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Why 'reform' equals more campaign spending

Some supporters of the 2002 campaign finance law said it would stem the flow of money into campaigns and limit the role of wealthy donors.'s Tom Curry explains why it has not worked out that way.
Boston Hosts the DNC
When Congress enacted a new campaign finance law in 2002, then-House Democratic Leader Richard Gephardt predicted it would help dispel Americans' cynicism about politics.Scott Olson / Getty Images
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Despite the fact that President Bush signed into law a campaign finance reform measure in 2002, more money has been raised in this presidential election than ever before.

Correction. Make that: Because President Bush signed the campaign finance law, more money has been raised in the presidential election than ever before.

Why? Partly because federal regulators’ interpretation of the law, known as the Bipartisan Campaign Reform Act of 2002, or BCRA, has allowed a newly powerful creature, called a “527” group, to flourish.

Although BCRA ended the old practice of unions and individual donors writing unlimited checks to the national party committees, it did not impose caps on what such donors could give to ostensibly independent 527 groups such as the Media Fund, which has run a series of ads attacking President Bush. Another 527 group that's getting a lot of attention these days is the "Swift Boat Veterans For Truth," which is behind a controversial anti-John Kerry ad.

BCRA also increased the limits on individual donors’ contribution to specific campaigns, known as “hard money” by campaign finance lawyers.

Instead of being able to give $1,000 in hard money to a presidential or Senate candidate, a donor can now give $2,000 to each candidate.

And, prior to BCRA, each individual donor's annual aggregate limit on donations was $25,000 a year, but the law raised that to $47,500, an increase of 90 percent.

So it is hardly surprising that more money than ever before has been raised.

For example, as of June 30, Democrat John Kerry’s presidential campaign had received more than $170 million in individual donations, more than five times as much as Democrat Al Gore had collected by the same point in the 2000 campaign.

And Bush’s campaign had collected 60 percent more money in contributions by June 30 of this year than it had gathered by the same point four years ago.

On Friday the presidential campaigns will file their reports on July fundraising with the Federal Election Commission (FEC).

Another reason, of course, for the increase in cash flowing into the campaigns is motivation, with partisans on both sides desperate to win.

The partisan intensity and the increased contribution limits also are showing their effects in congressional races.

In a report released this week, the FEC said that as of June 30, all congressional campaigns had raised a total of nearly $800 million in for the 2004 election. That’s an increase of about one-third from the comparable period in the 2002 campaign.

The FEC said much of the increase occurred in Senate races where candidates collected $338 million, a 67 percent jump in fundraising over 2002 levels.

'Reform' means more money
Given the increase in campaign revenues, you might wonder, by “reform” in the campaign finance reform law, didn’t most reformers mean less money going into campaigns, not more?

Back when BCRA was enacted in 2002, some of its supporters did imply that the law would stop what they portrayed as an obscene gusher of money.

“The amount of money in our political system is out of control," said Democratic Sen. Tim Johnson of South Dakota in the Democrats’ weekly national radio address on March 16, 2002, as he urged prompt congressional approval of BCRA.

"If the current unchecked flow of money continues, it will lead to government by auction to the highest bidder, and statesmanship will become a thing of the past," he contended.

But not all reformers promised that BCRA would necessarily mean less total money going into campaigns. Instead they argued it would build a bulwark against large contributors and what they called “special interest” money.

"Congress is erecting a dam against special interests that will allow the voices of the people to be heard,” said Carolyn Jefferson-Jenkins, president of the non-partisan League of Women Voters, applauding Congress for enacting BCRA.

And the man who was then the House Democratic Leader, Dick Gephardt, issued a statement calling the day the House passed BCRA “the most important day that I had spent in the Congress in 25 years.”

'Kill off the cynicism'
Gephardt added, “We've got to get people back into this democracy. We've got to kill off the cynicism and the disbelief and the skepticism that exists among our people. And this bill will do more than anything I've seen in my 25 years here to move us in the right direction."

Appearing at the bottom of Gephardt’s March 20, 2002, press release was the name of the man who was then his press spokesman, Erik Smith.

This is the same Erik Smith who is now the head of the Media Fund, a 527 organization that, under the FEC’s interpretation of BCRA, can raise and spend unlimited sums of money to help defeat Bush.

The Media Fund has spent $27 million so far in its anti-Bush efforts, with most of the money coming from big labor unions and wealthy Democrats.

As of June 30, Victory Campaign 2004, a 527 organization financed by Hollywood producer Steve Bing, Progressive Insurance executive Peter Lewis, Seattle environmentalist Paul Brainerd, oil company heiress Anne Getty Earhart, and others had given $18.8 million to the Media Fund.

Lewis alone has given more than $14 million to anti-Bush 527 groups, according to an analysis by the non-partisan Center for Responsive politics in Washington.

Why Bush signed it
The increase in the hard money limits on donations to specific candidates was a major reason Bush signed BCRA into law. Republicans knew they had a bigger universe of hard money donors and they figured the doubling of the limits would help them more than it would the Democrats.

“The White House political guys had a strategy, which was to have the president sign the bill and double the contribution limits, raise more money for the re-election committee than had ever been raised before, channel all the conservative/GOP money into the re-elect and the party committees,” said Republican campaign finance lawyer Cleta Mitchell. 

“Republicans thought it would hurt the Democrats because the Republicans have historically had way more hard money than the Democrats. That is what the White House/ Republican National Committee team believed. They never dreamed of what's happened” with the smashing success of the Media Fund and other 527 groups working to defeat Bush.

Republicans strategists are partly to blame for being outmaneuvered on campaign finance because “they make no effort to properly understand their opponents,” Mitchell said.

And the 527 phenomenon wasn’t the only factor at work. She adds, “The Democrats quickly figured out how to raise ‘hard money’ over the Internet rather than through direct mail, which is where the RNC advantage has always been.”

Run by campaign manager (and now MSNBC contributor ) Joe Trippi, the Howard Dean campaign showed the way.

“If a million Americans each wrote you a $77 check, that’s $77 million,” Trippi said last September. “We’re the only campaign that’s got a shot at pulling that off. We’re not going to shut the door on doing it.” And before his quest limped to halt in February, Dean did raise $51 million.

That figure seemed impressive back in February, but to put it in perspective, consider that 527 groups, most of them anti-Bush, have already spent more than $200 million, according to the Center for Responsive Politics.

"No one really knows which party in the end is going to be advantaged or disadvantaged by the changes we are making to the law today," said Sen. Carl Levin, D-Mich., on the day the Senate passed BCRA. "But we know for certain that the body politic itself will be dramatically benefited."

Whether Democrats now have the advantage may be debatable, but Democratic strategists and donors have learned to thrive in the post-BCRA environment.