McCain, Obama Rake In Megachecks
John McCain boasts that he’s running a publicly financed general election campaign. Barack Obama brags that his presidential campaign is financed by small donations from regular folks.
Both are telling the truth, but only the part of it that is likely to polish their images. What the presumptive presidential nominees aren’t saying is that they are also using — or gearing up to use — joint fundraising committees that undermine their claims about the noble sources of their campaign funds.
In the last two months, McCain has brought in a heap of huge checks through a network of hybrid fundraising groups in his effort to level the cash playing field against Barack Obama.
McCain’s use of so-called joint fundraising committees is unprecedented in presidential politics, and it highlights his reliance on the Republican National Committee and its state affiliates. Obama and his Democratic allies are likewise preparing to increase their use of the joint committees.
McCain has six joint fundraising committees. Federal Election Commission data filed last week show the committees have received more than 1,000 donations of $25,000 or more — including many from investment firm executives as well as President Richard Nixon’s grandson and a director of Freddie Mac, not to mention the owners of several professional sports franchises.
There are two joint committees boosting Obama, with nearly 500 contributors who have given $25,000 or more — a big-donor base heavy with trial lawyers and corporate executives, as well as owners of the Minnesota Twins and Boston Celtics, the doctor who performed the first testicle and ovary transplants in the U.S., and actors Edward Norton and Samuel L. Jackson.
The joint committees often corral checks at receptions and dinners that feature entry fees as high as $70,100 a head — many times the legal contribution limit to the candidates themselves. That eye-popping fee is possible because the joint committees are comprised of multiple groups, each of which can take a separate maximum contribution, including various combinations of the candidates’ campaign committees, their compliance committees, and national and state party committees. Plus, joint committees have the added benefit of synchronizing candidates’ finances closely with their respective parties in a manner watchdogs say skirts both coordination rules and contribution limits that were intended to limit the influence of wealthy donors.
The structure is well-suited to McCain, who has embraced joint committees as a central part of his campaign’s financial strategy and who has raised more through them than any previous presidential candidate.
The committees help McCain, a notoriously unenthusiastic fundraiser, spread the burden of raising cash and also help build the party’s war chest, upon which he’ll rely to supplement his spending after he officially accepts the party’s nomination. From that point through Election Day, he’ll be limited to the $84 million public funding grant.
The $63 million raised by McCain’s joint committees this year is about $20 million more than the previous record for presidential campaign-related joint committees, set by Democrat John Kerry’s 2004 presidential campaign and its allies.
In McCain’s case, cash steered through joint committees accounted for 21 percent of the $44 million his campaign raised in May and June of this year. During those months, the joint committees transferred another $40 million to the RNC and various state parties.
Not to be outdone, Democrats, who through the end of last month had raised a relatively paltry $18 million in two joint fundraising committees benefitting Obama, this month set up a third joint committee that will raise money for the state Democratic parties in 18 target states.
Through the end of June, the committees had transferred only about $1.4 millio to Obama’s campaign, though on its own the Obama campaign has set a blistering fundraising pace, pulling in a total of $350 million, compared with $144 million for McCain’s.
The party committees are allowed to spend $19 million in coordination with their respective candidates. But they can supplement that by splitting the costs of so-called hybrid ads and by spending unlimited sums independently supporting their candidate or attacking his opponent.
Insiders say the Democratic National Committee is planning to direct more money to the state parties for voter registration and mobilization, an approach emphasized by both the Obama campaign and DNC Chairman Howard Dean.
The RNC and the McCain campaign, on the other hand, have signaled their spending will skew toward ads boosting McCain and attacking Obama.
Joint fundraising complements both sides’ strategies, according to Jason Torchinsky, a campaign finance lawyer for President Bush’s reelection campaign and Rudy Giuliani’s failed Republican presidential bid.
“For McCain, he needs to integrate very closely — as closely as legally allowed — with the state parties and the RNC,” says Torchinsky. “And for Obama, he’s trying to maximize the private donations because he’s the first candidate to reject the public financing,” and, as such, he’s trying to help the DNC to pick up its fundraising pace, which has lagged behind the RNC.
To understand how the groups are able to stretch the contribution limits to aid their candidates, it’s helpful to look at the biggest joint committees for McCain and Obama.
McCain Victory 2008 is comprised of the Arizona senator’s main presidential campaign committee and an audit compliance committee (both of which can receive the maximum individual contributions of $2,300), the RNC (which can accept contributions of $28,500 per donor each year), and the state Republican parties in four targeted states: Colorado, Minnesota, New Mexico and Wisconsin (each of which can take checks as large as $10,000 per person, per year).
It all adds up to a maximum contribution of $70,100.
Of course, even without the joint committees, wealthy donors could give that amount in separate checks to the individual committees.
But the joint committees make life easier for big donors, who don’t have to write as many checks or attend as many events, and for the component committees, which don’t have to spend as much time — or money — planning and hooking donors for events.
And, unlike solicitations from the party, the joint committees expressly identify McCain or Obama as the sole beneficiary of the party funds.
That last point is a meaningful one, according to Craig Holman, a lobbyist for Public Citizen, which supports stricter campaign finance rules. Allowing the committees to make clear the party cash is going to the presidential nominee — and allowing the parties to pay for hybrid ads and independent expenditures — makes a mockery of the $19 million coordination limit, charges Holman, who calls the growth of joint fundraising committees “a very troubling trend” that “breaks down the barriers between the candidates and the party committees.”
Holman asserts that Obama's and McCain’s joint fundraising committees are undermining their reputations as champions of reducing the influence of big money in politics.
“It really does an end-run around the spirit of contribution limits,” Holman says. “The whole purpose of contribution limits is to prevent any major donors and wealthy special interests from being able to give so much money to a particular campaign that it could have a potentially corrupting influence.”
McCain Victory 2008 has reaped about two dozen maximum contributions of $70,100, FEC filings show, including from Kerry Murph Healey, the 2006 GOP nominee for governor of Massachusetts (who was defeated by Obama ally Deval Patrick) and her CEO husband, Sean Healey; Shi Sheng Hao of Roselle, Ill., who lists himself as president of American Chinese Entertainment; and Richard Chilton of Darien, Conn., founder of a $9 billion hedge fund, and his wife, Maureen Chilton.
Obama Victory Fund is limited to top donations of $33,100, because it is comprised of the Illinois senator’s main presidential campaign committee and the DNC, which have a lower combined contribution limit. According to FEC data filed Sunday, maximum donors include Jeffrey Jacob Abrams, who created and produced the hit ABC television programs "Alias" and "Lost"; Thomas K. Glenn II, an Atlanta-area philanthropist; George Krupp, co-founder of an investment firm, and his wife, Lizbeth; and Phillip D. Ivey, Jr., a champion poker player, and his wife Luciaetta.
Other notable big givers to McCain’s joint fundraising committees include Christopher Nixon Cox, grandson of Richard Nixon and an official with McCain’s campaign in New York; Geoffrey T. Boisi, chairman of a private investment firm and a member of Freddie Mac’s board of directors; William V. Bidwill Sr. and Michael J. Bidwill, owner and president, respectively, of the Arizona Cardinals football team; Alex G. Spanos and Dean A. Spanos, owner and president, respectively, of the San Diego Chargers football team; Robert Wood Johnson IV, owner of the New York Jets football team; Robert G. Sarver, managing partner of the Phoenix Suns basketball team; and Frank J. Fertitta III, CEO of Station Casinos in Las Vegas, Nev.
Other stand-out donors to the joint fundraising committees boosting Obama include Robert Epstein, managing partner of the Boston Celtics; Carl Pohlad, owner of the Minnesota Twins; Sherman Silber, a St. Louis doctor who performed the first testicle and ovary transplants in the U.S., and his wife, Joan; as well as Cleveland Cavaliers basketball star LeBron James.