CAMPAIGN FINANCE INSTITUTE CAMPAIGN FINANCE REFORM FORUM

Transcription

1 CAMPAIGN FINANCE INSTITUTE CAMPAIGN FINANCE REFORM FORUM FRIDAY, JANUARY 14, 2005 NATIONAL PRESS CLUB WASHINGTON, D.C. PANEL THREE PARTICIPANTS: GARY C. JACOBSON, PROFESSOR, UNIVERSITY OF CALIFORNIA, SAN DIEGO, POLITICAL SCIENCE ROBIN KOLODNY, ASSOCIATE PROFESSOR, TEMPLE UNIVERSITY, POLITICAL SCIENCE MICHAEL J. MALBIN, EXECUTIVE DIRECTOR, CAMPAIGN FINANCE INSTITUTE ROBERT BAUER, ATTORNEY DONALD F. MCGAHN II, GENERAL COUNSEL, NATIONAL REPUBLICAN CONGRESSIONAL COMMITTEE LOIS MURPHY, U.S. REP. CANDIDATE, D, PENNSYLVANIA Transcript by: Federal News Service Washington, D.C.

2 MICHAEL MALBIN: For those who are tuning in late, we ve done a session on political parties; we ve done a session on interest groups and 527s. The bulk of the rest of the full book, when it comes out, will be about election campaigns. I will write a chapter about presidential election financing, particularly in the pre-general election phase. And we re not presenting that today because we expect to do a substantial release from the CFI Task Force on Presidential Financing shortly. On that one, as many of you know, CFI issued a package of recommendations in 2003 that were designed to make the system more realistic and to stimulate more active participation by small donors. A few weeks ago that CFI task force reconvened to discuss their recommendations to see how they held up, or might hold up, after the experience of 2004, and we ll let you and the rest of the world know the results of that in about a month. Other chapters in this section [of the full book] will be about first of all we ll have one about self-financed candidates by Jennifer Steen and the impact of the millionaire s amendment. We ll have one on Internet advertising by Michael Cornfield, one on television advertising by Ken Goldstein, and one on voter mobilization, the so-called ground war, by David Magleby and Kelly Patterson, and particularly the ground war by non-party non-candidates. Those of you who are interested in that subject, in the ground war, you should come back to the National Press Club on February 7 th when Magleby and Patterson will be presenting results of their own book project on that subject. The chapters you will be hearing summarized today include one on congressional elections and one about the congressional party campaign committees. The chapter on congressional election competition is by Gary Jacobson. Gary is a professor of political science at the University of California San Diego and is probably the premier scholar in the nation on congressional elections, a career that goes back to Money and Congressional Elections, a nationally award-winning book on the effect of money and politics in the late 1970s. He has been hitting home runs ever since. The second paper on the congressional party campaign committees is co-authored by Robin Kolodny from Temple University and Diana Dwyre from California State University of Chico. Diana couldn t be with us today but Robin will present that paper. Robin previously is the author of Pursuing Majorities: Congressional Campaign Committees in American Politics. Following Robin, we re going to start with the comments with the one person on the entire day who has actually run for office; Lois Murphy, who was the Democratic congressional candidate for Congress in 2004 from the 6 th District of Pennsylvania just outside of Philadelphia. She received 49 percent of the vote. She s an attorney

3 specializing in estates, trusts and charitable planning in the firm of Heckscher, Teillon, Terrill & Sager. She served at the Department of Justice, was associate legal council for NARAL Pro-Choice of America, and in 2002 ran on the Pennsylvania Governor Ed Rendell s Montgomery County campaign Montgomery County, Pennsylvania, that is, not Maryland, for those of you who went through the floods this morning and I expect that we re going to see her in other campaigns in the future; I can t believe not. And then after Lois we will hear from Don McGahn, who since 1999 has been general counsel for the National Republican Congressional Committee, among many other political candidates. He also serves as counsel to many Republican members of Congress, candidates, and numerous leadership PACs; providing advice on federal and state election law, ethics and party rules. And then finally Bob Bauer, who s been on many CFI panels before. Bob is the head of election law practice at the firm of Perkins Coie where the DCCC, Democratic Congressional Campaign Committee, is one of its clients, along with the Democratic Senatorial Campaign Committee, Democratic National Committee, and many candidates. As you may know, we had been scheduled to have a senior member of the DCCC s political staff with us today. The untimely death of the committee s chairman, Representative Bob Matsui, forced a change, and I m very, very grateful that Bob has been able to come on rather short notice, but he s an incredibly fast reader and good thinker, as I m sure you will see. We re fortunate to have him here. We re going to begin with Gary Jacobson to talk about competition in Congressional campaigns. GARY JACOBSON: Thank you, Michael. Thank you for inviting me. I felt obligated to Michael enough so that I would fly across the country one day and fly back the next day in the middle of the winter, which I usually try not to do. So I really am happy to be here. Michael asked me to summarize my contribution to this book in 15 minutes, and in order to do so I ve had to shuffle the order in which I would present various pieces of information, so if I refer to figures or tables in your collection that you have there, it s not going to be in the order in which they re sitting there, so you may have to do a little scrambling there may be a little scrambling up on the screen here. So for that I apologize but I ll try to cover the highlights in a fairly brief period of time. The question that I set myself about addressing in this chapter was whether or not BCRA had any discernible effect on the cost, conduct, content, competitiveness or the results of the 2004 House and Senate campaigns, and doing this in comparison to what we ve learned from looking at all the previous campaigns for which we ve had pretty good campaign spending data, really going back to And the short answer is no. That is, there isn t much evidence that BCRA had any discernible effect on the basic level of competition, the results, what went on in the campaigns, the degree to which

4 candidates were well funded or under funded, the degree to which money was concentrated in competitive races versus non-competitive races. This isn t too surprising, and it s not surprising because when it comes to financing House and Senate races, the flow of money into these campaigns is overwhelmingly dominated by the strategic considerations generated by the possibilities of winning or losing these campaigns. That is, money flows to races that are going to be competitive, open seats if they re going to be competitive most of them are, not all of them the campaigns of challengers who look like they have a shot. It does not flow to the campaigns of challengers who don t look like they have a shot. And this year was no different from any other year that way. Perhaps what was different was the relatively small number or proportion of House races where anybody perceived there to be a likelihood of turnover this is from Congressional Quarterly s pre-election ratings, taking their two most competitive categories, either toss-ups or just leaning to one party or another. As you can see, in 2004 the number of races so classified by CQ is the lowest on record about 9 percent of the House races. Even the open seats this time around weren t terribly competitive; only 11 of the 33 or 34 open seats show up among that 37. So there wasn t much competition. There wasn t much competition for two reasons. I don t have time to go into the details. One has to do with the current configuration of House seats in terms of the distribution of voters in them. Most seats are safely in one party s hands or another now. Approximately 360 would fall into that category the rest of them a little bit less so. And then the second thing being that the national conditions in 2004 were not conducive to either party having much hope of taking seats from the other. This was a highly polarized, fairly evenly balanced electorate in which one could expect fairly high levels of party line voting and neither party had any kind of wind at its back in pursuing House and Senate races. Senate is a little bit different. Senate, because of the distribution of the seats that were up, and particularly the open seats, gave Republicans a lot of opportunity. There were 10 seats up in held by Democrats in states that Bush had won in 2000 and won again in 2004, and five of those seats were open seats in the South. So there were lots of opportunities for Republicans, a couple for Democrats as well, and these races, as one would predict, attracted enormous amounts of money remarkable amounts of money in some cases. Again, this is as we would have expected on the basis of past patterns. So let me first sort of the bottom line is that BCRA has not had a discernible effect on the major level of competition and what goes on and so forth in House or Senate elections and that basically I think this is a good thing in the sense that when you re doing reform it s like doctors: first, do no harm. I think in this case it s clear that BCRA has not done harm to competition for congressional seats, and it may have done a little bit of good. It s hard to tell at this point.

5 So, to some of the detailed information: first, there s not much sign of any change in the trends in the financing of campaigns. You can look at campaign spending in contested House races -- this is adjusted for inflation the amount spent over time. Again, the trends continue: challengers do poorly, incumbents do increasingly well, open seats are financed pretty much as well as incumbents are. The challengers look like they ve done a little bit worse in 04 but that s only because there were so few who were competitive. If we shift to those who were competitive no, I m sorry, can you do three? Yes, there. Those who were competitive: again, the trend is upward for those challengers in House races where they have a shot. The average challenger in a House race where the incumbent had won by less that 60 percent getting less than 60 percent of the vote an average of about $760,000, which is a respectable amount. It s almost enough to have a full-scale campaign. In other words, in 2004 those candidates in competitive races were amply funded, by and large, and they were funded at about the levels you would have expected based on past patterns of spending and contributions in those sorts of races. I looked and I couldn t find more than one race in either the House or the Senate where you could imagine that more money might have made a difference or that the availability of funding really mattered. In every House race where the challenger got at least 45 percent of the vote, which means they were in shouting distance there were only 16 of those races; in 14 of them the challenger had more than a million dollars to spend and the other two was 680,000 and 850,000, something like that. So those challengers who had a shot were well financed on the House side. The only race where money might have made a difference in the sense that if more money had come in, in a timely fashion was the Senate race in Kentucky, where Mongiardo came on late because of Bunning s rather strange behavior during the course of the campaign. Had he had a little bit more money a little bit earlier he had a shot at winning that race. But that s the only one that I could find where the lack of money might account for the results. Of the changes in the law, BCRA, that might have affected campaign finance at the congressional level most obviously was the increase in the ceiling of campaign contributions from $1,000 per candidate per campaign to $2,000 per candidate per campaign, and I looked to see whether or not that might have had any difference in funding and it did a little bit. If you look at the sources of House campaign contributions, the proportion coming from individuals is up, the proportion coming from PACs is flat, the proportion coming from loans is down, so maybe there was substitution of getting money from your rich friend that s supposed to be taking it out of your own pocket in some cases. It s hard to know whether this is a consequence of BCRA or maybe the Internet fundraising and things like that increased the individual take, or at least the payoff for individual taking. But there s some additional evidence that the Campaign Finance Institute folks collected for me on the amount contributed in sums of $1,000 or more, and that goes up fairly substantially. In 2002 something like 6 or 7 percent of the money raised by candidates

6 came in sums of $1,000 or more. That got up to about 13 percent this time around, and about 70 percent of the increase in the amount of money flowing into campaigns could be accounted for by sums coming in amounts of more than $1,000. So in that sense it helped to produce more money for candidates. It did not change the distribution of the contributions, however. That is, candidates across the board incumbents, challengers, candidates for open seats all enjoyed about the same level of boost pretty much the same level of boost. So it changed the mix a little bit but it did not change the distribution of the money in these campaigns. Now, in addition to looking at the flow of money into individual candidates, I ve also done a little bit of the work on what Robin s going to be talking about, what the parties were doing, and in particular I look at just how much money was coming from party independent spending, which was the big surprise to me in this election the amount parties spent independently for their House and Senate campaigns. But it turns out if you look at where that money goes, it all goes almost all of it goes to candidates who are extremely well financed in the first place; that is, it comes in on top of candidate fundraising that s also quite ample. For example, in financing House challengers, 99 percent of the independent party spending went to the candidates who were in the top 10 percent of spenders in the first place; that is, the people who already had it. And so I looked at whether or not if you do a standard kind of political science regression model trying to predict the vote and you throw in there things like district partisanship, incumbency, spending by each of the candidates, and you add to that what the parties were doing for each of the candidates; adding that information has not statistically significant relationship with the results. That is, it s highly correlated with what the candidates are spending in the first place. If you take candidate spending into account in all these equations you ll explain 80 percent of the variance, and you add party independent spending, and all other kinds of independent spending for that matter, and you increase your explanation of the variance by less than 1 percentage point it may be 81, So, in a statistical sense anyway, this was just carrying coals to Newcastle; it was adding resources to campaigns that were already amply funded and therefore it was unlikely to have any real consequences for the outcomes of these races. This is not to say that money didn t matter. It always matters. But in 2004 it mattered in this way: virtually every race that was winnable by either party that was competitive was amply funded. As a consequence, the outcome of these races generally matched the underlying partisan predisposition of the district very closely. That is, no party was able to sneak in and take a district from the other party just because it had more money and more resources. And in fact, the outcome of the election was one in which the links between national politics and congressional and state-level politics, Senate-level politics, were the highest I ve seen in at least 50 years of looking at these data. There were only something like seven House seats that changed party hands. Of those, five went to the party whose presidential candidate had gotten more votes in that district in I don t know what the 2004 presidential vote will look like yet on a

7 district-by-district basis. But using the 2000 vote, which is a really good vote for measuring district partisanship because that s where we ll bite it right in half five of the seven seats that changed hands went to the party that should have had it, given the underlying presidential vote, and the number of House seats now held by the wrong party, by this definition, is now to the lowest point that it s been at least since we ve had data available going back 50 years: only 58 of the 435 House seats are held by the party that did not win the presidential vote in that district in That s only I mean, that s much lower than it has been in the past. In the Senate there were a number of competitive races. I won t talk about them in detail. They re discussed in the chapter. They were often very well funded. The one in South Dakota where there was $19 million spent by one candidate and $14 million spent by the other candidate on an electorate of 480,000 or so this is about 60 bucks per voter. It probably would have been cheaper to bribe them go in there and just sort of hand out the money. They could have saved the money. Alaska wasn t quite as bad; it was only $24 per voter. All of the races were amply funded all the competitive Senate races were amply funded and the outcome, again, reflected the underlying partisan distribution of the state very clearly. There was only one Senate race in any of these competitive races, open seats, that did not go to the party that won that state in 2000 and 2004, and that was Colorado Salazar s victory in Colorado. So what the flow of money did in 2004 was essentially allow the electorate to express itself at the congressional level in the same way it had been expressing itself at the national level in recent years, and so in that sense money was a neutral factor. There was enough on both sides so that the underlying politics of the districts in the states were reflected in the results. MR. MALBIN: Thank you, Gary. Just for the sake of [providing] context: the presidential election was far and away the most expensive presidential and national election in history. If you add all the candidate spending, party spending, 527 spending, whatever, you come to about $10 per voter as compared to the $24 in Alaska or the $40- some-odd in South Dakota. MR. JACOBSON: Sixty. MR. MALBIN: Sixty, okay. Robin Kolodny from Temple University. ROBIN KOLODNY: Thank you very much, Michael, and thank you all for being here. I also have a somewhat subdued story to tell about BCRA in terms of the congressional campaign committees. This morning you heard about the national committees and the great successes that they had had in adjusting to BCRA, and I guess I am here to say that in our chapter in the Life After Reform book we argued there that

8 the political parties would adapt to the post-bcra landscape, and that is indeed what we have found but that the congressional campaign committees, my focus today, didn t adapt quite as well as the national committees have. And in an effort to save redundancy of tables I d like to refer you back to Tony Corrado s first table from this morning. And on that table he gives an array of national party committee fundraising. I don t know if we have a graphic but you can follow along this way. And you ll see that the Democratic National Committee and the Republican National Committees fundraising totals are extraordinarily impressive with the caveat that you look at the hard and soft totals from previous cycles, from 2000 and 2002 oh, there they are and then the problem with this particular table is that it just puts everybody together by party; the one in your packet disaggregates it by committee. You will see that the DNC and the RNC both were able to compensate for the loss of soft money exclusively in hard dollars -- so if you look along the very first line for the Democrats and then the very first line for the Republicans. What you see, however, in all four Hill committees is that without exception, not a single one of the congressional campaign committees was able to do that. I don t want to stand up here and minimize what they did do, however. They succeeded in raising a tremendous amount of hard money. The DSCC, for example, raised $48 million in hard money in 2002 and then $87 million in 2004; DCCC, $46 million compared to 92, but still those numbers now do not equal the total of hard and soft combined. That is, they don t equal 144 or 103, and the Republicans, even though the NRCC did quite an outstanding job, was still not able to equal what it put together and the NRSC had not. So when you move down in terms of national party committees, from the national committees you see a somewhat different picture there. Other things that I will talk about today, though, have not to do just with the receipts; they also have to do with the expenditures. I ll talk about independent expenditures and how they came to be a substitute for the issue advocacy that the congressional campaign committees had previously undertaken. And let me also note at the outset it s a minor point but it will become important later on that one of the few things that the Supreme Court decision did overturn in BCRA it was of course incredibly important to the congressional campaign committees and that was that they overturned the provision that said that party committees had to choose between making coordinated and independent expenditures. That was supposed to, in effect, fix Colorado II s decision but instead the Supreme Court said, no, we basically back up Colorado, that we don t see a reason for doing that, and that the parties could do both coordinated and independent expenditures. This is a relief for many reasons, not the least of which it was a complicated provision to enforce because it had to do with all party committees. But once that was dispensed with, the strategies for the Hill committees became a little bit clearer. Now, back to this money issue: where did the new hard money come from? What s interesting is that I have I think we ve got four sources of new money. Three of them come from sort of the traditional donor sources. Let me deal with those first. One

9 is, of course, new donors in general. We ve heard about that this morning, that all four congressional campaign committees did their best to improve their mail campaigns and improve their telephone telemarketing fundraising campaigns, Internet-based campaigns. And all of that did result in new donors coming to the party. Also they, as with the discussion with the national committees this morning, they revamped their high-dollar fundraising programs. The NRSC, for example, had the Majority Makers; the DSCC had the Majority Council, their $25,000 contributor programs that were basically what they had done before but a little bit augmented. And then there was some though I don t have the complete data on this joint fundraising activity, like you heard about this morning, for the national committees. The one big difference that sets these congressional campaign committees apart is the reliance on members of Congress as donors for the congressional campaign committees, and I d like to talk about that at some length. One of the things that happened as a result of raising the individual limit from a thousand to $2,000 was that incumbent members of Congress had more opportunities to raise money from individuals who were their traditional contributor base. And you found that members were doing this whether their races were competitive or not; that is, getting higher donations than they had previously. And in anticipation of either that certainty or that possibility, the leadership at all the campaign committees put more of an emphasis on going early to members about what their contributions were going to be at the congressional campaign committees. The DCCC in particular dramatically tried they didn t actually succeed but in some cases they did they tried to raise the dues that they asked members to pay to the DCCC. The NRCC also did raise its dues, and both the senatorial committees also made higher requests of members to transfer money to the congressional campaign committees than they had in the past. Let me take a footnote on this as somebody who has studied campaign committees for what feels like my entire adult life. This is a relatively new phenomenon. We ve been talking about it in Washington for a while, the idea of members paying dues to the campaign committees, but this really just started in Bill Paxton was the first CCC chair who actually went to members and said, guess what; you re here, you ve got a certain rank in the leadership; you need to donate some money directly to the NRCC. Before that, members felt that whatever the campaign committees raised was due them. It was sort of an automatic it s an ATM for them. They would go and they would get what their proportion was. That concept changed even before BCRA but now, with the BCRA here, it ratcheted up the pressure put on members to provide the money that these committees were going to be losing through the loss of soft money. So there was a 35 percent increase in member donations from their personal campaign committees transfers which are not limited under BCRA -- from their campaign committees to all four congressional campaign committees. It is a significant amount of money. In my Table 1, that can t be reproduced here but that s in the packet, I have we ve put together, Diana and I, some calculations about there are a variety of ways to interpret that but the 35 percent figure comes from the second column about halfway through, and that s an increase for the House, for example, of about $13 million.

10 And as you ll see later on, that s a good third it s a good proportion of what ends up being the independent expenditure money, so it s not trivial. Now, why do I even bother to talk at this kind of length about oh, I m sorry, let me make another couple of quick detailed footnotes here. On the Senate side there was a big press to give six-figure donations, some of which they got; some of which they didn t, but you probably all heard about the more significant donations from Senator Schumer of $2.5 million and from Senator Reid of a million dollars, and then later on Barack Obama gave about $850,000. So clearly there was some resonance with this set of appeals. They also tried to get members who were leaving to give money, and that was not nearly as successful as they had hoped. They got some but not as much as you might think. They got nothing from people running for higher office, which you would expect, but you wouldn t necessarily expect from the people who didn t plans to sort of take the cash with them. But in any event, let me talk for a moment about the implications of this. Why does it matter that we have reliance on members as donors to the campaign committees? The first thing is this is something you usually don t talk about in these forums is what are the implications of increased reliance on members in asking them to raise that extra thousand dollars that they didn t have the ability to raise before for the campaign committees to the internal workings of Congress? What does it mean when the availability of, let s say, committee chairmanships or leadership positions or other kinds of things like that might be gauged by your ability to contribute to these campaign committees? Obviously for the last decade that s very much been in play but I was interested in noting and this is not to cast any aspersion on Congressman Lewis at all, who is a very competent person and would be a great chair of the Appropriations Committee under any circumstances, but he also gave $1.2 million to other candidates in this campaign cycle, and he gave more than any other single member. And I m sure that that must have contributed to the discussion but it is an important thing for us to link what s going on in terms of member involvement financially with the campaign committees and how that affects the machinations of Congress. Secondly, it may be too soon to know what this dependence or this hope for dependence on members as contributors will mean in the 06 cycle. It s an artificial environment, as we ve heard before, because we have all these new donors that came into the DNC and the RNC. Well, they won t have a presidential race next time. Will those people be more like to now contribute to the congressional campaign committees? That s an open question, and I can say already that I ve already received my very first fundraising call of the year on January 4 th from one of the congressional campaign committees. So obviously they are aggressively pursuing their strategy for 2006 already. Now, let s move to party spending. Before the Bipartisan Campaign Reform Act there were four ways in which the congressional campaign committees could spend to help their candidates. The first, which still exists, is direct contributions, which are limited in small amounts and are all with hard money. The second were coordinated expenditures, which were also limited by a formula that s indexed to inflation and also

11 paid entirely with hard money. The third was independent expenditures, which was unlimited but also paid with hard money, so that was always an option out there, and the last was issue advocacy spending, which was a mix of soft and hard money but was also unlimited. Now, BCRA eliminated this fourth category. It eliminated issue advocacy, and that meant that the parties were left with three rather than four methods. If you can go to my oh, you do thank you you ve got Figure 1 up here. This I ll only talk about briefly. This indicates the level of party-coordinated expenditures which is a formula it s the same formula for every House race but it s indexed for the voting-age population for the Senate races and recalculated each year. And here you get and the yellow column is what was spent in coordinated expenditures in this past cycle and then we go read over to the right. And you can see obviously you heard about what happened in the DNC and RNC this morning, but with the rest of the campaign committees you can see that the senatorial committees went from virtually no spending in coordinated expenditures to significant spending and that the levels for the congressional campaign committees in the House side, the DCCC and the NRCC, are a little bit down from their 2000 levels. The DCCC is somewhat of a flat trend. Now, this does not mean any kind of new money being spent. This is just an indication that money that used hard money that used to be used to pay for issue advocacy advertising was now available to spend in coordinated expenditures. So you shouldn t interpret this lack of previous use of coordinated expenditures by the senatorial campaign committees as any kind of statement about their desirability; just that now they had to use that hard money in different ways than previously. But the next figure is the one that Gary Jacobson was talking about a second ago. The one that seems to be the story at first blush is the independent expenditure spending. And again, if you re just looking at the congressional campaign committees for Hill committees, you see that there s virtually no spending at all as independent expenditures in the previous two election cycles to this one and then this all-yellow column basically on this chart. But again, what does that tell us? What s different about independent expenditures is that unlike the issue ads that were paid for with mixes of party soft money and hard money prior to the passage of BCRA, independent expenditure communications may expressly advocate for the election or defeat of a specific candidate. So that s a plus for them. Now, we interpret independent expenditures as a proxy for what we might have known if we had been able to know it about issue advocacy spending in previous cycles. That is, because the parties didn t spend at all in independent expenditures in the last few cycles and now they have this tremendous amount, that doesn t necessarily represent a net increase. Actually, I don t think it represents an increase at all you can tell by the receipts of spending by the party campaign committees. It represents better information than we knew previously about the campaign committees.

12 And you can see I believe it s Figure 2 oh, we don t have Figure 2, do we? Oh, Table 3. I ll get back to that one in a minute. In the figures in the I m sorry; I was just going to give you the amounts. The amounts were about 20 million for the senatorial committees and about 46 million for the NRCC and 36 million for the DCCC. The $39 million that we know we can detail in the Senate side was made in about 12 races, and each party s committee spent about a million dollars I m sorry, at least a million dollars in each of eight of these races. The House concentrated the $80 million of independent expenditure spending in 30 races, and the congressional campaign committees that goes to the next chart sometimes outspent the candidates that they were helping, which was somewhat significant. The Democrats did this in seven House races while the Republicans did in 10. And the Democrats here we have this table shows you the party commitment to House races, independent and coordinate expenditures as a percent of candidate spending. When you put all the money together and this is a little different than the way the math is done in the FEC press releases for the end of the cycle you find 17 races where the congressional campaign committees spend more independent expenditure money than the candidates themselves did. And not surprisingly, it often balances itself out on both sides. That is, both lists include each side of the race in the Washington 8 th Congressional District race, each side of the Pennsylvania 8 th Congressional District race, each side of the Louisiana 3 rd and 7 th races. So it s not shocking. There are some disparities where the parties put more emphasis than others but this is where they spent more than the candidate. But you can also see there is a significant even when a congressional campaign committee spends 75 or 50 percent of what a candidate spends -- in Lois Murphy s race the DCCC spent 76 percent of your expenditures and the NRCC I believe spent 92 percent of Congressman Gerlach s expenditures. And then let s see, Table 4. I ll just give the raw amounts. That was the Democrats the over-$3 million expenditure was in the Washington 8 th race. That was the race of retiring Congresswoman Jennifer Dunn, a seat that switched parties. And then the rest, as you can tell, the half-a-million-dollar-plus club is a total of 61 candidates, meaning 30 races, so it s entirely consistent with the 37 races that you heard about before. Now, here s the issue with independent expenditures, and it has to do with the problem of independents and how they are different from issue advocacy campaigns. The parties could spend independent expenditures before BCRA, so why didn t they? So, first, issue ads had to be paid for by a mix of or could be paid for, rather, by a mix of soft and hard money, and at that time the parties believed that it was not possible to raise the same amount of soft money using hard money, but obviously, as we ve heard, that s not entirely the case. It didn t prove to be such a big burden. But the second issue was that running issue ads through state parties allows you to avoid disclosure of activity to the Federal Election Commission, meaning that you would disclose in the states where those ads were run, and it helps you to get out of some coordination issues.

13 Without centralized disclosure and this is where all this becomes a guess previous issue advocacy advertisements were harder to estimate and identify. So what s exciting for me now is that with some numbers we can approximate the type of party spending that must have happened, at least in the last couple of election cycles, meaning the concentration and the absolute amounts. But before we were left with very poor techniques, if any, to go ahead and find state party expenditure reports, if they existed, in a form that we could analyze that was appropriate to federal elections to figure out what the campaign committees were hoping to contribute to the outcome of races. But BCRA leaves the parties with no alternatives but disclosure to the Federal Election Commission, so now we will be able to see what that activity is. The coordination problem is also very interesting because the state parties run issue advocacy through they ve run the issue advocacy I m sorry but the CCCs guide that issue advocacy, but because issue ads did not count as candidate support under the old law there was no barrier to coordination. Now the congressional campaign committees are running independent expenditures as well as coordinated expenditures campaigns and they must be separate efforts, because a coordinated expenditure can be is by definition spending with the candidate s knowledge and consent, and the independent expenditure must be spending without the candidate s knowledge and consent. Now, I hope later to hear from our representatives from the two the DCCC and the NRCC, or the Democratic campaign committees about how that was handled, but the Hill reported that the NRCC in particular segregated the Republicans who handled independent expenditures, that they the quote was that they are cordoned off from the rest of the campaign committee. In fact, in 1996 the National Republican Senatorial Committee made a significant attempt to use independent expenditure before issue advocacy became the popular mode of spending, and they disbanded that operation afterwards, saying that the issues of keeping the independent people independent from the rest of the race were just too daunting for them. And so, the question at the end of the day about independent expenditures is how did those campaign committees handle the non-coordination of the independent expenditure issue? Did they all have separate staff? Probably all of them did, at last nominally. It seems to me already that there s evidence that they used separate political consultants; that is, some consultants had contracts to do independent expenditures exclusively for one party committee and not to also be paid with coordinated expenditure money as well from that party committee. Another thing that it appears to me nobody has talked about today is that press leaks very sloppy press leaks in my opinion were used to help coordinate activity in a non-coordinating way. That is, I could read all over this summer about the congressional campaign committee ad buys: where they were, which races they were targeting, sometimes even some details about amounts of money being spent, and that s not they re now coordinating. One side of the team has been coordinating with the other because they re reading something that s out there in the popular press.

14 And then one drawback, though, when you look at independent expenditures, when you are comparing them and estimating what it might have been like versus issue advocacy, is that you have to realize that if independent expenditures are really independent, then there has to be a certain amount of redundancy built in to what the independent expenditure people are spending their money on. The most important case in point I have here is the commissioning of polls through independent expenditure money to figure out how to put together the mail pieces or the television advertisements that you will run to help a particular candidate. You can t have the benefit of the candidate s own polls or you can t have the benefit of the party s polls overall. So on that note oh, the last thing I wanted to mention before I m told I m running out of time is the grassroots efforts by both the NRCC and the DCCC in particular were not very well-publicized. There were some the STOMP effort by the NRCC and the Red to Blue effort by the DCCC showed not only a commitment to spend some money on the ground war but more a coordination again, back to the members of getting members to help, out of their own campaign expenditures, to fund some of these efforts transportation, bodies to come and walk the district on a variety of weekends. And so, the other part of this equation in addition to the member money going directly to the committees is that we don t know how much party orchestration was involved; that is, how much the parties guided members in helping other candidates in their area to do well. Thank you. MR. MALBIN: I rushed Robin, which meant that she didn t ask a policy question that s teed up in the paper that I m going to tee up for her. That is, she asked, with all of this roundabout stuff and redundancy of expenditures going on in the independent expenditure column, she said as long as contributions into the party are all limited, she asked, wouldn t it make sense to consider just letting the party spend money in a coordinated way but in unlimited amounts? So this will be teed up as a question, particularly for the congressional campaign committee people. But the first person to speak afterwards will be Lois Murphy because she s just finished running a campaign that came ever-so-close. And I thank you for getting over that enough to be here and talk to us about it. LOIS MURPHY: Michael, thank you, and thanks to you and Steve for inviting me to be here today, and thanks to all of you for coming. I m pleased to be here and I do feel that I m in a somewhat anomalous position because I m the only person speaking today who is not either a long-time political fundraiser or operative with experience before BCRA in federal campaigns, nor an academic who has been studying, or a lawyer who has been advising campaigns and campaign committees for many, many years, and particularly I really do not have

15 experience in federal campaigns before BCRA, except incidentally in my half life. But I do have, I think, a unique perspective that I m happy to share with you today from the experience of running a federal congressional campaign in Pennsylvania, and in this 2004 cycle, which was a very exciting cycle and my first opportunity to both raise funds and spend funds as a federal candidate. I also was -- consistent with a lot of the remarks of both Professor Kolodny and Professor Jacobson, this was a race that exemplified many of the things that both professors talked about. It was a very competitive race. I was a challenger in the race, as you all know. It remained it looked competitive before I got into the race; it remained competitive. And it was very competitive in fundraising and very competitive ultimately in the independent expenditures that were made as well by both party committees. I was both the beneficiary and, if you will, the target (audio break, tape change) -- need to say to everyone and it s stating the obvious I assume, but that after BCRA, there is no it is just as true as it ever was that candidates need to raise a lot of money to run competitive races. And nothing in BCRA, as far I can tell, did anything to change that. Raising an enormous amount of the money is probably the most critical task that faces a candidate, a challenger, particularly a first-time candidate like me; is not necessarily the most important thing that you do as a candidate. And I don t think it is the most important thing to voters or to your supporters, but it s the most critical thing in two senses: it s the most time consuming thing that candidates need to do and I think that is important for people who haven t been a candidate to know. And it s also probably the most significant touchstone that others use to evaluate whether you re running a successful campaign, whether you have the potential to continue to maximize or to capitalize on the opportunity that you begin with. So from those two points of view, raising money really is, in a way, the most you know, the central and earliest touchstone for whether you re running a successful campaign. I would like to mention the late Congressman Matsui who was the chairman of the Democratic Congressional Campaign Committee during the year that I was running and who was tremendously supportive and encouraging but also, in a wonderful way, quite demanding and made it clear to me and to many other candidates for office his view, which I think is accurately correct, that you must be fundraising and if you re not fundraising eight hours a day, you re not doing your job. That s what he told me. Now, eight hours a day is a lot and it s also hard to do the other thing that you need to do if you re going to fundraise that much; it s also hard to sustain it, frankly, for eight hours a day without a break; you can t do that. Nevertheless, fundraising is an enormously time-consuming enterprise for candidates, and it s something that I think people who are not intimately involved in campaigns may not know what it is like from that perspective. In my race, just to give you a little bit of a statistics, which are available on some of the materials, we raised $1.9 million over $1.9 million in about 10 months. My opponent raised about $2.2 million but actually had an advantage of $800,000 raised in

16 calendar year 2003 before I was in the race. So we actually nearly caught him. And actually in terms of spending, we essentially did catch him because he had spent $300,000 before I was in the race. And I guess, the question does this whole enterprise of looking at campaign finances from the institutes perspective raises is, is it a good thing that candidates have to spend so much time raising money and that there is so much money required to run an effective campaign and to communicate with the voters in your district? I do think that it is simply true that in order to get a message across in a district at least in a district like mine, which is an expensive media market outside a major city, it s simply true that you have to spend a lot of money to communicate with the voters who are likely to come to the polls. And you have to spend a great deal of money in a race in a year like 2004 when there is so much media, both on television and in the mail from other party groups, from other non-party groups, from other candidates from presidential campaigns, from the Senatorial campaign, and from several other competitive Congressional races all in the same media market it is simply to break through and be able to reach your voters you simply have to spend several million dollars in order to be effective. But is it a good thing? I think that most voters would like to think that candidates and their representatives are spending time doing things that will make them effective representatives: listening to voters, attending community events, learning the needs of their communities, informing themselves about policy, and advocating for policy positions. So most voters, I think, are not really happy and wouldn t be happy to hear that candidates have to spend such a great deal amount of time raising money. On the other hand, I think there are some positives that we can since we re stuck with the system at least console ourselves with. One is one of my campaign staff is now studying for the bar exam to become a lawyer. And I reflected back on my experience as a lawyer studying for the bar exam and I don t think the bar exam is a particularly good way of telling whether somebody is going to be a good lawyer. But it s a test that you have to achieve in order to be permitted to become a lawyer. And I think similarly for candidates, campaigns may not be a particularly good way of telling whether somebody is going to be a good representative, but it s the system that we have and you have to go through it and you re not going to be a representative unless you re willing to conduct a campaign. But there are some things that may be good about it. One is that you simply cannot conduct a campaign in today s world unless you are willing to apply hard work and determination, unless you really want the office. You also need to be persistent and I think there are some other skills that we see: you need to have an ability to negotiate and build coalitions and seek support from a variety of sources, both individuals and PACs, and party committees; you need to have the ability to advocate for yourself and to advocate for your policy positions and your values; and you need to be creative and use your imagination.

17 And finally and this is one thing that I think people in the fundraising world and in the political fundraising world, in particular, sometimes overlook I think the substance of your campaign, the substance of yourself as a candidate, and the substance of the positions for which you advocate really are important factors in whether you are going to be successful at fundraising. You simply can t get on the phone and ask people to give you money when you don t know what you re about and you don t know why you are running for office and you don t stand for anything. There is no question in my mind that substance is a key factor in whether donors are going to actually be willing to give you the money and in your ultimate success at achieving your fundraising goals. So I guess that is all just a long way of saying that I think that the fundraising process well, it probably consumes more time than I wish it did as a candidate is not all wasted time and is related in the long run to putting together an effective campaign, effectively communicating a message, and having the resources to do a campaign with diverse aspects, which is also important I think from many of the comments we heard today throughout today s remarks, whether it was the presidential race or local races. Grassroots opportunities and grassroots activism actually was very important in 2004 and was very important in my race. The district in which I ran was a very diverse district with suburban areas, exurban areas, essentially rural areas, and some inner cities, and small towns. We had so many different kinds of communities and so many different newspapers and television stations serving the area that in fact the grassroots method of communication and direct mail were both incredibly important and equally important with ultimately with the television advertising, that took a great deal of the money. But we spent a great deal on mail in my campaign because we felt that communicating with the diverse area of people required some more innovative and different approaches. And we spent a great deal and time, and effort on our grassroots activities. I just have a few other comments; I don t want to take too much of your time, but I did want to comment on the impact of Internet fundraising, which I think was a very, very exciting new development in 2004 and gave us some new opportunities. It was not the huge, overwhelming factor in a race like mine as it may have been perhaps in Governor Dean s fundraising ability and in some ways it wasn t a replacement for the traditional methods of reaching out to donors and doing fundraising from likely prospects and calling them up and introducing myself. Especially for a candidate like me who did not hold elective office and was not known to donors, I simply couldn t ask people to give me money and get them to do it unless I spoke to them for the most part. So Internet fundraising was a modest amount of our fundraising, but it did have one very important effect and I think that in the future it will even have more effects and maybe as we re more creative, we can move forward with more ways of Internet fundraising. The one thing that was very important in my race was that it was a new mechanism for people to give. In other words, when I called somebody and especially as