Cash Is King In Campaign '98

With hardly the bat of an eyelash, the scandal of 1997 - money - turned into the scandal of 1998 - Monica. And while most of the Washington press corps was fixated on Monica Lewinsky and Ken Starr, political insiders were getting busy with business as usual.

Despite congressional and Justice Department investigations, nothing has stanched the flow of money into the coffers of political parties and candidates around the country.

The elections of 1998 are shaping up to be the most expensive ever in a non-presidential year. When state races and ballot questions are taken into account, there's a chance that spending in 1998 will set new records.

There is less of a disparity in contributions directly to congressional candidates, where Republicans ran only slightly ahead of Democratic candidates in collecting contributions - $145 million compared to $138 million in a recent report by the Center for Responsive Politics. But the money that the parties have raised will make its way into congressional races, giving the Republicans a big financial edge.

No one likes to bet on a loser, and this year proved no exception. Except in a handful of competitive races, incumbents had an overwhelming advantage in terms of money. An analysis by the non-partisan Center for Responsive Politics found that nearly two-thirds of House incumbents had raised at least 10 times as much money as their challengers, if they were opposed at all.

This trend is partly due to the fact that the Democrats need to pick up only 11 seats in the House to gain a majority. Early on, Democratic strategists decided to focus their recruiting and fundraising efforts on just a few dozen races where they had a shot at winning back GOP-controlled seats.

But the fact is that incumbents have a huge built-in fundraising advantage, especially in PAC contributions, and as it gets more expensive to be competitive, it becomes more difficult to find viable challengers.

The battles are fought mostly where there are vulnerable incumbents and in open seats. The average cost of winning a House seat jumped 30 percent from 1994 to 1996, and it can be expected to be higher this year.

As of June 30, political action committees (PACs) had contributed $134 million to congressional candidates by June 30. PACs gave overwhelmingly to incumbents -- $114 million or 85 percent. Republican candidates received $69 million froPACs, compared to $65 million for Democrats.

Here is a sampling of some of the hottest election contests around the country and the amounts being spent:

California Governor: Gray Davis (D) has raised $21 million and Dan Lungren (R) has raised $17 million in this battle for the top office in the most populous state in the nation. Davis had to spend $9 million to win the Democratic nomination. This is expected to be a record-setting contest in terms of the amount of money spent.

New York Senate: Al D'Amato (R) already has spent $5.4 million and has $6.6 million in the bank going into the final weeks. Chuck Schumer (D) has spent $4 million and has $1.3 million left in his battle to unseat him.

California Senate: Barbara Boxer (D) has spent $2.4 million so far and had $3.7 million left going into the final weeks in her effort to fend off challenger Matt Fong (R), who has spent $1.8 million and has $2.2 million left.

California Prop 5: The Nevada gaming industry is pumping in money in an attempt to defeat this proposition which would allow slot machines at tribal casinos in California and his backed by a number of Indian tribes. It is estimated that $60 million will be spent by the two sides combined.

California Prop 10: Sponsored by actor/director Rob Reiner, this proposition would raise the tobacco tax to fund early childhood development and smoking prevention programs. The tobacco industry is expected to spend $20 million to defeat it.

Congressional candidates may raise an unlimited amount of money, but there are limits on who may give and how much. Corporations and labor unions may only give through PACs that raise voluntary contributions and must be registered with the Federal Election Commission.

Foreign nationals and government contractors are prohibited from donating to campaigns. Individuals and PACs are limited in what they may give to each candidate. (See chart below.)

Individuals are also limited to contributing $25,000 per year to all federal campaigns, but PACs may give to as many candidates as they want.

All donations over $200 must be reported to the Federal Election Commission by the candidates or political committees which are the recipients. PACs must disclose their donors and the names of the campaigns to which they contribute. The campaign finance reports filed must also itemize disbursements of more than $200.

State campaign finance and disclosure laws vary widely around the country. Some states, like Iowa and Illinois, have no limits on the size of contributions to state candidates.

Political parties are allowed to set up fundraising accounts for "party-building" activities such as get-out-the-vote drives, polling, and generic media. Money that flows into these accounts is called "soft money" because it is exempt from the federal limits.

An individual may give $20,000 to the Democratic or Republican Party in "hard money,"then give $100,000, $500,000 or even more to the Party in soft money.

Corporations and labor unions may also give soft money, because it falls outside of the federal regulations. Soft money has grown exponentially over the past decade, and the political parties are finding new ways to spend it with each election.

Total contributions (soft and hard) to the national political parties have increased more than 50 percent over donations from the same period during 1994.

The two parties combined have raised $458 million from January 1, 1997 through September 30, 1998, compared to $296 million in 1993-94. The Republicans have outraised the Democrats by $110 million for this election - $284 million for the Republicans compared to $174 million for the Democrats.

Soft money contributions to both parties have been growing at an exponential rate - a 135 percent increase from $75 million in 1993-94 to $176 million in 1997-98. The Republican Party has taken in $100 million for this election compared to $76 million by the Democrats.

The Democrats are slightly more dependent on soft money contributions, which make up 43 percent of the total that they have raised, compared to 35 percent of the Republican total.

Much of the soft money that the national parties have raised this year has gone to fund so-called "issue ads."

This practice was perfected by the Democratic National Committee (DNC) during the 1996 Clinton campaign. During 1995-96, the DNC embarked on an unprecedented media blitz and spent more than $40 million blanketing the airwaves in key markets. The ads usually featured President Clinton and many included unflattering pictures and references to Bob Dole and Newt Gingrich.

The ads looked and sounded like campaign ads, but they stopped short of expressly advocating a vote for Mr. Clinton. The Republican National Committee soon followed the lead of the DNC and embarked on its own effort to boost Dole, although the amount they spent was only about half of the DNC's budget.

The Justice Department is currently reviewing these issue advocacy campaigns and whether the Clinton-Gore and Dole-Kemp presidential campaigns improperly benefited.

Meanwhile, the use of issue ads by the parties is growing. The most obvious example this year is the National Republican Congressional Committee's "Operation Breakout" - a highly publicized $37 million issue ad campaign targeting swing congressional districts in 30 states.

The ads either attacked the Democratic candidate or sent out a positive message about the Republican candidate. They do not tell the viewer who to vote for (although it's not hard to figure out) but instead ask the viewer to call the candidate.

The practice of using issue ads is also growing among outside groups. The Republicans are still steaming about a $35 million campaign launched by the AFL-CIO in 1996 to help the Democrats win back control of the House.

A study by the Annenber Public Policy Center estimates that outside groups will spend between $260 million and $330 million on issues ads in 1997-98.

Some of the organizations that engaged in issue ads designed to influence the 1998 congressional elections were the Sierra Club, the League of Conservation Voters, NARAL, the Campaign for Working Families (Gary Bauer's organization) and the AFL-CIO.

Doing Your Own Investigating

The number of resources available to reporters and citizens interested in researching the role of money in politics has grown by leaps and bounds in the past few years. Computers and the Internet have made gathering information and analyzing how campaigns are financed accessible to anybody with a decent computer and Internet access.

Here are a number of websites that are user-friendly and useful in researching who is funding the candidates' warchests and the national political parties:

www.fec.gov: The official site of the Federal Election Commission has improved dramatically within the last year. Now you can search the FEC database and access actual copies of candidate, PAC and national political party reports. FEC press releases, statistics and trends on voter registration and turnout, and information on federal campaign finance law are also available.

www.crp.org: This site is the most comprehensive source of information. It is operated by the Center for Responsive Politics, a non-partisan research organization that specializes in researching the role of money in politics. It contains a searchable database of contributors to federal campaigns and personal financial disclosure reports filed by Members of Congress, political contributions broken down by industry. It also contains an interactive "Do-It-Yourself Investigation Kit" to help people research connections between money and voting patterns.

www.tray.com/fecinfo: Former FEC employee Tony Raymond has created a site that combines a user-friendly interface with Federal Election Commission data. Use this site to look up which candidates individuals or PACs have given to or to look at top contributors in a particular state.

www.commoncause.org: This site includes legislative updates on reform efforts in Congress, reports on soft money and industry contributions, and how lawmakers have voted on key reform issues in Congress. It also includes information on reform efforts in state legislatures

www.campaignfinance.org: The Campaign Finance Information Center is a put together by the National Institute for Computer-Assisted Reporting and Investigative Reports and Editors. It provides a state-by-state rundown of what type of information is available in each state, where to find it, and links to some databases with information on state contributions. The site also has a list of experts on money and politics.

www.vote-smart.org: This site includes information on candidates, including biographical information campaign contributions, and voting records.

By the CBS Political Unit ©1998 CBS Worldwide Corp. All rights reserved