Prior to running for the U.S. Senate, the most money Barack Obama had raised for one of his political campaigns was $500,000. In his U.S. Senate race, Obama would face multimillionaires willing to spend a fortune to get elected, and he would have to overcome opponents with more established political connections and with greater name recognition. Traditionally, Illinois politicians begin campaigning around Memorial Day the year before the spring primary, but the 2004 campaign season began nearly half a year earlier, in the summer of 2002. Candidates not only had to go after the money sooner; they knew they were going to have to dig deeper to compete against the wealthy big-spenders. One of the biggest questions for the Obama campaign was whether they could raise enough money to mount the kind of statewide organizing battle and advertising campaign needed to win. Television advertising is the most expensive aspect of political campaigns. Yet Obama proved himself an adept fundraiser with an astute media strategy.
Barack Obama, unlike many other candidates, did not mind raising money. Finance Director Claire Serdiuk noted, ‘‘He’s great in making the ask and closing the deal.’’ He was remarkable at ‘‘cold-calling’’ potential donors and soliciting a contribution. Some weeks, Obama spent twenty to thirty hours on the phone asking for money. As he traveled the state, he would sit in the car and dial people. He was able to establish a rapport with people whom he had never met and make them feel ‘‘like buddies,’’ which made people want to contribute.
Because Blair Hull was self-financing, new campaign finance laws allowed his opponents to raise six times the normal $2,000 limit from individuals. This provision attempts to level the playing field between wealthy candidates who can rely on their own funds and those candidates who depend more on donations. The ‘‘millionaire’s amendment’’ to the McCain-Feingold Bipartisan Campaign Reform Act requires weal-thy candidates to file an estimate of how much personal wealth they plan on using when they declare their candidacy. Wealthy candidates have to notify opponents within twenty-four hours every time they con- tribute at least $10,000 of their own money. Opponents then are allowed to raise more money from donations, based on a complex formula derived from the voting-age population of the state. In Illinois, the ceiling is pierced when a candidate contributes just over a million dollars.
The law was just a few months old at the beginning of 2003. The main purpose of the act is to counter the influence of wide-open soft money contributions to political parties and to restrict third-party advocacy advertising in campaigns. The law was challenged in court because it allowed for different funding levels for campaigns for federal office and went against the Supreme Court’s approval of strict fundraising caps. Other critics of the provision argue that it actually fuels the need for greater sums of money for campaigns, rather than reducing the cost of running for office. Larry Noble, executive director of the Center for Responsive Politics, thinks that less well-funded candidates will have to spend more time raising money outside their home states to hit up contributors who can give more under the millionaire’s amendment. He thinks the law benefits incumbents who face a wealthy challenger, because incumbents have a wider circle of contacts and greater influence outside their states.
Hull indicated that he was willing to personally contribute $40 million and notified his competition around Memorial Day that they could seek the higher donation level. By early February 2003, Hull had already transferred $1.3 million, which allowed others to seek individual donations of up to $6,000 for the primary. The donation limit reached the maximum of $12,000 before the primary race was over.
Bettylu Saltzman, a veteran North Shore Chicago Democratic fundraiser and a member of Obama’s finance committee, said, ‘‘I find it easy [to raise money for the campaign]. You say, ‘You can give $12,000’ and you might get $2,000, where otherwise you’d get $500.’’
And Blair Hull spent the money—nearly $29 million of his own money. Hull made a fortune from playing blackjack and from trading securities and was estimated to be worth $400 million. Mr. Hull was not interested in raising money from individuals or political action committees (PACs). He limited individual contributions to $100 and collected only $120,000 from personal supporters. Hull also said he would not take any PAC money so that special interests would never have undue influence with him. Unlike some wealthy, self-funded candidates, Hull spent years making friends and networking. He was a board member of the National Abortion and Reproductive Rights Action League, and he received a national award for his support of Title IX, the federal program mandating funding for women’s athletics. He also endowed a chair for women’s studies at his alma mater in California.
Hull began spending money in Illinois elections a few years before he jumped into the Senate race. He donated nearly $1 million to other Illinois candidates from 2000 to 2003, in an attempt to quickly become a player in state politics. Hull also donated staff members on his payroll to other Democratic candidates to assist them, but also so that his people could learn the political ropes. Illinois Governor Rod Blagojevich accepted close to $260,000 from Hull for his 2002 gubernatorial reelection. Mayor Daley of Chicago and the city’s Democratic Party organizations also benefited from Hull’s generosity. Hull even contributed to downstate candidates for city elections. Hull explained in an early debate, ‘‘I’m very proud of what I did in terms of supporting Rod Blagojevich [and] making sure we returned the Senate [to Democrats] here in Illinois.
And I’m not expecting anything back from them. I’m not a special interest. I’m not a lobbyist.’’ Hull used his vast personal wealth to construct one of the most sophisticated political operations in the country. He announced his candidacy at the end of June 2002 and began a $750,000 two-week television and radio advertising campaign detailing his economic and health care plans. Red, white, and blue billboards bearing his name were in every corner of the state. Advertisements ran on World Wide Web sites such as the Washington Post and Yahoo e-mail pages. By mid-July 2003, he had spent almost $24,000 on newspaper advertisements, $14,000 on yard signs, $3,000 on banners, and almost $1,000 on bumper stickers. A quarter of a million dollars had been spent with a dozen different political consulting firms, and another $85,500 went to computer consultants. His campaign staff and payroll were larger than any of the Democratic presidential candidates. Hull chartered a jet for his longer trips, and he toured the state in a $40,000 recreational vehicle nicknamed ‘‘Hull on Wheels.’’ His snappy staff dressed in Hull T-shirts and baseball hats with catchy slogans such as ‘‘Give ‘em Hull.’’ Journalist David Mendell explained, ‘‘All of this sometimes gives the campaign an artificial feel, sort of a ‘Truman Show’ meets ‘The Candidate.’ ’’
He employed some of the savviest political consultants at the industry’s highest salaries. For example, his campaign manager was paid $20,000 a month, and his policy director earned $15,000 a month. In the last quarter of 2003, Hull had twenty-eight consultants on his pay-roll and employed almost 150 people. There were no real volunteers, for even the people who installed yard signs were paid $75 a day. Most campaigns depend on an army of dedicated, passionate volunteers.
Jason Erkes, Hull’s spokesman, said, ‘‘We’ve put more people to work in Illinois than George Bush has in the last three months. So yes, we’ve had to pay some people. Blair is not a professional politician and doesn’t have a built-in ward organization or patronage operation. That’s why we have had to build this state-of-the-art campaign.’’ By mid-July
2003, Hull was spending nearly $20,000 a day, double what all other candidates, Democrats and Republicans, spent combined! At the end of 2003 alone, Hull had spent almost $12 million. By late February 2004, with the primary five weeks away, Hull had contributed $18.7 million to his campaign, setting an all-time spending record for a senate race in Illinois. At this point, he had spent nearly $4 million more than any other candidate in the state’s history had spent running for the U.S. Senate in both the primary and general elections. This largesse propelled his campaign, but it also created a backlash. Forty percent of Democrats surveyed thought his financial advantage was unfair. About the same number thought it was fair, and 19 percent had no opinion.
Susan Lagana, Hull’s campaign spokesperson, explained, ‘‘As a first-time candidate, Blair is building his campaign from the ground up. But more importantly, this shows Blair is committed to giving Illinois a senator who will answer only to them.’’
Blair Hull is one of a number of people who have spent their personal fortunes to seek elected office. The retiring Illinois senator, Peter Fitzgerald, spent $14 million of his wealth, but decided politics was not for him after just one term. Jon Corzine (D-NJ) spent $63 million successfully campaigning for a senate seat. Other big spenders, though, have often not been victorious. Rick Lazio, a Republican from New York, spent close to $41 million and lost his bid for the Senate. Big spending does not guarantee electoral success, but it provides a mechanism for being taken seriously.
When Obama publicly announced his campaign in January 2003, he had already raised close to $290,000. Gery Chico raised an impressive $1 million in 2002, but his fundraising prowess was short-lived. When Hynes entered the race in the spring of 2003, he raised more money than Chico every quarter thereafter. Chris Mather, a spokesman for Hynes, said, ‘‘I think too many candidates in this race want to make it a race about money. Organization and message are key components to winning campaigns.’’ Obama also overtook Chico in generating revenue by the summer of 2003. Obama indicated, ‘‘The first $250,000 that I raised was like pulling teeth. No major Democratic donors knew me, I had a funny name, they wouldn’t take my phone calls. Then at a certain point we sort of clicked into the public consciousness and the buzz, and I benefited from a lot of small individual contributions that helped me get over the hump.… And then after winning, the notoriety that I received made raising money relatively simple, and so I don’t have the same challenges that most candidates do now, and that’s pure luck. It’s one of the benefits of celebrity.’’
Obama raised $878,359 between April and June 2003, which was about $69,000 less than that raised by frontrunner Hynes, but almost twice as much as Chico raised. However, Chico’s early success allowed him to spend significant amounts of money throughout the campaign.
Obama said, ‘‘We are going to have enough money to get on television and run a first-class campaign, we will not have the most money in the campaign. I’m confident that I have the track record behind me that doesn’t exist for any of the other candidates. I’m the only guy who’s ever passed a bill. I’m the only guy that’s ever cast a vote.’’
Obama’s strong showing in the 2003 second-quarter campaign finance reports surprised some observers. Thomas Coffey, CEO of Hay-market Group, a political consulting firm that was not involved in the senate race, stated, ‘‘If you looked at this at the beginning, you’d say that [state] Senator Obama has a very small fundraising base. But if you look at the (second-quarter fundraisng) results, it shows a lot of people don’t want to be left out.’’ Another unaffiliated political consultant, who did not want to be identified, remarked, ‘‘The buzz among Democrats has really changed from ‘poor Barack’ to ‘this is a two or three man race.’ ’’Some analysts thought he would have trouble raising money, but Obama explained, ‘‘I think a lot of people are surprised. It has exceeded my expectations and it’s very heartening. I think we’re going to be able to keep pace and be competitive with the other candidates.’’ Obama raised $1.4 million by July 2003, and at that point he had spent about $313,000. With a million dollars of cash-on-hand, he was not too far off from Hynes’s $1.5 million and Chico’s $1.3 million. In 1996, by contrast, Richard Durbin had $325,000 cash-on-hand in his three-way race for the Democratic nomination. Obama said, ‘‘We can’t write a million- dollar check like a lot of candidates in this race. But they can’t buy a record on the issues that matter to people across our state, like expanded health care, more job opportunities and tax relief for those who need it.’’ Summer is usually not the best time for fundraising, yet finance director Claire Serdiuk, a former fundraising consultant to Senator Durbin, said ‘‘$750,000 is what I’m shooting for’’ in the third quarter of 2003. She was right on target—the Obama campaign brought in $774,804 that quarter.
Vernon Jordan, the power broker who chaired President Clinton’s transition team in 1992, held a fundraiser for Obama in his home in September 2003. This event introduced Obama to many of the power elite of Washington, D.C. Gregory Craig, an attorney with Williams & Connolly and a long-time Democratic operative, met Obama that night. He commented, ‘‘I liked his sense of humor and the confidence he had discussing national issues, especially as a state senator. You felt excited to be in his presence. He gets respect from his adversaries because of the way he treats them. He doesn’t try to be all things to all people, but he has a way of taking positions you don’t like without making you angry.’’ Mike Williams, vice president for legislative affairs at The Bond Market Association and a member of an African American lobbying association, commented, ‘‘He’s a straight shooter. As a lobbyist, that’s something you value. You don’t need a yes every time, but you want to be able to count the votes. That’s what we do.’’ The Bond Market Association held a fundraiser for Obama in June 2004.
By the fall of 2003, Obama was raising more money than the competition. He brought in $120,000 more than Hynes and almost half a million more than Chico, although Hull dropped in another $4.5 million from his bank account. But by November 2003, Hull had little to show for all the money he had spent. A Chicago Tribune poll showed him attracting only 6 percent of the vote. Pappas drew the most support among the candidates with 16 percent, although 45 percent were still undecided.
During the two weeks at the end of February and the beginning of March 2004, nearly $500,000 in contributions allowed Obama to advertise in most downstate markets. Unlike the flagrant spending of Hull, Obama conserved his resources until early 2004. He spent almost $4.5 million from the beginning of the year until the primary; nearly 85 percent of the campaign budget was spent in these two and a half months.
Obama spent $5.7 million to win the primary; only about $8.75 per vote. Republican Jack Ryan spent $4.9 million ($3.5 million of his own money), less than the second- and third-place Democrats. Ryan’s per-vote cost was nearly $21. In second place in the Democratic field was Hynes, who spent $5.5 million at nearly $18.85 per vote. Hull spent almost $30 million, $223 per vote for the 134,173 ballots that put him in third place. Pappas spent a little over a million dollars, $14.45 per vote, and finished fourth. Chico spent just over $4 million, or $76.90 per vote, and placed fifth.
Obama tapped into a growing number of young, affluent African American professionals, not only in Chicago, but in Boston, New York, and Washington, D.C. Fundraisers were held in all these cities in mid-2003. When the economy boomed in the 1990s, the black middle class grew considerably. Valerie Jarrett, who chaired Obama’s fifty-two person finance committee, agreed that ‘‘the pool is definitely larger.’’ business leaders stepped up to support the campaign. John Rogers, chairman and CEO of Chicago-based Ariel Capital Management (number one on the Black Enterprise Asset Managers list with $10.3 billion in assets under management) contributed $9,000; Lou Holland, managing partner and chief investment officer of Chicago-based Holland Capital Management (number eleven on the Black Enterprise Asset Managers list with $1.3 billion in assets under management) gave the maximum allowed, $12,000. Obama also picked up support from some of the heavy-hitter ‘‘lakefront liberals’’ such as Marjorie Benton, Irving Harris, Martin Koldyke, Daniel Levin, Abner Mikva, Newton Minow, Nicholas and Penny Pritzker, and John Schmidt. Obama’s list of contributors included a roster of American popular culture: singers Barbra Streisand and Stevie Wonder; comedians Chris Rock and Chris Tucker; athlete Michael Jordan and Cubs manager Dusty Baker; and actresses Melanie Grif?th and Jada Pinkett Smith. Obama also held a $350-perperson fundraiser in Chicago headlined by Wonder and comedian Robin Williams.
More than two-thirds of Obama’s three-thousand-plus donors gave less than $25. Twelve percent of his fundraising dollars in the primary came from contributions of $200 or less, totaling $740,000. Obama held a fundraiser for young professionals at a bar near Wrigley Field, spoke with potential voters at a hip-hop music concert and at a poetry slam, organized campus coordinators at various colleges, and worked with church youth groups. He said, ‘‘People feel like the cultural references they have and the issues that they face are ones that I’m familiar with, and I think that makes a difference.’’ Only 4 percent of his primary campaign income, $260,300, came from PACs.
In the three months after the primary, Obama brought in a record $4 million. George Soros raised money for him in New York, and Hillary Clinton had a fundraiser for him in Washington, D.C. When Jack Ryan dropped out of the race, business contributions also started flowing Obama’s way. Many business PACs, sensing Obama’s victory, now wanted to be associated with him. For example, PACs sponsored by Chicago’s Exelon Corporation, LaSalle Bank, and the law firm of Piper Rudnick, LLP, each gave the maximum allowed, $10,000. Denis O’Toole, vice president of government relations for Household International, Inc., which contributed $2,000 to Obama, said, ‘‘You have to look at the reality of politics in Illinois. We aren’t delusional he’ll be a totally pro-business person, but he’s not anti-business either.’’ Rodney Smith, PAC director for SBC Communication, which gave $5,000 after the primary, was even more honest: ‘‘We’re contributing to Barack Obama because he’s going to win. He doesn’t always vote our way, but he’s willing to listen, and sometimes finding someone to listen is the best you can do in this business.’’ Obama’s much-lauded keynote speech at the Democratic National Convention in July spawned $150,000 in unsolicited donations, according to the campaign.
While enjoying a fifty-one point lead over Alan Keyes, Obama spent a good portion of his time campaigning for other Democrats. He was one of the hottest attractions for the Democratic Party. He traveled to more than a dozen states, including Wisconsin, Pennsylvania, Colorado, and Nevada. With $2 million in campaign funds in the bank, out of the $14 million he had raised, Obama was also generous, contributing nearly $300,000 to other candidates and committees.
Obama’s popularity and generosity to other candidates put him in good standing with his future colleagues, but caused a little stir back in Illinois. Obama was criticized for not posting his out-of-state speaking engagements. He raised and contributed more than $750,000 to Democratic candidates and causes. In addition, people who had donated to his campaign were asked to give to other Senate candidates, generating $260,000. These direct contributions to candidates and state parties are in addition to the nearly $2 million Obama helped raise for others by calling other donors or holding joint fundraisers. Senator Jon Corzine, chair of the Democratic Senatorial Campaign Committee, remarked,
‘‘It’s unprecedented and historic to receive this level of support from someone who has yet to be elected to the Senate and it is a testament to Barack’s sincere desire to elect a Democratic Senate Majority.’’
Obama for Illinois raised just under $15 million and spent $14.3 million. The nearly $800,000 cash-on-hand formed the beginning of the war chest for future campaigns. PACs gave $1.2 million, or 8 percent of the campaign total. Business PACs outspent labor PACs almost two-to-one, $582,500 versus $274,000. Ideological or single-issue PACs contributed $259,657. Sixty-eight percent of contributions came from within the state of Illinois, whereas 67 percent of Keyes’s funding was from outside the state. See Table 4-4 for a list of the top metropolitan areas for campaign contributions. Obama’s campaign funding is consistent with national trends. The Center for Responsive Politics reports:
Historically, the financial sector has consistently been the biggest source of funds in U.S. elections. In 2002, financial interests gave $105 million to federal candidates. The sector includes banks, insurance companies, the real estate industry, accountants, and other financial professionals. Lawyers and lobbyists were second with $72 million, followed closely by ideological groups at $71.6 million. The catch-all ‘‘miscellaneous business’’ category gave $63.4 million. Labor unions kicked in $55.4 million, giving 89.4% to Democrats. Obama’s largest category of donors is the financial, insurance, and real estate industry, with $2,315,177 in contributions. A close second are lawyers and lobbyists, with $2,238,436. Liberal ideology and single issue concerns gave $526,385, and labor contributed just $287,375.
Among contributors to Keyes were Virginia McCaskey, matriarch of the family that owns the Chicago Bears; Denis Healy, the CEO of Turtle Wax Co.; Thomas Sowell, a conservative black economist at Stanford University’s Hoover Institution; and Thomas Roeser, a conservative Chicago Sun-Times columnist. Keyes aides said more than twenty thousand donors had poured money into his campaign in the seven weeks after it began, most of it in small amounts that did not have to be itemized on reports to federal election officials.
Obama and Keyes had almost the same amount of cash on hand at the end of September, but the Obama campaign had already made its media buys for the fall. Julian Green, a campaign spokesman, said Obama had already paid $2 million for the television and radio commercials that would air in October. That came on top of the $1.2 million the Democrat had already spent on downstate advertisements in August and September.
Other than advertisements, the largest expenditures for most campaigns are polling, staff salaries, and rent. In the Democratic primary,
Hull spent $1 million on campaign staff alone. Keyes had few paid staff members, relying as much as possible on campaign volunteers, and could not afford much polling. Keyes took over the lease on Jack Ryan’s campaign office in Chicago’s West Loop, which cost about $3,000 a month in rent. In taking over office space and several staff members from Ryan, Keyes had to be careful not to take too many ‘‘in-kind’’ contributions from the Ryan campaign, as such contributions are strictly limited by law. After the big things like rent are taken care of, there are all the small things people who had donated to his campaign to add up, such as utilities, cell phones, pagers, and computers. In June 2004, Ryan’s campaign paid almost $10,000 in cellular phone bills.
Keyes relied less on trying to raise money for television advertisements and more on holding public events across the state to generate as much news coverage as possible. His ostentatious style and sometimes outlandish rhetoric often kept him in the media.
Keyes raised and spent nearly $2.8 million. His campaign claimed to have raised $50,000 in donations on-line in the first thirty hours after he announced his candidacy on August 8, 2004. The Internet proved to be the greatest tool Keyes had for raising money. PACs contributed slightly less than $51,000, about 2 percent of his total. Keyes’s major donor base was consistent with that of Obama, and with national trends, with finance, insurance, and real estate interests first with almost $30,000 in contributions. Miscellaneous businesses, however, were the second most generous donors for Keyes with $28,500, followed by health concerns at nearly $22,000. See Table 4-6 for a breakdown by individual industry.
Keyes tried to tap into his national base of abortion opponents, gun rights supporters, and other conservative causes, but he did not garner the support he had hoped for. Despite Keyes’s vehement opposition to abortion, the Republican National Coalition for Life was the only antiabortion group that contributed, giving him $2,500. Two Republican groups in downstate Adams County donated a total of $1,000. Keyes was disappointed that he did not get greater financial support from the Republican Party and conservative interests. Keyes’s slashing campaign rhetoric angered many Republicans, and prominent GOP groups did not chip in to help him with significant donations. His largest contribution came from the National Republican Senatorial Committee, which gave $35,000.
By spring 2006, Obama had raised another $2 million for his future war chest. He also created a leadership PAC, called the Hope Fund. Leadership PACs allow elected officials to donate to other campaigns.
These PACs have fewer restrictions on raising and spending money than campaign accounts do. A person can give $30,000 to a leadership PAC, but only $4,200 to an individual’s campaign. Leadership PAC money cannot be used for the candidate’s own campaign, but it is often used to pay for travel, staff, polling, and other means of building name recognition and a national profile. As of February 2007, Hope Fund had raised $4.4 million and had contributed $3.8 million to other candidates.
With Obama’s rock-star status, charisma, and mass appeal, he is well- positioned to raise staggering sums of money for his future campaigns. At just one event in Los Angeles in February 2007, he raised $1 million. In the first quarter of 2007, Obama raised an incredible amount of money for his presidential campaign: $25.7 million. This sum was only slightly less than Hillary Clinton, who has been on the national political scene since the early 1990s, eight times as long as Obama. Senator Clinton also had access to the donor lists from both her first senate campaign and Bill Clinton’s two presidential races. Former Senator John Edwards raised the third most money, $14 million. Obama did not accept money from federal lobbyists or PACs, and he had twice as many donors as Clinton.
One hundred thousand people made contributions to Obama’s campaign, and $7 million was generated over the Internet.
In the second quarter of 2007, Obama raised another $33 million, from 158,000 donors, and about a third of this amount was from small donations of less than $200. Senator Clinton, in comparison, raised an additional $27 million. This fundraising prowess demonstrates that
Obama is a viable candidate and that Hillary Clinton does not have the Democratic nomination sewn up.
The 2008 presidential race is expected to cost more than $1 billion!
This will be the most expensive race in U.S. history, and it will effectively do away with the system of publicly funded presidential races.
The fundraising for the 2008 presidential race started two years before the election, making it the earliest that candidates have ever started campaigning.