The Money Keeps Flowing

After federal reform, Washington's wealthy political donors find new outlets.

RealNetworks 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." His colleague, UW sociology professor Paul Burstein, disagrees with the notion that money buys votes. "Studies by economists and political scientists show that campaign contributions do not have that effect," Burstein says.

Political donations are grouped into two basic categories: hard money, a term which refers to gifts to candidates 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 disclosure requirements that are as strict. 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."

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' fund-raising 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 Republicans already have a sizable hard-money advantage in Washington state giving for this year's federal election. The GOP has raised $5,590,404 to the Democrats' $4,672,410, according to the Center for Responsive Politics. What makes the GOP's fund-raising advantage even more striking is that Washington is a terrific hard-money state for Democratic funding—12th in the nation—while for Republicans, the state ranks 39th.

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.

The New Soft Money

As predicted by many opponents of McCain-Feingold, soft money has not gone away, it has just found a new outlet: the so-called Section 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.

Even though the Democrats enjoy an advantage in this new area, they still lag far behind in overall campaign contri­butions nationwide, according to figures from the Center on Responsive Politics.

This year, new Section 527 committees, which earned their nickname because of the part of the Internal Revenue Code that allows them to be tax exempt, have formed to defeat President Bush. America Coming Together (ACT) and the Joint Victory Campaign have attracted big Democratic donors in Washington, including RealNetworks' Glaser, Costco CEO Jeff Brotman, Costco President James Sinegal, and investor James Roush. All told, Democratic and liberal 527s have raised more than $1.9 million from Washington state. Republican and conservative 527s have only raised around $300,000.

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." The FEC has yet to rule on the bulk of the complaint, according to Weiss. ACT did not return calls for comment.

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," he says.

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 $108,250 in this election cycle, $38,250 to federal Democratic candidates and $70,000 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 use 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."

Does Money Even Matter?

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."

UW sociology professor Burstein 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 Burstein 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.

In Reaganism and the Death of Representative Democracy, another UW professor, Walt Williams, argues that the growth of campaign contributions is having a corrosive effect, however, 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.

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