Uncovering New Trends in Campaign Finance

By Leslie Wayne
December 19, 2007 03:00 PM

The 2008 Presidential election is still nearly a year away, but the money race has already begun. As the candidates careen around early nominating states, all that travel and campaigning requires money - lots of it.

Already the 2008 race is out to set records. The 2004 Presidential race cost $880 million, but this one is expected to easily top $1 billion. In a reversal of tradition, this election cycle, Democratic candidates have outraised Republicans. Since the beginning of 2007 to the end of September, Democratic presidential candidates have taken in a total of $244 million, compared to $175 million for the Republicans. Interestingly, both parties have spent about the same amount - around $130 million.

Tracking where that money goes and where it is all coming from can be challenging for reporters. Each election year brings new trends and financial schemes, and 2008 is proving to be no different.

So what are some of the trends this year? And where would reporters look for information?

LOOK AT THE RAW DATA: The Federal Election Commission and the Center for Responsive Politics both have data on money raising and on where the money goes. On the Democratic side, Hillary Clinton is the leader in fund-raising, having taken in $90 million so far. Financially, she runs a tight ship. She spent $40 million, but had $50 million left at the end of the 2007 third quarter. During that quarter, the Clinton campaign spent about 80 cents for every dollar that it took in, giving her the lowest "burn rate" of major candidates.

By comparison, Barack Obama raised $80 million and spent $44 million. At the moment, however, he is spending money as fast as it is coming in - in the third quarter, he spent a little over a dollar for every dollar raised. This has left him with $36 million in cash on hand.

Finances are a lot tighter on the Republican side. Mitt Romney raised an impressive $63 million, but spent most of it - $53 million. And that $63 million that Mr. Romney took in includes a $17 million loan he made to himself. In the worst shape is John McCain, whose high spending ways and large payroll (all now cut) caused him to go through nearly all of the $32 million he raised. He has only $3 million left.

LOOK AT THE BUNDLERS: The Web site, WhiteHouseforSale.org, which is run by the nonprofit watchdog group, Public Citizen, keeps track of bundlers. Bundlers are wealthy and well-connected donors who collect checks from friends, family and associates for their favorite candidate. With individual contributions capped at $2300 and unlimited "soft money" donations now banned, bundlers hold lots of sway in big-time fund raising.

The most famous - or notorious - bundler this year was Norman Hsu, a bundler for Mrs. Clinton who turned out to be a fugitive in a fraud case. But other candidates also have had problems: Geoffrey Fieger, a lawyer best known for representing Jack Kevorkian at his assisted suicide trial, was indicted this year on charges of illegally funneling $125,000 to John Edwards in 2004. And Mr. Romney and Mr. Obama were both found to have bundlers who had been indicted on a variety of charges unrelated to their campaigns.

LOOK AT WHO IS HIRED: Blogs like The Politico and The Hotline have a wealth of information on campaign hirings and firings. Federal campaign spending reports contain names of key consultants and their salaries. In the 2007 third quarter, Rudy Giuliani paid $1.5 million for direct-mail services from Olsen & Shuvalov, a firm that was founded by Karl Rove and which is famous for creating advertisements that have attacked Democrats and aided Republicans in tight races.

Similarly, the Romney campaign paid $6.1 million to a firm headed by Alex Castellanos, who has produced attack ads for five Republican presidential campaigns, including a controversial series of anti-Kerry ads in 2004. The company also produced ads for former North Carolina Senator Jesse Helms that were criticized as racist.

LOOK FOR NEW TRENDS: YouTube and viral campaigning are among the newest trends this year. Ron Paul, ten-term Texas Congressmen and minor Republican candidate, stunned the political world when he raised $4 million in one day online - a bigger single-day haul than any other current candidate. The record was then shattered a month later when his supporters raised over $6 million in an Internet campaign timed to the 234th anniversary of the Boston Tea Party.

What was remarkable was that the Paul campaign never even asked donors for the money. A grassroots group of Paul supporters, via the Internet, all decided to have a one-day online fund-raiser for Mr. Paul. It all came about because Mr. Paul has a unique Web site featuring a ticker that shows all donations made in real time - with the name of the donor flashed for a moment. The telethon-like excitement generated by that ever-clicking ticker inspired Mr. Paul's supporters into action.

When it comes to the political debate, Mr. Paul, who believes in abolishing the Federal Reserve and returning to the gold standard, hardly registers. But, the 72-year-old is one of the most viewed politicians on YouTube, which costs his campaign virtually nothing.

As the major candidates continue to dominate the headlines and raise money in the double-digit million dollar range, the success of Mr. Paul shows that there are new trends in the most unusual of places - and, often, the most unexpected.

Leslie Wayne is a business reporter for The New York Times and has covered campaign finance in the last several Presidential races.

Links/Reources OpenSecrets Federal Election Commission The Politico The Hotline Campaign Finance (Hoover Institution)

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