The Democratic drive to retake the House has made such significant inroads with corporate America that the two parties' campaign committees are now dead even in business donations and worried Republicans have mounted an aggressive K Street counterattack to halt such "bet-hedging."

The House GOP's campaign chairman, Rep. Thomas M. Davis III (R-Va.), has hired a top lobbyist to run the National Republican Congressional Committee and said the new fund-raising strategy would return the party's emphasis to its traditional base among K Street lobbyists who advise big business where to spend its political money.

The Republican effort to reassure their increasingly nervous business allies about the party's prospects in 2000 comes as a new analysis shows that the NRCC and the Democratic Congressional Campaign Committee split donations from businesses 50-50 in the first half of 1999--a striking contrast to the last election, when the GOP campaign operation collected 63 percent of the business money.

The analysis of contributions--including political action committee donations, direct corporate contributions and individual giving--was prepared for The Washington Post by the Center for Responsive Politics.

Several senior Republicans described the hiring of BellSouth Corp. lobbyist Daniel Mattoon as a "shake-up" spurred in large measure by fears that the party is falling behind in fund-raising. Davis said Mattoon's presence would help soothe corporate America's fears that Democrats are on the verge of a congressional takeover. "What he adds to is the fund-raising base on K Street," Davis said.

Mattoon has led a group of lobbyists advising the NRCC on fund-raising since 1988 and is the closest confidant of Speaker J. Dennis Hastert (R-Ill.) in the lobbying world. He said House Republicans would focus on "making K Street understand we fully intend to be in the majority in 2001 in the 107th Congress. . . . We need to try to prevent a hedge from occurring, or at least an overt hedge."

Since Republicans took control of the House after the 1994 elections, business givers have contributed two-thirds of their money to the GOP. But the early giving this year has been far more competitive. In addition to the even split in business giving to the House campaign committees, more than 20 of the top 50 business political action committees have stepped up giving to Democrats this year, an analysis of their filings shows.

"The prevailing mood downtown is: This could go either way," said a GOP lobbyist who represents several Fortune 100 companies. "We better make sure our interests are protected no matter who's in control."

Davis acknowledged that at a time of record fund-raising for both parties, the NRCC does not expect to post a banner second half of 1999 before picking up the pace in 2000. And he also has been embroiled in a behind-the-scenes skirmish with other GOP leaders over how much of the party's campaign funds to spend on early television ads that may not affect next year's races.

For their part, Democrats are making an aggressive presentation to businesses that they can retake the House and that it would behoove them to contribute--seeking what Democratic lobbyist Tom Quinn described as "old-fashioned insurance money."

DCCC Chairman Patrick J. Kennedy (D-R.I.) launched a program for $100,000 donors earlier this year. "Major corporate donors," he said, "want to be able to enjoy the same access as they do with the current majority. . . . For them, it's a business proposition--it's not personal."

It's an ironic reversal for House Republicans, who have seen their financial advantage over Democrats increase dramatically since they won control of Congress in 1994 but also have a tradition of far more lavish spending.

In the 1998 election cycle that saw the GOP lose five seats to the Democrats, the NRCC raised close to $100 million--2 1/2 times as much as its Democratic counterpart. So far this year, the NRCC is still well ahead in overall fund-raising, having collected $27 million as of June 30, compared with the Democrats' $17 million. With its leaner operation, however, the DCCC had more money left in the bank for the first time since the GOP won the majority, $10.6 million to $10 million.

For Davis, the long-running internal debate over how much money to spend--and when to spend it--has taken on new urgency as K Street has become more skeptical about the party's chances.

"A fair amount of the NRCC's money is raised from K Street," said one lobbyist in the NRCC's inner circle, "and there is a legitimate right on the part of K Street to want to know where that money's being spent and how that money's being spent."

The most recent flash point has been the decision by the House GOP leadership to launch an early fall spate of television ads designed to win the budget endgame with President Clinton and at the same time beat up on 10 of the House Democrats whom Republicans hope to unseat next year.

The Republican National Committee has staked out a position against early spending, with senior officials flat-out rejecting the NRCC's request for money to help fund the ads, according to several sources.

Some lobbyists have also questioned the ad campaign. "K Street is worried that it's not a wise expenditure of money," said one lobbyist who is a former senior Republican official. "This decision plays into the general 'they don't know what they're doing' attitude" about the NRCC.

Davis has tried to have it both ways, at first adamantly refusing to fund the ads, then backing down, and finally pulling the funding after the first week. "I have budget restrictions," he said. The NRCC is "not a bottomless pit."

Majority Whip Tom DeLay (R-Tex.) said he understands Davis's hesitation. "He was concerned about where the money was going to come from," DeLay said. "He should be. He's the chairman of the NRCC."

With individual leaders like Hastert, DeLay and Majority Leader Richard K. Armey (R-Tex.) contributing as much as $75,000 each to keep them on the air, the ads have run intermittently for the past month--in the end, they will cost about $1 million, much less than initially predicted.

Davis said he is now a convert to the ads' effectiveness. "How we come out of this budget battle is very important to us," he said last week. "It is worth some level of expenditure to rally the troops and show we're not going to get pushed around."

Davis won his post little more than 10 months ago by criticizing as wasteful a $25 million ad campaign run last fall by then-Speaker Newt Gingrich (R-Ga.) and his handpicked NRCC chairman, Rep. John Linder (R-Ga.). Called "Operation Breakout," the last-minute television campaign focused on impeachment at a time when a scandal-weary public didn't want to hear about it. The new NRCC team under Davis mockingly referred to it as "Operation Breakdown."

One of Davis's first stops after succeeding Linder was a meeting held to reassure business lobbyists whose contributions had funded the ads.

"Davis and I went to K Street," recalled Scott Hatch, who served as the NRCC's executive director until last week's shake-up and is now taking a leave of absence due to illness. "We said, 'Look, we know you feel like you got sold a bad hedge fund, but Merrill Lynch is under new management and we've still got some blue-chip stocks we'd like to sell you.' "

Now, Mattoon is being brought in to continue Davis's selling job downtown. In addition to having a reputation as an adept fund-raiser who controlled BellSouth's federal PAC, Mattoon has a long history with the NRCC--his first job in Washington was as an intern there. His NRCC lobbyist group has brought together top fund-raisers such as Blue Cross-Blue Shield's Brenda Larsen Becker, the Dutko Group's Gary J. Andres and the Beer Wholesalers' David Rehr to help bankroll many of the pet political projects of the GOP majority.

He is best known, however, for his close ties to Hastert and other GOP leaders. A Republican close to Hastert said Mattoon would bring "adult supervision to the NRCC," adding that the speaker's confidant could convince other lobbyists that the majority is in safe hands. "He just understands how K Street works," the Hastert ally said. "He's someone who can convey what Denny's thinking about in a clear, reasoned way."

Hastert asked him to take the job, in part, several sources said, because while Davis has personally been a prolific fund-raiser, he has focused more on recruiting candidates this year than on the fund-raising side of his $100 million operation.

Davis made a relatively unvarnished presentation to the 30 or so lobbyists in the Mattoon group who gathered for lunch late last month at the Capitol Hill Club. As one participant put it, "It was not, 'We're going to win.' It was, 'This is going to be a tough election.' "

Hedging Their Bets?

Business interests have split their giving evenly between the House GOP and Democratic campaign arms this year.*

GOP: $24.8 million

Dem: $14.1 million

1995-96

GOP: 64%

Dem: 36%

GOP: $31.6 million

Dem: $18.9 million

1997-98

GOP: 63%

Dem: 37%

GOP: $10 million

Dem: $10 million

1999

(Up to June 30)

GOP: 50%

Dem: 50%

*Individual, PAC and "soft money" donations by businesses to Democratic Congressional Campaign Committee and National Republican Congressional Committee

SOURCE: Center for Responsive Politics