1 Where the Money Goes: Party Spending in Congressional Elections Robin Kolodny Associate Professor Department of Political Science Temple University 1115 W. Berks Street Philadelphia, PA 19122 [email protected] David A. Dulio Center for Congressional and Presidential Studies American University 4400 Massachusetts Avenue, NW Washington, DC 20016 [email protected] Paper prepared for presentation at the Annual Meeting of the Midwestern Political Science Association, Palmer House, Chicago, Illinois, April 19-22, 2001. [DRAFT – Please do not quote without permission.] This research was generously supported by a grant from The Pew Charitable Trusts to American University’s Center for Congressional and Presidential Studies and Campaign Management Institute. Thanks to Jim Thurber and Candy Nelson for their support. 2 The media and academics are obsessed with campaign fundraising in the United States. Indeed, the current debate on campaign finance legislation in Congress is focused primarily on limiting the inputs to the campaign finance system: how soft money can be raised (or whether it can be raised at all), and limits on hard dollar contributions. Any discussion of how money is spent has mainly been in the context of regulating electioneering activity, such as limiting the use of issue advocacy broadcasts by parties and interest groups. The topics of how the vast amounts of money being raised is spent and where that money goes, fall well below the radar. We all assume that campaigns are expensive, but that the increased amounts of money in the system has more to do with corporations and wealthy individuals wanting to buy better and better access than an increased rise in the cost of campaigning. We call this the “supply side” focus of congressional campaign finance. Our interest in this paper is the “demand side” of the issue. More specifically, what is the money spent on, and who is paid for these goods and services? This is a large question which cannot be answered fully either in this paper or possibly ever, but we undertake a detailed examination of direct party campaign spending in 1998 to give a partial, but not insignificant, answer. Our purpose is to ascertain what political parties spend their money on (this is a multi- faceted concept to be sure). Though we detail the various avenues of party spending below, we come to this question with specific hypotheses about political consultants political parties. We examine the extent to which the parties are spending on campaigns through political consultants and what those consultants are expected to do for candidates. Coming out of our previous research on consultants (Kolodny and Logan 1998; Kolodny 2000; Dulio 2001) we expect parties to rely on consultant services because of their belief that consultants provide campaign 3 services that parties no longer can. We also expect that parties spend their money on the most competitive races. This examination is only one part of what should be a comprehensive examination into where campaign money goes. In the next section, we set up the question of campaign spending by who does the spending in political campaigns. We then move to the issues that specifically concern the political parties. What Candidates Spend Candidates obviously spend the vast majority of their campaign receipts on direct election expenses.1 We know that in the aggregate candidates for Congress spend about three quarters of a billion dollars each election cycle.2 We also have self-estimates from House candidates of how much of the money they spend on campaigns goes to specific functions (see Herrnson 2000). Specifically, 39.9% goes for campaign overhead (staff salaries, fundraising, travel), 7.1% is dedicated for campaign research (polling and opposition research), and 52.4% is devoted to campaign communications (television and radio ads, direct mail, campaign literature).3 More specific figures and more explicitly defined categories of expenditures may be obtained by looking at actual FEC reports for each candidate who runs for federal office. However, this information is not currently indexed by the FEC in any manageable form prior to the early-1990s, and though we have made an effort to catalogue it, we are unlikely to have 1 We do know, however, that members contribute to the campaigns of other members, though the extent to which they do this depends on how competitive their own race is (see, for example, Pearson 2001). 2 The recent totals for House and Senate candidates are: $765 million in 1996; $740 million in 1998; and $683 million in 2000 (this figure is incomplete as the FEC has only reported data through October 18, 2000 thus far. 3 Paul S. Herrnson has completed extensive candidate surveys asking them to indicate what percentages of their funds have gone to specific functions (Herrnson 1998 and 2000). The percentage totals reported here are taken from the 1998 Congressional Campaign Study, and the reports are aggregated from self-estimates among those responding to the survey. Dwight Morris and Sara Fritz have also compiled comprehensive data on congressional candidate spending in the 1992 cycle, although it is not as detailed (see Morris and Gamache 1994). 4 comprehensive data any time soon (this data collection involves reading each candidate’s individual reports over the election cycle which can be anywhere from two to 500 pages). What we do know is that candidates spend a great deal of their campaign funds on either television advertising (including both the production of TV and radio ads and the buying of the time to broadcast them) or direct mailings (again both production costs and mailing expenses such as postage and mailing labels) depending on the expense of the candidate’s media market and/or the extent to which the media markets actually saturate the district. Some estimate that some campaigns spend upwards of 65% of their total budget on television advertising (Herrnson and Patterson 2000). Candidates do have overhead and fundraising expenses they must cover, but it is usually only a modest proportion of the money spent (see Herrnson 1998 and 2000 for an estimate). What Interest Groups Spend Long the subject of controversy because of political action committees (PACs), today interest group spending is mainly in the area of issue advocacy (independent expenditures are used less) and is the topic of much scrutiny (Dwyre and Farrar-Myers 2000). Since interest groups are not required to disclose the sources of their issue advocacy spending, we cannot ascertain anything other than what they volunteer about their campaign activities. However, we do know that groups spend a considerable amount of money on communicating their messages through television and radio advertisements as well as direct mail campaigns (Magleby 2001). We also know that interest groups hire political consultants to do their independent expenditure work (Dulio and Kolodny 2001), and that anecdotal accounts by consultants indicate a considerable client base from issue advocacy work. 5 What Parties Spend Though we do not purport to have data on how candidates or interest groups spend, we do offer an examination of how parties spend. Before we do that, we should point out that campaign spending by candidates, interest groups, and parties is largely channeled through political consultants. This observation alone demands consideration. Though we believe campaign spending was not always channeled through consultants, we believe consultants have been the brokers of campaign spending starting in the 1960s, rising through the 1970s and 1980s, only to truly take off during the 1990s. The word “channel” is important here. We do not mean to say that political consultants pocket enormous sums of money for general strategic advice. Indeed we argue the opposite. This is due to the fact that media and direct mail consultants pay for significant expenses out of the sums given to them by candidates, parties and interest groups including broadcast time, television ad production, printing and mail production costs, and postage. The implications of consultant brokerage of congressional campaigns will be considered later. Currently, political parties have four ways to spend money in congressional races: direct contributions, coordinated expenditures, independent expenditures, and soft money spending and transfers. The first two types of spending are due to the 1971 Federal Election Campaign Act (FECA) and its Amendments in 1974. In order to shore up the role of the political parties, campaign finance reform legislation in the 1970s recognized the special role that parties play in election campaigns. While contributions from individuals and multi-candidate committees to candidates were tightly restricted, lawmakers recognized that the party-candidate relationship was not necessarily a corrupt one, but one that might be healthy for democracy. So, while individuals were limited to contributing $1,000 in each election (normally a primary and a 6 general election), and multicandidate committees limited to $5,000 in each election to federal candidates, political parties could make contributions as PACs did ($5,000 per election) but were entitled to spend additional monies beyond that in the form of coordinated expenditures. Coordinated expenditures are monies spent by the political parties on behalf of their candidates with the candidate’s knowledge and consent. For races in the US House of Representatives, the formula for calculating the amount of coordinated expenditures is $10,000 times the consumer price index (CPI), a measure of inflation. In 1998, the amount of allowable coordinated expenditures in the House was $32,500 (source: FEC, www.fec.gov). For the Senate, the coordinated expenditures are calculated by population, with a minimum of double the amount for a house district race. The law allowed both the national party committees and the state party committees to spend the coordinated expenditures, effectively doubling the amounts (for the House this figure would be $65,000). Through “agency agreements,” these monies were often spent by the four congressional campaign committees instead of the original committees designated in the laws (Kolodny 1998).