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Midterm War Chests Gush Over

Tight races require more funds.

Grassroots activism more than usual.

Supreme Court ruling unleashes new funds.

Luke-warm economy. Hot midterm election.

Tight races, grass roots activism and reaction to a game-changing Supreme Court ruling will make this the most expensive midterm election in history—with fundraising reaching levels never seen before.

Despite a sluggish economy and high unemployment, spending for the November elections by the two major parties as well as splinter groups and third party candidates, is projected to reach more than $4 billion, a 30-percent increase from the 2006 midterms.

One reason so much money will be spent is—money itself. The average cost of campaigning for a congressional seat is around $400,000 to $600,000 and about $1 to 2 million for a Senate seat, say the experts.

While that may not sound like much in today's trillion dollar economy, those figures have doubled in the last ten years. And with 37 Senate seats—and the same number of states electing governors—plus all 434 seats up in the House, it means politicians have to ask for a lot of cash in 2010.

Your Money Your Vote - A CNBC Special Report
Your Money Your Vote - A CNBC Special Report

"Costs for campaigns have exploded and fundraising almost never stops," says David Frulla, a government-relations attorney at Kelley Drye and Warren in Washington, DC. "Politicians need millions of dollars to keep their seats for staff, advertising, mailings. It's like an arms race."

What's helping to fuel the political races for 2010 are tight congressional and gubernatorial elections across the country in places like California,Nevada, Florida and Pennsylvania.

Incumbents like Senate Majority Leader Harry Reid (D-Nev.) and Russell Feingold (D-Wisc.)—of McCain/Feingold campaign reform fame—face strong challengers, while in other states there is hearty competition for open seats.

Republicans—and their Tea Party allies—are expected to pick up seats at the expense of the Democrats in governor mansions, as well as the House and Senate and those prospects have energized the fundraising of many conservative groups.

"We raised $25 million in the 2006 cycle and we expect to do even more than that this year," says Mike Connolly, communications director with the Club for Growth, the political action organization that promotes a conservative economic agenda and gives nearly all of its funds to Republicans.

"Part of the reason is the close races. Honestly, we haven't had any difficulty in raising funds for our candidates. People are giving because the races are so close," says Connolly.

Not to be outdone, Democrats and their supporters are priming the contribution pump to keep control of Congress, with the party alone collecting more than $633 million by the middle of September. The GOP has more than $443 million for the same time period.

So just how is the money being raised? People are mostly giving money in the traditional ways says Costas Panagopoulos, assistant professor of political science at Fordham Universityand executive director of Campaigns & Elections magazine.

"Fundraising has changed dramatically with greater involvement by the smaller donors," Panagopoulos says. "But the basics haven't changed all that much. Most money is coming from the larger donors, the people who are giving more than $1,000, like those who attend fundraising events and dinners or just give the money because they like the candidates or party."

What's bringing in smaller donors of the $50 range, is the evolution—or revolution—of the internet which is fueling the coffers of candidates at a cost effective rate.

"When Howard Dean ran for the Democratic presidential nomination in 2004, he really set the tone by sending out emails and asking for money," says Chris Malone, associate professor of political science at Pace University in New York.

"In the past, you had to have a full staff for fundraising," adds Malone. "It's cheaper now because of the technology with emails and a web site. They may not bring in huge amounts, but in terms of the number of emails you send out, it's quite effective."

And candidates need a Facebook account—and whatever the next technology trend becomes—according to Bruce Newman, a professor of marketing at DePaul University.

"Social networking is the answer to fundraising for all candidates now and as time goes on," adds Newman, who is editor-in-chief of the Journal of Political Marketing. "It was a very successful strategy for Obama in 2008 getting to younger voters. It's a medium that will become familiar to them as they grow older, as the calculator was to the baby boomers."

Supreme Court ruling a wild card.

What's not going to be easy to calculate in this year's midterm is the effect of the Supreme Courts' ruling in the Citizens United case.

In January, the court—citing the right to free speech—reversed the ban on independent expenditures by corporations and unions. While they still can't give direct contributions to candidates, they can spend as much as they want on issue-related campaigning.

There's not much question more money will be spent in the midterms, but the effect of it is what's uncertain.

"My fear is that people who use this ruling will be polarizing," says attorney David Frulla. "I think the first amendment is important. The concern is that I'm not sure what kind of free speech we are getting."

AP

Corporations and unions—which will end up spending the most money as a result of the ruling and already have large war chests—will have to wait too in order to see what they get for their efforts.

"Honestly, businesses take risks when they get involved in this type of campaigning," says Panagopoulos. "They have consumers and shareholders to answer to and we saw what happened to Target for giving money to a pro-business group supporting the GOP candidate for governor in Minnesota who wants to ban same sex marriage. That set off a large protest and Target got set back on its heels."

Tale of Two War Chests

For some candidates, no matter what the 'Citizens United' ruling said or how many dinners are served, they may never end up with enough money to make an election close—let alone win.

Douglas Herbert is a 48 year-old lawyer running as a Democrat in the 11th Congressional district of New Jersey, and faces Republican incumbent Rodney Frelinghuysen, who's held the seat since 1995.

In the GOP-heavy district, the 63 year old Frelinghuysen hasa campaign fund of more than $724,000 according to the Center for Responsible Politics—and is expected to win again.

That hasn't stopped Herbert, who says he has just $20,000 in his war chest. But getting even that amount of money has forced Herbert to spend most of his time asking for funds—something that took getting used to.

"At first, doing fundraising was like pulling teeth, and not my favorite thing to do," says Herbert, an army vet who's taking his second shot at public office after losing a state assembly run. "But I've learned to love it. It does give you a chance to make your case to people. And I expect to raise another $10,000 to $15,000 to add to the money I have by election time."

Herbert, who is married and has three children, makes fundraising phone calls six nights a week, and attends as many fundraising events as he can organize—while getting little cash from the state and national arms of the Democratic party.

With so much effort needed to raise money, Herbert believes there's a better way to run for office.

"If we said to each congressional candidate you can spend only about $500,000 on your race and cap the spending, we could stop fundraising and focus on issues," says Herbert, who has a small campaign staff of non-paid volunteers. "It would give people a chance to be competitive. We could make candidates more efficient, more policy driven. But I don't expect that to happen anytime soon."

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