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GOP surges in campaign money race

WASHINGTON -- When Congress passed a campaign finance bill 18 months ago, it was hailed as a historic measure that would change the face of American politics. It was supposed to take special interest money out of campaigns. It was supposed to prevent a handful of wealthy people from dominating the election.

Today, at least one consequence is clear: The bill has been a bonanza for President Bush. And, some Democrats fear, there may be another result: a disaster for the Democratic Party in 2004.

Bush is on course to have $200 million to spend for the primaries; by comparison a Democratic nominee who accepts public financing can spend no more than $45 million.

Although this money theoretically is for the primaries, Bush has no primary opponent. He is thus able to spend his money from now to the Republican convention in September 2004, giving him a major edge for the fall campaign.

The disparity is so large that Representative Martin T. Meehan, the Lowell Democrat who coauthored the campaign law, said in an interview that Democratic candidates would be better off rejecting public financing and avoiding the attendant spending cap -- hardly the position of a reformer.

"It has gotten to a point where I think it is a disadvantage for a candidate to participate in the public financing system with spending caps," said Meehan, who is proposing a new law to address some of the problems.

Playing by the rules In 2000, Bush had a 2-to-1 financial advantage over Al Gore, Meehan reported. This time, he said, a campaign law provision that doubled individual contributions -- which Meehan said he opposed -- effectively has redoubled Bush's advantage for 2004. "George Bush is breaking all kinds of records and he is playing by the rules," Meehan said. "It is just that this system is clearly broken."

A separate problem has beset the Democratic National Committee. The DNC has relied on large, unrestricted donations for a greater percentage of its funds than have the Republicans. Those donations were banned by the campaign financing bill. Partly as a result, as of June, Republicans had accumulated an advantage of almost 3 to 1. And the financial gap has exposed a glaring Democratic weakness: The party has a weak base of smaller donors.

Bush's advantage is so extraordinary that some Democrats are considering avoiding voluntary spending limits. The former Vermont governor, Howard Dean, has filed a document with the Federal Election Commission stating that he intended to accept the cap. But he said recently that he might withdraw that document. "The question," he said, "is what do you do with an opponent who can murder you" financially.

While some of the other candidates have suggested that they would take public funds and abide by the spending caps, none of them has filed a statement with the Federal Election Commission declaring that intention, a commission spokesman said. Senator John F. Kerry, for example, has not announced a determination on the matter. "We are making a final decision in the fall," said a spokeswoman, Kelley Benander.

Democrats who opposed the 2002 legislation say the gap is even worse than they had predicted. Representative Albert Wynn, a Maryland Democrat who warned in debate on the bill that it would widen the divide between the two parties, said Democratic leaders were so eager to be labeled as reformers that they didn't act in the party's interest.

"They may have doomed us to being a permanent minority party," Wynn said. The shortfall, he added, means that there will be less money for programs to register minorities. "Bitterness is probably too mild a word . . . . I have had a lot of people in the Democratic Party tell me I was right."

Advocates of a campaign financing overhaul still stress that they are proud to have eliminated the most glaring problem -- huge contributions from wealthy donors. But even that measure is in doubt. On Sept. 8, the Supreme Court is scheduled to hear arguments that the campaign finance law should be found unconstitutional.

A paucity of small pockets The stories of President Bill Clinton's fund-raising -- such as sleepovers at the Lincoln Bedroom in exchange for big contributions -- overshadowed an extraordinary weakness for the Democratic Party. Although Democrats portrayed themselves as representatives of the little guy, they were far behind Republicans in drawing small donations. For years, Republicans gathered the names of thousands of potential donors in a huge database. The strategy appeared to have been inefficient at first glance; only a small percentage of mass-mailing recipients were inspired to donate. But over time, the database has paid off, providing the GOP with an overwhelming advantage year after year.

"The Democratic Party has been playing catch-up ball on small donors for years," said Steve Grossman, who was the party's chairman from 1997 to 1999. "When I got there, I was told the Republican Party had double the number of contributors," he said.

But Grossman said that he was unable to update the Democrats' system because the party had been saddled with millions of dollars in legal fees as a result of the campaign finance scandal.

Only in the past couple of years has the Democratic Party begun to put together a program similar to the Republican one. Contributions have increased under the program, known by the nickname "Demzilla," but their level remains far below that of Republicans. As of June, the Republican National Committee had collected $56 million for the 2004 cycle, compared with $19 million for the Democrats.

Republicans argue that their financial advantage is smaller than it appears. Last week, the Bush campaign chairman, Marc Racicot, sent an e-mail appeal for more funds, writing that Democrats "will have the all-out help of some leaders in the AFL-CIO, many wealthy personal-injury trial lawyers, and well-funded liberal special interests. The hundreds of millions of dollars they will spend could make the race close."

A free-speech conundrum Still, Republicans acknowledge that their fund-raising has been enhanced by the new campaign finance law, which was backed by most Democrats after the campaign finance scandal but opposed by most Republicans, many of whom saw it as an infringement on free speech.

"There were a number of us who said, you know, under this, the Democrats are screwed. They get their money from big money `soft' donors," said a Republican strategist, Grover Norquist. "Smart Republicans all said that. There was this discussion within the Republican Party, `Remind me why we're fighting against this so hard?' "

Even as the Republican Party has mastered the art of getting more money than Democrats, Bush has created a whole new level of fund-raising superiority. Until 2000, the post-Watergate system of financing presidential campaigns had produced relative parity. Candidates were expected to make a deal: If a candidate agreed to a spending cap, taxpayers would pay about one-third of the campaign cost. That was so enticing that every nominee agreed to the deal -- until George W. Bush.

In 2000, a candidate who accepted public money would have had about $41 million for the primaries. Bush, relying heavily on oil and financial interests, rejected public funding. Thus he didn't have to abide by the cap. As a result, he had about $100 million to spend, more than twice the sum raised by Gore, the Democratic nominee, who did agree to the cap.

Then came the campaign-finance law. Doubling the individual contribution is likely to double Bush's war chest to $200 million. In the meantime, the spending cap, which would affect a Democratic nominee who abides by it, has been raised only to $45 million, from $41 million, for 2004.

The reason for this is that when legislators doubled the contribution limit, they did not change a crucial countervailing element of the presidential campaign system -- a failure that is particularly haunting to Democrats.

The element is this: Under rules that remain unchanged from 1976, a candidate can get a 100 percent match for the first $250 raised from each individual. Thus, if a person gives $250, the candidate can double that with public funds, and thus effectively gets $500. But if a person gives the maximum, $2,000, the candidate still gets only $250 in public matching funds. The $250 matching limit has not been adjusted for inflation; it also was not adjusted when the individual contribution limit was doubled to $2,000 for the 2004 campaign. Bush has enhanced his fund-raising via supporters who are adept at fund-raising. "Pioneers" and "Rangers," as his campaign calls them, pledge to collect donations totaling $100,000 and $200,000, respectively.

Rather than use their own deep pockets, these fund-raisers use their wide range of contacts to assemble big pools of donations. Some critics say this violates the spirit of the law, but the practice is legal and is followed in varying forms by many candidates. In the Bush campaign, 23 people have qualified as Rangers, while another 45 have become Pioneers, according to the Bush-Cheney re-election Web site.

Three members of this select group are part of the Egan family of Massachusetts, headed by Richard Egan, the founder of EMC, the Hopkinton company that specializes in data storage. Egan, the former US ambassador to Ireland, and his sons, Michael and Christopher, did not respond to requests for interviews.

An analysis by the nonpartisan Center for Responsive Politics found that the Egans have raised more money for Bush than has any other family, dubbing them the "First Family of Fund-raising." In June, an Egan fund-raiser featuring Vice President Dick Cheney netted $1.2 million from 600 people giving the maximum of $2,000, the center said.

Such fund-raisers have been castigated by Dean, the former Vermont governor. At a rally in Falls Church, Va., before 4,000 people, Dean blasted the way Bush is collecting $2,000 checks, and contrasting that effort to the small-donor solicitations he makes on the Internet.

In fact, Dean also is soliciting clumps of large donations. As soon as he left the rally in Falls Church, he went to a private reception in nearby McLean; those in attendance had been asked to give at least $1,000 as an entrance fee. In an hour or so, Dean had raised about $120,000 from about 100 guests.

Still, Dean's overall success in fund-raising -- he is expected to overwhelm the nine-person field in reports to be filed in September -- has come largely from small donors.

It is no small irony that the national cochairman of Dean's campaign is Grossman, who didn't have the money to improve the small-donor program when he was chairman of the Democratic National Committee. Speaking as a Dean partisan, Grossman said: "The Democratic Party's salvation is to take a serious look at what the Dean campaign has done in terms of donor development and cultivation and to try to emulate that."

Michael Kranish can be reached at kranish@globe.com; Anne E. Kornblut at kornblut@globe.com.

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