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Center For Responsive Politics
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Campaign Finance Reform
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Where The Money Comes From, Where It Goes
By Lou Dobbs/CNN
WASHINGTON (Oct. 7) -- It was the biggest political fund-raiser held anywhere, any time. The Republican Party rang in the 1996 election year with a record fund-raising party in Washington -- $16 million raised on one January night. The Democrats hit their best fund-raising mark in May, bringing in $12 million at the Democratic National Committee's presidential gala. Two nights, almost $30 million.
The richest source of money during the campaign was business, flush with record profits, record stock prices and the ability to deliver huge sums of unregulated cash through soft-money donations.
Says Larry Makinson, deputy director of the Center For Responsive Politics, "Business has more money than anybody else. ... Both parties needed as much money as they could get. Both knew that the fastest way to raise it was through soft money, and both parties really put the hit on a lot of businesses."
Business responded in a bipartisan way. Democrats got almost 90 percent of their soft money from big business -- an estimated $124 million. About ten percent came from unions, the party's traditional allies.
The GOP received $138 million from business -- 96 percent of the Republicans' soft money.
Which industries gave
The money flowed to both parties from all sectors of the economy, but the biggest donors were those with the most at stake in Washington:
Hard money vs. soft money
Of the nearly $1 billion raised by the national, state and local parties, $262 million was soft money. The remaining $640 million was "hard money" -- hard because it's regulated.
Party spending doubled between the 1992 and 1996 elections. A big part of that increase was in TV advertising. Tens of millions of dollars -- hard and soft -- for ads.
The use of soft money for such ads was controversial -- but the president's media consultant said they were legal.
Asked about one such ad, former Clinton adviser Dick Morris said, "Some people say that was a thinly veiled disguise of a re-election ad. That's nonsense. They were designed to win the budget fight, to persuade people to reject the Republican budget. Because only if we succeeded in that could we even think about re-election," he said.
Advertising spending soared, as did the cost of running the campaigns. An estimated 40 percent of all the parties' money -- some $400 million -- went to administration, overhead, consultants, polls, salaries and offices. Fund-raising costs climbed as well: Direct mail, phone solicitations, and the lavish parties.
Fund-raising continues apace
The campaign funding scandal hasn't slowed the parties' lust for soft money. In fact, the parties set a record pace for raising unregulated cash in the first half of this year, not even an election year. The Republicans have raised almost $60 million, and the Democrats $35 million.
But criticism of the system is beginning to concern the biggest participants of pay-to-play politics. Prominent business leaders are opting out, and urging others to do so as well.
Says Jerome Kohlberg of business-backed Campaign Reform Project, "They get dunned every day of the week by this politician or that politician or this dinner or that dinner to help somebody get elected, and they're just tired of it."
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