Opponents of Self-Financers Seek Advice
By Paul Kane
Washington Post Staff Writer
Sunday, July 6, 2008
In summer 2003, an Illinois state senator used a new law to collect campaign contributions six times the normal limit for his insurgent U.S. Senate race against a multimillionaire securities trader.
But last week the Supreme Court struck down that law, the "Millionaire's Amendment," which helped launch the national political career of Sen. Barack Obama (D-Ill.) by leveling the financial playing field a bit. Writing for a 5 to 4 majority, Justice Samuel A. Alito Jr. said the law amounted to an "unprecedented penalty" on candidates such as Obama's opponent who want to exercise the First Amendment right to spend their own money in a run for office.
House and Senate candidates who had counted on the same aid in taking on wealthy, self-financed opponents are now scrambling for help and advice. Six years after an overhaul of campaign finance law, they find themselves prohibited from accepting the same outsize donations that helped Obama, Sen. Joseph I. Lieberman (I-Conn.) and others win their seats.
"If you run against a self-funder, the law's no longer going to help you out. . . . It will be potentially game-changing," said Marc E. Elias, a Democratic lawyer with Perkins Coie who represents dozens of candidates and party committees.
Before the court's ruling, more than 30 wealthy congressional candidates already had signaled the Federal Election Commission that they expected to self-finance much of their campaigns and would trigger provisions that allowed opponents to accept greater-than-normal contributions.
In some states, primary campaigns involving wealthy, self-financed candidates already have been completed under the rules now deemed unconstitutional. Elsewhere, the landscape of campaigns still underway has suddenly shifted.
In the first round of this summer's primary for Alabama's 2nd Congressional District, state Rep. Jay Love (R) donated $500,000 to his campaign. By waiting until May 20 to cross a self-financing threshold, he left his opponents less than two weeks to collect larger-than-normal donations.
Now, because of the court's ruling, Love is free to spend unlimited amounts of his own money against state Sen. Harri Anne Smith in the July 15 GOP runoff. Smith's donors, meanwhile, must abide by campaign finance limits.
Reports filed Thursday show that, in the last five weeks, Love has given his campaign an additional $150,000. Frustrated, Smith gave $100,000 to her campaign on June 26, the day of the court's ruling.
"It is a very difficult situation. It is a challenge. We are doing what we have to do," said Smith's senior campaign adviser, state Sen. Scott Beason (R-Ala.). "He can meet voters while we are trying to meet voters and raise money."
Love's campaign declined to comment on the financial strategy.
Critics of the Millionaire's Amendment rejoiced at its elimination, saying the provision was written into a sweeping 2002 campaign finance law by a bipartisan group of senators stunned at the huge sums of personal money used to win elections.
Senators took special note of former Goldman Sachs chief executive Jon S. Corzine, who had never run for office but in 1999 and 2000 pumped $60 million of his own money into a successful race for a New Jersey Senate seat. The winner of the state's governorship in 2005, Corzine (D) now has spent more than $100 million of his own money on two political campaigns.
The McCain-Feingold campaign finance law, which took effect after the 2002 midterm elections, contains the complicated formula that determined when candidates could exceed contribution limits.
In House races where wealthy candidates spent at least $350,000 of their own money, opponents were able to raise as much as $6,900 per individual contribution, triple the normal $2,300 limit in this election season. In Senate races, a sliding scale based on population and spending by the self-financed candidate allowed opponents to reach six times the normal limit, or $13,800 this year.
"This is the quintessential incumbent protection provision, because nothing frightens the members more than losing their incumbent fundraising edge to a guy with an unlimited checkbook," said Cleta Mitchell, a Republican campaign lawyer who attended the Supreme Court's announcement of its ruling. "This [ruling] is chalking one up for the farmers with pitchforks."
Lieberman was the largest beneficiary of the law. He took in $3.5 million from donors who already had given him the maximum donation for his 2006 Senate campaign, according to FEC records. He lost the Democratic primary to challenger Ned Lamont, but ran, and won, as an independent in the general election.
Big contributions kept Lieberman relatively even with Lamont, a wealthy telecommunications executive and partial heir to the J.P. Morgan fortune who poured $17 million of his own money into the race.
The court's ruling specifically applied to House races, the justices upholding a challenge filed by Jack Davis, a Buffalo manufacturing executive who spent $3 million of his money in a 2006 losing effort against Rep. Thomas M. Reynolds (R-N.Y.). But experts agree it also applies to Senate races.
Some wealthy candidates view their financial power as the only way to compete against incumbents. Sandy Treadwell, the GOP candidate running against freshman Rep. Kirsten Gillibrand (D-N.Y.), already has put more than $900,000 of his own into the race. But through March 31, Gillibrand had raised almost $3.2 million and had $2.4 million in her account.
"We need to get the message out, and we need to get the message out earlier than most candidates. If he's asking people for support, he's going to put up some of his own money to run as good a campaign as possible," said Peter Constantakes, Treadwell's spokesman.
Though it was tossed aside by the justices, the Millionaire's Amendment already has helped alter political history.
Its first major test came in the 2004 Illinois Senate race, when Obama, then a state senator, was pitted against a more experienced politician, state Comptroller Daniel W. Hynes, and former Goldman executive Blair Hull. By the summer of 2003, Hull's fortune had helped him assemble a dream team of consultants and pollsters that made him the prohibitive favorite to win the Democratic nomination.
Long before his current $287 million presidential juggernaut was financed by millions of small-dollar online donors, Obama needed only a core group of a few hundred of his closest supporters to keep his campaign afloat.
While Hull spent $29 million, Obama raised $2 million from more than 350 donors who gave more than the usual limit, according to FEC figures, about a third of his overall spending in the primary. Ten members of one family -- the Crowns, prominent Chicago investors -- gave $120,000, which was $100,000 more than they would have been allowed. George Soros and three family members gave Obama $48,000 combined, $40,000 more than the traditional limit.
Hull's campaign collapsed just before the primary amid allegations of abusive behavior toward his ex-wife, and Obama capitalized on the controversy and rode to victory over Hull and Hynes.
Two weeks before his easy general-election victory in November 2004, Obama's Senate campaign manager, Jim Cauley, told the Associated Press that those large contributions made Obama's late surge in the primary possible.
"I think it kept us in the ballgame," he said.
Staff researcher Alice Crites contributed to this report.
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