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This chapter is from the book

Is Your Candidate a PAC-Man?

FECA reduced the amount of money spent on campaigns—at least by the parties and candidates directly. But the law was like a finger in a leaky dike: The money has always found another way to burst through.

Since 1977, the number of Political Action Committees (PACs) has risen from about less than 1,400 to more than 4,000. The FECA legislation limited the amount of hard money the candidates themselves could raise, but limits on other kinds of funds—so-called "soft money" from the candidates' parties—were ruled unconstitutional by the Supreme Court.

Laugh Track

"John Kerry is busy trying to raise money right now for his campaign. It was reported today that Kerry's hoping to raise $80 million before the Democratic convention. That's a lot of money. Yeah, Kerry has two ways to raise the $80 million: soliciting Democratic donors or going through his wife's purse."

—Conan O'Brien

Parties have found many creative ways to bypass the donor limits, including transferring money to state and local party organizations and creating TV ads that don't violate the letter of the law because they don't use the phrases "Vote for..." or "Support...". Instead, so-called issue advocacy ads support or oppose a candidate's position on a given issue.

Political action committees are used by corporate and other large donors as funnels to send their money to the candidates. Because there are no limits on how much money donors can give to the PACs, these organizations effectively bypass the FECA law, in effect opening up an unlimited stream of campaign funding.

Finding Gold Despite McCain-Feingold

Despite opposition from an odd coalition of liberal and conservative interest groups, including the AFL-CIO, the American Civil Liberties Union, the U.S. Chamber of Commerce, and the Christian Coalition, the McCain-Feingold bill (less commonly known as the Bipartisan Campaign Reform Act) was passed into law by Congress and signed by President Bush in March 2002. Its constitutionality was upheld by the U.S. Supreme Court in December 2003.

McCain-Feingold eliminates "soft money" contributions, raises the limits on individual contributions, and includes a broad ban on "issue" advertising within 30 days of primaries and within 60 days of general elections. It also provides for improved and more timely reporting of who spends the money and how it was spent.

Kerry and the 527s

Kerry may trail Bush in fundraising for his own campaign, but he's bolstered by a wide margin in support from 527s, a new type of PAC used specifically in response to the McCain-Feingold Campaign Finance Reform Act. Organizations such as the Media Fund, MoveOn.org, and the AFL-CIO have spent more than $30 million dollars in TV advertising for the Kerry campaign—in effect becoming a kind of "shadow" Democratic Party.

America Coming Together, a 527, is run by Minyon Moore, former chief of operations for the Democratic Party. American Family Voices, a 501c (named after the 501c section of the Internal Revenue Code), is run by Michael Lux, former aide to President Clinton and former political director of People for the American Way. (For more information on the legal definition of 527's and 501c;s and a comparison of how "hard money" and "soft money" can be used by the candidates, go to http://www.opensecrets.org/parties/s97-91.htm.)

Kerry has been able to focus his media campaign on biographical or platform-related ads and leave the mudslinging to the 527s. This helps Kerry maintain more of a high-road image for his campaign, but make no mistake: The 527 committee ads are directly in support of Kerry because nearly all of them are anti-Bush.

Laugh Track

"Teresa Heinz is on the cover of Newsweek magazine. John Kerry said he first noticed her when she was on the cover of another magazine—Fortune."

—Jay Leno

The list of contributors who donate to 527 committees and 501c committees that support Kerry and Democratic causes includes George Soros, financier, ($10 million pledged to America Coming Together, $5 million to MoveOn.org, and $3 million to Center for American Progress) and Peter Lewis, chairman, Progressive Corp., ($10 million pledged to America Coming Together, $5 million to MoveOn.org).

Other top contributors include Stephen Bing's Shangri-La Entertainment, a film production company ($8 million to the Joint Victory Campaign and MoveOn.org), and Alida Messinger, daughter of John D. Rockefeller and trustee of the Rockefeller family fund (more than $3 million to various Democrat-support and environmental advocacy groups).

Go to http://www.opensecrets.org/527s/527cmtes.asp to see a list of the top 528 committees. Go to http://www.opensecrets.org/pacs/index.asp to see information about the top PACs.

Funding the Bush War Chest

  • Democrats have had to rely on soft money to keep up the pace with Republican fundraising for decades. Republican candidates have been able to raise substantially more "hard money" funds from individual donors: the wealthy and conservative constituency the party represents. Go to http://www.opensecrets.org/softmoney/softglance.asp to see the impact of soft money on Democratic and Republican fundraising.

  • The Republican advantage has carried through to the 2004 campaign, though the healthy funding Democrats have built from 527s and 501c's has them standing on more of an even footing. Go to http://www.opensecrets.org/overview/topcontribs.asp?cycle=2004 to see the top 25 overall donors in the 2004 election cycle.The information on this web page includes both PACs and individuals and shows the split between parties from each donor. Note that the split for these top donors is relatively equal when PACs and organizations are included. Democrats garnered 48% of the $29.6 million total, whereas Republicans took in 52%.

Laugh Track

"As a result of that testimony [President Bush before the 9/11 commission], somehow they raised $20 million for the re-election campaign."

—David Letterman

The Republican advantage in individual hard money donations is shown at http://www.opensecrets.org/overview/DonorDemographics.asp?cycle=2004. The clear advantage Republicans have in the number of donors and in total dollars is evident in all categories. Keep in mind that the total number of donors is very small relative to the total U.S. population. Only 0.25% of the U.S. adult population gave more than $200, and only 0.11% of the U.S. adult population gave more than $1,000.

What If?

Al Gore announced that he donated $6 million dollars left over from his 2000 election campaign to help John Kerry. What if Gore had spent that money in the last few weeks of the 2000 campaign? Would an ad blitz in Florida and other states decided by a few hundred votes have tipped the election to Gore?

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