November 25, 1997

Cost of '96 Campaigns Sets Record at $2.2 Billion

WASHINGTON -- The 1996 election campaigns were the most expensive in history, with $2.2 billion in expenditures by the two major parties, political action committees and other political organizations, according to a new study.

Campaigns for House and Senate seats cost more than ever. The median expenditure on a House race rose to $559,807, and on a Senate race to $3.5 million. In comparison, a House race cost $348,287 in 1994 and a Senate race cost $2.7 million.

The study by the Center for Responsive Politics, which analyzes campaign spending, also shows a significant shift in giving by corporations and other businesses away from Democrats and toward Republicans since the GOP took control of the Congress in 1994.

"It's getting more and more expensive to run for office all the time," Larry Makinson, the center's deputy director, said. "The threshold for a House race will soon be a million dollars."

Overall election spending jumped substantially in 1996, far beyond the $1.3 billion spent in 1994 and the $1.6 billion spent in 1992.

The report by the center, a nonpartisan organization funded by foundations, is the most comprehensive look so far at the 1996 elections. It categorizes by industry and interest group 1.2 million contributions from individuals and 230,000 contributions from political action committees, to provide a full picture of donors' backgrounds and spending patterns.

While labor unions continued to shower the Democratic Party and Democratic congressional candidates with large donations, the overwhelming support for the Republicans in the business community, which has many more individual donors and political action committees, provided Republicans with a giant financial edge.

The area of fund-raising that saw the biggest increase in 1996 was soft money, the donations that fall outside the limits of the federal election laws, and are raised by political parties from corporations, labor unions and wealthy individuals. Together, the Democrats and Republicans raised $262 million in soft money ($138 million for the Republicans and $124 million for Democrats). The amount was triple that raised four years earlier.

Although the Democrats were competitive with the Republicans in raising soft money in 1996, Republicans far outpaced the Democrats this year. Democratic coffers have been drained by investigations into campaign finance abuses and the party's multimillion dollar debt.

Last weekend, the Democratic National Committee announced that it was abandoning its recently adopted policy of capping soft money donations at $100,000. Republican National Chairman Jim Nicholson denounced the Democrats for the retreat, saying, "Their piety was folded up like a two dollar suitcase."

Melissa Bonney, a spokeswoman for the DNC, said the decision to abandon the $100,000 cap was reached because "Democrats were outspent five to one in 1997. So to make sure Democrats are competitive in '98, we'll play by the same rules as the Republicans." She also said the Republican National Committee had rejected a Democratic proposal for a soft money ban.

Republicans also enjoy a tremendous edge with corporate PAC's and among executives for large corporations. Many business sectors switched their allegiances following the GOP takeover of the Congress.

The study found especially dramatic shifts in the communications and electronics sector, where Democrats won 57 percent of donations in 1994, but Republicans won 59 percent of donations in 1996, and in the defense sector, which gave Democrats 56 percent of its donations in 1994, but Republicans 70 percent in 1996.

In industries known for past bipartisanship, such as finance, insurance and real estate, the shift was also pronounced, going from a 50-50 split in 1994 to a 65 percent edge for Republicans in 1996.

Even companies known for their Democratic ties, such as Wall Street's Goldman Sachs, the former home of Treasury Secretary Robert Rubin, went Republican. In 1994, Goldman and its executives gave 62 percent of their donations to Democrats; in 1996 the company tilted to the GOP, which won 53 percent of its donations.

Democratic Party officials blamed the defection of business donors on the tactics of Republican congressional leaders. Steven Grossman, the Democratic national chairman, said top Republican officials had threatened to cut off access for companies that gave to Democrats.

Mike Collins, a spokesman for the Republican National Committee, called these charges "ridiculous." Following the Republican takeover of the Congress, Collins said, business donors felt "free to donate to the party they believed in all along -- the Republican Party."

The Democrats continue to enjoy a huge advantage among labor. Many of the largest unions gave more than 90 percent of their donations to Democrats in 1996. "Our organizational skill will trump their money," Grossman said.

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