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With new law, chase for campaign cash becomes family affair

Housewives have donated more than $1 million to the three major candidates
for governor. That’s not as surprising as it sounds. Many of the homemakers
share last names with big-money California contributors–Mrs. Spanos, Mrs.
Perenchio and Mrs. Tsakopoulos.

The 2006 gubernatorial election is California’s first with contribution
limits. And as the governor’s race heats up, the campaigns are finding
creative ways to raise money, including asking for donations from the
spouses–and adult children–of major contributors.

Two of the candidates, Gov. Arnold Schwarzenegger and state Treasurer Phil
Angelides, have even tapped their own wives for contributions. Julanne
Angelides and Maria Shriver each gave their husbands the maximum $44,600
donation last December.

“It is naive to think there isn’t going to be money spent in politics,” says
Lance Olson, general counsel to the California Democratic Party, and the
author of Prop. 34, the 2000 measure that imposed contribution restrictions.

The new donation caps look unlikely to slow the flow of money in California
politics. But where the money goes is changing. The new restrictions, much
like at the federal level, are pushing big donations out of the candidate’s
hands and into party coffers and other independent expenditures.

For the first time, donations to candidates for governor are limited to
$22,300 for the primary, and $22,300 for the general election–for a maximum
donation of $44,600. But donors can still give unlimited sums to the state’s
political parties–and joint candidate-party fundraisers are already in the
works.

Lance Olson says the increasing amount of money going to state parties is
not “getting around” Prop. 34–it is the intended consequence.

“[Prop. 34] was intended to take the money and direct it to the political
parties,” said Olson. “At least the theory behind that is that it insulates
the candidates, to a degree, from the ‘corrupting’ contributions.”

But Gov. Schwarzenegger is actively raising money for the Republican Party
that Olson says should be insulating him from big donations. In the
invitation for a March 20 Beverly Hills fundraiser, Schwarzenegger asks
“Platinum sponsors” to donate $44,600 to his campaign and another $55,400 to
the party. “Gold sponsors” are asked to chip in $5,400 to the party, and
“silver sponsors” are asked for $2,700.

The party can use up to $27,900 per donation to directly support
Schwarzenegger, with any other money going to other party building
activities, such as voter registration drives.

Kathy Bowler, executive director of the California Democratic Party, says
that the while state Controller Steve Westly and Angelides are still focused
on their own fundraising, “right after the primary is over, we assume there
will be joint fundraisers.”

Just like federal officials whose contributions have been limited since
1974, California gubernatorial candidates are now being forced to build a
campaign treasury without seven-figure checks.

Kam Kuwata, a Democratic political consultant for U.S. Sen. Dianne
Feinstein, says that the same dynamics that changed federal campaigns three
decades ago are at work in California.

“The key fundraising people were not necessarily the people who could write
a huge check but the people who could call 2000 people with $1,000 checks,”
says Kuwata.

Democratic political consultant Darry Sragow says that big donors still find
a way to get money to favored campaigns.

“A bigwig can only write a certain size check and that means the spouse and
maybe the adult children of the bigwig, and the business associates of the
bigwig all step in to fill the breach,” he said.

“The question is not who writes the check, it is how much money does the
bigwig get credit for delivering to the campaign,” adds Sragow.
Contribution limits have brought about other parallels with the federal
system, including the rise of independent expenditures.

Last week, the U.S. Chamber of Commerce launched a statewide ad campaign
prominently featuring Gov. Schwarzenegger. But because the ad is categorized
as independent issue advocacy, the Chamber is not required to disclose who
paid for the ad, or how much is being spent.

“They’ll never admit it is for Schwarzenegger but is it is clearly intended
to help the bond and Schwarzenegger’s reelection,” said Sragow, who is
advises the state Chamber of Commerce on independent expenditures. “I think
you will see more of this at the statewide level.”

Sragow said that state-level independent expenditures mirror the rise of
so-called 527s independent committees at the federal level.

“They are genetically related,” said Sragow. “That [independent
expenditures] in California and 527s at the federal level exist are proof
that if you regulate any industry, people who are active in that industry
will find a way around [those] regulations.”

Still, there are significant differences between the state and federal
donation limits. For one thing, California candidates can still raise
unlimited sums in committees they control–so long as the money goes toward
an initiative campaign, not the candidate’s own reelection. For another,
direct federal donations to congressional candidates are capped at $2,000
per election versus $22,300 for governor’s race–and donations to political
parties are limited to $26,700 at the federal level.

But any caps at all, say campaign finance observers, benefit wealthier
office-seekers, because there is no limit to what candidates can contribute
to their own campaign. All three major candidates for governor are
multi-millionaires. Westly has contributed more than $20 million to his bid
for the Democratic nomination and Schwarzenegger is expected to donate
millions to his own campaign. Angelides is the “poorest” of the three,
earning $11.6 million in the last seven years.

Overall, this year’s governor’s race is expected to be the most expensive in
California history, topping 2002’s $120 million campaign.


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