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  •   Huge Money Chase Marks 2000 Race

    By Ceci Connolly
    Washington Post Staff Writer
    Sunday, February 28, 1999; Page A1

    The 2000 presidential race is developing into a mammoth spending spree, with Vice President Gore aiming to raise a record $55 million and two other candidates considering giving up federal money so they can spend unlimited sums.

    The Primary Rules
    If you accept federal funding:
    Individual contributions are limited to $1,000.
    Personal spending is capped at $50,00.
    Primary campaign spending is limited to $33.5 million.
    You must abide by state-by-state spending caps.
    You can receive up to $13 million in matching funds.

    If you opt out:
    Individual contributions are still limited to $1,000.
    You may spend as much of your own money as you want.
    You may spend as much as you want on primaries.
    You may ignore state-by-state spending caps.
    You get no matching funds.


    Gore, who has been holding a series of private dinners with top fund-raisers, plans to exploit every available legal loophole to collect far more money than the basic spending limits allow. An intimidating war chest, his strategists assert, will scare off other Democrats and give him an early start on attacking the ultimate Republican nominee.

    At the same time, Texas Gov. George W. Bush is weighing whether to opt out of the system that gives primary candidates partial federal funding in order to compete more effectively against the deep pockets of Malcolm S. "Steve" Forbes. That would let both men spend as much as they want in pursuit of the GOP nomination.

    "It's totally out of control," said Stan Huckaby, a Republican accountant who has advised numerous presidential campaigns.

    The money chase is so overwhelming that former California governor Pete Wilson (R) and Sen. John F. Kerry (D-Mass.) announced last week they would not run. On Thursday, the quest for cash will quicken with three candidates Gore, former vice president Dan Quayle and Democrat Bill Bradley holding major fund-raising dinners.

    "Everybody is pressing the envelope, spending a lot of time worrying about money," said Quayle campaign chairman Kyle McSlarrow.

    Twenty-five years after Congress passed a law to restrain the flow of money into presidential campaigns and two years after a campaign widely condemned for its financial abuses the candidates are preparing to open the floodgates to an unprecedented amount of unregulated spending.

    After investigations by Congress, the Justice Department and the Federal Election Commission into 1996 fund-raising practices fizzled and campaign reform legislation failed last year the strategists for 2000 have concluded that there is little risk in pushing the fund-raising boundaries to new extremes.

    When the 1974 act was written, lawmakers thought they had devised a foolproof way to shift the emphasis from dialing for dollars back to discussing the issues. They offered candidates a tantalizing deal: live within strict overall and state-by-state spending rules in exchange for millions in taxpayer-provided "matching funds." Each party's nominee would also receive full public financing for the general election campaign.

    But a combination of factors coalesced to frustrate those intentions. The cost of campaigning has skyrocketed while the maximum donation has remained at $1,000 for individuals meaning candidates have to spend more time than ever courting donors.

    The entrance of wealthy, self-financed candidates such as Forbes has other potential candidates worrying about how to compete against someone not constrained by spending limits. And a compressed primary calendar that will likely produce nominees by early March 2000 further increases the pressure on candidates to build up their bank accounts now.

    "To be competitive, you have to have the money up front," said Howard Opinsky, a spokesman for Sen. John McCain (R-Ariz.).

    The competition for dollars has become so intense that most candidates will spend half of 1999 trolling for cash, their strategists said.

    McCain plans to attend 25 fund-raisers by the end of March, while former Reagan administration official Gary Bauer is busy mining a direct mail list of 90,000 supporters. House Budget Committee Chairman John R. Kasich (R-Ohio) made a pilgrimage to New York to woo mega fund-raiser Georgette Mosbacher, while Elizabeth Hanford Dole is contacting many friends in her husband's ready-made donor network.

    Even as Bush prepares to announce the formation of his exploratory committee, a debate rages inside his inner circle about whether he should give up federal funding to attempt to match the wealthy Forbes dollar-for-dollar.

    His spokeswoman, Karen Hughes, said only: "A decision has not been made yet." Another top Bush adviser outlined "significant advantages" to forgoing matching funds, but said a final decision would likely come a number of months into the campaign.

    In the 1996 primaries, Forbes chose not to participate in the matching-funds system and spent $32 million of his own money, dropping about $4 million in the Iowa caucuses alone, more than double the legal spending limit. His early advertising blitz set off a chain reaction that left the eventual GOP nominee, Robert J. Dole, with little money and plenty of scars.

    "You need to be in a position to respond" to a Forbes attack, said the Bush adviser. Opting out of the federal system "puts you on more even ground with Forbes and his wallet."

    But the decision is not easy. By one Bush adviser's estimate, the governor would need to raise an additional $17 million if he chooses not to take matching funds. And he would still be limited to raising a maximum of $1,000 from individuals.

    "You begin to ask yourself how many people you can find to give you $1,000 each," said one Republican strategist.

    Indeed, while other candidates have considered not participating in the matching-fund system, none has taken that plunge without a large personal checkbook to finance his campaign.

    "In the past, you heard Ronald Reagan's and Bill Clinton's folks make noise about not taking the matching funds," said Anthony Corrado, a campaign finance expert at Colby College. "But, when push came to shove, they all took the money."

    Whichever strategy Bush adopts, Ron Kaufman, a veteran GOP operative who served in the Bush White House, said much of the former president's financial network is poised to step into action for the son. Already, Bush has played host to more than 75 prominent contributors at the governor's mansion, and his aides boast that between the governor and his brother, Florida Gov. Jeb Bush (R), the Bush team has a list of 122,000 possible donors.

    Gore offers a case study in how to stay within the system of federal funding but stretch the legal limits to the extreme.

    Over the years, politicians with the approval of regulators at the FEC have invented ways to raise money above the strict federal caps, estimated to be $33.5 million this year. They can collect more by designating some of it as intended for fund-raising costs or legal and accounting expenses. Thus, Gore's target is $21.4 million above the basic spending ceiling.

    While the extra cash is supposed to be used for those "exempt" expenses and not on direct campaigning, past campaigns have found creative ways to use the money. For example, the former director of Gore's political action committee, Nick Baldick, is on the payroll of Gore 2000 as a fund-raiser, meaning that his salary can be paid from those extra "exempt" dollars even though he has no experience raising money.

    Gore's advisers believe that raising $55 million serves a dual benefit, dissuading potential Democratic rivals from challenging him for the nomination and giving him a financial advantage heading into the general election.

    The strategy is "shut-out politics," said Fred Wertheimer, president of Democracy 21, which promotes the tightening of campaign finance laws. "The goal is to shut out opponents."

    If Gore wins the nomination with minimal effort and can hoard most of his money, he will enjoy a huge strategic advantage over the GOP nominee, just as President Clinton did four years ago. In April 1996, the president's $19 million dwarfed Dole's $2.1 million bank account, allowing Clinton to dominate the airwaves for four months.

    If the Gore plan works, he, too, will have several million dollars squirreled away for the early summer campaign before the two major-party candidates receive millions in general election financing.

    Building on the successful fund-raising model of 1995, Gore has left nothing to chance. Five weeks after opening his campaign, Gore's first solicitation was mailed to 850,000 people, said campaign manager Craig Smith.

    The Gore team, like many others, relies on a network of "collectors" to round up donors. Anyone who collects $50,000 from other supporters joins the vice president's national finance board, a ceremonial group that entitles members to attend a handful of private get-togethers with Gore.

    "Fund-raising for a presidential campaign is as much a grass-roots organizing effort as it is a finance effort," said Smith. "You can have somebody worth a billion dollars, but at the end of the day you can only write a check for $1,000."

    For lesser-known candidates, raising the amounts that Gore plans is impossible. Putting the best face on that fact, they all argue that the nomination can be won for less, although they differ on exactly how much it will cost.

    "I don't think it will necessarily take more money than last time," said Ted Welch, the top fund-raiser for former Tennessee governor Lamar Alexander. "It may take less."

    In the 1996 contest, the Alexander camp touted his fund-raising prowess as evidence of his strength as a candidate. This time around, Welch says the breakneck pace of the 2000 primaries will place greater emphasis on "free media" coverage rather than paid advertisements. He hopes to raise $15 million this year from some of the 22,000 people who supported Alexander in 1996.

    Kasich hopes to raise $18 million this year. His advisers know that would place him far back in the money race, but they are confident he can overtake the better-financed candidates with sheer sweat.

    "If you don't have a message and a messenger," said Jim Rappaport, a Massachusetts entrepreneur raising money for Kasich, "you can have all the money in the world and it won't matter."

    © Copyright 1999 The Washington Post Company

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