Center for Responsive Politics predicts midterms could cost nearly $4 billion

Contact: Dave Levinthal (202-354-0111)

WASHINGTON – This year’s federal election will obliterate spending records for a midterm contest, surpassing the previous high-water mark set in 2006 by about $1 billion, the Center for Responsive Politics predicts less than a week before voters cast their ballots.

That’s enough cash to run the city of Pittsburgh for two years. Buy every resident of Topeka a nice used car. Or treat each and every American to a Big Mac and fries.

And such record-breaking spending is largely fueled by the confluence of two powerful political forces. First, dozens of competitive, often contentious congressional campaigns are being waged, providing incentive for record spending. Second, recent federal court decisions have armed corporations, unions and ideological organizations with the firepower to spend as much as they want, whenever they want on political messages saying just about anything they want, no matter how scathing or partisan.

“We knew this election could make spending history, but the rate of growth is stunning,” said Sheila Krumholz, executive director of the Center for Responsive Politics and its website, OpenSecrets.org. “This kind of money in 2010 makes the 2000 presidential election – hardly a distant memory – look like a bargain at $3.1 billion. And tens of millions of dollars of it is now coming from organizations who, by law, need not disclose their donors. It’s now more difficult than ever for voters to determine whether the outside groups flooding their television and radio airwaves with political messages are doing so for any reason other than promoting their own, narrow set of special interests.”

Republicans have more quickly adapted to this new campaign finance landscape ahead of an election in which they’re angling to recapture the U.S. House of Representatives, if not the U.S. Senate, too. And their potential success at the polls may result in a marked shift in federal policy, painting the U.S. Capitol a bright shade of red after four years tinged with blue.

Identifiably conservative organizations are spending more than $2 on advertisements and other communications for every $1 liberal organizations do. While corporations are behind much of this money, many of these companies have skirted public scrutiny by laundering their cash through intermediary organizations, which often sport nondescript names and don’t immediately, if ever, reveal who funds them.

The three national Democratic party committees do enjoy slight fund-raising advantages over their Republican counterparts this election cycle. And in some of the cycle’s most competitive races, Democrats have built notable financial resources that remain the envy of their Republican opponents.

But nationwide, House Republican congressional candidates themselves have so far raised and spent more money through the middle of October than Democrats – in House races, raising $502 million to $461.5 million, and spending $407.3 million to $397.3 million.

In Senate races, Republicans are out-raising Democrats $400 million to $347 million, although Democrats have spent a tiny fraction more. A key factor in these realities: Major industries and special interest areas that had just months ago primarily bankrolled Democrats have suddenly flocked to the GOP – a phenomenon that the Center finds has only increased in speed as Election Day draws closer.

Conservatively, the current election cycle will cost $3.7 billion, the Center predicts, reaffirming an initial cost-of-election prediction from earlier this year. The Center now forecasts, however, that final spending numbers for the full cycle will likely flirt with the $4 billion mark.

As of today, the Center calculates that Republicans have raised $1.64 billion to Democrats’ $1.59 billion. These figures include money raised by candidates and parties, and the money reported by outside organizations. The party split for outside money include independent expenditures on behalf of or against Democrats or Republicans; electioneering communications based on the general ideological leanings of the organization; and receipts by 527 organizations that are not already included elsewhere.

Regardless of the final figures, they’ll be profoundly large: In 2006, the federal midterm election cost $2.85 billion, while in 2002, it cost $2.18 billion. The 1998 election cost just $1.61 billion. Races during the 2004 presidential election cycle are tallied at $4.14 billion – only a small fraction more than the predicted cost of the 2010 midterm cycle. The 2008 presidential election cycle, at nearly $5.3 billion, remains the most expensive overall.

The Center’s findings are largely based on fund-raising data reported to the Federal Election Commission into this month by all candidates for federal office, party committees, political action committees and federally focused 527 committees. This conservative estimate also includes independent expenditures on advertising and get-out-the-vote efforts by outside political action committees and other organizations to support and oppose candidates.

KEY INDUSTRIES TURN FROM BLUE TO RED

Throughout most of last year, health care-related industries favored Democratic candidates and committees in their political giving. As Democrat Barack Obama entered the White House in January 2009, people and political action committees associated with the health sector that month donated about two-thirds of their federal-level contributions to his partisan brethren. The sector continued to favor Democrats for most of the year.

Suddenly, in January, the trend flipped – just as Democrat-led health care reform legislation began to near final passage. In each month since, health interests have donated more money to federal-level Republican candidates and committees. And in September, a preliminary analysis of campaign finance filings by the Center indicates that the health sector donated more than 60 percent of its political money to the GOP – by far, the greatest percentage of the 2010 election cycle. See detailed monthly breakdown here: Healthtrends.xls Click graphic to enlarge:



A similar shift took place among Wall Street-related industries, which also dramatically shifted their donation patterns toward Republicans while Democratic-led financial reform legislation – unpopular among many banks and financial firms – coursed through Congress.

As recently as March 2009, Democrats enjoyed 63 percent of these industries’ campaign dollars. By September, the Center’s preliminary analysis finds, that figure had more than reversed itself, with 67 percent of Wall Street-related industries’ cash going to federal-level Republican interests. See detailed monthly breakdown here: financetrends.xls Click graphic to enlarge:

The change of fortune in 2010 is stark. During no single month this year have Democrats received a greater percentage of campaign cash from either the broad health or finance, insurance and real estate sectors.

An even more extreme example of a shift away from Democrats comes from the energy sector, which in January 2009 fueled Democrats with 56 percent of its federal-level political contributions. By September, preliminary numbers indicate Republicans benefitted from 74 percent of the sector’s cash. (Note that the data for this industry, as well as others, will change as the Center processes more data between now and the election cycle’s conclusion.) The energy sector had frequently sparred with congressional Democrats over climate change legislation and fossil fuel-related regulations.

As a class, retirees have also tired of Democrats, consistently donating more to Republicans during 2010 after oscillating between the two parties throughout much of 2009. Even lobbyists, who favored federal-level Democrats with 86 percent of their money in January 2009, are now effectively splitting it evenly between Democrats and Republicans, the Center finds.

“When it comes to politics, industries and special interest groups are fickle,” Krumholz said. “If an industry perceives a particular party is both threatening its bottom line and sinking in the polls, the industry is apt to turn on a dime and bring its financial largesse to the other one.”

In terms of overall spending, retirees lead the list of more than 120 industries and special interest areas the Center tracks. Through mid-October, this class of people has donated nearly $109 million to federal-level candidates and committees, slightly favoring Republicans when the entire election cycle is considered.

Among top givers, retirees are followed by lawyers and law firms ($102.8 million), securities and investment firms ($65.8 million), political candidate committees ($57.4 million) and real estate ($55.4 million). While many industries only slightly favor one party over another, lawyers and law firms in particular back federal-level Democrats, sending more than $3 their way for every $1 directed at the GOP.

INCUMBENTS STILL PRIMED TO WIN BIG

Despite talk of an anti-establishment wave swamping numerous incumbents, the Center predicts that the vast majority of incumbents running this year will survive their challenges and return next year to the nation’s capital. In the House, the Center predicts that about 90 percent of incumbents will win re-election. Incumbent U.S. senators are in comparatively less certain political territory, although the Center projects that at least three-fourths of them will prevail.

Consider that the average House incumbent has raised more than $1.42 million through mid-October, compared to less than $558,000 for the average House seat challenger. (The average House incumbent raised just $1.3 million during the full 2006 cycle.)

Among Senate candidates, average incumbents have raised nearly $11.4 million through mid-October, while challengers on average have generated about $4.1 million.

Such a disparity allows incumbents to hire more staff, produce more advertisements and otherwise operate a more robust, better organized campaign effort.

“While there are notable exceptions – the Senate races in Alaska, Delaware, Pennsylvania and Utah among them — the rule remains that incumbency is a politician’s greatest defense,” Krumholz said. “Even if the electorate appears to have a kick-the-bums-out mentality, and even if nascent anti-establishment movements such as the Tea Party appear to have expanded their clout, prepare to see most incumbents comfortably back in their congressional chairs come January.”

Where Democrats are likely to suffer significant losses are in open congressional races that feature no incumbent. In these races, there’s generally more parity among candidates’ fund-raising efforts, and Republicans have earlier this decade enjoyed a greater level of outside help from party committees and conservative organizations all too happy to spend millions, even tens of millions of dollars on political messaging that supports their favored candidate or lambastes that candidate’s opponent.

SMALL DONORS PLAY BIG ROLE IN KEY RACES

Small donors have the potential to give candidates a booster shoot of cash, as people who donate to a candidate, regardless of the amount donated, become invested in a candidate’s success. And political candidates on the right and left have attempted to tap the enthusiasm of donors who contribute $200 or less — political pocket change — this season.

Some politicians rolling in the dough from small donors are Tea Party favorites, such as Florida Republican U.S. Senate candidate Marco Rubio, Nevada Republican U.S. Senate candidate Sharron Angle and Rep. Michele Bachmann (R-Minn.), the chairwoman of the House Tea Party Caucus. Others are liberal firebrands, such as freshman Rep. Alan Grayson known for his YouTube-friendly rhetorical torrents against Republicans.

You don’t have to be a hothead to maximize the gold mine of small-donor cash. In 2010, more and more candidates across the political spectrum attempted to use online fund-raising techniques to their advantage.

OUTSIDE MONEY BUOYS REPUBLICANS

Colorado, Pennsylvania and Washington. Nevada, Arkansas, Illinois and Missouri. They represent every corner of the country, and yet, they share the distinction of having witnessed eight-figures worth of outside money pour into their Senate races. At least several more states are almost certain to join them between now and next week.

This outside money, made considerably easier to raise and spend by the Supreme Court’s Citizens United v. Federal Election Commission decision primarily purchases television, radio and print advertisements. Sometimes, these messages promote a candidate.

But often, they attack politicos. And of this spending, about $176.5 million has come from non-party-committee conservative organizations, through Wednesday. That compares to $81.6 million from non-party-committee liberal organizations. In four U.S. Senate races, outside groups have spent more than the candidates themselves through mid-October.

The U.S. Chamber of Commerce ($34 million), American Action Network ($22.1 million), the Karl Rove-backed American Crossroads ($19.9 million) and Crossroads Grassroots Policy Strategies ($16.2 million) and ranked one, two, three and four among outside organizations spending money on independent expenditures, electioneering communications and other political communication costs through Wednesday. All are overtly conservative organizations.

They’re followed in fifth and sixth place by two liberal labor unions – Service Employees International Union ($15.5 million) and the American Federation of State, County and Municipal Employees ($11.8 million).

In all, more than 50 non-party-committee organizations have, through Wednesday, engaged in outside spending efforts exceeding $1 million. While some of these organizations are constituted as political action committees, 527 organizations or so-called “super PACs” – all political vehicles that to some degree report donor information to either the FEC or Internal Revenue Service – others skirt disclosure, hiding their funders behind the iron curtain that is their tax exempt status.

These tax-exempt groups are registered with the IRS as 501(c)(4), 501(c)(5) or 501(c)(6) entities. By law, they are prohibited from having a “primary purpose” of engaging in politics. Nevertheless, a number of these groups are this election cycle spending seven- or eight-figure amounts on political messaging at the federal level.

They’re generally conservative organizations, such as the aforementioned Crossroads Grassroots Policy Strategies, the American Future Fund ($9.4 million) and Americans for Job Security ($9 million) – the latter a group that refuses to even reveal exactly how many Americans (if more than a handful) are behind its quest for job security.

Liberal organizations, albeit to a lesser degree, play a game of donor hide-and-seek, too, such as the League of Conservation Voters ($3.56 million), the VoteVets.org Action Fund ($2.2 million) and Arkansas for Change ($1.31 million).

Through Wednesday, more than $273 million in non-party-committee outside spending has found its way into federal campaigns. That now exceeds the $259.1 million in non-party-committee outside spending up to this point during the 2008 election cycle. And is it exponentially more than the $51.6 million spent up to this point during the 2006 midterms.

When party committees are included, nearly $430 million in outside spending has flowed into the 2010 midterm through Wednesday. That compares to less than $300 million for the 2006 election cycle and less than $31 million during the 2002 midterm election.

In contrast to non-party committees engaging in outside spending, the left is leading.

This cycle, for example, the Democratic Congressional Campaign Committee leads all party committees, having spent nearly $64 million on independent expenditures as of Wednesday. It also currently holds the mark for the singular one-day expenditure this race: $21.6 million on Tuesday alone. The National Republican Congressional Committee, for its part, has spent $44.8 million as of Wednesday.

IN ONE REGARD, BIG MONEY DOESN’T ALWAYS EQUAL BIG RESULTS

Remember Jeff Greene? No?

For all the money this billionaire Democrat spent to win Florida’s open U.S. Senate seat, one might think every last American would know him. Yet Greene, despite spending $23.8 million of his own money this year on his political ambitions, couldn’t even defeat Rep. Kendrick Meek to win his party’s nomination.

Greene may take solace in knowing he’s hardly alone, as numerous self-funded candidates have spent millions of their own dollars for naught. And those who at least won their partisan primaries often face tough general election battles and are struggling in the polls. Most are challenging an incumbent, or, vying for an open House or Senate seat.

There’s no better example of the perils of self-financing than Republican Linda McMahon, the former World Wrestling Entertainment chief executive. Now a U.S. Senate candidate in Connecticut, she finds herself in a political full nelson courtesy of the state’s Democratic Attorney General Richard Blumenthal, despite having contributed more than $46.6 million of her own money to her campaign. Only one other candidate – John Corzine in 2000 – has spent more on a U.S. Senate race than McMahon.

In all, 58 candidates have so far this election cycle met the Center’s criteria to become a self-funder: someone who contributes at least $500,000 of his or her own money to his or her campaign. Of them, the Center finds, more than half have already lost in their primary, primary runoff or special election, or in the case of U.S. Senate candidate Terrence Wall in Wisconsin, dropped out.

Among the five candidates who have so far contributed at least $6 million of their own money to their campaigns this cycle, three – Greene, Steve Pagliuca of Massachusetts and William Binnie of New Hampshire – have already solidified their status as Election 2010 footnotes.

“Even multi-millionaires must have a message that resonates with voters,” Krumholz said. “You might have all the money in the world, but if you can’t appeal to the people who retain the power of the ballot box, then you’re powerless in your quest to represent them in Congress. Voters must remain vigilant in an election such as this. Do your homework. Be your own best sleuth. Study candidates’ positions and be skeptical of any message from organizations whose motives and funders aren’t obvious. Information, like money, is power.”



ABOUT THE CENTER FOR RESPONSIVE POLITICS

The Center for Responsive Politics is the nation’s premier research group tracking money in U.S. politics and its effect on elections and public policy. The nonpartisan, nonprofit Center aims to create a more educated voter, an involved citizenry and a more responsive government. The Center’s website, OpenSecrets.org, is the most comprehensive resource for campaign contributions, lobbying data and analysis available anywhere. The Center relies on support from a combination of foundation grants and individual contributions, as well as income earned from custom research projects. The Center accepts no contributions from businesses, labor unions or trade associations.



For permission to reprint for commercial uses, such as textbooks, contact the Center: Feel free to distribute or cite this material, but please credit the Center for Responsive Politics.For permission to reprint for commercial uses, such as textbooks, contact the Center: [email protected]

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