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68. Kenneth Pins, “Foes Make Pitches on World Wide Web,” Des Moines Register,

June 10, 1996, p. 5.

69. Sarah Bouchard, “Electric Utilities Power up Push for ‘Clear Skies’ Bill,” Roll

Call, July 9, 2003. Internet.

70. S. L. Esrock and G. B. Leichty, “Corporate World Wide Web Pages: Serving the

News Media and Other Publics,” Journalism and Mass Communication Quar

terly, Vol. 76, No. 3, 1999, pp. 456–467; also their “Organization of Corpo

rate Web Pages: Publics and Functions,” Public Relations Review, Vol. 26, Fall

2001, pp. 327–344.

71. Ibid.

72. Ibid.

73. Birnbaum, op. cit., p. l52.

74. Ibid., p. 13.

75. Nelson, op. cit., p. 416.

76. Peter H. Stone, “Grass-Roots Group Rakes in the Green,” The National Jour

nal, Vol. 27, March 11, 1995, p. 621.

77. See “Can It Be Controlled? Ad Men Decry ‘Sleaze’ in Political Promos, but See

Even More in ’96,” Impact, December 1994, pp. 1–2. Impact is a monthly

newsletter of the Public Affairs Council.

78. Mike Morris, “Glaxo Wellcome’s Civic Action Network: Case Study of a

Broad-Based Grassroots Program,” in Kramer, op. cit., p. 34.

79. Margery Kraus, “Government Relations in the 90s and Beyond,” in Dennis,

op. cit., p. 97.

272 I CHAPTER 10

Chapter 11

Electoral Activities

Electoral activities are political actions intended to influence election out-

comes and agendas of political parties, legislative bodies (particularly the

House and Senate), and presidential and gubernatorial contests. Indi-

rectly, electoral activities support lobbying activities by enhancing access

to, and influence on, lawmakers.

As stated by Charles S. Mack, president

and CEO of the Business-Industry Political Action Committee, “Political

action tries to affect the outcome of elections to produce political decision

makers favorably inclined to the views of particular interest groups—ei-

ther by involving their members directly in the political process or by pro-

viding financial support to friendly candidates.”

The common denominator of most electoral activities is money: PAC

money, independent expenditures, soft money, and other money used

for issue advertising. Money is so important that, as Republican political

leader Mark Hanna once quipped, there “are two things important in

politics. The first is money and I can’t remember the second.”

Money is

provided by private financing of congressional campaigns, which is

consistent with Americans’ belief in capitalism. Consequently, wealthy

individuals and well-organized segments of society, such as corpora

tions and labor unions, have disproportionate political access.

Candidates recognize that more and more money is needed to run for

office. In the costliest campaign in history, the 2004 presidential and

congressional elections cost nearly $4 billion, compared with $3 billion

in 2000, $2.2 billion in 1996, and $1.8 billion in 1992.

The five most

expensive Senate races in the 2004 elections cost more than $20 million

each, headed by the South Dakota Senate race costing slightly over $33

million. The most expensive House race was in Texas District 32, costing

over $8.4 million.

Because of the precipitous rise in political campaign

costs, elected officials increasingly depend on financial contributions

and other resources to run for, or remain in, office.

273

It is no wonder members of Congress spend so much of their time on

fund-raising activities. They must, in effect, contend with two cam

paigns: one for the vote and one for resources.

A snapshot of a day in

the life of representative Gerald Solomon (R-N.Y.) shows him rushing to

a $500-a-head breakfast meeting for the reelection of fellow Republican

Rep. Deborah Pryce and leaving 25 minutes later saying, “Take a look at

this. I’ve got three this morning—I’ve already been to two—and seven

this evening. They’re time-consuming.”

Sometimes, however, collect

ing money is fast and simple. In the 2002 election, it took Thomas

Siebel, a Silicon Valley money man, just a few weeks to collect more than

$2 million from his top executives to form a PAC.

Corporations, as well as other political participants, find an opportu

nity in the politicians’ need for campaign funds. Contributors can in

gratiate themselves with politicians to gain access and influence.

POLITICAL CAMPAIGN CONTRIBUTIONS

Providing candidates and political parties with money—and in-kind re-

sources—is the most important corporate and business electoral activ-

ity. Money helps get the “right people” elected and adds clout to lobbying

efforts. Justin Dart, CEO of Dart Industries, got to the core of the matter

when, referring to lobbying, he said, “With a little money they hear you

just a little better.”

A member of Congress expects that anyone who

wants to get a point across will have already contributed to his or her of-

fice. Conservative political analyst Kevin Phillips said of the system, “If

you don’t pay, you don’t play.”

Public relations professionals must know how to respond to requests

for political contributions and when to take the initiative in making po-

litical contributions a part of a public affairs program or campaign. The

various ways politicians and political groups finance their campaigns

are summarized next in the “big picture” and each source is then further

described. Because political contributions can either promote or under

mine the political process, Congress has passed laws that spell out pro

cedures and limits. A summary of the provisions of the McCain-

Feingold Campaign Reform bill serves as a guide to allowable actions

and contributions.

Sources of Campaign Financing

The sources of political campaign funds are individual contribu

tions—both large individual donors and small donations—candidates’

self-financing, PAC money, soft money (now channeled primarily to

527 groups), and other forms. The relative importance of each is shown

in the breakdown of projected spending in the 2004 elections as shown

in Box 11.1.

274 I CHAPTER 11

Specific Sources of Funding

Individual Contributions. The biggest single source of campaign

cash in the 2004 elections was individuals. They donated an estimated

$2.5 billion to federal candidates and political parties—an increase of $1

billion over the 2000 elections. Despite the McCain-Feingold reform

law’s intent to reduce contributions from large individual donors, they

gave a disproportionate amount. Billionaires such as George Soros gave

seven-figure checks to the 527s. On the positive side, however, more

small-money donors—giving $200 or less—contributed in the 2004

elections than before.

Giving by small-money donors was accelerated by the Internet. As

demonstrated during the 2000 election cycle, leading political contend

ers used this tool effectively. Bill Bradley raised $650,000 as of Septem-

ber 30, 1999, followed by John McCain with $260,000, and George W.

Bush with $90,000. Internet giving reached a new high in the prelude to

the 2004 campaign. Vermont Governor Howard Dean shattered all re

cords and entered the Guinness Book of World Records when in the 3

months prior to October 1, 2003, he raised more than $14 million on

line, and during his entire campaign raised $19 million in online contri

butions.

Some see this method of campaign financing as the least

corrupting because the contributions are mostly small, thus reducing

the danger of a quid pro quo relationship between givers and recipi

ents.

Furthermore, the Internet will cause more people to give, says

Jay Friesel of the advertising firm 24/7 Media, because of “the ease of ex

ecution, the ability to contact immediately.”

PACs. PACs have become a staple of national politics, with nearly

every major issue group and federal candidate forming a PAC. Corpora

tions, labor unions, trade associations, and others may legally solicit

ELECTORAL ACTIVITIES I 275

Box 11.1 Sources of Projected Spending in the 2004 Elections

(In Millions)

Individual contributions to candidates and parties $2,500

PAC contributions to candidates and parties 384

Candidate self-financing 144

527 spending (related to a federal election) 386

Public funds to presidential candidates and party conventions 207

Convention host committee spending 139

Other (loans, interest to candidates, Levin funds,

independent expenditures)

102

Total $3.9 billion

money from individual members of their organizations and disburse

these funds to chosen candidates for federal office.

Campaign finance

laws set limits on the amount individuals may contribute.

Called hard

money, these funds are particularly valuable to a candidate because they

can use them directly for personal advertising and other purposes.

The growth of PACs was spurred by the passage of the 1974 amend

ments to the Federal Election Campaign Practices Act that clarified what

PACs could and could not do. From about 1,600 PACs in 1978, their

number grew to more than 4,000 6 years later, with total contributions

rising from $92.6 million to $228.7 million.

According to Political

Money Line, there were 201 corporate PACs in September 2004, which

collected $111 million in 2003.

In the 2004 elections, PAC contribu

tions from all sources totaled $384 million, an increase of 33% over the

2000 elections.

As shown in Box 11.2, trade and professional associations account

for 6 of the 10 top PAC contributors to federal candidates in 2003–2004,

followed by 3 labor unions and only 1 corporation. Membership organi-

zations can aggregate the donations of many people while corporations

are limited to their own employees and stockholders. The geographi-

cally spread United Parcel Service is an exception—and some predict that

far-flung Wal-Mart, with its mounting legal problems, will join the

list.

The three labor unions and the Association of Trial Lawyers of

America consistently give the lion’s share to Democrats, whereas most

associations give more to Republicans.

Corporate PACs give more money to Republicans than Democrats,

with about 9 out of 10 doing so from January 1, 2003, through October

13, 2004, according to a study by PoliticalMoneyLine. This preference

276 I CHAPTER 11

Box 11.2 Top 10 PAC Contributors to Federal Candidates,

2003–2004

PAC Nam

Total

(in Millions) Dem % Repbl %

National Association of Realtors $ 3.7 48 52

Laborers Union 2.6 86 14

National Auto Dealers Association 2.5 27 73

National Beer Wholesalers Association 2.2 23 77

Association of Trial Lawyers of America 2.0 93 7

United Parcel Service 1.9 27 73

International Brotherhood of Electrical

Workers

2.0 95 5

American Medical Association 1.9 20 80

United Auto Workers 1.9 98 1

National Association of Home Builders 1.8 35 65

reflects the “growing allegiance of the business community to the GOP,

driven by ideological compatibility, respect for majority power and the

concerted pressure exerted by Republican congressional leaders and con

servative activities,” says the Washington Post.

A study by the Federal

Election Commission (FEC) of PAC giving for all of 2003 and the first half

of 2004 showed that all corporate PACs gave $14.1 million to Republi

cans running for the Senate versus $8.3 million to Democrats. In the

House, Republican candidates received $38 million versus $18.1 million

for Democrats. Republican leaders have sought to accelerate the shift to

the GOP through the K Street Project (named for the street where many

lobbyists have their offices). House Majority Leader Tom DeLay (Tex.)

and conservative advocate Grover Norquist have strongly suggested

that companies favoring the Republican party will have better access

than those that do not.

The prevalence of corporate PACs, however, should not be exagger

ated. According to a study by M.I.T. professor James M. Snyder, Jr., 40%

of Fortune 500 companies did not even have a PAC in 2002, and the aver-

age corporate PAC gave only around $1,400 to legislators, well below

the then legal limit.

Because of the soft money restrictions imposed by

the new campaign finance reform law, PACs were expected to be more

attractive in the 2004 elections. Furthermore, the appeal of PACs was

recognized for other reasons as well. Greg Casey, president of the Busi-

ness-Industry Political Action Committee, told business groups: “There

is a growing realization that hard dollars raised through PACs will be

the coin of the realm.”

Also supporting this view is Ken Phelps, a fund-

raiser for Lockheed Martin’s PAC, who stated, “We’ve got to grow the

PAC. It’s a political environment and we need to be a political com-

pany.”

PACs have also become more appealing because e-mail and the

Internet have made solicitation for donations cheaper and easier. New

computer software has eased the formidable task of running PACs and

reporting transactions to Washington.

Candidate Self-Financing. Few candidates finance their own cam

paigns, but rich candidates can. The Center for Responsive Politics re

ported that federal candidates were expected to have poured $144

million in personal funds into their campaigns in the 2004 elections.

Among House candidates, Benjamin Earl Streusand (R-Tex.) and Jeanne

L. Patterson (R-Mo.) spent $2.8 million, and Michael McCaul (R-Tex.)

spent $1.9 million. Among Senate candidates, Blair Hull (D-Ill.) spent

$28.7 million, Douglas Gallagher (R-Fla.) spent $6.6 million, and Jack

Ryan (R-Ill.) spent $4.6 million.

In 2000 self-funders spent even more ($205 million), including the

astounding $63 million laid out by Jon Corzine, co-chairman of the in

vestment firm Goldman Sachs, when he decided to run in the New Jer

sey senatorial race. This huge outlay “brought the street-tough political

order of New Jersey to its knees.”

The size of his self-financing over

shadowed the $37.4 million of self-financing by publishing magnate

ELECTORAL ACTIVITIES I 277

278 I CHAPTER 11

Steve Forbes in the 1995–1996 election cycle, followed by Ross Perot

with $8.2 million. As Scott Fitzgerald said, “The super-rich are different

from you and me. They can become U.S. Senators.”

Soft Money and 527s. 527s, the new outlet for soft money, ac

counted for a slightly higher source of spending in the 2004 elections,

$386 million, than PACs with $384 million, as shown in Box 11.1.

Soft

money refers to unregulated donations to political parties by individu

als, corporations, and unions. The use of soft money in federal cam

paigns has been a highly controversial issue because its rising use

circumvented the goals of campaign finance laws, one of which was to

remove the influence of “big money.” However, as soft money contribu

tions to national parties in the 2002 election cycle shows, 724 organiza

tions gave $100,000 or more. Thirteen gave $3 million or more, with

Saban Capital Group leading the list with $9.3 million. Eight gave $2

million or more, with government-sensitive companies Philip Morris

giving $2.9 million and Microsoft giving $2.7 million.

Soft money was intended to be used for supposedly generic party-

building activities, such as get-out-the-vote drives, bumper stickers,

yard signs, and generic TV ads that say “Vote Democratic” or “Vote Re-

publican.” Such donations, which the Supreme Court in its 1976 Buckley

v. Valeo ruling declared legal,

had no limit, in contrast to hard money.

The only conditions that had to be met were those of not coordinating

efforts with a candidate and not constructing a political message that

refers to a particular candidate. The Republican and Democratic na-

tional party committees, however, learned to circumvent these restric-

tions. They financed television ad campaigns that attacked or promoted

congressional candidates by name, rationalizing that the law was not

broken because the ads were “issue ads” that did not explicitly say “vote

for” or “vote against” a particular candidate. In practice, therefore, soft

money was often used to benefit specific federal candidates, thus becom

ing a major vehicle for skirting the limitations and restrictions of federal

law, says the Center for Responsive Politics.

In the 1996 elections, the record growth of soft money contributions

became the big story and led to sharp criticism from several sources:

• Fred Wertheimer, former president of Common Cause, said,

“This past election will go down as the worst in modern times, if not

in our history as a nation.”

He asserted that a record-shattering

$200 million in contributions were made outside the federal law. Al

though saying most of it came from business interests, he also at

tacked the AFL-CIO for running its $20-million-plus television and

radio ad campaign with the stated purpose of defeating Republicans

in selected House districts.

Donald J. Simon, executive vice-presi

dent of Common Cause, said, “There’s complete lawlessness out

there.”

“A new country club has taken root: a club of wealthy, high

ELECTORAL ACTIVITIES I 279

powered donors who help set the political agenda, impact the out

comes and, in many ways, run the country.”

• Paul S. Herrnson, professor of government and politics at the

University of Maryland and author of many books on politics and

campaigning, concluded that most soft money contributions were

“little more than subterfuges that enable wealthy individuals, or

ganizations, and party committees to skirt federal campaign fi

nance statutes.”

The result, he said, is that there is no public

accountability.

• Reporter Beth Ragan called soft money contributions the

“black market” economy of campaign finance.

(Soft money contri

butions were sought and made in many ways. As highly publicized

in the press, the president and members of Congress offered to meet

large contributors, whose gifts were unregulated. For example,

$50,000 brought an invitation to coffee with President Bill Clinton.

Further disclosures, such as the easy access to the White House and

Congress by Enron officers and lobbyists during the Bush adminis-

tration helped create the momentum for reform. The media por-

trayed Kenneth Lay, Enron’s former chairman, as having benefitted

from writing big checks to political parties—and aggressively urg-

ing other top officers and employees to make contributions.)

• Darrell M. West titled his book about our system of government

Checkbook Democracy, describing it as a form of government in which

money has hijacked the campaign process.

Some corporations also joined the backlash to soft money, saying

that executives were “tired of endless appeals for funds that may not

serve their interests.”

Two thirds (68%) of the 400 top executives who

responded to a BusinessWeek/Harris Poll conducted in mid-March 1997

favored “ending unlimited ‘soft money’ contributions to political par-

ties by corporations and other interests.”

Said General Motors vice-

chairman Harry J. Pearce, “There’s no way to tell how the money is re

ally being used.”

The argument for campaign finance reform was

growing. Even some companies in heavily regulated industries—tele

communications, pharmaceuticals, finance, and tobacco—that used

to give soft money because they felt they had to were let off the hook

after the reform bill was passed.

At the urging of the Committee for

Economic Development, corporations mostly avoided 527 groups try

ing to pick up soft money in the 2004 elections.

Not a single top cor

porate political donor in 2000 gave to them in the 2004 elections,

partly because they felt they had even less control over them.

After the McCain-Feingold reform bill outlawed old-fashioned soft

money contributions to national parties, the fast-proliferating 527

groups quickly became the new recipients of soft money contribu

tions. From January 2003 through March 2004, they raised $146.4

million for federal elections compared to the $212.4 million in soft

money the national political parties raised over the same period during

the 2002 election cycle.

They have not yet caught up with previous

soft money donations to national party committees.

Named after section 527 of the Internal Revenue Code, 527 groups

are tax-exempt and allowed to raise money for political activities, in

cluding voter mobilization efforts, issue advocacy advertising, and the

like. They are supposed to be independent from the parties and the can

didates. In reality, however, the groups overlap in many ways and the

campaigns often swap consultants and lawyers. Bush campaign con

sultant Tom Synhorst, for example, was also founder of Progress for

America, the largest pro-Bush 527.

As with previous soft money contributors, the circle of major donors

to 527 groups is small. Of the more than $290 million raised by those

groups in the 2004 elections, 44% came from just 25 people. As of Sep

tember 2004, billionaire investor George Soros gave $13 million to

Democratic groups, insurance man Peter Lewis gave $15 million, and

Hollywood producer Stephen Bing nearly $7 million.

Among the re-

cipients, seven organizations spent two thirds of the money: Three

groups ran television ads for Republicans, and four ran ads and assisted

with voter turnout for Democrats. The most prominent recipients were

America Coming Togther (ACT)—largely the brainchild of Steve

Rosenthal, former political director of the AFL-CIO—which spent $72

million; The Media Fund, $51 million; MoveOn.org, $12 million; and

New Democratic Network, $11 million. They were doing the advertis-

ing and voter mobilization work traditionally done by the Democratic

National Committee.

The Republicans got a late start with 527s in the 2004 elections be-

cause they sought to pressure the FEC to rein in Democratic operations.

However, when the FEC failed to act, Republican-leaning 527s received

funding and ended up having the greatest impact, said Fred Wertheimer,

a veteran of campaign finance overhaul.

Texas developer Bob J. Perry

led Republican donors with his $8 million to pro-Bush groups. Other

major donors were Texas energy magnate T. Boone Pickens; $5 million

from Alex Spanos, owner of the National Football League’s San Diego

Chargers; and $4.2 million from Jerry Perenchio, chairman of the His

panic television network Univision. The major recipients were Progress

for America, receiving $38 million; Swift Boat Veterans and POWs for

Truth, $12 million; and Club for Growth, $8 million.

Understandably, Senator John McCain, one of the reform bill’s spon

sors, feared that “with their billionaire backers and nasty, negative tele

vision ads” the 527 groups “threaten to bring politics to a new low.”

sees nothing wrong with 527s when used to fund get-out-the-vote ef

forts and educate voters about issues. However, he considers their activ

ities “illegal, plain and simple” when used by “unscrupulous operatives

on both sides … to run political smear campaigns against George Bush

and John Kerry.”

He vows to correct this abuse in future campaign

finance reform legislation.

280 I CHAPTER 11

An unintended consequence of 527s is that the stabilizing role of po

litical parties will be further weakened. Large donors will write checks

to state parties instead, and these are likely to be more ideologically ex

treme, resulting in more partisanship in Washington. National parties

will also have to spend more time and money eliciting small donations

from individuals.

Although candidates and political parties can use

PAC money for issue advocacy advertising, most ad campaigns are paid

for by “money raised by nonprofit groups that claim no connection to

candidates or political parties, and use their funds to run ‘issue’ ads.”

Financing Conventions and Inaugurals. At least 29 companies do

nated to the conventions of both parties in 2004. Big corporations and

their lobbyists host receptions, dinners, and baseball outings and help to

underwrite the costs of the convention itself, allowed by a loophole in

the campaign finance law. The FEC concluded that such donors are

civic-minded, not politically motivated.

Likewise, companies and indi-

viduals have been contributing to Bush’s Presidential Inaugural Com-

mittee. According to BusinessWeek’s analysis, at least 28 defense

contractors, energy giants, financial firms, Big Tobacco, technology,

and health care companies have contributed $100,000 or more. Among

those giving the maximum of a quarter-million dollars were Exxon-

Mobil, ChevronTexaco, Occidental Petroleum, Southern Co., United

Technologies, Sallie Mae, and Altria.

Campaign Finance Laws

After the Watergate scandal, which revealed large contributions to

Nixon’s reelection campaign, Congress passed the Federal Election Cam-

paign Practices Act of 1971 to prevent candidates and their committees

from soliciting large donations from individuals and organizations that

might corrupt the political process. Only money from PACs raised and

spent according to the requirements and restrictions of this law could be

used in connection with an election for federal office. The law prohibited

corporations and labor unions from making direct contributions from

their treasuries to political candidates. In its place, the 1974 amend

ments to the Act authorized the establishment of PACs for corporations

and labor unions, as well as for trade and professional associations.

McCain-Feingold Bill. The reform bill that was on the political

agenda the longest is the McCain-Feingold bill. It seeks a ban on soft

money to the national parties, restricts corporate and union spending

on campaign advertising, and provides for greater disclosure of contri

butions.

Senator John McCain made a drastic overhaul of the cam

paign finance system the centerpiece of his campaign for the

presidential candidacy of the Republican party in 1999 and he vowed to

keep the issue alive. His stated aim was “to give the government of this

ELECTORAL ACTIVITIES I 281