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.

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 7th 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 6th District of Pennsylvania just outside of Philadelphia. She received 49 percent of the vote. She’s an attorney 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 1972. 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 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.

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 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, 80.5. 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 2000. I don’t know what the 2004 presidential vote will look like yet on a 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 2000. 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 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 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 1994. 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. 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 4th 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 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.

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 8th Congressional District race, each side of the Pennsylvania 8th Congressional District race, each side of the Louisiana 3rd and 7th 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 8th 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.

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.

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 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 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.

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 we approach filing deadlines, I could say, you know, go on the website; you can look me up, you can see what I have done, you can read – you know, you could see one of my speeches. You can make a donation when you are there.

And the effectiveness of actually reeling in the donations -- rather than waiting for something to come back in the mail a week later after I had mailed out an envelope and spent the money mailing the envelope, I was able to actually get donations on the phone while I was talking to someone and they were looking at the website, and they made a donation that day. So it was – it made the speed with which donations were achieved much more rapid and that was a very big plus I think in terms of the effectiveness of fundraising.

I talked a little bit about how the money is spent. I know you have heard a great deal about the party independent expenditures. One observation I had about – trying to think about what were the effects of BCRA – and Professor Kolodny mentioned this – is that the independent expenditures – the contributions that supported them because they are hard money are fully disclosed. And my view of campaign finance, as a lawyer at least, if not also as a voter, is that disclosure is a good thing – the disclosure of where the support comes for political candidates and political activities is generally a good thing. And so to me I think that is one improvement that we see under BCRA – is that the independent expenditures are now based on contributions that are fully disclosed.

I think we’ll see a great deal more of independent expenditures and issue advocacy from third parties, whether they be PACs of 527s. I think that we saw so much more successful fundraising both by the parities and by the 527s than really anybody anticipated; that can only grow. And I’m – so I’m eager to see where that leads.

And I have two very modest points about reform, about BCRA, that from my experience I think – are food for thought. One is, there are issue advocacy organizations that get involved in mailings and television advertising supporting candidates that are not express advocacy and that are not regulated under BCRA. For television, they are not permitted to air such television ads within 60 days of the election. But that regulation, that rule does not apply to mailings.

And in my race, it was quite clear that there were organizations both spending hundreds of thousands of dollars supporting my opponent both on television before the 60-day rule, but also in the mail after the 60-day – you know, within the 60-day period. And while there is a First Amendment right to the speech, I think that the most voters who get these kinds of mailings or see the television really don’t distinguish between express advocacy and the issue advocacy that is not express advocacy. And if it says this congressperson is a great guy and did these great things, it looks like a campaign mailing to them.

So I would suggest that it is worth revisiting the question of whether mailings and other mechanisms of communicating the same kind of message ought also to be prohibited in the 60 days before an election. If that is permissible from a First Amendment perspective with respect to television, it ought to be permissible with respect to other types of communications.

And finally – and this is another minor point but it is something that was new under the bipartisan campaign reform act – was the disclaimer that was required by candidates at the end of advertising, particularly television advertising. And I know you are all familiar with it. I of course became familiar with it. The idea, as I understood it from reading the law, of people who put it in the law, was that candidates ought to take responsibility for authorizing ads and ought to be personally associated with the ads that they authorized. And consequently, a candidate should – and if – what developed in this year, which was the first year this requirement applied, was that when a candidate had their campaign produce an ad and authorize an ad that had a message that drew contrast with their opponent but also had a positive message about himself or herself, the candidate typically expressed the disclaimer personally talking into the camera at the end of the ad.

But when a candidate – (chuckles) – decided to run an ad that was going to be harshly negative and harshly critical of their opponent and maybe make some statements that were – well, you know, stretches of the truth or in any way could be criticized, the candidate – as my opponent did and as many other people in our media market did – had a picture at the beginning of the ad and no direct speaking into the camera, made the statement orally, which was played at the same time as the still photograph.

And then the ad began and the experience of the voters that I spoke to was, they had no idea who had paid for these ads; the disclaimer appearing at the beginning gave people no idea of what was coming and they weren’t really paying attention. And then when they saw what was going on in the ad, they never heard the disclaimer at the end because it wasn’t there.

So I would suggest that to those people that write these statutes and had a purpose in mind when they wanted to require this kind of candidate adoption of the disclaimer, ought to require the candidates put the disclaimer at the end and speak into the camera. I think it is a reasonable extension of the existing rule – if you want to keep the existing rule at all, I think it is a reasonable extension to say, if you’re going to run the ad and you’re going to authorize it, take responsibility for it and speak into the camera, and tell the people it’s your ad.

So that was a minor suggestion about reform for BCRA from my point of view, having run in the 6th District of Pennsylvania. Thank you very much.

MR. MALBIN: Thank you very much.

I want to pick up on a point you made very briefly. You mentioned Internet fundraising. I just want you to know that we are hoping to move forward with a study of this with the Institute for Politics, Democracy, and the Internet at George Washington University. This is an interesting question; what is the interaction? It’s not just Internet fundraising; there is a whole panoply of activities and motivations that are going on around the Internet that feed on each other that are quite interesting that need further study.

We’re now going to hear from Don McGahn who is the general counsel to the National Republican Congressional Committee. I just leaned over to whisper to him to say, Don, not your fault, but we’re going to talk a little shorter now so that we have a chance for you all to get questions before we have to leave.

DON MCGAHN: Thank you. I appreciate the invite to be here today; it’s always a pleasure to address folks who follow the minutia of what folks like me and Bob Bauer do every day. (Scattered laughter.) It makes me wonder why you do that sort of thing but some of us enjoy it, I guess. I guess we all do here.

I’m going to try to keep this brief and keep the clock moving but a couple of points I want to make. The first is a discussion of the predicted consequences of BCRA versus what actually happened and then move from there into how we actually do independent expenditures. It seems to be the hot topic, the mechanics – they seems to be a big secret to me; they are not since I – I’m kind of the guy there doing it. But we’ll go into details there so we can move on to questions because I’m sure people want to know all sorts of things about what really goes on inside these party committees.

I’ve heard over and over again the predictions regarding the consequences of BCRA – were wildly overblown or wildly exaggerated or that kind of thing. I think the answer – my answer to that is yes and no, mostly no.

The no’s are the idea that members of Congress were going to be asked to do more fundraising for the party, to transfer more access campaign funds to the campaign committees. That was a not a mystery consequence; that was something that was explained to members; that was pretty much obvious to those of us who were doing it but for some reason that has been labeled – not by this panel but in other contexts – as some sort of unintended consequence or some sort of surprise; it as not a surprise; they knew it was coming.

The second is the role of outside groups, 527s. An early panel talked about those. Again, the money has to go somewhere and I recall writing Talking Points in memos pre- BCRA about where the money would flow and it would probably flow to outside groups. So the idea that it was shocking and appalling that outside groups popped up to spend money was really not shocking nor appalling.

And then the second wave was, well, it’s the FEC’s fault because of the definition of political committee and we’ve all been around that argument. Well, that only gets you so far. It’s a natural consequence of the law; BCRA doesn’t say anywhere in there outside groups are going to start doing ads. But at least from my point of view and those on the Republican side before this passed, it was a foreseeable consequence of the other limitations placed by the law.

The Millionaires’ Amendment, which no one seems to really talk all that much about, seem to be a whole lot of nothing when it came to House elections – big brew-ha, ha when it went through the House and all kinds of different versions of the Millionaires’ Amendment. Very few races triggered the Millionaires’ Amendment; those that did were not particularly sexy in any way, shape, or form. So time will tell whether or not the Millionaires’ Amendment matters or not.

On the other hand, the predictions that we would raise less hard money and it would cripple the national parties, well – I can’t get them right all the time; we did a little better than we thought and hard-money wise, all the parties did much better than anticipated. That being said though, the critical number is not the net fundraising in my mind. There are really two other numbers that matter more than the gross. Gross numbers are very, very impressive, but when you look at the net number, it is not nearly as impressive because it costs a lot to raise hard money.

And second, beyond the net, how much money was actually spent on direct voter contact -- the thing that the – going with independent expenditures causes a lot of what I think was redundant spending; double polling, duplicative staff. In our case, we set up an office down the street from the NRCC just to avoid any appearance of water-cooler talk or what not and I’ll talk about that more in detail in a moment.

But a lot of money was burned up simply on essentially duplicative, redundant infrastructure. So the actual dollars that went to the voter would be an interesting question to answer; I don’t have any facts and figures; I don’t live in that world of analysis. I just kind of go with my gut and what I see happening day to day. But at the end of the day, it was not nearly as much money as you would think. Now, the South Dakota Senate race – (chuckles) – is the exception to the rule – (scattered laughter) – they were sort of buying full-page newspaper ads three times a day just because they had more money there than they ever expected.

The final point on the fundraising is we did okay in 2004 but what about 2006 and beyond. 2004 was unique for a couple different reasons: President Bush – his popularity nationwide -- although inside the beltway, folks didn’t believe this it was quite strong – and his fundraising ability is quite remarkable. That, at least on the Republican side, helped everyone else who was a Republican on the ticket; there was – fundraising was first rate out of the Bush campaign. The same is true to a certain extent on the Democratic side. Howard Dean did a nice job in his fundraising and then John Kerry had a lot of support financially that two years ago, people really didn’t think were going to happen for a presidential nominee.

Once the 800-pound gorillas are taken off the top of the ticket, what is going to happen in ’06? My guess is we’re not going to be as robust, although I’ve been wrong before on this. I want to caution folks not to declare that BCRA – all is well with the parties under BCRA and that somehow we’re going to keep raising all of this money and everything is fine; I’m not so sure that future elections are going to see the same sort of intensity. I could be wrong but that’s a question.

Turning to the actual mechanics, there are some statements that are floating around about things that began in this cycle – new things: party committees began investing and prospecting to get new donors; and the idea of member fundraising and transfers into the party committee (stop ?) was mentioned at grassroots to get out the vote operation; joint fundraising committees and the like. None of this really new in 2004; this had sort of building up to where we got in 2004. But cycle after cycle, there was an incremental building upon what had worked before and sort of getting rid of that, which did not work. So at least at the NRCC – and other party committees began prospecting; from other folks it was new. But in a lot of ways, it was not something that was completely generated by BCRA.

The one change that hasn’t gotten a lot of play is the aggregate contribution limit change and the idea that there is a cap on what you give the candidates and a cap to what you can give to parties, PACs, and other federal accounts. The interesting thing that happened and – it’s essentially two checkbooks for your donors. The parties weren’t necessarily competing head-to-head with the candidates. So if someone had made a maximum contribution to the Bush campaign, he wasn’t running into another overall limit by giving to the party; that was something that the RNC and the Bush campaign really exploited and that again helped everyone else on the ticket because was that much more candidate money that was out there, whereas in prior cycles it would have been probably going to the RNC or someone else and not directly to candidates.

Shifting to independent expenditures, we spent – and the numbers have already been put on the screen – a little north of $46 million on independent expenditures; the DCCC spent somewhere around $36 million. By way of comparison, we spent about $65 million on issue advocacy in the prior cycle. So again, for those who say, gee, it looks like they spent about the same, not so fast; it was a significant cut. What helped us were there just weren’t as many competitive races.

What also helped was – what I call the hotspot of the campaign didn’t start until late September. We really didn’t go on the air – both sides of the aisle in the House races until late September. In 2000, we started going up late July, ’02 was somewhere in August. This cycle was very compressed when it came to the heavy spending. It eventually it had in essence a four-week sprint as opposed to the eight- to 10-week sprint that we used to pay for. In the 2002 cycle, we were able to essentially buy 10 weeks of television in some form or another in all of the competitive races. It would not have happened this time if the cycle had got started sooner.

Independent expenditures were not unique. We had done them before here and there. In special elections we had done some IEs. The dirty little secret about 2002 is we started to do independent expenditures a couple of weeks out in certain races because we ran out of soft money, as hard as that is to believe. When BCRA was being debated and being passed, there was a common statement, you know, “unregulated soft money.”

Well, it wasn’t so simple as simply digging into the corporate coffer and just spending money in the state. To transfer money to a state party, you would have to transfer money legal under that state law. So in states like Indiana and other states that had either corporate bans or very low corporate limits, you would need what we call personal soft; that was in short supply in 2002 and we ended up going all hard in the end of ’02, which we were able to use as sort of an example of how maybe we could do things in ’04. So we built upon what we were forced to do in ’02 and continued it in ’04.

Our independent expenditures legally – my view is you are not required to move it out of the party committee headquarters. We did anyway just to – more for political reasons and legal reasons. We didn’t want to have a tight race coming down the homestretch and someone file an FEC complaint based upon some coordination theory, saying that obviously this was some massive conspiracy. So we put in a lot of safeguards which the law does not explicitly mandate but politically made sense because the folks who have been doing independent expenditures have been doing our spending for cycle after cycle, after cycle. So we weren’t a position where we had to educate people on what these races were and that kind of thing, they being very experienced – knew what they needed to do.

Budgeting for IEs was tricky because it is essentially a guessing game on how much you are going to spend on independent expenditures because when you’re making these decisions, the races really have not peaked; you have a pretty good sense of what is going to be competitive but you don’t really have a sense of whether TV, mail, or phones are going to work or what you’re doing here and there. So we sort of blocked off the chunk of money and then from there, the folks who receive the overall budget cap of what they were going to spend on IEs made the decisions within their own little unit.

The big expense we had was polling. We took the position that it made more sense to double poll, although it was much more costly because we really wanted to be able to talk to our campaigns about polling data. So the political division would do a poll, sometimes split the cost of the campaign, sometimes not, but at least get in a position where there was no secrets about what was in the data.

The independent expenditure folks did their own poll and the frustrating thing was being in the council – you know, I see a lot of things and after the fact you see all the polls, it’s amazing how pollsters do – some pollsters really end up saying the same thing, but we did have some wildly diverse polling results where the political division thought they were in good shape and the – (inaudible) – thought it was a disaster waiting to happen and vice versa. It made it very challenging to kind of keep your message straight.

The other thing that was tricky was the candidates would occasionally not like the ads that were being run and obviously Democrats didn’t like ads that the committee I represent ran. But even some of our own candidates really didn’t like the ads – too negative, this or that – same general complaint. And what we did was – they actually – they all got transferred to me so I got to be the lucky one that made even more friends. And some of these folks won so now I have members who think that somehow I was the one that almost cost. But if it weren’t for me – (laughter) – they would have got 62 percent, not 51 percent, but we walled off the chairman and executive director from that and any complaints essentially went around files, sad as that is – not much we can do if it’s an independent expenditure.

The production of the ads – and this will be my next to last point – was tricky because TV ads are typically 30 seconds. We had new disclaimers that had to go on the ads. The candidate or the party committee of independent expenditures didn’t require the stand by your ad, person talking to camera, which at least gave us a couple of more seconds. That being said, it did require – there is a lot more text at the end. Ads got very, very busy, both campaign and independent expenditure and very kind of herky- jerky in some instances. And it was very tough I think to get an ad that made sense start to finish. And what was said earlier about people really not know who paid for what ad, there was some truth to that simply because some of these ads were so schizophrenic it could cause a seizure if you’re not careful. Some of them were really that choppy.

So they – to me, the ads were not as punchy or as tight as they had been in prior cycles. Part of that is the coordination issue. It was very difficult to get good footage of candidates, both ones we were supporting and ones we were opposing. In prior cycles, it was easier – we had begun to buy b-roll from campaign stuff – they weren’t going to use it in our issue ads. This time, the answer to the question was not nearly as clear, not that it was clear before but that made the ads more old fashioned in that it was much more still pictures and grainy, and that kind of thing; they weren’t slickly produced as old ads had been.

The flip side of that is the notion of common vendors. We don’t use common vendors. We spend a lot of time figuring out who is doing what campaigns and what – therefore they can do independent expenditures somewhere else but they can’t do it on that campaign and a myriad of Chinese walls to make sure that vendors do not overlap and that sort of thing. It’s not as easy as it looks. Some folks confuse, for example, volunteer mail, which can be coordinated with independent expenditure and they get all bent out of shape because it looks like the same vendor as the campaign. Well, that’s legal when that happens but it’s not necessarily going to be okay if it’s an independent expenditure. So there was some confusion in the press about what was okay and what wasn’t.

My final point is media buys. There was a mention about sort of sloppily telegraphing what we were going to do – that’s really not what was going on. The DCCC let down some buys early in places like New Hampshire and certain parts of Florida that made absolutely no sense to us. They eventually pulled those buys back and put the money elsewhere. The early buys were schizophrenic; it made no sense to us. Maybe Bob can shed light on why – what they were thinking but we thought we were missing something.

The buys are public; you can go to the station and get the buy. So there is really no massive head-fake that goes on with the buys. Campaign laid down their buy; we lay down our buys. The reason why we lay down early is to save money. The earlier you lay down the buy, the cheaper the rate is going to be and if you wait until late in the cycle, late in the game, it is going to be exponentially more expensive. So there was no – at least in my world – any conscious effort to let people know we were going to spend.

If you read the (quick ?) report or similar publications, it’s not hard to figure out where the competitive races are going to be. You really don’t have to call the campaign and say, gee whiz, how is your money? Are you going to do TV? Obviously they are going to do TV, obviously you know how much money they have – it’s on the FEC reports. The wonderful thing about disclosure is now you know. There are very few secrets remaining because of the reports.

And with that, I think that’s all I have and I look forward to any questions and thank you.

MR. MALBIN: Thanks, Don.

Bob Bauer, who represents just about every Democratic Committee.

ROBERT BAUER: I’ll be brisk because I know that we’re at the end of the program. I came behind Don McGahn, a structuring of the agenda that was obviously designed to follow the election results. (Laughter.)

I listened very carefully to Don’s explanation of how they ran their program and I want to spice things up here by saying it was clear to me that it was run totally illegally. (Laughter.) And I’m very pleased that I’ve noticed both Commissioner Mason here and a member of the general council’s office, and if C-SPAN will keep the cameras a little bit shortly, you’ll see Don being arrested as soon as we can – (inaudible, laughter).

MR. MCGAHN: Dare to dream.

MR. BAUER: In any event, let me very briefly – let me very briefly comment on some of what I have heard.

First of all, I agree with Professor Jacobson: I do not believe, as we consider the effect of BCRA on the overall competitive outcome of this election, that a case can be made, at least on any data that I’ve seen – you know, in any argument that I’ve heard, that BCRA affected the outcome in a direct way; that is to say that there is a competitive impact of the statute that is unique and that we can isolate. I also believe that attention ought to be paid to the very significant impact relative to other predicted impacts of the increase in the hard money limits under that statute.

Now, I share with him and Professor Kolodny the view that party independent expenditures have become very important but I want to step back here and refer to another piece of the test that Professor Jacobson lays out in his paper and that he repeated when he opened his remarks, and that is that we’re looking at a number of potential effects of BCRA including the effects of campaign finance reform on the conduct and not only the competitiveness of elections.

And I believe it is fair to say that the changed role of parties under this legal regime, which is not solely an effect of BCRA, but certainly an effect of BCRA in part and the interrelationship of BCRA with other campaign finance reform changes in recent years, like for example, the Colorado one and two cases of the United States Supreme Court that put us in the position we are in today where parties can finance independent expenditures on behalf of their candidates. Those effects, those interrelated effects I think have meant a great deal for the conduct of Congressional election and certainly presidential election campaigns as well. We are in a position where – and Don touched on this briefly in his remarks – very significant decisions are made by parties that cannot be discussed with, planned with, or coordinated using the legal terms with their own candidates.

And I can’t – because I don’t have the time here – discuss all of the ramifications. Don suggested one, which is that very often the parties wind up in the difficult position where they do things that their candidates violently object to. But I think that there are obvious on their face, though I can’t spell them all out here, broad strategic significance to a state of affairs where parties make decisions of great significance in campaigns without the knowledge and indeed, intending to keep from knowledge, their candidates.

I also want to note that I believe that a study needs to be done of BCRA’s effect and some has been done on BCRA’s effect on national – it used to be state and local parties and the relationship between national parties on the one hand and state and local parties on the other. Many know that when soft money was used by the parties to finance issue advertising, a huge amount of that money flowed to the state and local level. Some part of that soft money to the state and local level was expected or at least thought possibly to be retained under the BCRA provision known as the Levin Amendment that was supposed to preserve at least some soft money activity comparable to the old kind – not in the form of broadcast issue advertising but in other ways – that the state and local parties enjoyed before BCRA was enacted.

I think you’ll find that the Levin Amendment did not prove to be a robust source of state and local party activity and I also believe that the effect of BCRA – and again, I want to talk about an inter-related effect; I don’t want to say that BCRA alone accounts for this – but campaign finance reform itself is, I believe over the long run, increasing the role of national organizations and I think contributing to the trend and the weakening of state and local party organizations, and I think that has brought strategic impact. I promised Professor Malbin I wouldn’t take the soap box about the merits or demerits of BCRA; I’m really speaking here just about how campaigns are run and the role of state and local parties as a legitimate strategic issue and a legitimate effect to be taken into account in discussing the conduct of elections.

And last but not least, I fully agree that you have to relate in some fashion to BCRA the sudden appearance of heavy fundraising by members from other members. This I obviously an effort to deal with party resource deficiencies and so when I hear it said over and over again that parties did much better than some predicted under BCRA, I agree and I believe Don McGahn agrees that in many respects we did do much better in our hard money fundraising, we having raised our money honestly, Don’s clients having raised it corruptly – (laughter).

But in any event – but in any event, we did better in that respect than many had predicted and yet at the same time I think it is a mistake to conclude from that that parties have all the resources that they believe they need to wage the most effective campaigns. And again, I won’t say BCRA alone accounts for some of the resources stresses experienced by the party, I think you have to look at the whole course of campaign finance regulation and other factors culminating in the enactment of BCRA.

And last but not least, I do want to comment on Candidate Murphy’s presentation, who, by the way, not only is the only candidate but also has practiced campaign finance reform while before becoming a candidate. And there is no question – and this goes back to the general observation that huge amount of money is raised and spent in politics, still even post-BCRA, which leads BCRA supporters to say they never intended to limit the total amount of money spent – a different story for a different day – but it is a huge amount of money and I don’t think there is any reason to believe that the amount of money raised and spent for federal election purposes is likely to diminish any time soon.

So I want to return on the strength of Candidate Murphy’s remarks about the time consuming pressures and the burdens of fundraising to the point made about parties that we have put on candidates is an extraordinary obligation – I don’t think it’s an escapable one to raise a huge amount of money, A, because the candidates need it, B, because in needing it they must also establish their credibility and ability to raise it, and at the same time, as they raise this money, putting between them and the party some significant distance in discussing how that money will be spent. And I think that has significant implications for the conduct of Congressional elections.

Thank you very much for having me.

MR. MALBIN: Thanks, Bob. Thank you.

[One comment for future thought]: We now have a system where the contributions to the parties are limited. And I think what you have just done quite properly for future discussion is to say, since the Supreme Court has said, you cannot limit what party can spend to help a candidate – the only thing that is limited is the amount the parties could talk to the candidates about spending but not the amount the parties spend -- you then have quite properly opened the question for future discussion: why not let the parties talk to their candidates since that particular firewall has nothing to do with the way money is raised or how much is spent? Good question – good policy question; not a legal question – we’re finished with the law on that one. Congress may limit coordinated spending, but there is nothing the Constitution that requires Congress to do everything it may do.

So having said that – let’s open the floor. Are there any comments people wanted me to make. I think we’re pretty – let’s open if for questions. First question, please bring the mike, identify yourself.

Q: Bob Benenson for Congressional Quarterly. (Off mike) –

MR. MALBIN: Do we have another microphone, please. Okay.

Q: It’s on there?

Bob Benenson from Congressional Quarterly.

I just want to go back to what Gary was saying early on about how – and this has to do with the preponderance of the party’s money going into this circumscribed group of competitive – already defined competitive races. And we see in each election cycle the number of competitive races diminishing. Unless the parties adopt a more risk-taking strategy in terms of putting venture capital early on into more longer shot races, is there any real likelihood that we are going to break out of the cycle, baring the, you know, every 10- or 20-, or 30-year pendulum swing that we have in American politics.

MR. JACOBSON: No. (Laughter.) To put it briefly, no, I think – I’m surprised the parties this time weren’t a little more adventurous because they did have a lot of hard money and there were – you would have expected a little bit more risk taking, I think, but it’s maybe it’s new in the election cycle.

I’ve been writing this for 20 years – that the parties – you know, you can make type I errors or type II errors – and I can never get them straight – but one of them is doing something where you were waste your money because you didn’t have a chance to win and the other is not doing something that you would have had a chance had you not worried about wasting your money. And parties always get at the wrong way – they’re more worried about wasting money than they are in missing opportunities. And I think that if I were advising either party, I would say, you know, go for the missed opportunities; take some risks.

MR. MCGAHN: Yeah, because what we have for now is a situation that is sort of mutually assured preemption where I think Lois that if the DCCC had decided to contribute even more to your campaign, then the NRCC probably would have matched it to Jim Gerlach.

MR. JACOBSON: The correlation between the two parties’ independent spending on both side is about .93. So they’re just – they’re in lock step.

MR. MALBIN: So there was – the CCCs used to follow more a strategy – thinking in terms of multiple cycles are building up and that seems not to be happening as much now. Does anybody else what to comment on this?

MS. KOLODNY: I did if that’s all right. I wanted to ad a couple of things to what you said. Dianna and I had predicted in the last book that the party committees might get more involved in primaries. And you saw a little of that but not very much, so we were wrong about that one and Pennsylvania 15th is one where they did get involved and Pat – (inaudible) – at the NRCC did early on. But that was an exception.

The other answer to that in talking about Lois Murphy’s race since there I am in the Philadelphia area – they had an unusual set of circumstances there which probably doesn’t happen anywhere else. But there really is such a thing as a media capacity. And there you are in Philadelphia with both presidential candidates wanting to advertise, a U.S. Senate race with an incumbent with a lot of money – he’s advertising, competitive races in the 6th, the 13th, and then, oops, surprise, the 8th. Now, there were strategic decisions made that might have fallen very differently if that – the Jim Greenwood had not decided.

So in a way, they ended up in that scenario taking risks on some candidates that they might not have otherwise. So that is part of what I think Don McGahn was saying before, is that you don’t really know if things happen and you have to – I think they reserve appropriately some cash in case something unexpected were to happen, but then it ends up not happening and the same old races get invested in.

MR. MALBIN: Dan Manatt (ph)?

Q: Yeah, a question for –

MR. MALBIN: Microphone.

Q: A question for Bob Bauer and Don, I guess, to an extent.

Given some of the criticisms both of BCRA and arguably the intentions of the reformers in your mind are the imputed intentions of the reformers, I’m wondering if we can put this in a comparative context first of all and with specifically, the policy of goal of BCRA and that is reducing the appearance of corruption from office holders engaging in soft money fundraising. Would you say from a public policy perspective that the 2004 campaign was a better policy result or worse result than say the ’96 election with its legion fundraising abuses and even 2000 with the pioneers and the rangers raising so much soft money for President Bush? Would the good old days be better than today?

MR. MALBIN: Bob could probably give us a book on this.

MR. BAUER: Yeah, I won’t write a book on this but my answer to you is the last time around, there was a great deal of concern about the corrupt appearance presented by office holders raising huge amounts of money in large sums for the parties from so-called special interest donors. And the notion was that this was particularly corrosive of the public trust.

This time around – and I heard a bit of the 527 panel – I’m hearing uncoordinated fundraising by non-elected officials presents the same appearance of corruption, vast sums of money being raised and spent for political purposes.

So my answer to you is this: I think we will always find something disdainful about raising and spending money and we’ll chase after and we’ll address the ones in front of us as we did with BCRA – people can decide whether or not that made a dent in the public’s anxiety about corruption, but the 527 date – the 527 debate illustrates that it’s a moving target and that people who look at this election cycle are now talking about some other source of financial abuse with Swift Boat Veterans, 527 activity, and so forth, also alleged to be in some fashion damaging to public confidence in the political process.

Q: Surely not on the same scale as John Huang.

MR. MALBIN: Dan, we’re simply not going to have a full-scale debate on that.

MR. BAUER: No, no, I promise – (inaudible) – because I promised to be very self-controlled today. But the one thing -- I will answer this: it depends on who is getting excited about it. I mean, I know people who are as easily as excited about Swift Boats as the Republicans were about John Wong.

MR. MALBIN: Is there – Don, you were addressed, but let’s not – there are other issues to be brought up. I think that the fact the members were not engaged in fundraising this time – in fact other people did do fundraising – make your judgment whether you think when a member asks, it makes a difference. And that is a debate that has been going on for eight years. And in no way are we going to get to that and finish before it’s time to go for dinner or drinks, or whatever. (Chuckles.)

So go ahead.

Q: Al Millikan, affiliate with Washington Independent Writers.

Have we had enough talk and discussion about corruption since reform has taken place? And does anyone think that there has been too much concern about the First Amendment and free speech since reform?

MR. MALBIN: The answer to your question is, no, we haven’t had enough but we’ve had it but it’s as much as we can do. That is to say, it’s a really long subject that we just opened and I think it deserves to be heard but I really do think that we need to hear questions in about the five minutes we have left or so about the Congressional papers. So I’m taking that prerogative, sorry about that.

Go ahead.

Q: Hi, I’m Steve Weiss with the Center for Responsive Politics.

Professor Jacobson showed a chart that showed actually a slight decrease, if I remember, in the amount of money put into races by self-financed candidates. That was a little bit surprising I think given the fact that the parties are at least not certain how much money they would raise – they turn out to be more successful.

But I guess my question is to anyone on the panel, do you expect to see more or less money put in by self-finance candidates as election cycles go on in the future?

MR. MALBIN: Who wants to take that? It was directed to you?

MR. JACOBSON: I think what we saw this time is a random blip; I don’t think there is any particular reason to think that candidates are not going to be asked to or willing to put their own money into campaigns.

Just a note on the Millionaires’ Amendment: I had – there’s two lines in my paper. Basically, there were 25 candidates who spent than a million dollars on their own campaigns this time around; one of them won; two-thirds of them didn’t even get into the general election; blew it all in the primary and lost. And the only winner won in a race where there was no opponent; it was an open seat taken by a Texan who had no opponent in the general election.

So we may have had a low number of these kinds of folks because they got wiped out in the primaries this time around; I wouldn’t expect that to happen routinely.

MR. MCGAHN: The other thing is – if I can jump in – on our side, there were folks who self-financed in the 2000 cycle and the 2002 cycle, who still ran in ’04 – they didn’t self finance this time. So, you know, that could be part of the blip. And then Michael reminded me of another angle that you can no longer loan your campaign an unlimited amount and expect to get it paid back. If you don’t sort of get your shop in order by the election, anything over $250,000 becomes a contribution, which was, I think, a very big deterrent. I spent a lot of time counseling people on that and it makes it tougher to (refer/refuse ?) candidates when they realize that if they are going to self- finance, they are not going to get the money back.

MS. KOLODNY: I was just going to add it’s interesting that you had couple of candidates because I followed the Pennsylvania 13th race, for the David Magleby project and there is – one of the candidates that Don McGahn is referring to, Melissa Brown, who did spend almost a million dollars of her own money in 2002 didn’t do it this time. But the Millionaires’ Amendment I think acted as a disincentive for her but on the other hand, her opponent used it as a way to raise the urgency of her need – the Democrats need to raise more money and raised double – as it ended up – what the supposed millionaire candidate raised.

MR. MALBIN: I owe you one.

Q: I’m Paul Vinovich from the House Administration Committee.

I would be interested hearing from the counsels as to what their understanding is of the scope of the coordination ban, not to mention that during the campaign received calls from members upset about the independent expenditures that they were running in those districts, and he would disregard them; I assume that is related to the coordination ban. I saw their interpretation that seemed to imply that as long as the party officials didn’t direct money expenditure, it was okay for him to listen to representative of these other groups; you know, lay out their strategy and, you know, the coordination was only – line was only crossed if their some subsequent direction of the activity or something.

So I would just be kind of interested in hearing what your understanding is of the threat of the coordination prohibition.

MR. MCGAHN: My thought is that the coordination rules as applied to the House races are a square peg in a round hole because the premise of the whole coordination issue is really the model of the presidential campaigns where the nominee essentially starts suggesting to the party what they need to do with their funds. So you see a different approach at that level.

At the House level, there are so many more races in play, so much little – the time is so much more valuable; you just don’t have time to really have these massive coordination – (chuckles) – sessions. Moreover, at least in the House level, a lot of folks, first time candidates or they make it – you have to come out of the state system, they are not nearly as sophisticated or staffed, or -- whether from a compliance point of view, or fundraising point of view, or political strategy point of view – as maybe a statewide Senate campaign would be or certainly presidential campaign.

So the idea that a House candidate is going to call the DCCC or the NRCC and say, look, I need you to spend this money here and that money there, it just doesn’t happen. So it is tough to answer questions because I’ve always read that of these coordination rules as not quite fitting the facts of House races are run.

MR. MALBIN: Bob, did you want to say anything?

MR. BAUER: I’m not sure that I entirely agree; I think that the rules do have an effect on the ability of the parities to communicate with their House and Senate candidates and I think the scope of them is quite broad and I would simply refer back to what professor Malbin said; it’s a direct restriction on what you can say to somebody.

And there may be reasons to have such a rule to enforce the contribution limits and that’s the underlying theory but it is a very significant requirement and the example I use is one that I think – and again, it is in the presidential context that Don would be very familiar with and that is the FEC’s ruling of an advisory opinion last year of that – the candidate including, with President Bush’s permission, President Bush’s endorsement and that Congressional candidate’s advertisements converts the advertisement into a coordinated expenditure.

And the Republican council argued quite desperately that all they really wanted to do was to review the text to make sure that the advertisement as a whole comported with the president’s political and other standards. And the mere fact the council would be involved in that exercise and that the president would know that his name and photograph would be included in the advertisement would be sufficient to make that communication a coordinated communication allocable to a limit and that the one way to get out of it would be for the president to pick up his share of the cost of the advertisement so it was an advertisement for the president as well as for the Congressional candidate. I think that example suggests to you the scope of the coordination rule.

MR. MALBIN: On a different kind of coordination, I want to assure Bob Bauer that the book will have a chapter on state and local parties. And that and a large many other subjects remain to be covered but not today. We will have additional releases of material, additional conversations. We hope to see many of you at future events. I want to thank the panelists. I want to thank the panelists for the entire day, I want to thank you for being with us and we’ll call this meeting over.

(Applause.)

(End of panel three.)