BusinessWeek

Excerpted:

. . . Yet it's still the big bucks and influence peddlers that count most.
Bush and Kerry each have gotten more than 65% of their money from $
1,000-plus donors. But Kerry is catching up fast to Bush by holding
Dean-like meetups and challenging online contributors to meet daily
fund-raising goals. It seems to be working: On Mar. 26, Kerry said he
had raised $ 20 million in 20 days online, beating even Dean's record
and far outstripping Bush's $ 4 million in Net donations. . .

Business Week
April 12, 2004
SECTION: NEWS; Analysis & Commentary: ELECTION 2004; Number 3878; Pg. 32

LENGTH: 2114 words

HEADLINE: THE NEW FAT CATS

BYLINE: By Paula Dwyer in Washington, with Robert D. Hof and Jim
Kerstetter in San Mateo and Ronald Grover in Los Angeles

HIGHLIGHT:
Meet the fund-raisers who are finessing the campaign-finance law -- and
raising more dough than ever

BODY:
Laurie David doesn't consider herself part of a special-interest lobby
seeking political favors. She's just a determined environmentalist
who's raising gobs of money to defeat President George W. Bush. What
does she want in return? For starters, stronger pollution-control laws
for utilities and tougher fuel-economy standards for Detroit. Oh, and
she would also like the next President to sign the Kyoto treaty
committing the U.S. to significant cuts in greenhouse gases.

For years, David, 45, has raised money for environmental causes, but
her new gig is political fund-raising. Operating outside the
campaign-finance laws, she is drumming up heaps of soft money -- the
unlimited contributions that political parties once thrived on but are
now barred from accepting -- by bringing hundreds of prominent people
from the entertainment, media, and fashion worlds into her Beverly
Hills home. There, they listen to Democratic activists lay out their
strategy for defeating Bush. There is no fancy meal and no admission
charge. But afterward, David, a former talent coordinator for The Late
Show with David Letterman and wife of comedian Larry David, discreetly
mentions that she has given $ 100,000 -- and could her guests please do
the same? ''My job is to do everything I can to take the country back
from the right wing,'' she vows.

And how. David has raised some $ 2 million for liberal 527 committees
-- nonprofit groups named for a section of the tax code -- whose
purpose is to bypass the 2002 McCain-Feingold campaign-finance reforms.
That makes her part of a new breed of fund-raiser taking advantage of
chinks in the law to keep the cash coming. Call them the New Fat Cats.
The reform measure has also given rise to a handful of even more
effective fund-raisers: ''super fat cats'' such as billionaire George
Soros, who support the 527s with huge gifts. Soros alone has given some
$ 15 million to liberal causes.

Equally important, the act has spawned mega-bundlers: high-powered
executives and lobbyists who mine the money veins within their
industries on behalf of a candidate. By corralling thousands of
employees, partners, and friends, each of whom can give up to $ 2,000,
such GOP bundlers as Merrill Lynch & Co. Chairman E. Stanley O'Neal,
and Kerry bundlers such as Ivan A. Schlager, partner at law firm
Skadden, Arps, Slate, Meagher & Flom LLP, have raised huge sums. THE
ART OF BUNDLING. Tally it all up, and the 2004 Presidential election is
taking place against a backdrop of record fund-raising and
record-shattering influence by the same special interests that the
reforms sought to stifle. By Mar. 1, Bush and the 10 Democrats who
sought his job had garnered $ 316 million, or 72% more than the $ 184
million raised at the same point in 2000. Both Bush and Democratic
nominee-in-waiting John F. Kerry raised so much in March that they've
almost met their fund-raising goals for the year -- $ 170 million for
the Prez and $ 80 million for Kerry. After a slow start, Kerry is
catching up: He was expected to announce on Apr. 1 that he pulled in
more than $ 40 million between January and March, bringing his total
close to his target and beating even Bush's single-quarter record of $
29 million. BUSH'S CORPORATE BUNDLERS. For the GOP, corporate bundlers
reign supreme. Bush's bundlers have raised the practice to a fine art
by opening the taps at Wall Street firms, health-care companies,
manufacturers, and oil-and-gas outfits. The President has 188
''Rangers,'' who have brought in upwards of $ 200,000 each, followed by
270 ''Pioneers'' who have raised at least $ 100,000. Health-care
interests have raised $ 7 million, while high-tech companies have
kicked in $ 4 million. But it is Wall Street that has dug deepest for
Bush: Employees of securities, banking, and insurance firms together
have produced $ 15 million.

Indeed, seven out of Bush's top 10 donor sources are from financial
services firms, led by Merrill Lynch's $ 458,000. O'Neal, a Bush
Ranger, last year co-hosted a party that netted $ 4 million. He sent a
letter to top Merrill execs' homes, urging them to support Bush.

Financial firms have produced more Pioneers and Rangers than any other
industry -- 73 in all, 15 of whom are heads of firms, says the Center
for Public Integrity, a watchdog group. Besides O'Neal, the Rangers
include Joseph J. Grano Jr., CEO of UBS Wealth Management USA; American
International Group Chairman Maurice R. Greenberg; and Credit Suisse
First Boston Corp. CEO John J. Mack.

Why the generosity? O'Neal's support ''reflects his personal belief in
President Bush,'' says a Merrill spokesman. Moreover, the company says
Merrill employees are encouraged to give to the candidate of their
choice. Critics aren't buying that: Eighty percent of Merrill's
largesse is flowing to Bush, and donations from other Wall Street firms
are running heavily in his favor. ''It's pure self-interest,'' asserts
William B. Patterson, director of the AFL-CIO's Office of Investment,
which oversees $ 400 billion in union pension funds.

Business bundlers find less to like in Kerry. Instead, Washington law
firms, lobbyists, and the entertainment industry provide his bedrock
support. Kerry's top fund-raisers are less numerous, and their monikers
less colorful: His 59 vice-chairs have raised $ 100,000 or more, while
123 co-chairs have brought in at least $ 50,000 each. The Democrat's
richest treasure trove has been Washington lawyers and lobbyists, which
account for 4 of his top 10 donors. His single-biggest cash source:
Skadden Arps, whose lawyers have given a total of $ 106,000. The
Beltway buck-rakers tap a vast network of colleagues, trade groups, and
government workers. Capitol Hill connections are key. Schlager, the
Skadden Arps partner, served as chief counsel to a Senate Commerce
subcommittee on foreign trade, which Kerry chaired in the early '90s.

The entertainment industry has also been generous. On Mar. 30, former
grocery-chain magnate Ron Burkle raised $ 1 million at a lunch at his
La Jolla home and another $ 3 million at a dinner that evening. Among
the stars: actors Jennifer Aniston, Leonardo DiCaprio, and Dustin
Hoffman, and director Oliver Stone. ''The right wing is getting its way
in a manner that I have never seen before, like picking judges,'' fumes
movie producer and ex-Universal Studios Chairman Tom Pollock. And
although some on Wall Street also support Kerry, the $ 2 million he has
gotten is far less than Bush's haul, largely because of Street worries
that Kerry will raise taxes.

Kerry's bundlers have helped him stay competitive in the money race,
after early fears that he might lack the funds to respond to withering
Bush attacks. Kerry has raised $ 80 million himself, the Democratic
National Committee expects to raise another $ 75 million, and at least
$ 100 million will go to 527 funds. So altogether, the Kerry campaign
figures it can count on a minimum of $ 255 million. ''This is an
even-steven campaign in votes and money,'' says University of Virginia
political scientist Larry J. Sabato.

Still, it's not as easy as it once was to shake the money tree.
Consider high tech. The industry, which had been a strong backer of
Bill Clinton and Al Gore, is on the mend after a three-year meltdown,
and hasn't been as generous as the Kerry camp expected. As of Mar. 1,
he had raised $ 301,000 from computer and Internet companies, vs.
Gore's $ 587,000 in 2000, according to the Center for Responsive
Politics, a nonpartisan, pro-reform group.

Some tech leaders aren't thrilled with Kerry, especially after his
populist primary campaign and the current fulminations about
outsourcing. Such talk rankles Netscape Communications Corp. co-founder
Marc L. Andreessen, now chairman of software firm Opsware Inc. Kerry
''is just running in the wrong direction'' on trade, says Andreessen,
who gave Democratic candidates $ 300,000 in 1996 and 2000 but hasn't
given them a dime this time. Despite such misgivings, Kerry may be
gaining favor among techies. At a Mar. 29 San Francisco fund-raiser,
Kerry pulled in $ 3 million alone, though his campaign won't reveal how
much came from tech interests. LOTS OF LITTLE GUYS. It's not just $
2,000 contributors propelling the election-year money machine. Small
contributors also played a huge role. Howard Dean led the way, but by
Mar. 1, all the Presidential candidates combined had raised $ 78
million in under-$ 200 chunks, more than double the take in 2000.

Yet it's still the big bucks and influence peddlers that count most.
Bush and Kerry each have gotten more than 65% of their money from $
1,000-plus donors. But Kerry is catching up fast to Bush by holding
Dean-like meetups and challenging online contributors to meet daily
fund-raising goals. It seems to be working: On Mar. 26, Kerry said he
had raised $ 20 million in 20 days online, beating even Dean's record
and far outstripping Bush's $ 4 million in Net donations.

Perhaps reform's most controversial outcome has been the liberal 527
groups, and the political entrepreneurs behind them. The most prominent
527s are the ones that Laurie David is supporting: the Media Fund, run
by ex-Clinton aide Harold M. Ickes, and America Coming Together, run by
ex-AFL-CIO political director Steve Rosenthal. Big Labor has also
steered millions to 527s, such as Partnership for America's Families,
which gets money from 10 unions.

The liberal 527s supporters have no common theme other than a burning
desire to unseat Bush. So when EMILY's List founder Ellen R. Malcolm
asked David to raise money for ACT and the Media Fund, she signed on.
She views her work as a noble calling, but others think she is
undermining the intent of the McCain-Feingold law. ''The only objective
is to influence the outcome of a federal election,'' says Thomas E.
Mann, a senior fellow at the Brookings Institution. ''The 527s should
register with the Federal Election Commission like other political
action committees.''

Just as troublesome, the 527s have led to the rise of the super fat
cat, or donors who write megamillion-dollar checks. Among them are such
ACT and Media Fund supporters as RealNetworks Inc. CEO Robert Glaser ($
745,000), Progressive Corp. CEO Peter B. Lewis ($ 3 million), and
hedge-fund impresario George Soros, who donated a record $ 10 million
and gave an additional $ 5 million to MoveOn.org, which is also
sponsoring anti-Bush ads.

So far, there is no evidence that corporate dough is rushing to the
527s or that candidates are shaking down execs for money, says Charles
E.M. Kolb, president of the Committee for Economic Development, a
pro-reform business group. He believes that this election season's
river of cash reflects strong voter sentiment and the high stakes
involved -- not campaign reform thwarted. The money may be flowing, but
the corrosive effect may turn out to be far less in 2004, Kolb insists.

But that assumes Laurie David won't seek tougher anti-pollution laws
if Kerry wins in November or that Wall Street won't lobby for new
retirement savings plans if Bush triumphs. In any case, the special
interests can be expected to call in their chits one way or the other.
 

The Faces Of Money Politics

BUNDLERS:

GREENBERG/O'NEAL

They're the high-powered execs and lobbyists who gather like-minded
givers, all of whom can give up to $2,000 apiece

SHADOW PARTIES:

MALCOLM/DAVID

These political entrepreneurs, who mainly back liberal causes, raise
the soft dollars parties can no longer take for the 527 committees

SUPER FAT CATS:

LEWIS/SOROS

The rise of the 527s has created a new class of donor: Those who write
megamillion-dollar checks

 

Hey, Big Giver

Bush's Top 10

The President has raised a record $158 million; the
financial-services  industry is his biggest backer*

MERRILL LYNCH

$458,204

GOLDMAN SACHS

$282,725

PRICEWATERHOUSECOOPERS

$431,800

CSFB

$255,750

UBS AMERICAS

$358,850

BEAR STEARNS

$240,250

MBNA

$337,750

ERNST & YOUNG

$234,655

LEHMAN BROTHERS

$288,559

BLANK ROME

$207,400

Kerry's Top 10

The Democratic contender has gathered $41 million; lawyers and
lobbyists are  his largest contributors*

SKADDEN ARPS

$105,650

GOLDMAN SACHS

$68,750

ROBINS KAPLAN

$91,750

HARVARD UNIVERSITY

$55,600

CITIGROUP

$82,900

HILL HOLIDAY

$53,750

PIPER RUDNICK

$77,050

MASS. MUTUAL LIFE

$50,250

MINTZ LEVIN

$72,050

AKIN GUMP

$45,550

* Includes all contributions, up to a limit of $2,000, made by
individual employees who work for the firms cited through Feb. 29.

Data: Center for Responsive Politics

 
 
URL: http://www.businessweek.com/index.html

GRAPHIC: Photograph: ALABAMA EVENT: Team Bush is mining a mother lode
of donors PHOTOGRAPH BY DAVID SCULL ; Photograph: GREENBERG PHOTOGRAPH
BY SEOKYONG LEE/BLOOMBERG ; Photograph: O'NEAL PHOTOGRAPH BY ALLAN
TANNENBAUM/POLARIS ; Photograph: MALCOLM PHOTOGRAPH BY JAY
CARRIER/BLOOMBERG ; Photograph: DAVID PHOTOGRAPH BY EPA ; Photograph:
LEWIS PHOTOGRAPH BY BLOOMBERG ; Photograph: SOROS PHOTOGRAPH BY SEAN
GALLUP/GETTY IMAGES ; Photograph: SCHMOOZING FOR KERRY: Democratic
bundlers are doing well, too PHOTOGRAPH BY KIM KULISH