The Most Expensive Midterm Ever
Donors found a way around McCain-Feingold and made this the most expensive midterm campaign in history.

Nov. 7, 2006 - Regardless of which party claims control of Congress, one thing's for certain: this has been the most expensive midterm campaign in history.

According to the nonpartisan Center for Responsive Politics, the price tag for this year's election will reach at least $2.8 billion—about a 20 percent increase over the 2002 election cycle, the last midterm campaign. That total includes a conservatively estimated $30 million raised and spent by so-called 527 committees, issue-advocacy groups that are largely secretive about where they get their money and where they spend it. And those totals could climb higher since candidates, parties and political committees raised and spent funds at a record pace in the final days of the campaign.

What's striking about the jump in 2006 fund-raising is that members of Congress said it wouldn't happen. In 2002 Congress approved the McCain-Feingold campaign-finance reform bill, which was intended to close election loopholes that allowed national parties to take unlimited and unregulated “soft” money contributions from corporations and other entities. The idea was to block special-interest groups that contributed massive checks to the parties from having undue influence over elections. As a side benefit, lawmakers also hoped to slow the focus on fund-raising that had driven recent campaigns.

Before the new rules went into effect in late 2002, the parties went on a final spree. In March 2002, the Democratic National Committee got the largest single federal campaign contribution ever: a $7 million check from Haim Saban, a major Democratic donor best known as the creator of the kids' TV show “Power Rangers.” Steve Bing, a Los Angeles film producer, wrote a single $5 million check.

Today, it's illegal for someone to contribute more than $101,400 in total to federal parties, PACs and candidates each campaign cycle—but the days of the $7 million check aren't entirely over. Instead of giving that money to the national parties, donors are writing megachecks to 527s. Take Bob Perry. Best known for initially funding the Swift Boat Veterans for Truth attacks against John Kerry in 2004, the Houston home builder has contributed more than $10 million to 527 groups in 2006—making him one of the largest political donors of the year. His money has funded attack ads against Tennessee Democratic Senate candidate Harold Ford and New Jersey Democratic Sen. Bob Menendez. In New Jersey, an anti-Menendez ad spoofed “The Sopranos” when talking about a federal investigation into a nonprofit group with which Menendez has had financial dealings. (Menendez denies any wrongdoing.)

The number of contributors this year is in line with 2002—but each person is giving more. (In 2002 lawmakers doubled federal contribution limits to make up for checks the parties would miss with a soft-money ban: individuals can now give candidates $4,000 per election, up from $2,000.) According to the CRP, more than 603,000 Americans have given a campaign contribution of $200 or more in 2006. Of that total, 71 people have given the maximum $101,400. The list that includes lawyers and lobbyists from both sides of the aisle, energy executives and other business types.

Where'd the money go? Republicans have been the main beneficiaries of federal campaign contributions this year, raising about $1.2 billion, according to the Federal Election Commission. But Democrats have something to smile about. While they didn't raise as much—just more than $1 billion—Democratic candidates and party committees entered the final weeks of the campaign with slightly more cash in the bank than Republicans. (Democrats had about $294 million, while the GOP had about $290 million, according to the CRP.) The cash-on-hand stats are most positive for the Democrats when looking at the House and Senate party committees. As of Oct. 18, the Democratic Congressional Campaign Committee reported $36 million cash in the bank, compared to $18 million for the National Republican Congressional Committee. The Democratic Senatorial Campaign Committee reported having nearly double the cash of its Republican counterpart with $23 million in the bank compared to $12 million for Senate Republicans.

The biggest success story for Democrats: they've competed financially. Party officials have chalked this up to the support of the grass roots, but that's not the only reason. With a possible leadership shake-up in Washington, business interests that have typically supported Republicans have been hedging their bets in recent months, making friends with Dems just in case. Possible leaders like Nancy Pelosi—House Speaker if the Democrats win the majority—have seen an uptick in campaign contributions from business PACs representing banks and securities brokers. Ditto for the DCCC.

The DCCC's most recent FEC filing included a $5,000 contribution from Valero Energy, one of the nation's top oil companies. Valero is a big GOP booster, contributing more than 80 percent of its contributions to Republicans. But this year, as Democrats have pledged to roll back oil-company tax breaks if elected to the majority, Valero has contributed $25,000 to the DCCC.

This was an expensive year for political donors, who will have to wait and see whether their money has made a difference.

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