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Fundraising and ostentation in the race for the
US presidency

Money makes the difference

14.05.2007 · Mirela Isic

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1. Money makes the difference

In February 2007, Tom Vilsack, former Governor of Iowa, withdraw from the election stage. The only reason for the drawback was the lack of sufficient funding. Vilsack had raised about 1.1 million Dollars. But the election 2008 could cost up to 1 billion Dollars. The underlying reasons can be found in the US-electoral system. Political parties in the United States are not at all comparable to the parties in for example Germany or Europe. The motto "a party is to elect" is the minimal notion of the US-American party system. A party structure has to be built during the electoral campaign, a task that requires a lot of money, most of which has to be raised by the candidates for the presidential election. Although public sponsorship is offered, aspirants like Hillary Clinton, who was first to declare not to take tax money for her presidential campaign, contest without public sponsorship, thereby initiating a crowding-out effect in the presidential race. Furthermore, with the renunciation of public help, Clinton avoids any financial restrictions that are linked to public funding. In 2004, the state New Hampshire, for example, allowed a maximum of just 729.000 Dollars for election campaign funds.

The amount of private donations, however, is also regulated. Individual fundraising is limited to 95.000 Dollars per legislative period. That means a private person can donate no more than 95.000 Dollars to a candidate in the present legislative period. Another important vehicle to raise campaign money are the so-called Political Action Committees (PAC's), which are said to be politically independent. They allow scratching up vast sums. The PAC’s are private groups, which are organizations to elect or defeat government officials or to promote legislation. The Federal Election Campaign Act defines a “political committee” as an organization that receives contributions or makes expenditures in excess of 1.000 Dollars for the purpose of influencing a federal election. The maximum limit that one person can contribute to a PAC is 25.000 Dollars. But the number of PAC’s is not limited. That means that a person can incorporate as many PAC’s as needed to raise funds for a preferred candidate. Therefore, a lot of PAC’s are nothing but a bank account.

Big spenders are still rare and it therefore is a clear advantage if a candidate can invest personal money for the presidential campaign. For example, Rudy Giuliani sold his investment bank Giuliani Capital Advisors to an Australian banking group in March 2007 in order to provide money for his potential presidential race. For candidates that are not as well-off, fund raising dinners are very appealing. Hollywood mogul David Geffen, for example, recently arranged such a dinner for Barack Obama who is said to have raised about 2 million Dollars for his election cash box on this occasion. A few years ago, Geffen was supporting Bill Clinton. Now, as an Obama supporter, Geffen offended Bill’s wife Hillary by contending she is a polarizing character who is unable to unite the nation. After this uproar, Hillary Clinton claimed that Obama should distance himself from Geffen and give the money back. The situation offers an insight into the highly competitive nature of fund-raising in the United States: The candidates heavily depend on the money and use every opportunity to entice the well-off donors to make a difference.

As a response, in case of the two of them winning the nominations for the presidential campaign, Barack Obama and John McCain agreed to end this race for money, concluding that each will raise no more than 85 million Dollars from public sponsorship for the whole campaign. As a consequence, they hope the political raising of funds will become more transparent.

Nevertheless, the deadline for the submission of fund raising reports to the Federal Elections Commission expired on the March 31, 2007. Every potential candidate should have raised no less than 20 million Dollars in order to not convey the impression that he won’t be able to manage the run for the presidency. The now published fund-raising records exceed all expectations: Hillary Clinton raised 26, Barack Obama 25, and John Edwards 14 million Dollars. Democratic activists said that they were astonished about Barack Obama’s endeavors to match Hillary Clinton’s campaign coffer. But Hillary Clinton is not going to make a withdrawal that soon. Her campaign manager congratulated Obama Barack and announced that the fund-raising schedule for the next quarter will be even more intense. Hence, everyone who wants to support Hillary Clinton can go online and become a “Hillraiser”, if requested also anonymously. The candidates don’t seem to intend to divulge the names of their big spenders.

The Republican candidates on the other hand are always good for a surprise. This time, it was Mitt Romney who announced that he has raised 23 million Dollars, almost double of the amount raised by John McCain. Although Romney is currently only third in place in the Republican voter’s preferences, he seems to believe in his victory in the presidential race. The reason is that money rules the election 2008 more than ever before and Romney is the richest of the Republican contenders. At the present time, 2.35 million Dollars of the 23 million Dollars he raised in the first quarter 2007, were added from his private capital to his own campaign. Accordingly, Mitt Romney’s religious affiliation as Mormon is reflected in the financial value. The Marriott hotel dynasty for example, which is also part of the church of Mormon, is classed among his supporters. But John McCain seems to close in on Mitt Romney. Certainly, McCain has only raised 12 million Dollars but his advisor announced that McCain’s fund raising has just begun at the beginning of March 2007. Hence McCain could catch up with Romney in the second quarter of 2007, based on the polls, which – together with Rudy Giuliani – position him ahead in the preferences of the Republican voters. Giuliani in turn has raised 15 million Dollars although he entered late into the race for the presidential nomination and therefore had to raise the major part of his money in recent weeks. This impressive fund-raising campaign shows that Giuliani despite Romney’s donations record can equally still win the race.

2. The next steps on the way to the Presidency

During the next months, the candidates will have to focus on two tasks: raising money for their campaign and elaborating their political profile. Raising money appears to be the harder part. But no candidate can neglect the fact, that neither Democratic nor Republican voters are already confident, in whom they are going to vote for as the next President of the United States. Most likely, swing voters will again dominate the average of the population. Therefore, the candidates are resorting to unconventional methods to attract attention and approval of the voters. For example, every candidate who wants to run for presidency has his own webpage at the internet portal myspace.com.

How successful the campaigns will have been, will be seen in the presidential primaries. It is deemed to be certain that the nominee for the presidency will be pointed out in those states, where the first primaries take place. Traditionally, the first primary was held in New Hampshire. In this election, however, for the first time, the time schedule for the primaries has changed. In all states that are considered important primaries are going to be held on an earlier date than historically designated. On February 5, the so-called “Mega-Tuesday”, the American voters are going to nominate a Presidential candidate of their parties in more than 20 federal states. Never have there been as large a number of primaries on the same day before. Political analysts say the aim of the earlier voting is to force the presidential candidates to recalibrate their strategies and resources. They cannot neglect any voter and have to campaign on every essential issue, particularly social welfare and national security, because every issue can be crucial to the decisive votes during the electoral campaign. With the earlier voting, the candidates are pressed for time and money until the Election Day although the presidential campaigning and fund-raising started as early as never before. Nonetheless, next time both records will probably be beaten.

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