On Political Books

January/February 2012 The Campaign-Industrial Complex

Political reform will never happen until candidates and donors realize they’re being ripped off.

By Walter Shapiro

This is ludicrous—voters in Colorado and Florida are “a crucial subtext” in the 2012 campaign. Financiers, no matter how intense their yen for politics, are comparatively bit players. Obama is going to corral so much money for his 2012 campaign that $75 million (a guess at the upper limit of the potentially lost swag from Wall Street) is little more than a rounding error. Sure, there are moments in politics when $10 million or $3 million represent the difference between a raucous election-night victory party and a wake. If Tim Pawlenty, for example, had had $3 million more in the bank at the time of the Iowa straw poll, he would never have dropped out of the GOP race. In a photo-finish Senate race, an extra $5 million can make all the difference. These orders of magnitude rapidly change when you get into the fall presidential campaign. What is misguided about both the Times and the Post stories is that the reporters assume that every single dollar in a presidential campaign shapes the outcome. As a result, the implicit message of this kind of journalism is insidious—that by not completely kowtowing to Wall Street, Obama risks losing the White House.

It is a mistake for political reporters to look at campaign fund-raising totals as if they tell the whole story. Not all campaigns are equally parsimonious in how they deploy their fiscal resources; there is, for example, wide variation in how much consultants take home for producing the ads, conducting the polls, plotting overall strategy, and shepherding the big-donor fund-raising. The finances of campaign consultants remain the biggest continuing mystery in politics. The press pack is often a tiger in its ferocious coverage of politicians, but it becomes a pussycat when it comes to the consultants, who are often invaluable sources. The result is that the personal finances and business arrangements of consultants in both parties are considered a private matter beyond public scrutiny.

This is admittedly difficult information to obtain even for the most hardnosed political reporter. The Federal Election Commission is meticulous about detailing the source of all money brought in by candidates and party committees. But the FEC’s reporting requirements have always been lax when it comes to disclosing where the money goes. The October 2008 spending disclosures by the Obama campaign—which I have picked at random—include slightly more than $1 million paid to Tiger Eye Productions, an Ohio fund-raising firm. There is no way to tell from that line item precisely what the money went toward and what profit Tiger Eye made on the deal. The same is true for the $262,000 that went to the Philadelphia mediaconsulting firm Shorr Johnson Magnus. Most of the Obama funds this late in the campaign were being transferred to state parties ($419,000 to Pennsylvania Democrats, $1 million to the Ohio party). What happened to the money after that—and who the media consultants were who benefited from what was presumably TV spending—is untraceable.

Please understand, I am not accusing the Obama campaign of anything unethical or outside the norms of politics. (Though I am a tad curious about the $1,280 that was spent at Thomas Keller’s signature Napa Valley restaurant, the French Laundry.) The larger point is that the fee structure of any campaign dictates how much of the money from donors ends up paying for prep schools for the media consultant’s children and an addition to the strategist’s beach house. In traditional political campaigns, the media consultant corrals as much as 15 percent of the overall television ad buy as his fee. And that is in addition to production costs and a possible victory bonus. The frequent result: out of every $1,000 donated to a candidate, less than $850 is spent on campaigning. Often general strategists and pollsters are brought in to share the media fee so that no one on the campaign team has economic incentive to complain at meetings with the candidate that so much money is going for TV advertising. Given how much compensation is wrapped up in the campaign’s media budget, it probably is not surprising that political candidates remain the ultimate true believers in the power of television ads in an era of social media and YouTube. These days— especially in presidential campaigns— this t radit ional fee st ructure has been downsized and some consultants (ssshhhh) even work on negotiated flatrate terms. But there is no way for a donor or a reporter to know whether the Obama reelection campaign will be more frugal in its payments to consultants than, say, the Romney campaign. The problem of rapacious consultants remains far more acute in House and Senate campaigns. I have had a series of recent off-the-record conversations with political operatives in both parties who identify specific ad makers as notorious for charging high fees and padding production costs while simultaneously producing ineffective commercials. But like doctors who are prone to misdiagnose, these media consultants mask their incompetence with an engaging bedside manner that wins the trust of candidates. Congressional incumbents often demonstrate their loyalty by sticking with the same consultants who ran their initial winning campaigns, regardless of fee structure. Moreover, when a senator spends three hours on a Wednesday afternoon in a cubicle at party headquarters coldcalling would-be donors, a fund-raising consultant is probably raking off a hefty percentage of the amount raised.

Over the years, I have written several indignant articles about the ways that campaign consultants prosper from the naïveté of candidates and major donors. Much to my surprise in our politics-obsessed culture, these pieces garnered all the reaction of a threepart series on the proper use of the adverb in contemporary Urdu. In hindsight, the problem of overcompensated campaign consultants came across as a victimless crime. After all, who’s going to weep for Hollywood executives, Washington lobbyists, and corporate chieftains whose campaign donations have been squandered?

In truth, the real victims are not the well-heeled donors but every candidate with a shred of idealism who falls under the sway of his or her campaign consultants. Let me explain the connection—and how it relates back to a problem that was identified so shrewdly and so depressingly by Lessig. The most tainted money in politics is not the first million that a candidate raises but the last. The more desperate a candidate, the more willing he is to put ethical beliefs in a blind trust and accept money that comes with winkand- nod strings attached. As Lessig writes, “Influence happens on the margin, and the most powerful are the contributors who stand there.” The more money that the press and the consultants claim is required to run a competitive race, the more likely a candidate is going to brush up against the yellow line to get it. That is what has been happening in recent years as the cost of running for president or for the Senate and the House has doubled or even tripled since 2004.

Walter Shapiro , a Washington Monthly contributing editor, is a special correspondent for the New Republic and writes for Yahoo. He is currently covering his ninth presidential campaign.


  • janinsanfran on February 04, 2012 12:01 PM:

    That just might be one of the most lucid descriptions of what's wrong with our democracy that I've ever read.

    The other constraint that will eventually tend to break up the current system is the spread of niche "information" systems in which we all live in personalized information bubbles. Hard to see how this broadcast model translates to that world.

  • school grants on July 26, 2012 5:05 AM:

    The other constraint that will eventually tend to break up the current system is the spread of niche school grants
    "information" systems in which we all live in personalized information bubbles.