A wealth of advice

Nearly $2 billion flowed through consultants in 2003-2004 federal elections

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 Updated:

In the 2004 federal races, more than $1.85 billion flowed through a professional corps of consultants whose influence plays an important, though largely unexamined, role in the unrelenting escalation of campaign spending, a groundbreaking Center for Public Integrity study has found.

The money going to these consultants amounted to more than half of the total spending by presidential candidates, national party committees, general election candidates for Congress, and so-called "527"s — independent political groups.

The high cost of running for office raises concerns because fundraising demands can ultimately bind elected officials to special interest donors and lobbyists who help with fundraising — deepening the widely held perception that politicians serve the interests of large contributors over those of constituents.

Potential candidates who can't meet the fundraising demands are shut out.

The Center conducted a six-month review of thousands of Federal Election Commission and Internal Revenue Service reports on spending during 2003 and 2004 in 471 races. The study involved more than 900 general election presidential, House and Senate candidates; the four other presidential primary candidates who spent $20 million or more; the six major party committees; and 90 nonprofit 527 groups.

The Center's database team sorted through nearly a million individual expenditures. Unlike the other records, Senate candidates' disclosures are not filed electronically. The Center hired a vendor to convert those paper records into electronic form so they could be included in the study.

The study, sponsored by the Joan Shorenstein Center on the Press, Politics and Public Policy, found that:

  • About 600 professional consultants were paid more than a combined $1.85 billion in the 2003-2004 federal campaigns.[correction]
     
  • Media consultants, who offer political and strategic advice and handle political advertising, were paid $1.2 billion, or 65 percent of all consultant spending.
     
  • Direct mail consultants billed the second-largest amount, $298 million, totaling 16 percent of all consultant spending.
     
  • Consultants routinely pitch campaign plans that rely heavily on their own specialty because there is a financial incentive to do so.
     
  • Fundraising consultants, whose services are necessitated in large part by the rising amounts campaigns spend on other consultants, cost candidates at least $59 million.

In 2004, it took an average of $7 million to win a seat in the Senate and $1 million to win a seat in the House, an eleven-fold increase since 1976. Candidates running for Congress in 2006 are spending 12 percent more overall than two years ago, according to the FEC.

Interviews with experts, veteran consultants and candidates paint the picture of a competitive industry that thrives on the high-stakes world of campaigning, and is just as competitive about pushing its advice and services for the highest possible price.

"You negotiate the best deals you can," says David Axelrod, the Chicago-based media consultant for Illinois Democratic Senator Barack Obama's 2004 campaign.

But, Axelrod and other consultants say, the expense is really all about winning.

"We know the person with the most money wins. So let's go make sure we're the person with the most money," says Joe Trippi, the manager and consultant for Howard Dean's presidential bid.

"It's kind of like the nuclear arms race," he says. "No one's willing to unilaterally disarm."

Advice driving up campaign price

Some experts blame rising campaign costs on the proliferation of professional and technical services that candidates and parties feel they must buy.

"Really, what drives the cost of campaigns is just the technology. We do so much more advertising, so much more polling, so much more computerized micro-targeting of voters. I mean what we've really seen is the professionalization of campaigns. The days when someone runs for Congress or Senate, especially in a competitive race, who doesn't have a bevy of consultants is over," says Anthony Corrado, an expert in campaign finance and professor of government at Colby College.

Then, in the name of making sure media expenditures are not squandered, even more money is invested in pollsters and focus groups to critique political ads.

"We don't want to waste any of the money. So therefore before we put any ad on TV, we want to make sure that we've completely studied that ad to see if it's the most effective ad we can put on," says Corrado.

Campaigns hire consultants for their expertise in media, direct mail, polling, fundraising, phone banks, get-out-the-vote operations and a dizzying array of political-tech services.

Media consultants are typically the most important hires of any campaign, and are heavily relied on for political and strategic advice that goes far beyond their specialty of writing, producing and placing television ads.

Since candidates in large campaigns speak to voters through professionally scripted television ads, the media adviser (along with the pollster) helps candidates decide which issues to emphasize and how to frame them, and aids in shaping an image that will win over voters. Media consultants also act as key advisers in deciding how and when to launch negative campaigns, virtually a given in modern politics — particularly in tight races.

Federal campaigns paid media consultants $1.2 billion in 2003-2004. The amount is particularly large because the money used to book commercial airtime on television stations and networks passes through the media consultants or media buying specialists. The consultants typically retain up to a 15 percent commission, but that payment is not shown in reports filed with the FEC. (See "Airtime Is Money" and "The More Media the Better ..." sidebars.)

Not surprisingly, the two largest consultants for the 2004 elections were the media consultants for the Bush and Kerry presidential campaigns. The media group that created the president's television commercials, Maverick Media, was paid a combined $177 million by the Bush campaign and the Republican National Committee. Riverfront Media, the group led by consultant Bob Shrum, worked on John Kerry's media campaign and was paid $150 million by his campaign and the Democratic National Committee.

The direct mail firm with the most billings, Olsen & Shuvalov, received $42 million from the Bush re-election campaign and the RNC for the 2004 races.

Driven by 'pocketbook incentive'

As any campaign gets underway, veteran consultants say an internal tug-of-war begins between consultants who specialize in media, direct mail and other forms of communicating with voters.

Cathy Allen, a Washington-state based consultant and board member of the American Association of Political Consultants, says that consultants routinely push campaign plans that emphasize their own specialty because there is a "pocketbook incentive" to do so.

"That's the dirty little secret of political consultants," Allen says.

Direct mail tends to get less attention than television because campaigns send much of it to carefully targeted addresses — tailored lists of voters that their research shows are likely to donate money or be receptive to particular messages. Some of the most negative campaign messages are sent in the mail.

In two races, for instance, voters in the northwest suburbs of Chicago and in southwestern Indiana received mailings from the party committees tagging incumbent Republican Congressman Phil Crane of Illinois as "the Junket King," and Democrat Jon Jennings, running for Congress in Indiana, as supportive of "civil unions for homosexual couples."

Both Crane and Jennings lost.

The anti-Crane literature was designed by MSHC Partners, a direct mail consultant that was paid almost $370,000 by the Democratic Congressional Campaign Committee (DCCC). Three of the five mail pieces show Crane posing on mock postcards that depict him as a tourist wearing a loud shirt and shorts in Rome, Costa Rica, and Antigua — with all expenses paid by "Washington special interests." Another pseudo-postcard shows Crane dressed in a kilt sending "Greetings from Scotland," again blasting his sponsored trips as junkets.

In the Indiana race, a flyer paid for by the National Republican Congressional Committee (NRCC) declares Jennings is "Wrong for Indiana" because he moved from Boston bringing its "liberal values with him." The mailer was designed by Arena Communications, a Salt Lake City, Utah firm, which was paid nearly $85,000 for the effort by the NRCC.

Other services get smaller slices of the consultant pie, according to the Center's analysis. Polling and fundraising were each paid about 3 percent of the total paid to consultants, and banks were phone banks were paid 7 percent of the total.

Spending on Internet services was a tiny fraction, accounting for less than one percent in the 2003-2004 election cycle. For all the attention given the role of the Internet in fundraising during that campaign, for the most part, consultants are still trying to figure out how to widely distribute a controlled message to voters using the Web.

These percentages were calculated from the Center's review of the brief descriptions the campaigns included with each expenditure report. The Center labeled undefined consulting expenditures as "generic consulting." Some expenditures were impossible to categorize and labeled "other."

Fundraising pressure

The campaign starts with the push to raise as much money as possible. Fundraising consultants and services identified in the Center study raised money through events, the mail, as well as by phone.

"The role of the consultant is to make sure the candidate knows the urgency of getting all this money. It's also very much of a conflict of interest," says Dennis W. Johnson, a former consultant who is now a George Washington University professor of political management. Consultants pressure candidates to "hurry up and raise all this money so you can pay me," he says.

The urgency of raising money was a constant theme at a training conference sponsored by Campaigns & Elections magazine in June 2006. Before a large crowd in Washington, D.C., hotel conference room, Jefrey Pollock, president of the New York-based polling firm, Global Strategy Group, preached his "Ten Commandments of Campaigns."

"Number one, money is the Lord your Savior. You, both candidate and manager, shall have no other Lord," he told the room. He said candidates should work the phones at least 10 hours a week, calling potential donors and asking for money.

Martin Frost, chair of the DCCC during the late 1990s, says that large donors, such as special interest political action committees, want to hear from the candidate directly.

"The candidate has to spend a lot of time on the phone to raise money," says Frost, who served 13 terms in Congress until 2004. "The fundraiser can't make the calls."

The job of the fundraising consultant is to schedule "call time" for the candidates, advise them what to say, and take care of mundane details, such as dealing with the prospective donor who asks to use a credit card.

"You don't want your candidate spending their time writing down credit card information. 'Ok, what's the expiration date?'" advised Holly Robichaud of Tuesday Associates, a Massachusetts-based fundraiser, in a March 2006 training session run by Winning Campaigns magazine.

"I just think that it has gotten out of hand," says Frost. "We spend too much time raising money, and I think legislators should spend their time legislating."

According to the Congressional Research Service (CRS), the legislative research arm of Congress, the cost of running for office has escalated over time at a much greater pace than the cost of living. Looking at the cost of winning elections in 1976 and then in 2004, CRS found a steep increase in spending.

In 2004, it cost an average $1 million to win a seat in the House and $7 million to win a seat in the Senate. That's eleven times more than it cost back in 1976, when winning candidates spent $87,000 to run for the House and $609,000 for the Senate. Over the same span of time, the cost of living rose just three-fold.

Costs have continued to rise for 2006 races. Candidates now running for House and Senate seats are spending 12 percent more than was spent two years ago, according to the FEC.

For many years, the fact that legislators have to solicit money for their campaigns has troubled those who study politics and government.

"Well, the money has to come from somewhere," says James Thurber, director of the Center for Congressional and Presidential Studies at American University.

"We all have the myth, if not the goal, that we have people in public office that are public servants. [But] if you need a heck of a lot of money, you're going out to specialized interests to get it," he says.

"Now, they're not just investing in — these people giving the money — in the quality of democracy. They're investing in a reciprocal relationship. Not bribes, but a reciprocal relationship — a legal reciprocal relationship," Thurber says. "They'll want something eventually."


Correction: Since publishing this story Sept. 26, 2006, the Center updated the total figure paid to consultants from $1.78 billion to $1.85 billion. This reflects an additional consultant, InfoCision Management Corporation, paid $62 million for phone banks and fundraising services. The Center also identified additional payments to a media and a phone consultant. The additions changed the percentage of the total paid to phone consultants, (from 3 percent to 7 percent), to media consultants (from 67 percent to 65 percent), and to direct mail consultants (from 17 percent to 16 percent).

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