads in the spring against six incumbent Republicans. It is now back, with more than half a million dollars in attack ads in races in Virginia, Pennsylvania and North Carolina.

The American Federation of State, County and Municipal Employees PAC has spent $2.3 million supporting Democratic challengers. The National Association of Realtors has spent $4.2 million on behalf of Democrats and Republicans. And the conservative Club for Growth has used both its political action committee and its nonprofit organization to back candidates who advocate for tax cuts and smaller government.

"We're seeing PACs being much more aggressive in making independent expenditures on behalf of candidates," said Michael Toner, the chairman of the Federal Election Commission. "All of this is the latest in the transformation of the campaign finance system after the McCain-Feingold law."

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