December 27, 1996
The Making of a Money Machine: How Clinton Built His War Chest
By ALISON MITCHELL
In This Article:
The Strategy: Mr. President, Mr. Television The Marathon Man: From Event to Event The Personal Diplomacy: Turning On Charm Turning Out Gifts
ASHINGTON, -- In the ornate Map Room of the White House residence, with Vice President Al Gore at his side, President Clinton assembled his most senior advisers for an important budget meeting. It was not the Federal budget that was being considered, but the budget of the Democratic National Committee.
For more than an hour on that day last spring, the officials debated how much money the Democrats could realistically raise by Election Day and how the dollars should be allocated for different campaign purposes.
These decisions would help shape Mr. Clinton's final drive for re-election. And so the cast at the meeting, according to officials, included senior White House aides like Leon E. Panetta, the chief of staff, and Harold M. Ickes, deputy chief of staff, as well as party officials, among them Donald L. Fowler, national chairman of the Democratic committee, Marvin S. Rosen, the Democratic finance chairman, and Scott Pastrick, the party treasurer.
By the time the meeting was over, the group had reached a general understanding of how much money it would take to run the Democratic committee's end of the 1996 campaign. "There was no definitive judgment in that meeting," Mr. Fowler recalled. "There was no occasion where somebody said, "O.K., the budget's going to be $123 million," he said. "It's probably accurate to describe the median point of consensus as somewhere between $120 million and $125 million."
As controversy has grown over Democratic fund raising, Mr. Clinton has sought to distinguish between the practices of his own re-election campaign and those of the Democratic committee. But the Map Room meeting is just one example of how closely the committee worked with the White House.
Indeed, the meeting was a culmination of an evolutionary process that began after November 1994, when the President was shaken by the Republicans' Congressional victory and feared that it could be the prelude to his own defeat. He directed his political advisers to embark in 1995 on what they believed to be the earliest, most sustained television advertising campaign of any incumbent President.
And since Mr. Clinton did not know if he would face a primary challenge, and wanted to scare off rivals with the size of his war chest, he and his aides decided the money for many of the commercials during the primary season should not come from his personal campaign treasury.
That, in turn, put more pressure on the Democratic committee to carry out a fund-raising program of unprecedented scope.
In the frenzy, a small group of Democratic fund-raisers and donors amassed questionable, and, in some cases unlawful, contributions, some from Asian sources, that have left the White House and the Democratic Party embroiled in controversy and facing a new round of hearings from a Republican-controlled Congress.
The Democratic Party has returned more than $1 million raised by John Huang, the Democratic committee's principal fund-raiser among Asian-Americans. Congress and the Justice Department have initiated multiple investigations of Mr. Huang's activities, as well as those of Charles Yah Lin Trie, another fund-raiser, and of James and Mochtar Riady, donors to the party. The Riadys are Indonesian businessmen with longstanding ties to Mr. Clinton from Arkansas; Mr. Trie is an Arkansas businessman who brought in questionable contributions to Mr. Clinton's legal defense fund that were returned.
While party officials argue that only a tiny percentage of their donations have come under question, they have been forced to admit that they made a series of mistakes, beginning with a decision in 1994 to disband a unit that had previously screened contributions and contributors. Instead, they relied on the gut instincts of fund-raisers about what was seemly and unseemly. One of the results was Mr. Clinton himself had to acknowledge that he had entertained the head of a state-run Chinese investment and weapons trading company at a White House coffee session with donors.
Such controversy has turned the spotlight not just on whether money was raised from foreign sources, which would not be legal, but also on practices that, while legal, ran counter to Mr. Clinton's own promises to clean up the election system.
In his 1992 campaign book "Putting People First," Mr. Clinton said American politics had become a "hostage" to monied interests. He argued that "political action committees, industry lobbies and cliques of $100,000 donors buy access to Congress and the White House."
But this year Mr. Clinton relentlessly used all the perks and power of incumbency to raise money, according to both his aides and campaign finance experts. And White House and party officials met weekly to go over money goals and determine where the President would be needed to appear.
Mr. Clinton and Mr. Gore presided over unpublicized, small gatherings aimed at rewarding the largest donors with access to the highest echelons of power. Donors who gave roughly $50,000 or $100,000 to the Democratic Party could have dinner with the President in small groups of 10 to 20 in luxurious Washington hotels near the White House: the Jefferson, the Hay-Adams, and the Carlton, according to Democratic fund-raisers and Administration officials.
Others were escorted in small groups to the Map Room in the White House residence for an hourlong coffee with Mr. Clinton. Democrats say the President was host at an average of two White House coffees a week this past year for a mix of political activists and large donors. Among the guests at one of those coffees last Feb. 6 was Wang Jun, who is chairman of Poly Technologies, which intelligence officials say is owned and run by China's People's Liberation Army.
Individuals who gave $10,000 and $25,000 met in small groups with Mr. Gore. Or else they attended dinners with the President in groups of about 100. In other cases, White House and Democratic officials say there were no explicit price tags, but there were rewards and incentives used to thank major donors and charm potential givers.
Mr. Clinton occasionally played golf with a potential donor while other large givers and fund-raisers were taken on overseas trips or invited to State Dinners. Some stayed overnight in the Lincoln Bedroom. White House officials say that there was no dollar figure tied to the overnight stays and that not all large fund-raisers were invited. But Michael D. McCurry, the White House press secretary, has acknowledged that some fund-raisers and other supporters and friends of the President were put up there as a gracious thank you gesture by the Clintons.
"It's clear that Mr. Clinton and the First Lady are social by nature," he said. "They enjoy entertaining at the White House and made clear they were willing to have guests over. They actively invite friends, supporters, fund-raisers, interesting people over."
Democrats argue that only by using the President himself as their star attraction could they draw near the Republicans in fund raising.
"As long as I've been around, for several decades, there has been an ongoing concern that the Democratic Party is outfinanced in national elections," Mr. McCurry said. "The President had to work hard to correct that imbalance if he was to be competitive."
In fact, despite all their efforts, the Democrats still lagged behind the Republicans. According to the last report of the Federal Election Commission, which did not include the final weeks of fund raising, the Democrats brought in $242 million in 1995-1996, compared with $399 million by the Republicans.
But it is also true that the cost of this Presidential campaign was driven up by Mr. Clinton himself and his determination to use television commercials to spread his political message across the country.
The Strategy: Mr. President, Mr. Television
or years the increased reliance on television advertising in Presidential races has made the costs of national campaigns rise exponentially.
But in the aftermath of the Republican sweep of Congress in 1994, when his own political fortunes looked bleak, Mr. Clinton turned to television commercials as no incumbent President had done before.
In 1995, Mr. Clinton hammered home one point again and again, his aides said. He felt that he had lost on the overhaul of health care -- the centerpiece of his first term -- because he had allowed his opponents to win the debate through their television commercials.
He was determined not to let this happen again.
Mr. Clinton was reinforced by Dick Morris, whom he had brought on as his new political strategist. Mr. Morris had long believed in using television advertisements early in a race to allow his candidates to get their interpretation of events on the record first and then force opponents to try to dislodge it.
In June of 1995, Mr. Clinton broke precedent and aired two commercials on crime in crucial electoral states almost a year and a half before the election. The nascent Clinton-Gore re-election campaign, which had just begun fund raising in April, spent $2.5 million for those ads -- a decision that caused much dissent among Mr. Clinton's aides.
Harold M. Ickes, the deputy White House chief of staff who was running the campaign, and Terence McAuliffe, the national finance chairman of the Clinton-Gore campaign committee, wanted to concentrate on amassing the largest primary season war chest allowed under campaign finance laws and to do it quickly in order to scare off primary challengers.
Spending the money as it came in would defeat that purpose, they said, arguing also that there was no proof that early commercials would have any lasting effect.
Mr. Morris countered that the President should opt out of the public finance system and forgo any Federal matching dollars. By doing so, Mr. Clinton would be freed from the strict fund-raising limits set under the public finance law and be able to raise and spend unlimited sums.
The idea, according to one White House aide "had some appeal to the President at first blush." Mr. Ickes and Mr. McAuliffe, officials say, argued strenuously against it.
The two said Mr. Clinton would be pilloried in the press for having presented himself as an advocate of reform only to break out of the public finance system that was established after the Watergate scandals. They also said that if the President began unlimited fund-raising, he would dry up the well for Democratic Congressional candidates.
Mr. Clinton agreed, but still considered the television commercials imperative. In September of 1995, he and his aides hit upon another route that in effect would allow him to spend more than the $37 million limit set by the public finance law for the primary campaign period.
After consulting with campaign lawyers, Mr. Ickes presented Mr. Clinton with a plan for the Democratic National Committee, which is not bound by the same fund-raising restrictions as the President's primary season re-election committee, to pay for political commercials tied to the budget fight in Congress and featuring the President and his positions on issues like Medicare. The campaign would cost about $15 million through the end of the year.
This plan was legal, Mr. Clinton's advisers said, because the commercials concerned a legislative issue and would stop short of urging a vote for Mr. Clinton. "Our lawyer's opinion was that while it might be a tad controversial, we were well within our bounds to run issue advertising," said a White House official.
One pilot set of commercials paid for by the national committee had already run in August at a cost of $900,000. With Mr. Clinton's approval and participation in editing scripts, the Democrats in October began running $1 million to $1.5 million worth of political commercials a week in key markets.
Except for a break over Christmas and New Year's, the President was on the air the rest of the campaign. The issue commercials alone ended up costing the Democrats about $45 million, party officials said.
It was that decision about advertising that several senior party fund-raisers privately blame for creating the fierce pressure for money that overwhelmed the Democratic committee. "They were pushed to do the media stuff and no one at the D.N.C. pushed back," said one fund-raiser, who spoke on the condition of anonymity.
But many in the White House and the party also believe it was those ads that turned the public against the Republicans' budget plan and positioned Mr. Clinton to win re-election.
"I think the decision to do that was absolutely the correct decision," Mr. Fowler said. "It worked. It absolutely worked both for the President and the Democratic Party."
He added, "The other side is, 'Hell, yes there was pressure to raise money.' We never raised that much money. But that was self-imposed. It was not inordinate. It was not callous. It was not done in any sort of cavalier manner."
The Marathon Man: From Event to Event
o bring in the money needed for the 1996 campaign, the Democratic National Committee set up an extensive network of fund-raisers.
A Financial Advisory Board of 170-members was created for those who pledged to raise at least $350,000. The Business Council composed of donors who gave $10,000 and $15,000 was expanded from 240 members a few years ago, to 1,700 members.
There were Democrats who would specialize in raising money from Asian-Americans, from Greek-Americans, from donors of Hispanic origin and from women. In fact, Asian-Americans were considered such a lucrative new fund-raising source that John Huang was given the title of vice chairman of finance to give him added credibility as he foraged for funds among that group
The Democrats knew they would also have to make extensive use of the President and the Vice President to meet their goals, sending them both to the $1,000 a plate dinners, which were open to press coverage, and to the private soirees held in mansions, hotel suites and even a Buddhist Temple outside Los Angeles.
Once a week, officials from the White House and D.N.C. would meet, usually in the Ward Room in the basement of the White House, to review the fund raising and set schedules for the President. Those who usually attended were Mr. Ickes; Douglas Sosnik, the White House political director; David Strauss, the Vice President's representative; Mr. Fowler; Mr. Rosen, the D.N.C. finance chairman, and Richard Sullivan, the finance director of the party.
The intensity of the money drive can be seen in Mr. Clinton's activity.
In the past year alone he stopped in to at least 90 fund-raising events across the country, according to public schedules, with virtually every road trip built around multiple dinners, lunches and receptions to raise money.
He brought in more than $10 million for the Democratic Party in a single night in an event at Radio City Music Hall in New York celebrating his 50th birthday in August. He not only courted the big donors but the small ones, too. After more high-priced dinners he would attend late night "Saxophone Club" events for young donors giving perhaps $150 each.
One principle of the fund raising was that the largest donors could be wooed by intimate access to Mr. Clinton and Mr. Gore. "For 99.9 percent of them, it's ego," said one party fund-raiser. "It's to be able to sit in a room with the President and later be able to say they had dinner with the President."
To attend a small dinner with Mr. Clinton outside the White House, those invited were usually asked for specific donations, often of $50,000 or $100,000, Democrats say. Still others who gave $50,000 and $100,000 -- or were considered prospects for such sums -- were invited to coffee at the White House. But their invitation came a discreet interval after they donated or before they were going to be asked for a contribution. The coffees were also attended by political supporters and local officials.
Those who attended the coffees and dinners said Mr. Clinton never asked for money and that the discussions covered a wide range of issues.
Lewis Rudin, a New York City real estate developer who customarily gives large donations to political candidates, said he attended a White House breakfast with the President over the summer along with other New Yorkers mostly from the financial world.
"It was a freewheeling discussion on the problems of the state of the union," he said. "I brought up issues that concerned New York City and insfrastructure. The guys in the financial industry, they talked about the state of the economy."
Another New Yorker said he was invited to a White House coffee by a fund-raiser after he had given about $50,000. He recalled that in his session with Mr. Clinton, one lawyer discussed pending product liability legislation. A financial investor told Mr. Clinton that companies that laid off their workers during a restructuring should give their former employees stock options so that they could get some benefit from the layoffs. "It was not more than 45 minutes," the participant said. "It was substantive."
Asked at a White House appearance recently about the February coffee attended by the Chinese Government trade official, Mr. Clinton said, "There were disparate people from different walks of life, from all over the country there," and "normally what would happen in one of those conversations is I'd talk for 5 or 10 minutes and then we'd either go around the table and let people say whatever they wanted to say."
Mr. Clinton's aides say they tried to stay away from industry-specific events. But that was not always the case. When Mr. Clinton went to a small dinner in August at the California home of Steve Jobs, a co-founder of Apple Computer, his aides openly said they hoped the President would woo back support and donations from chief executives of high-tech industry who were angry that he had vetoed a Federal securities law they wanted to protect them from shareholders' suits. (Congress overrode his veto.)
The Personal Diplomacy: Turning On Charm Turning Out Gifts
n another instance, Mr. Clinton raised about $1 million at a $10,000-a-plate dinner thrown by William A.
Brandt, a veteran Democratic fund-raiser, at his home in the Chicago suburbs on Sept. 17.
Mr. Brandt is the chief executive officer of Development Specialists Inc., which does bankruptcy workouts and most of the guests were from the bankruptcy industry.
Bankruptcy issues are expected to move centerstage next year when Congress is to receive a study it commissioned on ways to improve the Federal bankruptcy code.
Mr. Brandt said the donors at his house were sending a message: "We want you to know that we are aware our issues are being debated in the highest councils. It's of sufficient concern to us that we are out in demonstrable numbers."
"End of story," he added. "It's American participatory democracy."
In another case, Mr. Clinton charmed a donor on the golf course.
Last spring Brian L. Greenspun, the editor of The Las Vegas Sun, decided to try to heal a rift between Democrats and gambling interests.
A friend of Mr. Clinton from college days at Georgetown University, Mr. Greenspun set up a golf game on May 31 between the President and Stephen A. Wynn, the chairman and chief executive officer of Mirage Resorts Inc. and a man widely regarded as the industry's leader.
"It was an opportunity for Steve to meet him in a different way from the way a citizen would meet the President through the media," explained Mr. Greenspun. "I wanted Steve to meet him face to face."
The President and Mr. Wynn rode together in a cart during 18 holes of golf at Congressional Country Club in Potomac, Md., discussing world events and raising daughters, but avoiding policy matters, one of Mr. Wynn's aides said.
On June 9, Mr. Wynn and his wife, Elaine, attended a $25,000-a-couple fund-raising luncheon for the Democratic Party at Mr. Greenspun's Las Vegas home that featured Mr. Clinton.
Mirage later gave another $10,000 to the Democrats, but the bulk of Mirage's money continued to go to Republicans. Still the Democratic donations were a big switch for Mr. Wynn, who in 1995 was host at a party for Bob Dole that raised half a million dollars for the Republican Party and who had described Mr. Clinton's philosophy of government as "ready, fire, aim."
"I don't think there's any question but that Steve's good feelings about the President helped change the dialogue among the industry people and the Administration," said Mr. Greenspun.
The White House also regularlly made gestures of thanks to large contributors, whether through a holiday dinner at the White House, an invitation to a state dinner or the inclusion in a delegation accompanying the President on a foreign trip. Mr. Gore has also played his part in the care of donors.
The night after he and Mr. Clinton were re-elected, a select group of political supporters, Democratic donors and fund-raisers gathered at the Vice President's mansion for cocktails.
These were 175 people to whom the Gores gave a special thank you before a larger, less exclusive victory celebration elsewhere in the city. Many in the White House also saw the group as the core of what will eventually become the Gore camapign of 2000.
Some of the guests were longtime Gore friends, like James Free, a Washington lobbyist and Norman Brownstein a Colorado lawyer who both raise funds for the Democratic party. Also invited were Mr. McAuliffe the powerhouse fund-raiser who was the national finance chairman of the Clinton-Gore campaign; Steven Rattner a New York investment banker; Walter Shorenstein, a California real estate magnate; Howard Glicken, a fund-raiser from Miami and Gore loyalist; Noach Dear, a New York City Councilman who is a prolific fund-raiser among Orthodox Jews.
"You call them donors," said Lorraine Voles, a spokeswoman for the Vice President. "They call themselves friends of the Vice President. They were a lot of people who contributed to the Democratic Party and Presidential campaign who are friends and colleagues of the Vice President."