The Money Keeps Flowing

by George Howland Jr.


Real Networks founder Rob Glaser has given more than $1 million to support Democratic candidates and defeat President Bush in November. Glaser's giving is just Washington's biggest example of how campaign cash continues to flow, despite all the sound and fury when Congress passed the McCain-Feingold campaign finance reform law in 2002.


Walter Williams, professor emeritus of public affairs at the University of Washington's Evans School, says the flood of political money is so huge that "there is more political bribery now than at any time in our history."


However, his colleague, UW sociology professor Paul Burnstein, disagrees with the notion that money buys votes: "Studies by economists and political scientists show that campaign contributions do not have that effect," he says.


Political donations are grouped into two basic categories: "hard money," a term which refers to gifts to candidates, parties and political action committees (PACs) that are strictly regulated, both in amount and disclosure requirements; and "soft money," the term for unlimited donations that do not have stringent disclosure requirements. The McCain-Feingold bill, named for its sponsors, Sen. John McCain. R-Ariz., and Sen. Russell Feingold, D-Wis., stopped the tsunami of soft money that was rushing into the Democratic and Republican political parties from wealthy individuals, corporations and labor unions.


Steve Weiss of the Center for Responsive Politics, a D.C. campaign watchdog, explains that wealthy individuals, "corporations and labor unions were prohibited from giving to political parties to reduce the possibility of corruption."





Leveling the Field


The McCain-Feingold changes, however, hurt Democrats more than Republicans. "Republicans have long had an advantage in hard money-raising," notes Weiss.


The new law raised the contribution limits on hard money donations from $1,000 to $2,000, and the Republicans' fundraising advantage is expected to increase, because, Weiss says, the GOP is better able to raise contributions near the upper limit. In addition, the Republicans are far better at raising small, hard-money contributions of $25 or $50 through direct-mail appeals. "Republicans have invested tens of millions into developing a very effective direct-mail campaign," notes Derek Willis of the Center for Public Integrity, a D.C. nonprofit.


The Democrats have a slight hard-money advantage in Washington state giving for this year's federal election. As of June 1, the GOP has raised $8.18 million to the Democrats' $8.58 million, according to the Center for Responsive Politics, which tracks Federal Election Commission statistics. What makes the GOP's fundraising disadvantage seem like an advantage is that Washington is a terrific hard-money state for Democratic funding -- 12th in the nation -- while for Republicans the state ranks 23rd.


The McCain-Feingold law also hurt the Democratic Party by curtailing soft-money donations. During the Clinton years, Democrats became more effective at raising large amounts of soft money from the very rich and from labor unions. "Republicans used to have an advantage in soft money, but Democrats pulled even in the last couple of elections," explains Weiss.


As predicted by many opponents of McCain-Feingold, soft money has not gone away. It has just found a new outlet: the so-called 527 committees. In 2002, these organizations, like the Republican Governors' Association and the Democratic Governors' Association, poured more than $250 million into election-advocacy efforts, $185 million of it going to supporting Democrats, according to a report by Willis of the Center for Public Integrity. In fact, the 527s remain an advantage for Democrats, who until recently had been badly trailing GOP fundraising efforts. There are more 527s sympathetic to Democrat causes, and those committees have raised more money than those used to promote Republican causes.


Even though the Republicans ran out to an early lead in overall fundraising, Democrats have made an impressive comeback. Between March, when John Kerry sewed up the nomination, and May, Kerry has raised more money than Bush, $100.4 million to $55.2 million, according to the Washington Post. Still, Bush has a money edge; when you combine the cash raised by the candidates, the parties and by the 527 committees, the GOP has raised $574 million to the Democrats' $421 million, according to the Post on June 17.


The 527 committees, named for the part of the Internal Revenue Code that allows them to be tax-exempt, include some that have formed to defeat President Bush: America Coming Together (ACT) and the Joint Victory Campaign. Both have attracted big Democratic donors in Washington state, including Real Networks' Glaser, Costco CEO Jeff Brotman, Costco President James Sinegal and investor James Roush.





Cutting the Parties Out


The growth of 527s has set off a furious debate. Late last year, campaign watchdogs, including the Center for Responsive Politics, filed a complaint with the Federal Election Commission charging that these committees were "illegal schemes" to circumvent McCain-Feingold and "inject million of dollars of soft money into the 2004 electorate." In May, the FEC rejected efforts to limit 527 committees in any way, although it did ask its own lawyers to study the matter further. A report is expected some time in August.


Washington State Republican Party Chair Chris Vance says the growth of 527s might weaken the state's Democratic Party. In previous elections, Vance explains, the main task of both state Democratic and Republican parties was to get out the vote by registering voters, running phone banks and sending direct mail encouraging partisans to participate. These efforts were overwhelmingly funded by soft money, says Vance. Now that soft money can no longer flow to state parties, Republicans are just switching to their strong suit -- hard money. Democratic state parties, including Washington's, however, are scrambling, claims Vance. Democrats "have created these 527s to get out the vote," says Vance.


Washington State Democratic Party Chair Paul Berendt says the state GOP will have a lot more money than his party will have this fall. He will not, however, comment on the growth of 527s.


Vance's description, however, is consistent with that of a large Democratic contributor, environmental attorney Peter Goldman. He is well known for his efforts to protect state forests. He has also contributed more than $100,000 in this election cycle, with roughly 70 percent of it going to ACT. Goldman bristles at the description of the latter as soft money. He supports McCain-Feingold's elimination of soft money donations to the parties because he thinks it helps insulate politicians from business interests. ACT, he argues, is something altogether different.


"We are paying to get our message out to the citizens," he explains. ACT will go into the 12 or 15 battleground states, including Washington, and using a combination of high tech and shoe leather to identify voters who will be opposing President Bush. ACT will then work to get those voters to the polls on Election Day. "I don't look at that as soft money," says Goldman. "We are getting the troops out. Republicans are doing the same with the evangelistic voters, largely in response to our effort." He notes he is not expecting any favors for his money. "I am giving a huge chunk of change to ACT. The environment is incredibly important to me, but I am not getting anything for my pet issue." He also claims that the Democratic state parties are not pleased about this independent effort. "We are cutting the parties out. They are pissed at us."


The Center for Responsive Politics' Weiss believes 527s aren't playing fair. "They are not supposed to be involved in federal elections," he says. "They are claiming they are not political committees. They can collect unlimited funds. It raises big concerns."





Does Money Matter?


UW sociology professor Burnstein thinks Weiss is mistaken to be worried about the impact of campaign cash on politicians. "Members of Congress are more strongly affected by their parties, ideology and constituents than by interest groups," he argued in an article in Contexts magazine last summer. "The effects of campaign contributions and lobbying is overestimated because people tend to remember the egregious but atypical cases of apparent influence."


He says that critics who see influence-peddling everywhere frequently assume that they know what the general public interest is. "Maybe you are mistaken about the public interest," he says. Neither is Burnstein concerned about the amount of campaign money spent on political advertising: "It's less than Coke and Pepsi spend fighting each other." He notes that even many wealthy campaign donors don't max out in giving to political campaigns. "Maybe they know those contributions don't make that much difference," he says.


However, in Reaganism and the Death of Representative Democracy, UW public affairs professor Walt Williams argues that the growth of campaign contributions is having a corrosive effect on democracy. "Politicians listen to monied interests rather than their constituents," he says. Politicians respond to voters on issues that are hotly debated in the public sphere -- like abortion or the war in Iraq, but that is not where business gets done, Williams says. Rather, it is on issues that are "below the noise level," like changes to tax code and corporate subsidies, where you see the real influence of money on politics. "It's a plutocratic government in Washington, D.C., today," he says.


Williams is not surprised that wealthy donors have found a new outlet for soft money donations. "They were going to find a loophole," he says. "It is like cutting off mother's milk. These guys live and die by political contributions." Williams believes that you can no longer reform the nation's campaign finance system. "It is broken so badly, it cannot be fixed," he says.





George Howland Jr. is the political editor of Seattle Weekly, where this story first appeared. Ted S. McGregor Jr. updated this story.





Publication date: 07/01/04