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Money and Politics: A Primer by Robert Schlesinger and The Center for Public Integrity

Robert Schlesinger is a staff writer with The Hill in Washington, DC.
The Center for Public Integrity is a Washington-based, non-partisan, investigative research organization.


In early April 1997 The New York Times published a poll of the views of 1,347 adults on the current campaign finance system. The results were telling.

  • 75% of Americans believe that "public officials make or change policy decisions as a result of money they receive from major contributors."

  • 89% of Americans believe that the current campaign finance system needs either a "fundamental" change, or should be scrapped entirely.

  • 53% of Americans think President Clinton wants to keep this system, and 68% believe that the Congress wants to keep the status quo.

And they are probably correct. It is fashionable inside and outside The Beltway these days to speak with knowing cynicism about the chances of reform: it probably won't get done, and if it does it won't be substantive.

Indeed, campaign scandals did not begin with Watergate, and will not end with the current congressional hearings. If anything, the current situation has proven the adage that stopping money in politics is like trying to stop water from flowing down hill. You can't do it. Given enough time, special interests will find and exploit loopholes, quickly making small pinpricks in the law loopholes large enough to drive a billion Chinese contributors through.

But if the President and Congress are indeed as resistant to change as the public believes, Americans have no one to blame but themselves. Politicians are mainly decent people stuck in a bad system, where going along is conducive to getting along. As long as Americans participate in the New York Times poll, but shy away from the poll that counts in November, our elected officials have little incentive to change.

What follows is a primer on the influence and effects of money in politics and 'The Way Washington Works.' There's no easy fix to it all. But the answer to the problems with this country remain engagement, not apathy or cynicism. While the average American - who gives $0 - may wonder what they can do, it is useful to remember the words of the late Robert F. Kennedy: "Few will have the greatness to bend history itself. But each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation."

1. WHO GIVES A BUCK?

How much money are we talking about, and where does it come from?

The 1996 election cycle was a record breaker, no matter which way you cut it: fund-raising hit all time highs. The Democratic Party raised $221.6 million in hard money -- a 36% percent increase from the 1992 election -- and $123 million in soft money contributions. That's almost three and a half times as much as was raised in the 1992 cycle. (1)

However, Democrats are amateurs next to the GOP. The Republicans raised $416.5 million -- a whopping 57% increase from 1992 -- while pulling in more than $138 million in soft money. That's almost three times as much in soft money contributions from the previous presidential election. (2)

So where is the money coming from?

The popular answer is PACs. However, they account for only a relatively small percentage of party receipts. In the 1996 elections, the Democrats received 9% of their campaign cash from PACs, while the GOP -- more proficient in direct mail appeals -- got only 3% of their money from PACs. Individuals contributed 87% of the Republican's money, and 77% of the Democrats'. (3)

But which individuals? Only about 5% of Americans contribute to campaigns. (4) And a smaller number give in large amounts. According to the Center for Responsive Politics, only about 0.33% of the 250 million people living in this country gave contributions of $200 or more to congressional candidates during the 1992 cycle (the last for which these statistics have been tabulated).

Where does the soft money come from? During the 1996 election cycle, more soft money ($39,852,719) was given from the District of Columbia than any other state or territory. Not surprising since that's where most of the lobbyists and PACS are located.

2. THANK YOU FOR NOT FUND-RAISING

Where legislators can, cannot and do raise money

They huddle outside their office building, forced out by the conflict between the law and the demands of an addiction many deny even exists.

They're not smokers, they're members of Congress. While they can smoke to their hearts' content inside their offices, they can't raise money there. Yet the inexorable logic of re-election makes the money chase a year-round necessity.

The average House member has to raise more than $5,000/week over their two year term, while the average senator must raise in excess of $14,000 weekly over their six years. Many Congressmen retreat to cubicles provided by their party or to special space they've rented, to make phone calls. Some use the cell phone on the sidewalk. But others can't resist the temptation to cheat.

David Grann and Erika Niedowski recently reported inThe New Republic . "When one lobbyist recently got a call from a member soliciting donations, he asked why the congressman was whispering. 'I'm in the committee room,' he answered. Texas Senator Phil Gramm has boasted of his office telephone solicitations. And in 1995, New Hampshire Senator Bob Smith telephoned one potential donor and left a message saying the contributor could call him back in his personal office suite." (5)

Skirting (or violating) the law isn't confined to the Capitol end of Pennsylvania Avenue: Vice President Gore was recently the center of a finance fire storm over his making fund-raising calls from his office, leading to Gore's bizarre explanation that there was no "controlling legal authority" to stop him.

3. LEADER OF THE PAC

What is a leadership PAC, and why should I care?

They have names like Time Future Inc., Acorn PAC, Catch the Spirit PAC, and Faith, Family & Freedom PAC. Critics have another name for them: slush fund.

They're Leadership PACs, special committees associated with politicians, but not regulated under the same guidelines as their re-election committees.

The best known Leadership PAC is GOPAC, the controversial committee formerly run by House Speaker Newt Gingrich. According to the Center for Responsive Politics, there are at least 95 Leadership PACs, most affiliated with members of Congress.

Members build good will and political support by doling out thousands of dollars to their colleagues, who appreciate the financial aid. To critics, however, Leadership PACs are just another venue for special interests to line the pockets of legislators.

Republicans have greater success with the PACs. As the New York Times recently reported, "Twelve Republicans members of Congress have leadership PACs of more than $200,000. By contrast, only two Democrats have leadership PAC's with more than $200,000.

10 Largest Republican Congressional Leadership PACs

1. GOPAC
Rep. John Shadegg (R-AZ), $4,575,019

2. New Republican Majority Fund
Sen. Trent Lott (R-MS), $1,721,476

3. Majority Leader's PAC
Rep. Dick Armey (R-TX), $1,622,013

4. Monday Morning PAC
Rep. Newt Gingrich (R-GA), $1,296,035

5. National Conservative Club
Sen. Jesse Helms (R-NC), $885,522

6. Republican Majority Fund
Sen. Don Nickles (R-OK), $776,124

7. Americans for a Republican Majority (ARMPAC)
Rep. Tom DeLay (R-TX), $674,145

8. Senate Victory Fund
Sen. Thad Cochran (R-MS), $476,516

9. Capitol Committee
Sen. Orrin Hatch (R-UT), $471,045

10. Adam Smith PAC
Sen. Connie Mack (R-FL), $433,554

10 Largest Democratic Congressional Leadership PACs

1. Effective Government Committee
Rep. Richard Gephardt (R-MO), $1,164,024

2. Committee for a Democratic Majority
Sen. Edward Kennedy (D-MA), $699,454

3. New Democratic Network
Sen. Joseph Lieberman (D-CT) & Sen. John Breaux (D-LA), $189,086

4. Fund for Democratic Leadership
Rep. Robert Matsui (D-CA), $138,167

5. Rangel National Leadership PAC
Rep. Charles Rangel (D-NY), $131,350

6. Ameripac: The Fund for a Greater America
Rep. Steny Hoyer (D-MD), $99,500

7. Rhode Island PAC
Rep. Patrick Kennedy (D-RI), $91,246

8. People Helping People
Rep. Maxine Waters (D-CA), $61,710

9. 29th Congressional District of California PAC
Rep. Henry Waxman (D-CA), $42,000

10. Committee for a Progressive Congress
Rep. David Obey (D-WI), $21,893


4. FUND-RAISING FEDERALISM

How politicians use state PACs for a little extra carrying cash

Power isn't the only thing being devolved to the states on Capitol Hill. An increasing number of lawmakers on both sides of the aisle are also turning to state PACs to raise money -- some of it inaccessible under federal law.

Take House Majority Whip Tom DeLay (R-TX). During 1995, the Texan legislator established a state version of his Americans for a Republican Majority (ARMPAC) ... in Virginia. According to Roll Call, Virginia law allows for direct corporate contributions of the sort banned by federal law. For example, R.J. Reynolds, the tobacco company, gave Virginia's ARMPAC $73,000 -- or almost as much as the PAC reported raking in at the federal level during that year.(6)

Or take freshman Senator Bob Toricelli (D-NJ), who has run the state level Torricelli PAC in New Jersey since 1984. According to the National Journal, "more than half the PAC's income has come from corporate donors who are prohibited from giving directly to Torricelli's [federal] campaign committee."(7)

5. SOFT FRANCS?

Why some dollars are more foreign than others

Foreign nationals and foreign companies are prohibited from contributing money to U.S. political campaigns, but resident aliens and subsidiaries of foreign corporations can give as much as they like -- and do.

During 1995, Congress voted on a technical correction to the General Agreement on Tariffs and Trade (GATT) that would close a loophole for British-owned Glaxo-Wellcome, Inc. As David Grann and Erika Niedowski recounted in The New Republic, "when Congress moved to correct [the] mistake, Republican Senator Orrin Hatch of Utah led a GOP effort to quash the correction. On June 28, one day after the Senate voted not to fix this mistake, Glaxo dumped $100,000 into the Republican National Committee. ... And while Glaxo could legally reward Hatch with only $5,000 in political action committee money, it was able to express its gratitude in larger terms by donating $15 million (at Hatch's encouragement) to a cancer center at a university in the senator's home state."(8)

Glaxo, which gave more than $500,000 to the GOP, was the fourth largest foreign soft-money contributor in the last election cycle.

In response to the latest money scandals, President Clinton has ordered that the DNC stop accepting gifts from resident aliens and subsidiaries of foreign corporations.

The top ten soft money contributions from U.S. subsidiaries and affiliates of foreign companies, according to the Center for Responsive Politics

1. Joseph E. Seagram & Sons ($1,938,845/Canada)

2. News Corp. ($674,700/Australia)

3. Brown & Williamson Tobacco ($642,500/United Kingdom)

4. Glaxo Wellcome ($510,000/United Kingdom)

5. CS First Boston Corp. ($296,600/Switzerland)

6. BP America ($274,579/United Kingdom)

7. Sony Corp. of America ($207,319/Japan)

8. Toyota Motor Sales ($188,475/Japan)

9. Citgo Petroleum ($188,450/Venezuala)

10. Zeneca Inc. ($184,700/United Kingdom)


6. WASHINGTON ON $100,000 A DAY?

The price of access to the White House and Congress

In Putting People First, his '92 campaign book, Bill Clinton criticized the "cliques of $100,000 donors [who] buy access to Congress and the White House."

Apparently, the Democratic National Committee missed that section, because three years later - 1995 - they put out an expensive menu affixing the $100,000 price tag to ... White House access. A $100,000 contributor would become a "managing trustee" of the party, garnering, among other things, two meals apiece with the President and Vice-President, a slot on a DNC trade mission. Lesser donors could get a mix of Clinton receptions and Gore dinners, as well as special policy briefings.(9)

At Clinton's insistence, the DNC rescinded the pamphlet, but a year later - 1996 - party fund-raisers were charting the projected take on coffee sessions with the President, and he was telling them that he was "Ready to begin overnights right away." The White House insists there was no explicit quid pro quo, but the facts are telling: while most of the 938 overnight guests gave no money to the DNC, those who did averaged contributions of more than $82,000.

The Democrats live up to their 'high tax' reputation when compared to the GOP. For a mere $15,000 (or $20,000 for a couple), one can join the GOP Eagles Club. "Eagles" enjoy comparable benefits meetings with top party leaders, including members of Congress and (when applicable) the president. Other benefits include a spot on a GOP trade mission.(10)

7. A THOUSAND Nights

Doesn't everybody do it?

If President John Kennedy had a thousand days, historians may one day say President Clinton had a thousand nights.

There's been a great deal of teeth gnashing about the 938 people -- many of them donors -- who spent nights at the White House, not to mention all the coffee-klatch guests, but has this administration behaved differently from previous ones?

MCA Chairman emeritus Lew Wasserman -- who gave $335,000 to the DNC during the 1990s (11)--passed an evening in the White House, but it was not his first according to a 1992 study by the Center for Public Integrity. One night during the 1970s, Democratic donor Wasserman was unable to find accommodation in Washington, so he called DNC chairman John White. He couldn't find hotel accommodations for Wasserman, but White was finally able to put him up ... in the Lincoln Bedroom in the Carter White House. White would later describe the favor as, "just a small thing."(12)

During the Reagan and Bush administrations, high-rolling donors were promised access to the President, Vice-President and cabinet officials. Even today, the National Republican Senatorial Committee advertises it's "Presidential Roundtable" with the enticement that, "During Republican Administrations, member meetings and receptions with the President, Vice-President and cabinet officials are not uncommon." (13)

The Clinton administration has raised the art of fund-raising to a new level, however. From detailed charts projecting the take on coffees to Clinton's hand-written exhortation that he was "ready to start overnights right away," an administration with an early reputation for chaos showed a great deal of order in it's fund-raising.

Another venue for money that was developed during the '96 election was the tax-exempt organization. Presidential candidates like Bob Dole and Lamar Alexander used such groups to lay the groundwork for their presidential runs. Newt Gingrich involved them in his fund-raising web, and both major parties diverted money to such groups for reasons that may be revealed during the congressional money raising hearings.

8. BANG BANG! GINGRICH'S GOLDEN "HAMMER"

Funding the GOP's revolution

"For anybody not on board now, it's going to be the two coldest years in Washington."(14)

The speaker was Newt Gingrich, a month short of the 1994 elections. The audience was a group of lobbyists and Gingrich reminding them that they owed the GOP for killing a lobby reform that session. In return, he expected campaign cash for his troops -- and lots of it.(15)

The message was received: according to the Center for Responsive Politics: "In October alone ... Republican candidates enjoyed an almost unprecedented $4.2 million edge over their Democratic opponents in individual donations of $200 or more."(16)

Once the revolution was under way, the GOP remembered who had been with them and who against. Majority Whip Tom DeLay's (R-TX) heavy-handed fund-raising tactics earned him the nickname "The Hammer." DeLay kept a ledger in his office listing contributions from the four hundred largestPACs, broken down by party. Those who had given heavily to the Republicans were listed as "Friendly," but those unfortunate enough to have given to Democrats were deemed, "Unfriendly" and "The Hammer" acted accordingly.

9. HOW MUCH FOR JUST THE LAW?

Why some contributors get to write their own laws

"Project Relief." It sounded, reporters Michael Weisskopf and David Maraniss observed in their book "Tell Newt to Shut Up!", "more like a Third World humanitarian aid effort than a corporate alliance with a half-million dollar communications budget and a battalion of lobbyists." (17) But a corporate alliance it was, formed in early 1995 by incoming Majority Whip Tom DeLay (R-TX) to roll back 20+ years of environmental and health regulations.

The group consisted of more than 350 members, mostly corporations sympathetic to DeLay's view that the Environmental Protection Agency is "the Gestapo of government pure and simple." (18)

They had something else in common: a 1995 study by the Environmental Working Group showed that during the 1994 election cycle, PACs funded by Project Relief members pumped $10.3 million into House campaigns -- including nearly $40,000 to DeLay alone.(19)

They got good return on their investment. One of the first pieces of legislation the House passed during it's first 100 days in 1995 was a moratorium on government regulations -- a bill first drafted by a petrochemical lobbyist at DeLay's behest. (20) The Congress became infamous for it's unprecedented use of lobbyists as legislative ghost-writers.

As Weisskopf and Maraniss wrote, "Although business groups were consulted by Democrats during their reign, they normally were ushered in for comment after legislation had been drafted. DeLay embraced lobbyists more openly as part of what he called an 'interactive' family of conservatives in which 'you can work for each other and get a common goal.'"(21)

10. WITHER NEWT?

What fate do the tides of history hold for the embattled Speaker?

For $250 you too can receive an official replica of "the Gavel that changed America" (22) -- but how much longer will Speaker Gingrich wield that gavel?

That he still has it speaks to his tenacity as both leader and fund-raiser. While Republicans credit him with their historic victory in 1994, gratitude alone is not enough to keep him politically afloat. The key to his survival remains money.

Gingrich is the GOP's rainmaker: "by the party's own account, he raised more than $100 million for Republican House candidates in the lastelection," according to The New York Times. (23) He raised an unheard of $6 million for his own record breaking re-election campaign, but had enough left over to pay his $1.1 million in legal bills. He also donated $1.7 million from his re-election committee and his Leadership PAC, The Monday Morning Group.(24)

Nevertheless, Gingrich's poll ratings keep slipping, and pundits smell blood in the political waters. The situation could come to a head when he decides how to pay the $300,000 penalty imposed by the House ethics committee. If Gingrich -- who has sworn to resign if he loses the Speakership -- uses his campaign funds, he may not need them for another campaign. Ironically, he would not have to give them back, either, but could put them to a further "official" use or donate them to otherRepublicans.

11. MANCHURIAN DONATIONS

Why did the Chinese give money?

"Use barbarians to control barbarians." That's how some analysts describe traditional Chinese lobbying practices. (25) In practice this has meant using the carrot of a billion person market to ward off the stick of U.S. sanctions: American corporations' lobbying clout has effectively neutralized attempts to repeal China's Most Favored Nation (MFN) trading status.

Starting in 1995, China stepped up its lobbying efforts after Taiwan President Lee Teng-hui was granted a visa to enter the U.S. for his college reunion. Taiwanese lobbying strength has long been a thorn in the Chinese government's side.

Admission to the World Trade Organization (WTO) is China's other driving concern. Entrance into the WTO would not only moot the MFN debate, but would ensconce China in the world trading regime -- possibly on very favorable terms.

Ironically, Chinese attempts to influence the political process may have backfired: reports have strengthened anti-China sentiment in the fCongress making WTO entry harder, and possibly even jeopardizing this year's MFN passage.

12. BACK BEAT

Has professed outrage hampered the money chase?

Declaring he would "help free our democracy from the grip of big money," President Clinton last month called for passage of the bipartisan McCain-Feingold Bill, which would, among other things, abolish soft money.

Hours later, Clinton was the star attraction at two political fund-raisers, gripping and grinning for the very "big money" he had earlier decried. The second of the two events was a $25,000 a plate dinner where the President told 37 donors about his plan to make their contributions unnecessary.(26)

Not all politicians, to be sure, wish to wrestle themselves "from the grip of big money." Take Senate Majority Leader Trent Lott (R-MS). At a posh Florida resort for a meeting of the GOP's Team 100 -- donors who have given at least $100,000 in a single year and $25,000 annually for three years after that -- Lott declared such political fund-raising to be "the American way." Asked what such donors receive, Lott explained, "They get good government."(27)

According to Common Cause, corporations qualifying for Team 100 status include RJR Nabisco, Dow Chemical, ARCO, and Philip Morris, among others. Indeed, while most official Washington expresses shock that donors would pay $100,000 for a cup of White House coffee, a steady drum-beat of $1,000 breakfasts and cocktail parties echoes through the corridors of power. As reported in The Hill last month, House Democrats alone are having nearly 40 events this spring, some charging as much as $5,000.(28)

The Democratic Senatorial Campaign Committee reported record consecutive months in Janurary and February, and a National Republican Senatorial Committee spokesman was quoted as saying, "If we were to continue on the fundraising pace that we have right now ... we would actually come close to outpacing the money we raised last year."(29)

13. COMPARATIVE POLITICS 101

How do other countries finance their elections?

A wise man once said that Democracy is the worst form of government in the world ... except for all the others. Does the same hold true for our version of campaign funding?

The Economist observed last month that "Americans might ask themselves why other democracies do not have the same problems with campaign finance. Certainly, many countries -- Japan, Italy, France and Belgium, to name but four -- have had far more severe episodes of political corruption. ... But no developed country suffers a money chase on anything like the American scale. The reason is simple: most democracies put strict limits on candidates' spending and access to foreign broadcasting."

In England, for example, candidate spending is limited to $12,800 per campaign, (which is itself limited to three weeks).(30) That's less than what a U.S. Senate candidate must raise in a week. There are no limits on spending or fund-raising by British parties,(31) but the demand for money is offset by the fact that British candidates and parties are barred from buying television or radio time. Instead, parties are awarded free air time based on the number of votes they received in the last election.

While different countries have different laws, most major democracies have some form of free television. Canada, for example, distributes free time based on the number of seats each party holds in parliament. France also allows for free television and radio time, and Germany allows air time at reduced cost.

(1) FEC Web site

(2) FEC Web site

(3) FEC Web site

(4) Martin Dyckman, "Where 'good government' is for sale," St. Petersburg Times , 25 February 1997.

(5) David Grann and Erika Niedowski, "The Dirty Hill," The New Republic, 7 March 1997.

(6) Damon Chappie, "DeLay's Leadership PAC Bagged Almost $200,000 in Corporate Soft Money in 1995," Roll Call, 1996.

(7) Eliza Newlin Carney, "Backdoor PACs," The National Journal, 2 March 1996.

(8) David Grann and Erika Niedowski, "The Dirty Hill," The New Republic, 7 March 1997.

(9) Paul Bedard, "$100,000 buys deal with Clinton; DNC accused of selling office," The Washington Times , 6 July 1995.

(10) Paul Bedard, "GOP sells access--for less; Techniques resembles Democrats' fund-raising plan," The Washington Times, 19 July 1995.

(11) Inset Box, "Donors Who Stayed at the White House," New York Times , 2 March 1997.

(12) Center for Public Integrity, Private Parties, 1992, 3.

(13) NRSC Web site

(14) Editorial, "Read the Fine Print," Atlanta Journal Constitution, 19 October 1994.

(15) Editorial, "Read the Fine Print," Atlanta Journal Constitution, 19 October 1994.

(16) CRP's 10 Myths of Money in Politics

(17) Michael Weisskopf and David Maraniss "Tell Newt to Shut Up! " (New York: Touchstone, 1996), 13.

(18) Michael Weisskopf and David Maraniss "Tell Newt to Shut Up! " (New York: Touchstone, 1996), 13.

(19) Gareth Cook, "Laws for Sale; Republicans in Congress let lobbyists write laws," Washington Monthly, July 1995.

(20) Gareth Cook,"Laws for Sale; Republicans in Congress let lobbyists write laws," Washington Monthly, July 1995.

(21) Michael Weisskopf and David Maraniss "Tell Newt to Shut Up!" (New York: Touchstone, 1996), 13.

(22) Leslie Wayne, "Gingrich, Politically Weakened, Remains Top GOP Fund-Raiser," New York Times, 23 March 1997.

(23) Leslie Wayne, "Gingrich, Politically Weakened, Remains Top GOP Fund-Raiser," New York Times, 23 March 1997.

(24) Leslie Wayne, "Gingrich, Politically Weakened, Remains, Top GOP Fund-Raiser," New York Times, 23 March 1997.

(25) Michael Weisskopf, "Backbone of the New China Lobby: U.S. Firms" The Washington Post , 14 June 1993.

(26)Elizabeth Shogren, "Clinton Proposes Free TV Time for Candidates; Politics: He Suggests Broadcasters Seeking Licenses For New Digital Technology Be Required to Offer Service," Los Angeles Times, 12 March 1997.

(27) Martin Dyckman, "Where 'good government' is for sale," St. Petersburg Times, 25 February 1997.

(28) Robert Schlesinger, "House Dems defy critics, raise funds," The Hill, 26 March 1997.

(29) Robert Schlesinger, "Despite scandals, Hill fundraising sets record in '97", The Hill, 2 April 1997.

(30) "Greasing the Skids; Candidates Worldwide Find Public Favor Exacts a Price," The Dayton News, 21 February 1996.

(31) "Greasing the Skids; Candidates Worldwide Find Public Favor Exacts a Price," The Dayton Daily News, 21 February 1996.

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