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Print StoryJoint Statement of the
The Center for Public Integrity,
The Center for Responsive Politics,
and The National Institute on Money in State Politics
National Press Club
Washington, D.C.
June 25, 2002 — Good morning. My name is Charles Lewis, executive director of the Center for Public Integrity. I am joined at the podium today by Larry Noble, executive director of the Center for Responsive Politics, and Samantha Sanchez, executive director of the National Institute on Money in State Politics. Information about all three organizations is available here today, and on our respective Web sites, www.publicintegrity.org, www.opensecrets.org and www.followthemoney.org. None of our groups accept donations from corporations, labor unions, governments or revenue from advertising. This joint project is funded by the Pew Charitable Trusts.
For years, all three of our nonpartisan, nonprofit organizations have been investigating the role of money in politics. Before this project, we have never joined together to research a single subject. Because we understood in 2001 that an historic federal campaign finance law might be enacted, and we all recognized the potential loophole significance of political money to the hundreds of state political parties, we decided to conduct an unprecedented national, 50-state investigation of this subject, in the context of the 2000 election.
State party committees, like their counterparts here in Washington, D.C., collectively raise millions of dollars, but they have done so without the scrutiny that the national parties have drawn in the past few elections. State parties were the back channel of political giving in the 2000 election. Now, in the past week, the Federal Election Commission has kept open many of the soft money channels for state and local party committees and has ruled that candidates for national office can raise soft money for state parties. Consequently, it appears to us that the state party money channel will most likely become a flood after the Bipartisan Campaign Reform Act – more familiarly known as either McCain-Feingold or Shays-Meehan – takes effect the day after the mid-term elections.
Over the past twelve months, we collected campaign finance disclosure reports from 50 state agencies covering the activities of some 225 party committees. Most of these records were on paper – all told, we amassed something like 30,000 pages of records, a stack that would rise 15 feet. We compared these reports to ones filed with the Federal Election Commission. We collected contribution information and coded it to allow us to say who the biggest players in state giving are. We also tracked the money that parties transfer to one another, and that a single state party might transfer from its state account to its federal account, allowing it to spend part of that money influencing federal elections.
Disclosure of state party financial activity is marred by widely divergent reporting standards and, in some cases, inaccurate information filed by parties. For example, the state committees reported receiving $16 million less in soft money transfers from the six national party committees than those same six committees reported to the FEC. Or take the Washington State Democratic Central Committee, which reported receiving just $705,000 in soft money from the national Democratic Party committees — $6.6 million less than FEC records show. When it comes to state campaign finance records, we are talking about gross disparities and multimillion dollar discrepancies throughout the country.
Today, we are here to announce the results of our joint investigation.
In the 2000 election cycle, state party committees raised $570 million, of which 46 percent were transfers of soft money – unregulated, unlimited contributions made to the national parties.
State parties reported – to the 50 state agencies that oversee their activities – sending $204 million to what are called their "federal accounts." Under current election law, they could spend part of that money to influence federal elections. Of that $204 million, 44 percent was spent on media – broadcast, print ads, and so on – the expenditure data we collected showed.
To turn an old saying on its head, the singular of data is anecdote. We asked Mark Brewer, the chairman of the Michigan Democratic Party, about the money transferred by the Democratic National Committee to his party. "The vast majority was spent on issue ads," he told us.
Issue ads that benefited candidates for national office.
In 2000, no state was more critical to the presidential election than Florida. And that was reflected in how much the state parties received in soft money. According to FEC records, Florida Democrats and Republicans received more soft money transfers from their national counterparts than any other state in the 2000 election cycle.
Because of the way the Democrats report expenditures to the state, we were able to get a clear look at how that soft money was put to work. The Democrats reported paying some $15.7 million to three firms: Democratic Victory 2000 Inc. of Washington, D.C.; Greer, Margolis Mitchell, also of Washington, and Morris & Carrick Inc. of New York City.
Democratic Victory 2000 Inc. was set up by Carter Eskew, Robert Shrum, and Bill Knapp to craft issue ads for Democratic presidential nominee Al Gore. Greer, Margolis, Mitchell, Burns & Associates is a firm with strong ties to the Democrats that specializes in issue-oriented advertising. Morris & Carrick is also a national media consulting firm with operations in New York and California; it too specializes in issue ads.
We considered it as a little more than coincidental that national party money went to a Florida party, which in turn sent $15.7 million to a trio of firms that specialized in crafting issues ads for national candidates.
Remember that the soft money loophole, which dates back to the 1970s, was supposed to help state parties raise money for state purposes – candidate support, get out the vote drives and the like. There is no clearer example that something else was going on than the spending patterns in Florida.
We also found that the 225 state party committees raised $307 million in contributions from donors. These were not federal transfers, but rather, money raised by the parties themselves. We found contribution patterns that, in many ways, mirror soft money donations at the national level. State parties, like their national counterparts, collect millions from labor unions, corporations and rich individual donors. Some states, it should be noted, bar such contributions; others don't.
In at least 30 states — even after a federal soft money ban takes effect later this year — big money donors will still have parties they can send six- and seven-figure checks to. And in some states, the donors and dollar amounts won't be publicly disclosed.
We found that that top individual donor – by that I mean one person, and not a union or corporation – was Steven T. Kirsch, a software entrepreneur who currently owns a company called Propel, but made his fortune when he sold Infoseek, an Internet search engine, to the Disney corporation.
In the 2000 election, Kirsch spread $2.1 million in six-figure chunks among nine different state Democratic Party committees, virtually all in key swing states in the 2000 presidential election. Democratic parties in Florida, Pennsylvania, Oregon, Michigan, Missouri, Iowa, Arkansas, Nevada and Minnesota each received checks ranging from $100,000 to $200,000. He gave the bulk of his money in a seven-day period shortly before the election.
It's worth noting that Kirsch also gave money at the federal level. He and his wife Michele donated $619,000, according to Federal Election Commission records that were compiled by the Center for Responsive Politics. He gave more than three times as much to state parties.
We contacted Mr. Kirsch and asked him why he, a Californian, gave so much to political parties in states like Iowa, Pennsylvania, and Arkansas. "I got advice from the DNC and my own political advisers," he told us, demonstrating that the national parties are well aware of the possibilities that the state parties offer.
The top donor overall was the National Education Association, through its political action committee and its affiliated teachers' unions. The NEA contributed $3.6 million, and was one of five unions that ranked among the top 10 donors to state parties in the 2000 election cycle.
The second biggest donor was the Association of Trial Lawyers of America at $2.5 million; third was the Service Employees International Union at $2.4 million; fourth was Kirsch at $2.1 million, and fifth was the International Brotherhood of Electrical Workers at $2 million. All those groups gave their support overwhelmingly to the Democratic Party.
AT&T was the top corporate donor, and ranked sixth overall with $1.4 million in contributions. Sixty-one percent went to Republican Party committees. The second biggest corporate donor was tobacco giant Philip Morris with $1.2 million. Republicans received 72 percent of those contributions, according to our analysis.
In addition to Kirsch, other top individual donors included S. Daniel Abraham, a member of the Forbes 400 list of the wealthiest Americans, with $1.3 million. Abraham made his fortune from the Slim-Fast company, which he recently sold to Unilever, the Anglo-Dutch multinational consumer products manufacturer. Bernard and Marsha Daines, another high-tech success story, gave $1.2 million.
We also looked at how state parties spent the $570 million they raised. The top type of expenditure by far was transfers. State parties transfer funds from their non-federal, or soft money accounts, to their federal, hard-dollar accounts to cover expenses for federal activity, primarily issue advertising. The state parties reported transferring $204 million to their federal accounts. However, records from the FEC show this amount is millions of dollars less than what was actually transferred.
Second on the list – less than a quarter of the total – were funds for get-out-the-vote, polling, consultants and other candidate support at $127 million. Third was media at $77.1 million, or 14 percent. The parties spent $59 million on administrative expenses, and made direct contributions to political candidates and PACs totaling $45 million.
In the 2000 election, a half-billion dollars in soft money was raised by the Democratic National Committee, the Republican National Committee and the four party committees that raise money to win U.S. House and Senate races. More than half of that amount, we found, was then transferred to state parties, which in turn, spent the money largely on issue ads.
By soft money, we mean the unregulated, unlimited contributions that national party committees raise from sources normally prohibited from donating to candidates by federal law. National party committees keep two general types of accounts—federal (that's for hard money) and non-federal (soft money). Contributions to hard money accounts are regulated by the FEC; the amount given by any single donor is limited. Contributions to soft money accounts are often unlimited and may be made by corporations and unions. Soft money is supposed to be used to benefit state and local elections, but since 1992, it's been used more and more for federal purposes, like funding issue ads.
When you look at the myriad laws governing federal elections, you'll find that national parties must use a higher percentage of hard money to pay for such ads than a state party. Under the old system – the one that will still be in place for the November 2002 elections – using state parties to pay for issue ads benefited the national parties.
After this November, soft money for the national party committees will be banned, assuming the Supreme Court doesn't strike down the law. The states will only gain in importance. And, we found, the quality of state records means that tracking that money will be much more difficult.
The principles of openness and disclosure are strongly held by all Americans. As Louis Brandeis once said, "Sunlight is the best disinfectant." But here we are, a year and a half after the 2000 election, still trying to learn the truth about who gave what to whom in our political process.
It will only get worse, we fear, after the November election.
Thank you. Before taking questions, let me thank the 32 people who have worked on this extraordinary, yearlong project – each of them is listed in our published report today. And, of course, special thanks again to the Pew Charitable Trusts.
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