First of two articles
The House Democrats' courtship of Steve Wynn -- owner of Mirage Resorts, grandiose prophet of the new Las Vegas, and major Republican donor -- began four years ago with a cold call from David Jones, Minority Leader Richard A. Gephardt's top fund-raiser.
Wynn took the call, and soon Jones was flying out to breakfast at his golf course mansion along with Rep. Charles B. Rangel. The gravelly voiced New Yorker became the Democratic point man, reciprocating Wynn's hospitality with a tour of his Harlem district.
By last February, when Jones and Rangel met with Wynn in his Las Vegas office, they didn't even have to make their pitch. Wynn had told friends he was angry at "mean-spirited" House Republicans for impeaching President Clinton. Besides, he complained, they had neglected him, and hadn't stopped Rep. Frank R. Wolf's (R-Va.) anti-gaming crusade. He was ready, Wynn said, to help the Democrats regain control of the House.
How much, Wynn asked, do you need me to help raise out of Nevada for the 2000 election? Jones knew that during the entire 1998 election, the House Democrats' campaign arm had only collected about $110,000 from Vegas, so his answer was an audacious one: $1 million to $1.5 million. Done, Wynn replied.
The first installment -- a $250,000 corporate check from Mirage Resorts -- was Wynn's downpayment on a bet that Democrats will take back the House next year. It also suggests one reason why they might succeed. With the Democratic Congressional Campaign Committee as their vehicle, they are raising record amounts of money for next year's races, trading on their new electoral competitiveness to raise funds earlier and in larger amounts than ever before.
"Soft money" -- the term of art for the unlimited contributions that corporations, unions and wealthy individuals can give for so-called "party building" -- has fueled an explosive growth in fund-raising for both parties since the 1996 elections, when campaign operatives figured out a way to legally spend it on TV ads that focused on individual candidates.
But this year it is the House Democrats who have been most aggressive in increasing the amount of soft money they raise, even as they lead the campaign in Congress to eliminate it. Driven by Gephardt and Rep. Patrick J. Kennedy (D-R.I.), the chairman hand-picked by Gephardt, the DCCC is out to reverse its traditional status "at the bottom of the fund-raising food chain," as former Rep. Vic Fazio (D-Calif.) put it.
In just the first six months of this year, the DCCC raised $17 million total -- $9 million of that in soft money. That marks a stunning 373 percent increase in soft money compared with the first six months of 1997 -- the highest rate of growth for any party committee. The fund-raising escalation foreshadows an election season next year when both parties will pour a million dollars or more into more than 30 House races whose outcome will determine control of Congress.
Some of the money is from businesses like Wynn's Mirage Resorts; some is from well-heeled individuals giving $100,000 each, such as Slimfast founder S. Daniel Abraham, National Enquirer heiress Lois Pope and Florida Marlins owner John W. Henry. As of June 30, Democrats had attracted 21 six-figure soft-money givers compared with 14 for Republicans, according to data compiled by the Campaign Study Group. Those checks came from groups or individuals who had never before made such a financial commitment so early.
Since individual members can't raise soft money for their own campaigns, the DCCC ("d-triple-c") and the National Republican Congressional Committee do it for them. This embrace of soft money -- legally meant to go only for "nonfederal" purposes -- is particularly ironic since the two campaign committees exist for the sole purpose of electing federal candidates.
In recent years, the soft money powerhouse on Capitol Hill has been the NRCC. Since the beginning of 1997, a new Common Cause study found, the House Republican committee has raised more of it than any other congressional committee: a total of $37.8 million. So far this year, the NRCC has outraised the DCCC overall $27 million to $17 million. And in House Majority Whip Tom DeLay (R-Tex.), the subject of a story Monday, the Republicans have the single most effective fund-raiser in Congress.
But slightly less than a year before the congressional elections, the House Democrats have significantly cut into the GOP's fund-raising advantage.
The DCCC is running essentially even with the NRCC in soft money raised this year, and Democrats are ahead for the first time ever in cash on hand: $10.7 million to the NRCC's $10.1 million.
"Republicans have experienced growth," said David Plouffe, the Gephardt strategist who is now executive director of the DCCC. "We've experienced much greater growth." By design, the Democratic growth strategy has focused on soft money, seeking contributions from a new club -- "Team 2000" -- for $100,000 givers, and on what several sources said was an organized effort to get labor unions to "frontload" their contributions by giving as much as possible early in the election cycle.
Republicans have hardly ignored big givers. After the Democrats upped the ante, NRCC Chairman Tom Davis (Va.) imitated them with his own $100,000 program -- the "Business Leadership Trust," a name reflective of the GOP's financial base. The GOP is also starting a new national finance committee to recognize corporate CEOs and top lobbyists. And when it comes to big checks, the NRCC lays claim to the biggest single donation of the year: $300,000 from Chiquita banana king Carl Lindner.
"Soft money follows power," said Davis, recognizing that the Republicans' takeover of Congress in 1994 has immeasurably boosted their fund-raising capacity. But he argued that Democrats have benefited most, leveraging the power of the presidency for their financial gain.
Eroding the GOP Edge
For decades, Democrats have gone into campaigns knowing they would be outspent. Taking over the DCCC in 1981, when Republicans had a fund-raising lead of 13 to one, Rep. Tony Coelho (D-Cal.) cut into that edge by convincing businesses they should invest in what was then the congressional majority. Coelho, now Vice President Gore's campaign chairman, also professionalized the DCCC, insisting for example that a campaign hire pollsters before it could receive a dime from the committee.
But the game then was hard money -- strictly limited contributions of no more than $20,000 a year to party committees. At the time, before a succession of court rulings and Federal Election Commission cases, soft money was an add-on, used to finance building projects and television studios but never contemplated as a thinly veiled way around the contribution limits to specific races. And so the dollar amounts were low, amazingly so compared with the current checks.
"In retrospect, we were pikers," said one former Coelho adviser. "We thought we were pushing the envelope when we were asking people for $5,000."
And yet Coelho was a transformative figure, his close ties to S&L power brokers and aggressive style memorialized in a book, "Honest Graft," by journalist Brooks Jackson that showed members how the DCCC and the NRCC could become fund-raising powerhouses and use that money to wield more influence over campaigns. New York Republican Bill Paxon, who took over an NRCC deeply mired in debt in 1993, said flatly, "Coelho was my model" as he reinvented the committee in time for House Republicans to win the majority for the first time in 40 years.
In 1994, the last election before soft money's rise, the NRCC raised $7.4 million in soft money, compared to $5.1 million by the DCCC.
When Texas Rep. Martin Frost became chairman of the DCCC in 1995, he knew the Democrats were going to have to raise money differently. In the minority after four decades of power, they no longer had the legislative club that Coelho had taught them to wield with the K Street lobbyists who controlled business giving.
"Once we went into the minority, we had to reach beyond the PAC community in Washington," said Frost, who led the DCCC in the 1996 and 1998 elections and is now the Democratic Caucus chairman. "We really had to work the rest of the country aggressively."
Clinton and his advisers supplied the blueprint, using the Democratic National Committee to fund an unprecedented $35 million ad campaign to boost his reelection and paying for the ads with a mix of hard and soft money. On Capitol Hill, members quickly grasped the implications: soft money could now be used to launch candidate-specific TV ads that were legal as long as they avoided the magic words "vote for" or "vote against."
Frost was planning to raise more soft money -- but only to fund more traditional activities, like election-day turnout and overhead expenses. To start, he had to confront a party committee without much of a national donor base. "We weren't really thinking about soft money," said Matt Angle, Frost's top aide. "We were thinking about new money."
When they arrived at the DCCC, Angle said, they found that only 100 or so individuals had ever given more than $1,000 to the DCCC. Democratic House members, still stunned by their party's defeat, were reluctant to hit up their own big donors for the committee. And most donors had never heard of the DCCC, assuming it was an affiliate of the DNC.
"We had one guy who was a $100,000 giver," Frost said, New Jersey businessman Grover Connell, a rice broker who figured in the Koreagate scandal of the late 1970s and as long ago as the Coelho days was already giving $50,000 a year to the DCCC. "He was the only one we ever had," Frost said. "I said, `Well, if Grover will give that much, we should start asking other people for larger figures.' "
Meanwhile, the predicted switch in business giving was coming to pass -- Republicans, led by Speaker Newt Gingrich (R-Ga.) and DeLay, made an aggressive push to shut down Democratic money on K Street. By the 1998 election, about 65 percent of business funds were going to the House GOP.
Overall, the DCCC raised $16.6 million in soft money to the NRCC's $27.8 million for last year's election -- 225 percent more for the Democrats and 274 percent more for the Republicans since 1994.
Gephardt was already a top fund-raiser, a master of "the big ask," and yet, said Frost, "we didn't have 100 percent of his attention."
But last fall's election, when Democrats shocked even themselves by whittling the House GOP's majority to just six seats, galvanized Gephardt, a believer in the power of political money ever since his 1988 presidential campaign sputtered to a finish on Super Tuesday, several million dollars in debt.
Gephardt Aims for Speaker
Two days after last year's election, Gephardt convened his top advisers and started planning for the 2000 campaign. His goal, it was clear, was to become speaker -- not to run for president. While he didn't announce that decision until February, Gephardt quickly began planning his DCCC strategy, deciding to transfer virtually all his political operation to the committee.
As chairman, Kennedy would be Gephardt's "director of sales and marketing," in the words of banking lobbyist Tom Quinn, a longtime Kennedy family backer. Unabashed about trading on his family name, Kennedy was seen by Gephardt's team as a financial asset. "Patrick being chairman means an additional $10 million to $20 million for the DCCC," argued a leading party fund-raiser.
Jones, Gephardt's top money man, was put on contract at the DCCC. So was Richard J. Sullivan, the young lawyer who had served as the DNC's finance director in the 1996 election and was the lead-off witness in hearings held by Sen. Fred D. Thompson (R-Tenn.) about the influx of foreign money to the DNC in 1996.
The idea was to personalize the committee, selling donors on the future speaker. Kennedy said he often tells would-be contributors: " `This is the Dick Gephardt for Speaker committee.' They get that. It personalizes it."
Gephardt himself calls big donors, not just to ask but also to thank. "He's the kind of guy who understands that in order to get dessert, you have to eat your vegetables," said Erik Smith, a Gephardt aide who is now the DCCC's communications director.
Determined to take advantage of the political momentum generated by the November election gains -- and to play off the outrage felt by Democratic donors about the GOP House's impeachment of Clinton -- the DCCC decided to focus its efforts on soft money and to push earlier than ever for major checks.
But Kennedy himself proposed the most audacious innovation, according to his aides. Until then, the biggest dollar program at the DCCC had been the Speaker's Club, price of entry: $15,000 in hard money. Kennedy created "Team 2000," a new club for $100,000 and over donors who would be feted by the party at exclusive events, including a weekend of clambakes and sightseeing at the Kennedy family compound in Hyannisport last month.
Big donations began to roll in: $250,000 from the Communications Workers of America, whose political director considers herself Kennedy's "fairy godmother" in the labor movement; $210,000 from AFSCME; $102,000 from AT&T; $100,000 from Texas trial lawyer Walter Umphrey's firm, Price Club founder Sol Price and others.
The Democrats are eagerly keeping score: according to the sheet handed out at each week's Democratic Caucus meeting, Gephardt has already collected $6.8 million for the DCCC and House candidates this year, followed by Kennedy at $6.2 million, aspiring Ways and Means Chairman Rangel at $1.9 million and Frost at $670,000.
Contributors who have dramatically increased their help to the House Democrats this year cite everything from personal loyalty to Gephardt to disaffection with the Republicans to a sense that the Democrats may lose the White House and therefore need to go all-out to retake control of at least one branch of government.
Richard Medley, a Wall Street analyst and former congressional aide, mentioned all three. "I've been a friend of Gephardt's for probably ten years," said Medley, who hosted a July dinner in New York with former treasury secretary Robert E. Rubin that raised $300,000. But he also referred to pessimism about Vice President Gore's chances to win next November: With GOP front-runner "George W. Bush doing so well, it's important to take out an insurance policy hoping to have at least one branch controlled by Democrats."
Personal service from Gephardt and Kennedy also helps land donors. That certainly was the case with the $100,000 check from David Alameel, a wealthy Dallas dental clinic owner. Alameel was already on the radar of Frost and his team, but they had no idea he would become a six-figure contributor.
Frost duly set up the meeting with Kennedy and, in the end, he said, "Patrick was the one who convinced him." The $100,000 check came in on June 21.
Indeed, Kennedy has produced a number of eye-popping checks from unexpected sources, like the $100,000 from Lois Pope, the Palm Beach heiress to the National Enquirer fortune. The wooing of Pope included Kennedy flying to Florida to present her with an award for her charity work.
"One of the great joys of my job is meeting people who inspire me," Kennedy gushed as he presented her with a "distinguished service award" from Citibank Private Bank of Florida. "I feel the energy that they feel for this country. Those of you who know Lois know that energy comes through." That was on April 7. On May 28, the DCCC received Pope's $100,000 check.
An even larger amount came as the result of his friendship with John J. McConnell Jr., a trial lawyer for Ness Motley Loadholt Richardson & Poole, a South Carolina-based firm that has earned millions of dollars from representing states in the tobacco settlement. Operating out of the firm's Rhode Island office, McConnell worked hard to introduce Kennedy to colleagues, flying him on the corporate jet so he could spend time with senior partner Ronald L. Motley and hosting a dinner on Capitol Hill for Kennedy, Gephardt and other trial lawyers with deep pockets.
On June 30, the courtship paid off -- with a check for $250,000. "No question about it," McConnell said, "that was a personal contribution to Patrick."
Spending in New Ways
That check -- and all the others -- will go into a new pot of soft money that the DCCC will be able to spend next year in ways not envisioned by the 1974 election law, which restricts the parties to direct and coordinated gifts to their House candidates of only about $100,000 each. The idea behind the law was "to take fund-raising out of the hands of the party committees and give control of it to candidates themselves," as GOP pollster Brian Tringali put it.
Instead, with soft money issue ads and sophisticated voter identification programs, the parties are planning to spend upwards of $500,000 or $1 million each in next year's key districts. That gives the parties more say over how campaigns are run, what they are saying and who they are saying it to.
"Practically speaking," said a top Democratic fund-raiser, "you can take a race that is a $1 million House race and turn it into a $3.5 million race with soft money. In a day and age when parties themselves are not as strong, individual party committees are stronger than ever."
For Kennedy and his staff, the new emphasis on soft money is simple political pragmatism. "You can really draw a direct correlation between the amount of money in a campaign committee and the impact it has in terms of getting members elected," he argued.
To win, Kennedy said, "we need to raise an even greater amount of money. In practical terms, that means we need to raise it in bigger chunks."
Next: DeLay Inc.
`Soft Money' Explosion
The Democratic Congressional Campaign Committee's "soft money" fund-raising has skyrocketed since 1997 .
Soft money raised, in millions
Democratic Congressional Campaign Committee
First six months
National Republican Campaign Committee
First six months
SOURCE: Federal Election Commission