The Center for Public Integrity

Sen. John F. Kerry may have a $24.8 million advantage over President George W. Bush in pursuing any recounts that result from Tuesday's election, according to the campaigns' most recent financial filings.

Under Federal Election Commission rules, both candidates are allowed to use remaining funds from their primary election committees to conduct recount activities, which in Kerry's case amounts to just under $45 million. That compares to just more than $16 million left over in the Bush/Cheney primary election committee's coffers.

Those funds, combined with the cash on hand each campaign reported for accounting and legal costs, give Kerry a total of $51.6 million that could possibly be used for potential recounts, according to the campaign's pre-General Election filings. By contrast, the Bush campaign has $26.8 million. Bob Biersack, spokesperson for the Federal Election Commission, said "it's possible" that Kerry could use the leftover $45 million from his primary funds for recounts. "There should not be any problem with them using primary funds for a recount," Biersack told the Center for Public Integrity. "One of the clearly permissible uses would be a transfer to a party and the party could use that money for a recount."

The candidates' funds would not be the only source of cash available for recount efforts. Both political parties are allowed to participate, and as in 2000 the campaigns could establish separate fundraising committees.

In phone calls with the Center, spokesmen for both the Kerry campaign and the Democratic National Committee would not speculate on how they intend to use the $45 million in leftover primary funds.

The Bipartisan Campaign Reform Act of 2002 brought about monumental changes in campaign finance practices, forcing political parties at all levels to significantly modify their operations. County parties—which are often closest to the ground during key elections —are having an especially difficult time adjusting, according to a Center for Public Integrity analysis of Federal Election Commission data covering the first 20 months of the 2004 election cycle.

In fact, county parties appear to be shying away from overtly "federal" activities, even in key presidential "swing states" and states with other hotly contested U.S. House and Senate elections. Records show that 82 county party committees in 15 states raised just $3.3 million in "hard money" (the regulated contributions that can fund federal election campaign activities) between January 2003 and August 2004. This pales in comparison to the 100 Democratic and Republican state parties, which raised almost $80 million in hard money over the same time period.

County parties showed a similar caution about Levin funds, a special kind of campaign account created by BCRA that parties can use for get-out-the-vote and voter registration and identification. A Center report earlier this month showed that just two county parties in the entire country reported raising Levin funds between January 2003 and July 2004, and both raised a combined total of only $64,000.

Why the counties' reluctance to use hard money? Some county officials say that complex BCRA rules have made their jobs much more difficult. "We have money, and I'm afraid to spend it," said Conni Brunni, of the Kern County, California, Republican Party. "The rules don't always reconcile with our distinct state law, and it has made it very difficult for me in my attempts to comply."

Political organizations known as "527 committees" have raised a record $391 million during the 2003-2004 election cycle, according to a Center for Public Integrity analysis of filings with the Internal Revenue Service.

Just under half of the money—$175 million—went to 28 of the independent groups formed either to elect or to defeat President George W. Bush, the Center found. Groups involved in all federal elections—the presidential race plus House and Senate contests—have raised more than $233 million.

The amount raised by 527 groups during the months of July, August and September alone totaled nearly $161 million, which is about $12 million less than was raised during the entire year of 2002. The total was boosted by two dozen committees that filed their first disclosure forms last week.

The top 527 committees this cycle are America Coming Together and its partner, the Media Fund, which were formed to oppose the re-election of President Bush. ACT has collected $51 million, while the Media Fund has raised $46 million (a third related committee, Joint Victory Campaign 2004, splits its proceeds between the two). The largest Republican-leaning 527, Progress for America Voter Fund, has raised nearly $30.6 million. Swift Boat Vets and POWs for Truth, a 527 group which has aired ads attacking Kerry's anti-Vietnam war activities, has raised more than $9 million.

Thirty six individuals or couples have given at least $1 million to 527 groups during this cycle, led by Peter B. Lewis, chairman of Progressive Insurance, who has contributed nearly $18.9 million through Sept. 30 to liberal committees. Financier George Soros has given $18.2 million during the same time frame to many of the same groups that Lewis gave to. Hollywood producer Stephen Bing ranks third with $13.5 million in contributions to 527 organizations.

State, district and county political party committees throughout the country are largely shunning a new kind of federal campaign money, according to a Center for Public Integrity analysis of Federal Election Commission data covering the first nineteen months of the 2004 election cycle. With only weeks left in the campaign season, preliminary data already shows how parties are adjusting to—and struggling with—new campaign finance rules.

So-called Levin funds, a creation of the Bipartisan Campaign Reform Act of 2002, are named after Michigan Democratic Sen. Carl Levin, who introduced an amendment to BCRA to lessen the impact on state and local party committees of BCRA's ban on unlimited "soft-money" contributions. The amendment allows such committees to receive up to $10,000 from individuals to pay for certain limited federal election activities such as voter registration and get-out-the-vote efforts.

When the amendment was first introduced, several lawmakers and watchdog organizations—including the Center for Public Integrity—warned that the Senate had simply introduced a large loophole through which significant sums of money would flow. Bob Ney, a republican representative from Ohio, mockingly dubbed them "the $30 million dollar loophole," a figure he arrived at by multiplying the $10,000 contribution limit by the nation's 3,000 counties. The Center for Public Integrity, in a 2002 report, predicted an explosion of new local party committees created to absorb the deluge of $10,000 contributions.

It hasn't turned out that way. In fact, according to a Center analysis of FEC data, from January 2003 to July 2004 only 14 state and two county party committees in 12 states reported raising Levin funds. The total amounts raised are less than impressive: $1.4 million. Democratic Party committees raised almost three-quarters of the total.

Although Ohio has long been called ground zero for the presidential election, other Midwestern states appear to be key targets for independent political groups seeking to influence the race, particularly the conservative Progress for America Voter Fund.

Progress for America Voter Fund spent nearly $1.2 million on Wisconsin television stations between Aug. 24 and Sept. 8 for advertisements promoting President George W. Bush, according to a Center for Public Integrity analysis of filings with the Federal Election Commission. Some of the stations reach into Minnesota and Illinois, according to the FEC records. In Iowa, the group ran ads costing nearly $952,000 during a similar period.

The Media Fund, a liberal group opposed to Bush, purchased nearly $249,000 in ads in Wisconsin and nearly $100,000 in Iowa in July, August and early September. The group also turned its attention to Florida. The Media Fund bought $871,000 in television ads on Aug. 13. The spots aired between Aug. 17 and Aug. 23 in cities including Orlando, Jacksonville, Sarasota, Gainesville and West Palm Beach.

Groups such as the Media Fund and the Progress for America Voter Fund are known as "527 organizations" after the section of the Internal Revenue Code that governs their activities. They can raise unlimited contributions and can spend millions on advertising so long as they do not specifically call for the election or defeat of a federal candidate. They are mainly funded by individual contributors, some of whom have given six- and seven-figure checks.

Since June, the Progress for America Voter Fund has spent at least $3.8 million on presidential ads, while the Media Fund has spent nearly $2.6 million. The Swift Boat Veterans for Truth, which opposes Democratic presidential candidate Sen. John F. Kerry, spent nearly $585,000 on Sept. 10 for commercials on national cable networks CNN, Fox News Channel, MSNBC and The History Channel.

Independent political groups favoring President George W. Bush or opposing Democratic Sen. John F. Kerry of Massachusetts have reported raising more than $26 million since June, narrowing the gap between them and other groups supporting Kerry, according to an analysis by the Center for Public Integrity.

Democratic-supporting groups have held an overwhelming advantage during the current election cycle – previous analyses by the Center have shown left-leaning organizations out-raising their GOP counterparts by as much as 9-to-1 – but the gap is decreasing. Republican-backing committees involved in federal races now account for one of every four dollars raised, about $42 million.

Reports submitted to the Federal Election Commission by two groups, Progress for America Voter Fund and the Swift Boat Veterans for Truth, account for the $26 million since July. Such groups, known as "527 committees" after the section of the Internal Revenue Code that defines their structure, have raised more than $150 million to influence the presidential campaign and House and Senate races this year. Tens of millions more have gone to state-oriented 527 groups.

Progress for America Voter Fund, which formed earlier this year and has been airing pro-Bush advertisements in competitive states such as Wisconsin and Ohio, has raised $24.7 million since June, according to FEC reports. That includes $5 million each from San Diego Chargers football team owner Alex Spanos and Ameriquest Capital co-chairman Dawn Arnall, $2.5 million from Texas oilman and business magnate T. Boone Pickens and $2 million each from Amway Corp. executives Richard DeVos and Jay VanAndel of Michigan.

Laying the groundwork for the November election, the national political parties have transferred nearly $13.5 million to their state counterparts thus far in 2004, according to a Center for Public Integrity analysis of Federal Election Commission data.

Three state parties – the Democrats in Alaska and Republicans in Florida and California – have received the most money from the national parties this year, records show. The Florida GOP received a $659,720 transfer from the Republican National Committee, the largest single transaction in 2004, on July 29. The California Republican Party got two $500,000 checks from the RNC earlier this year.

The other national party committees are the Democratic National Committee, the National Republican Senatorial Committee, the Democratic Senatorial Campaign Committee, the National Republican Congressional Committee and the Democratic Congressional Campaign Committee.

All of these transfers involve "hard money," funds raised under federal limits that can be used to benefit any candidate at the federal or state level. State parties that conduct voter registration and turnout drives close to the election must use either hard money or a combination of hard dollars and funds from a Levin account. Created by a 2002 federal campaign finance law, Levin accounts can accept up to $10,000 per donor.

The $13.5 million through the end of July is already more than the $12.4 million that state parties received in all of 2003, and the combined figure should only grow as Nov. 2 draws close. During the 2001-02 election cycle, the national parties sent $86 million in hard money to the states.

Kentucky had no federal elections in 2003, but it did have an expensive gubernatorial race pitting Ernie Fletcher, a Republican congressman, against Ben Chandler, the Democratic state attorney general.

Yet this quintessential state race had a heavy federal flavor: most of the money raised by the Bluegrass State's main political parties went to their federal accounts, which can accept up to $10,000 from individuals—four times the limit for contributions to parties' state accounts.

Using their federal accounts, Kentucky's two major party committees were able to take in between $976,000 and $1.5 million more in individual contributions than state contribution limits would otherwise allow. And there was no loss of utility for the money, either: Federal funds can be spent directly on state races.

The emphasis on federal account fundraising—the Kentucky Republican Party raised nearly nine of every 10 dollars that way—is one of the changes that the Bipartisan Campaign Reform Act, commonly known as McCain-Feingold, has brought to state political parties. Although Kentucky's low state contribution limit is unusual, a handful of mostly smaller states—including New Hampshire, South Dakota, Vermont, West Virginia and Alaska—could see their parties use federal accounts to benefit state candidates.

The Center for Public Integrity studied the receipts and expenditures of more than 200 state party and state legislative caucus committees in 2003, the first full year under BCRA's new rules. While most caucus committees have little contact with the federal system, they too were affected by the law's ban on national party transfers of unlimited funds known as "soft money."

In the 2004 campaign season, 22 well-heeled contributors have, for the first time, made Section 527 organizations—the non-profit committees that can raise unlimited donations from individuals, corporations and labor unions—beneficiaries of their largesse, giving at least $200,000 each and a total of more than $26 million since early 2003.

These 22 contributors, while new to the 527 system, have each previously made donations to candidates and parties on the federal level. When contributing to 527 groups, most of these newcomers directed their money to organizations that opposed the re-election of President George W. Bush, according to a study by the Center for Public Integrity.

The infusion of cash from first-time donors, coupled with the recent inactivity of many of the largest contributors to 527 groups since disclosure began in 2000, points to a changing of the guard among individual contributors in the current election cycle.

Every first-time donor has contributed to a 527 that has focused advertising on national electioneering. While new to the 527 system, these contributors have given at least $4.8 million since 1991 to political committees that, unlike 527s, are regulated by the Federal Election Commission. The 527 groups file with the Internal Revenue Service, not the FEC.

Almost 95 percent of their 527 contributions have gone to Democratic-leaning groups—many of which are running issue ads or registering voters to defeat Bush. Joint Victory Campaign 2004, which primarily splits its proceeds between two other anti-Bush committees, has taken in the most from this new club of donors, relying on them for $15.7 million; overall, JVC has raised $41.7 million.

JVC provides money to America Coming Together, which canvases and employs people to increase voting efforts, and the Media Fund, which has run ads criticizing the President entitled: "Bush and Halliburton," "Broken Promises," and "No Oil Company Left Behind."