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Where the Money Goes: Party Spending in Congressional Elections

Robin Kolodny Associate Professor

Department of Political Science Temple University

1115 W. Berks Street Philadelphia, PA 19122

rkolodny@astro.temple.edu

David A. Dulio Center for Congressional and Presidential Studies

American University 4400 Massachusetts Avenue, NW

Washington, DC 20016 dulio@american.edu

Paper prepared for presentation at the Annual Meeting of the Midwestern Political Science Association, Palmer House, Chicago, Illinois, April 19-22, 2001.

[DRAFT – Please do not quote without permission.]

This research was generously supported by a grant from The Pew Charitable Trusts to American University’s Center for Congressional and Presidential Studies and Campaign Management Institute. Thanks to Jim Thurber and Candy Nelson for their support.

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The media and academics are obsessed with campaign fundraising in the United States.

Indeed, the current debate on campaign finance legislation in Congress is focused primarily on

limiting the inputs to the campaign finance system: how soft money can be raised (or whether it

can be raised at all), and limits on hard dollar contributions. Any discussion of how money is

spent has mainly been in the context of regulating electioneering activity, such as limiting the use

of issue advocacy broadcasts by parties and interest groups. The topics of how the vast amounts

of money being raised is spent and where that money goes, fall well below the radar.

We all assume that campaigns are expensive, but that the increased amounts of money in

the system has more to do with corporations and wealthy individuals wanting to buy better and

better access than an increased rise in the cost of campaigning. We call this the “supply side”

focus of congressional campaign finance. Our interest in this paper is the “demand side” of the

issue. More specifically, what is the money spent on, and who is paid for these goods and

services? This is a large question which cannot be answered fully either in this paper or possibly

ever, but we undertake a detailed examination of direct party campaign spending in 1998 to give

a partial, but not insignificant, answer.

Our purpose is to ascertain what political parties spend their money on (this is a multi-

faceted concept to be sure). Though we detail the various avenues of party spending below, we

come to this question with specific hypotheses about political consultants political parties. We

examine the extent to which the parties are spending on campaigns through political consultants

and what those consultants are expected to do for candidates. Coming out of our previous

research on consultants (Kolodny and Logan 1998; Kolodny 2000; Dulio 2001) we expect

parties to rely on consultant services because of their belief that consultants provide campaign

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services that parties no longer can. We also expect that parties spend their money on the most

competitive races.

This examination is only one part of what should be a comprehensive examination into

where campaign money goes. In the next section, we set up the question of campaign spending

by who does the spending in political campaigns. We then move to the issues that specifically

concern the political parties.

What Candidates Spend

Candidates obviously spend the vast majority of their campaign receipts on direct

election expenses.1 We know that in the aggregate candidates for Congress spend about three

quarters of a billion dollars each election cycle.2 We also have self-estimates from House

candidates of how much of the money they spend on campaigns goes to specific functions (see

Herrnson 2000). Specifically, 39.9% goes for campaign overhead (staff salaries, fundraising,

travel), 7.1% is dedicated for campaign research (polling and opposition research), and 52.4% is

devoted to campaign communications (television and radio ads, direct mail, campaign

literature).3 More specific figures and more explicitly defined categories of expenditures may be

obtained by looking at actual FEC reports for each candidate who runs for federal office.

However, this information is not currently indexed by the FEC in any manageable form prior to

the early-1990s, and though we have made an effort to catalogue it, we are unlikely to have

1 We do know, however, that members contribute to the campaigns of other members, though the extent to which they do this depends on how competitive their own race is (see, for example, Pearson 2001). 2 The recent totals for House and Senate candidates are: $765 million in 1996; $740 million in 1998; and $683 million in 2000 (this figure is incomplete as the FEC has only reported data through October 18, 2000 thus far. 3 Paul S. Herrnson has completed extensive candidate surveys asking them to indicate what percentages of their funds have gone to specific functions (Herrnson 1998 and 2000). The percentage totals reported here are taken from the 1998 Congressional Campaign Study, and the reports are aggregated from self-estimates among those responding to the survey. Dwight Morris and Sara Fritz have also compiled comprehensive data on congressional candidate spending in the 1992 cycle, although it is not as detailed (see Morris and Gamache 1994).

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comprehensive data any time soon (this data collection involves reading each candidate’s

individual reports over the election cycle which can be anywhere from two to 500 pages).

What we do know is that candidates spend a great deal of their campaign funds on either

television advertising (including both the production of TV and radio ads and the buying of the

time to broadcast them) or direct mailings (again both production costs and mailing expenses

such as postage and mailing labels) depending on the expense of the candidate’s media market

and/or the extent to which the media markets actually saturate the district. Some estimate that

some campaigns spend upwards of 65% of their total budget on television advertising (Herrnson

and Patterson 2000). Candidates do have overhead and fundraising expenses they must cover,

but it is usually only a modest proportion of the money spent (see Herrnson 1998 and 2000 for an

estimate).

What Interest Groups Spend

Long the subject of controversy because of political action committees (PACs), today

interest group spending is mainly in the area of issue advocacy (independent expenditures are

used less) and is the topic of much scrutiny (Dwyre and Farrar-Myers 2000). Since interest

groups are not required to disclose the sources of their issue advocacy spending, we cannot

ascertain anything other than what they volunteer about their campaign activities. However, we

do know that groups spend a considerable amount of money on communicating their messages

through television and radio advertisements as well as direct mail campaigns (Magleby 2001).

We also know that interest groups hire political consultants to do their independent expenditure

work (Dulio and Kolodny 2001), and that anecdotal accounts by consultants indicate a

considerable client base from issue advocacy work.

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What Parties Spend

Though we do not purport to have data on how candidates or interest groups spend, we

do offer an examination of how parties spend. Before we do that, we should point out that

campaign spending by candidates, interest groups, and parties is largely channeled through

political consultants. This observation alone demands consideration. Though we believe

campaign spending was not always channeled through consultants, we believe consultants have

been the brokers of campaign spending starting in the 1960s, rising through the 1970s and 1980s,

only to truly take off during the 1990s. The word “channel” is important here. We do not mean

to say that political consultants pocket enormous sums of money for general strategic advice.

Indeed we argue the opposite. This is due to the fact that media and direct mail consultants pay

for significant expenses out of the sums given to them by candidates, parties and interest groups

including broadcast time, television ad production, printing and mail production costs, and

postage. The implications of consultant brokerage of congressional campaigns will be

considered later.

Currently, political parties have four ways to spend money in congressional races: direct

contributions, coordinated expenditures, independent expenditures, and soft money spending and

transfers. The first two types of spending are due to the 1971 Federal Election Campaign Act

(FECA) and its Amendments in 1974. In order to shore up the role of the political parties,

campaign finance reform legislation in the 1970s recognized the special role that parties play in

election campaigns. While contributions from individuals and multi-candidate committees to

candidates were tightly restricted, lawmakers recognized that the party-candidate relationship

was not necessarily a corrupt one, but one that might be healthy for democracy. So, while

individuals were limited to contributing $1,000 in each election (normally a primary and a

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general election), and multicandidate committees limited to $5,000 in each election to federal

candidates, political parties could make contributions as PACs did ($5,000 per election) but were

entitled to spend additional monies beyond that in the form of coordinated expenditures.

Coordinated expenditures are monies spent by the political parties on behalf of their candidates

with the candidate’s knowledge and consent. For races in the US House of Representatives, the

formula for calculating the amount of coordinated expenditures is $10,000 times the consumer

price index (CPI), a measure of inflation. In 1998, the amount of allowable coordinated

expenditures in the House was $32,500 (source: FEC, www.fec.gov). For the Senate, the

coordinated expenditures are calculated by population, with a minimum of double the amount for

a house district race.

The law allowed both the national party committees and the state party committees to

spend the coordinated expenditures, effectively doubling the amounts (for the House this figure

would be $65,000). Through “agency agreements,” these monies were often spent by the four

congressional campaign committees instead of the original committees designated in the laws

(Kolodny 1998). What entity actually spent the monies is not actually relevant in this analysis

(especially since the party committees have engaged in a shell game in recent years, transferring

hard money for coordinated expenditures to state parties in some cases, spending the money

through the national committees in other cases, and leaving the rest to be spent by congressional

campaign committees). What is relevant is what the coordinated expenditures were used for.

Independent Expenditures

Though campaign finance law defines independent expenditures as spending carried out

without the candidate’s knowledge and consent (the definition of independence), political parties

won the right to spend in this way from the Supreme Court. In Colorado Republican Federal

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Campaign Committee v. Federal Election Commission (1996), the court found that it is possible

for political parties to spend in a way that does not benefit a particular candidate, but rather the

party as a whole. The particular case referred to the Colorado Republicans’ spending against

Democratic Senator Tim Wirth before his Republican opponent was determined. Starting in

1996, the parties had the legal authority to conduct independent expenditure campaigns. Though

independent expenditures use hard dollars and must be fully disclosed, they are not limited. The

National Republican Senatorial Committee and the Republican state and local party committees

experimented with significant independent spending in 1996, the parties largely abandoned it by

1998, but the Democratic Congressional Campaign Committee gave it another try in 2000.

The reason independent expenditures have had a spotty history is that parties have had a

hard time carrying out activities that are truly “independent” of their candidates (Dwyre and

Kolodny 2001). One of us carried out a detailed examination of recent DCCC independent

expenditures in the 2000 cycle and found that the entire $ 1.9 million was spent on phone banks

in 38 close races in the last few days before the election. The phone banks were conducted

through a handful of political consultants whose firms are dedicated largely to making political

get-out-the-vote (GOTV) calls, and represent an ideal way to spend “independently” since

parties can appeal to voters in terms that do not imply or require coordination (Dwyre and

Kolodny 2001). A cursory examination of independent expenditures in 1996 and 1998 indicates

that parties spent this money on issue advocacy ads for or against (mostly against) candidates in

key competitive races using political consultants that were not being used by the candidate in

question. We do not have systematic data on independent expenditure spending at the moment,

but because of the inconsistent way in which the money has been spent, we are sure it would not

reveal significant trends at present.

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Soft Money

While American campaign finance regulation originally intended for political money to

be raised and spent under tight legal limits, several important court decisions and executive

agency interpretations have changed the role of political money in the US. Some time around

the late 1970s, a series of amendments to the campaign finance laws and interpretations by the

Federal Election Commission (the law’s enforcement agency) created a new category of funds

known as “soft money.” These funds, used for “party-building” purposes instead of explicit

campaign costs for candidates, were not subject to the strict limits imposed by the law. This

meant that the political parties could now raise funds from previously “illegal” sources and spend

those funds in unlimited amounts (Kolodny 1998; Goidel et.al. 1999). When soft money was

first discovered, the national party organizations spent it to free up their “hard” dollars that could

be spent on direct election costs from significant overhead expenses, including items such as the

cost of maintenance of the physical building, office furniture and office equipment. Next, the

national parties moved to extend the definition of “party-building” to the state level. Through a

Byzantine series of matching formulas between the national and state parties, states are now the

arena in which large sums of soft money are spent for the overall good of the party. According

to Sarah Morehouse, soft money spent in the states is used for “supporting volunteer and grass-

roots party building activities such as voter registration and identification, certain types of

campaign material (slate cards), and voter turnout programs and issue advertising” (Morehouse

2000, 7). Ray La Raja shows that over $100 million of soft money was spent for media expenses

in the 1996 election (a presidential year) and over $40 million was spent in the 1998 election

cycle. (La Raja 2000).

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In order to make the most compelling case for linkages between parties and political

consultants, we would need to have a detailed analysis of which firms were paid to do the issue

advocacy campaigns that were paid for by political party soft money on behalf of candidates.

We have strong anecdotal evidence that not only are consultants hired to perform nearly all of

this work, but also the parties literally cannot conduct issue advocacy campaigns themselves.

One of the strange twists of party issue advocacy campaigns (or party independent expenditure

campaigns) is that the parties cannot coordinate with their candidates in any way about the

contents of the party strategy. Though at first glance that seems like a tall order, the use of party-

loyal consultants easily eliminates any conflicts of interest. Indeed, consultants have told us that

the large physical geography of the US allows them to work on direct candidate campaigns

(perhaps paid in part by the parties) in one region of the country and accept contracts for issue

advocacy and independent expenditure work in another region. Thus, we would not expect to

find substantially different consultants receiving hard and soft money in the aggregate, but would

expect to find distinct flows of money in particular states and regions.

Why Study Political Party Spending on Political Consultants

Examining party spending on political consultants comes out of a sparse, but growing

literature on the role of consultants in elections (Sabato 1981, Medvic 1997 and 2001, Kolodny

and Logan 1998, Thurber and Nelson 1995 and 2000, Dulio 2001) Many students of political

parties view the contemporary political consultancy industry with suspicion and believe that

consultants are agents outside the party who try to bring commercial methods to the political

process. Critics would argue that this forces political parties, who fear their very existence is in

jeopardy, to adopt market-oriented approaches recommended by these outsiders. The result is

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believed to be parties that chase public opinion, not lead it and parties that are willing to do

whatever it takes to hold power, no matter how compromised that power may be.

We offer an alternative scenario. What if political parties choose consultants because the

modern demands of campaigns exceed their abilities? Specifically, what if party staff cannot

efficiently provide the types of specialized services candidates need to make their case to the

voters? How are parties to survive? We argue that political consultants are necessary for parties

to compete in the digital/telecommunications or post-modern campaign age. Furthermore, the

political consulting industry in the US is better understood as a response to the inadequacy of

party staff to provide the level of services necessary for the party to remain competitive than a

deterioration of the party as a consequence of the rise of candidate-centered campaigning (Dulio

2001). A corollary argument is that these political marketers should not be considered outsiders

to the party at all, but instead as an extension of the party staff. Indeed they are independent

contractors for the party and their proliferation is a consequence of downsizing in party

bureaucracies and not a disintegration of party integrity. In addition, many political consultants

got their start at one of the six national party committees (Kolodny and Logan 1998; Thurber,

Nelson, and Dulio 2000).

The Institutional Capacity of Political Parties

Our contention is that parties have a hard time transcending their original organizational

roots, or in wholly reinventing themselves. Both major parties were created in the early- or mid-

nineteenth century as cadre parties but with their primary focus on voter mobilization, not voter

persuasion. While mobilization of voters is still obviously needed (that the party/candidate who

gets the most voters to the polls pulling their lever wins the elections), what it takes to

accomplish voter mobilization has changed. In earlier campaign eras, voter identifications were

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formed as a result of group identifications. Social arrangements were sufficiently

compartmentalized that voters did not experience the significant cross pressures they do today.

But if parties were established in an era when voter mobilization meant approaching

voters at the most local unit, then we have a sense of how their institutional structure was formed

and what its boundaries might be. American parties are organized to identify where voters are at

the local level and to respond to their needs so that they will vote. Although we may say that the

strength of so-called political machines (where parties controlled tangible goods like jobs) has

declined, the model on which party machines were formed still endures. That means that parties

know where their supporters live, select leaders at the precinct or ward level to find out how to

get those voters to the polls, and proceed accordingly. If that is the institutional form that

endures, what do parties do when voters change their fundamental ways of life? What happens

when they move to new neighborhoods in the suburbs without political traditions? When they

get their information from a wide variety of sources (including free and paid media via

newspaper, radio and TV as well as the internet), their jobs based on merit, and their “public”

services from privatized sectors of formerly governmental functionaries? Since residential

patterns have changed, the public became more educated and the professions became

standardized, the party’s role as social caretaker disappeared. This is why the party had to shift

the method of its vote-maximizing efforts.

The above-named elements comprise the era of campaigning we are now in, what has

been called the “telecommunications” age (Farrell 1996) or post-modern campaigning (Norris

1997). Farrell distinguishes eras of campaigning by changes in the following variables:

campaign organization, campaign preparations, agencies/consultants, sources of feedback, use of

media, campaign events, and targeting of voters. What is clear from the “telecommunications

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revolution” is that the above named factors focus on central concepts of contemporary business-

speak such as “market segmentation” and “downsizing.” Indeed, Farrell describes a

contemporary campaign arena that focuses on increasingly specialized appeals to specific sectors

of the electorate. Hence, a straight party mobilization approach (just getting identifiers to the

polls) is ineffective. The clear implication is that voters are not party identifiers but choosers

between parties (Aldrich 1995). This means that the party mobilization approach mentioned

above is ineffective. Voters must be persuaded first, and then deployed. And because of the

fundamental changes in political and social life, the persuasion must take the form of very

specific, targeted appeals based on a constellation of individual issue concerns, not just those of

major group affiliations. This environment calls for the expertise of specialists who can help the

party or candidate persuade the greatest number of voters come election day. At question are the

implications this “telecommunications revolution” has for the conduct of campaigns and the

parties.

Campaigns require specific and repeated appeals for votes. This means conducting

public opinion polls to assess the issue location of the electorate, specific appeals in the form of

direct mail or media advertising, and a way to raise the substantial funds to produce the

aforementioned goods. The shift of campaign environments produces enormous changes in the

definition and execution of political communication.

Post-Modern Campaigning Exceeds Party Institutional Capacity

The change in the campaign environment and the shift in the relationship between parties

and voters may simply mean that the parties have to adapt their strategy and tactics (Kolodny

1998). However, our normal expectation is that the party organization will change tactics within

its traditional structure. As one observer of consultant use in Britain found, changes in the

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relationship in the traditional party organizational structure sound a warning bell about the health

of parties to most observers (Wring 2000). The idea that the party structure cannot serve

electoral needs on its own unnerves some. Party use of political consultants is worrisome for this

reason. Does the presence of consultants necessarily signal political parties’ inability to cope

with contemporary campaign demands (as Sabato (1981) would argue)? Or does the presence of

consultants signal a change in party strategy from a model of omnipotence to one of market

segmentation and downsizing? Further does the use of consultants by parties signal party

weakness or party strength by husbanding scarce resources (money and staff in particular) and

hiring temporary or piecemeal workers? This alternative scenario finds change in internal party

arrangements to be neither a sign of party weakness or strength, but merely an admission that

traditional party structures are inadequate to maintain a truly viable electoral position.

Political Consultants v. Political Party Staff

Political consultants are normally thought to have a detrimental effect on political parties

because it is assumed that if candidates have an individual relationship to consultants, that such

relationship will squeeze the role of parties, making them irrelevant to candidates. Repeated

references to the candidate-centered US political environment further confirm this notion. If

candidates rely on consultants hired by the campaign directly, then they ostensibly have no use

for more general party advice, themes, or strategy. Larry Sabato (1981) asserts that the use of

consultants implies party weakness, sometimes deliberately by the consultants who feel their

contribution is much greater than that of the parties.

The debate over the consultant / party relationship can basically be boiled down to a

dichotomy where the two are either allies or adversaries (Kolodny and Logan 1998). The

adversarial school of thought finds that the goals of the consultants are at such odds with the

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goals of the parties that the only possible result of consultant success is party decline. The allied

school of thought finds that if political consultants are trained by the parties (that is, they began

their political careers as party employees), then their work does not go against the goals of the

party, but instead reinforces it. As such, they are allied.

The allied view of consultants argues that consultants use their contacts in the party they

worked for and related party organizations to obtain clients and to facilitate the servicing of their

clients (Kolodny and Logan 1998). They may even be hired by the party organization to do

work for the party generally or to do work for specific candidates. Though the allied view sees

consultants in the US as independent contractors for the party (specifically in areas that exceed

their institutional capacity like media ad production, polling and direct mail targeting), this

analogy may not go far enough. Indeed, political consultants may be more properly viewed as

part of the party “network,” as party-connected actors that are surrogates for the larger

permanent staffs that the parties once had.

There is precedent for viewing political consultants as part of a party network. Mildred

Schwartz (1990) makes this case in her 1990 study of the Illinois Republican party. Schwartz

puts consultants under the category of “advisor” in her analysis and explains that advisors “are

persons regularly consulted by their clients, but not necessarily paid for their advice” adding that

“[w]hether paid or not, the road to becoming an advisor is often prior service in government,

where contacts are established and reputations acquired that may then be converted into an

advising service” (Schwartz 1990, 39-40). She notes that advisors have three main areas of

competence for the party network: political issues, media use, and campaigning. Schwartz also

finds that advisors work primarily with one party and its candidates (Schwartz 1990, 39). As

part of her analysis of the party network, Schwartz measures the centrality of each unit

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associated with the party under study, or how frequently a particular component of the network is

called upon by other entities in the network. Schwartz concludes that advisors are the third most

central component of the party network (out of 23 components which include mostly party

officials and elected officeholders) behind only financial contributors and interest groups in the

number of contacts they had with other components of the party (Schwartz 1990, 55). Later,

when looking at the cohesiveness of sub-groups within the party, Schwartz finds that: “The

largest subset, located in the middle of the matrix, consists of seven actors: state senator, state

representative, senator, governor, advisor, interest group, and financial contributor. This is the

party core—the actors whose identities and activities define the Republican Party.” (Schwartz

1990, 75)

Schwartz concludes her study by stating that she finds no evidence of party decline due to

the influence of the unofficial wing of the party, of which advisors are a significant part. She

does not agree that “party has been superseded just because candidates make direct contacts with

the unofficial wing” (Schwartz 1990, 261). This leads us to the important point that candidates

seldom make contacts with advisors or consultants without the party acting as an intermediary or

acting as the symbolic commonality that causes them to do business. Herrnson makes this point

by describing American parties in the 1980s as intermediaries engaged in making linkages

between their candidates and the resources that matter to them (Herrnson 1988). Indeed, it has

been a long-standing practice of US political parties to deliver information to candidates about

which outside consultants will best help their race (Herrnson 1988). After all, the geography of

the US makes it almost impossible for candidates to identify all the appropriate outside political

talent for their races, especially since modern technology allows many central campaign

functions such as polling, telephone voter contact, or television ad creation to be done from any

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location. Therefore, party committees have always had this linkage role, especially when it came

to identifying national resources (such as hiring political consultants) to the candidates in their

local constituencies (Kolodny 1998).

Where is there empirical evidence for this assertion that consultants can not only assist

parties with their goals, but even make them stronger? The above-mentioned survey of

consultants asking their background and training (Kolodny and Logan 1998) was followed by a

more extensive survey by James A. Thurber and Candice J. Nelson that confirmed the earlier

findings (Thurber, Nelson and Dulio, 2000). In 1998, a survey of US state party executive

directors was conducted to ascertain their approach to political consultants. The parties said that

they routinely hired consultants themselves for some specialized functions (such as direct mail

design and delivery and polling) and also recommended that candidates use consultants for

additional functions they could not provide (such as media ad development and placement).

However, they still found themselves best at providing grassroots organization, local information

about the political landscape and mores, voter mobilization and fundraising. For the most part,

consultants concurred in this assessment of their strengths and weaknesses (Kolodny 2000).

This survey data was accompanied by open-ended comments on the party/consultant

relationship that included one state party executive director referring to consultants explicitly as

sub-contractors. In addition, the emphasis on valued consultants by parties was on those who

“produced” something tangible that the parties found hard to do cheaply or efficiently. Such

products include public opinion polls, direct mail pieces, and media ads (Kolodny 2000, 127-9).

Still, additional evidence of this party-consultant “contractor” relationship is needed.

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What Party Coordinated Expenditures Tell Us

Recall that coordinated expenditures are spent by a party on behalf of a candidate with

that candidate's knowledge and consent, with priority logically given to competitive races

(Glasgow 2000). The coordinated modifier means that the party and candidate consulted on

what was the best use for the money, though fundamentally it is the party’s money. They write

the check, and therefore they have the final say. Herrnson explains that coordinated expenditures

“typically are for campaign services that a Hill committee or some other party organization gives

to a candidate or purchases from a political consultant on the candidate’s behalf…[they] often

take the form of polls, TV commercials, radio ads, fund-raising events, direct-mail solicitations

or issue research.” (Herrnson 2000, 93) Beyond Herrnson’s brief statement, little else has been

ascertained about how the coordinated expenditure money has been spent. Normally,

coordinated expenditures have been seen as a way for the party to help a candidate “pay the

bills” furthering the idea that candidates are in the driver’s seat and parties are just another

source of campaign money. In this next section, we explore in detail how coordinated

expenditures were spent in 1998 elections for the US House and Senate to answer the following

questions: How much do the parties spend on political consultants for their candidates?; How

does their outlay for political consultants compare to other coordinated spending?; What types of

services are the parties likely to spend their money on for candidates?; and How does this square

with the discussion of party institutional capacity?

Data and Methods

We compiled comprehensive data for the 1998 congressional elections through several sources.

In building a data set we first examined every individual payment made by the national political

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party committees4 and the federal campaign committees of the state parties in coordinated

expenditures in the 1997-98 election cycle. This data is available from the Federal Election

Commission, though it is not summarized for each individual candidate (i.e. the FEC provides

each report filed by the candidate or party and summary tables that aggregate all coordinated

monies over the course of the election cycle). Each individual payment is recorded with the date,

amount, vendor paid, and candidate on whose behalf the payment was made. We coded each of

these by the broad functions of campaign expenditures. Though the data was organized by each

individual payment, we created variables corresponding to several aspects of how candidates

campaign – polling, television and radio advertising, fundraising events, direct mail, and

opposition research – that included a summary amount for each type of campaign activity made

by party committees on behalf of individual candidates.

Second, we used data supplied by the FEC that contained a number of pertinent variables

for each candidate’s campaign activity. These included the candidate’s total campaign receipts

and total disbursements, their opponent’s total receipts and spending, and party affiliation.5 We

also created a candidate quality variable for all challenger candidates based on Krasno and

Green’s (1988) eight-point measure.

Finally, we included a variety of additional measures to assess the competitiveness of the

campaign including the number of campaign consultants the candidate hired, whether any of

those consultants the candidate hired were also paid by a party organization or committee,

4 They are: Democratic National Committee (DNC); Democratic Senatorial Campaign Committee (DSCC); Democratic Congressional Campaign Committee (DCCC); Republican National Committee (RNC); National Republican Senatorial Committee (NRSC); and National Republican Congressional Committee (NRCC). 5 The spending variables were measured in total aggregate dollars for the entire campaign. Candidates’ party affiliation was coded as 0=Democrat and 1=Republican.

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whether the candidate’s opponent hired a consultant, and the margin of victory the incumbent

officeholder enjoyed in 1996.6

Party Money Spent on Congressional Elections

In the 1998 cycle, candidates spent a total of $740 million dollars for both the US House

and US Senate. The political parties, on the other hand, spent $30 million dollars in coordinated

expenditures for congressional elections. Though that amount seems trivial in comparison to the

candidates’ expenditures, coordinated expenditures do not include the whole of party money

spent – an additional $275 million was spent in soft money expenditures. However, since soft

money is not spent in coordination with the campaigns, it does not give us insight into the party-

candidate-consultant relationship the way coordinated expenditure data does. Also, the $30

million is mainly concentrated spending in the most competitive races, whereas $740 million

dollar figure includes spending by candidates whose election results are almost never in question

(they are headed for either certain victory or certain defeat). In 1998, only 38 candidates for the

US Senate received coordinated money from their party (19 Democrats and 19 Republicans).

However, in House races 141 Republicans and 262 Democrats found party coordinated money

coming into their campaigns. As will be discussed below, the Democratic party’s spending habits

in House races (mainly the DCCC) are a bit out of step with the other party committees. One

reason for the high number of House candidates receiving coordinated contributions is because

nearly every Democratic incumbent received a $200 contribution for party sponsored research.

6 The variables that measure professionalization were created by utilizing Campaigns & Elections magazine’s “Winners and Losers of ’98,” which is a list of all campaign consultants who were active in the 1998 election cycle and their clients. From this we were able to build a list of all major party candidates and the consultants they hired during the 1998 election cycle. This allowed us to create a dichotomous variable indicating whether the candidate’s opponent also hired a consultant. To build the variable measuring whether the candidate hired a consultant that was paid by their party, we simply matched the list of all the consultants that were paid by the party with coordinated expenditure money with the list of consultants the candidate hired. This variable was also coded 0 / 1. For the margin of victory variable, a simply absolute value of the difference in the two-party vote total was used.

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With those caveats, the data on party coordinated expenditures in is quite enlightening.

Table 1 shows the total amount of coordinated expenditures broken down by party and chamber.

The coding of the expenditures included three categories: amount spent on consultants, amount

spent on activities provided by the parties themselves7, and amount spent on all other outlays. Of

the nearly $30 million dollars spent on coordinated expenditures, almost $27 million, or 90.1%

was paid to political consultants. Significantly, there is almost no difference in spending on

consultants by political party as Democrats spent $13.2 million (88.7% of their total outlays) and

Republicans spent $13.7 million (91.5% of their total outlays). There is more of a difference in

how party money was spent by chamber, with just under one third of the total coordinated

monies being spent on House elections and two-thirds being spent on Senate elections, attesting

to both the more competitive and the more expensive nature of Senate elections compared to

House races.

Of the House expenditures, 77.4% were spent on consultants, which is significantly less

than the 96% of Senate expenditures for consultants. Part of the reason for this discrepancy is

the 11.2% of House expenditures spent by the Democratic Congressional Campaign Committee

(DCCC) on in-house activities for candidates. None of the other five party committees8 spent

funds in this manner, though they routinely used to do this in the 1980s. These party-provided

activities by the DCCC (media, research and fundraising services) are now bought from

consultants by the remaining five committees (that is, the congressional and presidential

committees) in the 1998 congressional elections, leading us to believe that the DCCC will

shortly follow their lead.

7 This line is comprised entirely of services the DCCC provided for Democratic candidates to the US House of Representatives.

21

[Table 1 about here]

What is Coordinated Expenditure Money Spent On?

Table 2 shows the distribution of coordinated money by expenditure type (which includes

5 categories for this preliminary analysis: media advertising, polling, fundraising, other

campaigning activity (phone banks, direct mail production, get-out-the-vote, and opposition

research), and overhead). Virtually all of the money spent by parties was spent on advertising or

campaign activity. Less than 5% of the party money was spent on the last three functions

(polling, overhead, and fundraising). One explanation for this expenditure pattern is in the

timing of the party spending. The bulk of the party expenditures were made in the last two

months of the election cycle. That is because the parties wait to see how viable candidates are

before they invest. So, individual campaigns would be expected to be conduct their own

fundraising operations and pay for their own overhead for most of the campaign (which are

somewhat fixed expenses) while the big expenses associated with voter outreach (such as

television ads and direct mail) come at the very end of the campaign cycle, close to election day.

Since the party committees say that they are interested in investing in only the most winnable

races (Herrnson 1988; Kolodny 1998), such spending at the last moment and on the most

determinative expenses is logical. This explanation also accounts for the small amount of money

spent on polling. While we know that political parties have preferred pollsters whom they expect

their candidates will hire (Luntz 1988) they apparently are not paying for their services out of

their own coffers. Since most polls are commissioned early in the cycle, such minimal spending

is logical.

8 They are: Democratic National Committee (DNC); Democratic Senatorial Campaign Committee (DSCC); Democratic Congressional Campaign Committee (DCCC); Republican National Committee (RNC); National Republican Senatorial Committee (NRSC); and National Republican Congressional Committee (NRCC).

22

[Table 2 about here]

Of the remaining 96% of coordinated expenditures, 72.7% is spent on advertising and

23.2% is spent on all other campaign activities. The portion spent on advertising, which is $21.7

million dollars (and 68% of all coordinated expenditures) includes the cost of broadcast time,

explaining its large number relative to other expenditures. Likewise, expenditures for direct mail

often (but not always) include production costs and postage. Table 3 shows who received the

coordinated money by groups, as in Table 1, and by purpose. Political consultants received

almost 94% of all advertising expenditures and almost 81% of all other campaign activity

expenditures. It is impossible to know from these figures just how much of this money went to

political consultants as compensation for their services and how much was passed through them

to pay for broadcast time or other production costs. The issue of bottom line to consultants is

beside the point of this paper however. We are interested in the extent to which consultants are

connected to the political party network and this data reveals that consultants are the primary

means through which parties purchase campaign products for the good of their candidates.

Along the way, we have discovered that consultants have become the prime contractors for both

parties and candidates for campaign services and products, hiring sub-contractors (such as buyers

for media time and printers for direct mail) for the parties’ and candidates’ indirect use.

[Table 3 about here]

What Types of Candidates Receive Party Spending?

It seems logical and almost too easy to say that the political parties would invest scarce

resources in the most competitive races. As a preliminary test of this common sense hypothesis,

we conducted a difference of means test on a number of different variables that can be seen as

indicators of the competitiveness of a race for both House and Senate campaigns: the candidate’s

23

total spending, the opponent’s total spending, the electoral competitiveness of the district, and

the most final measure – the candidate’s percentage of the vote in the general election (see

Tables 4 and 5). Using an figure that is roughly half of the legal amount parties can spend in

coordinated money ($30,000) as a cutpoint for the analysis, we find that the parties invest in

House candidates who spend more, whose opponents spend more, and whose districts are the

most competitive. Moreover, candidates who received coordinated money from the party were

involved in the closest races. When we break this number down by incumbents and challengers,

the results are even more compelling.

[Table 4 about here]

Table 5 includes a similar analysis for Senate candidates, which shows similar trends.

Rather than use a dollar figure as a breakpoint in the analysis – recall that the limits in Senate

races are not constant across states but are a function of state population – we calculated the

percentage of the maximum parties spent on a candidate and compared those who received 50%

or more of the maximum allowable contribution to those who received less than 50% of the

maximum allowable contribution.

[Table 5 about here]

The trend among Senate candidates is similar to those in the House. Here again, parties

spent more (on a percentage basis) on candidates who campaign in states that have been

competitive in the past. This is seen across a number of different measurements of

competitiveness including the margin of victory in previous races and the amount spent by each

candidate in the race. Furthermore, those incumbents who received more than 50% of the

maximum allowable contribution received, on average, 51% of the vote on election day,

compared to the 66% that to those who did not get more than 50% of the maximum party

24

contribution garnered. Challenger and open seat candidates showed similar trends. Challengers

who received more than 50% of the maximum allowable spending received 47% of the vote on

election day, compared to only 32% for those candidates who did got less than 50% of the

maximum legal coordinated contribution. Open seat candidates who were the recipients of 50%

or more of what parties were allowed to spend garnered 51% of the vote, compared to the 46%

the open seat candidates who got less than 50% of the allowable contribution.9

Table 6 shows the results of regression analyses for incumbent, challenger, and open seat

candidates in 1998 House races. As one would expect, the more competitive the district

candidates campaigned in received more help in the form of coordinated money from the parties

– this held for all types of candidates. Additionally, incumbents whose opponents hired a

consultant of any type received greater levels of coordinated party help. This relationship did not

hold for challengers or open seat candidates, likely because their opponents (incumbents and

other open seat candidates) hire consultants with relative uniformity (Dulio 2001). Moreover,

the more money the candidate and his or her opponent spent during the campaign was positively

related to party coordinated spending for all candidate types. There was no relationship between

the strength of an incumbent’s opponent and the amount of party coordinated spending on behalf

of that incumbent. The stronger an open seat candidate’s opponent, the more coordinated money

the party funneled into that race, although the relationship is not highly significant.

Finally, one last relationship deserves special note. We have established elsewhere

(Dulio and Kolodny 2001) that there is an elite group of consultants active in House races, many

of which were hired by party committees during 1998. Challengers, the least likely candidates to

hire professional consultants (Medvic 1997 and 2001; Herrnson 2000), who hired consultants

9 Here we are not arguing that receiving more than 50% of allowable coordinated contributions results in victory or a higher percentage of the vote, but simply that the races are more competitive.

25

that were also on the party payroll received more in coordinated party contributions than did

those who did not hire consultants with these party ties. This relationship did not hold for

incumbents or open seat candidates. As noted above, incumbents and challengers hire

consultants with greater frequency than challengers. However, upon examining the lists of who

incumbents and challengers hired it was also discovered that incumbents and challengers

routinely turn to those consultants that were also hired by the party. This uniformity in hiring

likely diminishes this relationship.

[Table 6 about here]

We expected to find distinct patterns of party coordinated spending for candidates.

Indeed, if parties were following a seat-maximizing strategy, we would expect to find the most

capital-intensive expenditures made in races considered most competitive. An expected

hierarchy of spending might be: broadcast/mass media investments in the most competitive

races, direct mail investments in the next most competitive races (with the difference between

media and mail spending depending on the cost of the media market), polling in less competitive

races early on, in-house spending for marginally competitive races, events/fundraising for less

competitive races, and research would be for hopeless candidates. In fact, none of these

relationships were uncovered. In this sense, party spending seems to be truly coordinated – that

is, parties use these monies to buy services from consultants that the candidates say they need or

are in the middle of purchasing on their own.

Trends in Party Spending

We realize that coordinated spending in the 1998 cycle gives only a snapshot of where

party money goes. We have preliminary data for party spending by the House campaign

committees (the DCCC and the NRCC) that gives us a sense of trends for the 1992, 1994, 1996,

26

and 1998 cycles. It appears that though party spending on consultant services was significant in

1992, since 1994 parties changed to spending virtually all their money this way. We believe that

1994 marked the return to true competitiveness in the House of Representatives, and the shift to

post-modern campaigning could no longer be denied. Parties, understandably, gave up trying to

keep up at that point and switched their strategy entirely toward consultants for the provision of

campaign services, at least in coordinated spending.

Figure 1 illustrates three trends in House campaigns. First, parties have become more

reliant on political consultants, as seen in the increasing percentage of coordinated payments

going to outside professionals. The second trend – national party committees have completely

moved away from coordinated spending on House candidates – is tied to the third – the House

campaign committees (DCCC and NRCC) increased their coordinated spending in 1994 and

1996 but have since scaled back. It is naïve to think that parties would spend less on their

candidates in an election cycle where control of the House was up for grabs. We believe parties

have begun to shift their strategy from coordinated money to soft money (and specifically issue

advertisements). We also believe that parties have continued to look to consultants for help in

this area. We assume that parties have always spent soft money for issue advocacy via

consultants, but since this only began in 1996 after the coordinated trend was established, we get

more information from studying coordinated expenditures.

[Figure 1 about here]

Implications and Conclusions

We have begun to assess the role of political consultants in the future of political parties.

Rather than seeing the proliferation of consultants as a sign of party decline, we argue that their

presence is actually a next step in party evolution. If political parties are meant to contest

27

elections with the hope of gaining power (by winning office), then the parties must help their

candidates remain electorally viable in whatever way they can. We believe this is further

evidence of a consultant/party partnership (see Dulio and Kolodny 2001). If the contemporary

campaign environment is so segmented that consultants become the subcontractors of campaign

services, then consultant use by parties and candidates is a rational response to this market

segmentation. It seems that maintaining niche specialists is what the party does to retain its

efficiency in achieving its immediate electoral goals of winning control of governmental

institutions.

Consultants are not going to disappear from the party payroll. The method and type of

funds parties use to pay consultants may change substantially, however. While we have

hypothesized that party spending has slightly shifted away from coordinated spending to soft

money spending (and soft money transfers to states), this may change after the Supreme Court’s

decision in the Colorado II case (the left-over portion of the Colorado Republican Federal

Campaign Committee v. Federal Election Commission (1996) case which ruled that parties

could spend unlimited amounts in the form of independent expenditures). The Court is

deciding whether the current limits on coordinated spending are constitutional. If the Court

rules that parties cannot be limited in the amount they can spend on behalf of, and in

coordination with, a candidate, coordinated spending will likely increase. If the ban on soft

money that is part of the current reform legislation before Congress becomes law and survives a

sure constitutional challenge, the only avenue for parties to spend large sums of money will be

through coordinated spending.

28

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31

32

Table 1: Total Coordinated Expenditures for the US House and Senate by Party and Chamber

Sum Total of Party Coordinated

Expenditures

Total Democratic

Expenditures (House and Senate)

Total Republican

Expenditures (House and Senate)

Total House Expenditures

(Democrat and Republican)

Total Senate Expenditures

(Democrat and Republican)

Amount Spent on Political Consultants

$26,958,051 (90.1%)

$13,204,082 (88.7%)

$13,753,969 (91.5%)

$7,355,354 (77.4%)

$19,602,697 (96.0%)

Amount Spent for Party Provided Campaign Activities

$1,063,428 (3.5%)

$1,063,428 (7.1%)

$0 $1,063,428 (11.2%)

$0

Amount Spent on all other outlays

$1,895,076

(6.3%)

$609,350 (4.1%)

$1,285,726

(8.5%)

$1,079,999

(11.4%)

$815,077 (4.0%)

Grand Total $29,916,555 $14,876,860 $15,039,695 $9,498,781 $20,417,774

33

Table 2: Coordinated Spending by Purpose and Consultant Use Total Spent Total Amount to Consultants Percent to Consultants of Overall Total All Advertising

$21,740,846 (72.7%)

$20,425,017 (75.8%)

68.3%

Campaign Activity

$6,943,074 (23.2%)

$5,623,173 (20.9%)

18.8%

Polling

$900,679 (3.0%)

$900,679 (3.3%)

3.0%

Overhead

$248,637 (1.0%)

$5,182 (0.2%)

0.1%

Fundraising

$83,319 (0.1%)

$4,000 (0.1%)

0.1%

Grand Total $29,916,555 $26,958,051 90.3%

34

Table 3: Coordinated Expenditures for House and Senate by Purpose and Vendor Type

All Advertising

Campaign Activity (Research, Direct Mail,

Telemarketing)

Polling

Overhead (including rents,

travel, and salaries)

Fundraising Expenses (including all overhead

for fundraising) Amount Spent on Consultants

$20,425,017 (93.9%)

$5,623,173 (80.9%)

$900,679 $5,182 (2.1%)

$4,000 (4.8%)

Amount Spent for Party Provided Activities

$795,29410 (3.7%)

$217,87511 (3.1%)

0 0 $50,25912 (60.4%)

Amount Spent on all other Vendors

$520,535 (2.4%)

$1,102,026 (15.9%)

0 $243,455 (97.9)

$29,060 (34.9)

Grand Totals $21,740,846 $6,943,074 $900,679 $248,637 $83,319

10 This number is entirely for DCCC in-house media services (mostly the use of their in-house production facility). Thus it applies only for Democrats in the House of Representatives. 11 This number is entirely for DCCC in-house research services. As above, this number applies only to Democrats in the House of Representatives. 12 This number is entirely for DCCC in-house fundraising services. It applies as in the two previous notes.

35

Table 4. Party Coordinated Spending and the Competitiveness of House Campaigns. Amount of Party

Coordinated Money Candidate’s Total Spending

Opponent’s Total Spending

Competitivenessa

Candidate’s General Election Percent

$$30,000 (N=138) $943,919 $940,488 11.84% 47.5% All Candidates < $30,000 (N=621) $392,340 $335,740 32.88% 55.31%

t=11.81; p=0.000

t=14.317; p=0.000 t=-14.50; p=0.000 t=-6.661; p=0.000

$$30,000 (N=44) $1,150,602 $714,637 11.68% 54.84% Incumbents < $30,000 (N=621) $578,349 $280,254 22.39% 73.2%

t=6.832; p=0.000

t=11.082; p=0.000 t=-10.23; p=0.000 t=-16.67; p=0.000

$$30,000 (N=61) $734,111 $1,061,717 11.35% 41.49% Challengers < $30,000 (N=237) $103,152 $625,207 22.02% 30.30%

t=9.602; p=0.000

t=6.534; p=0.000 t=-9.686; p=0.000 t=12.924; p=0.000

$$30,000 (N=32) $1,067,118 $455,947 8.00% 48.97% Open Seats < $30,000 (N=36) $498,076 $504,756 22.27% 46.97%

t=5.149; p=0.000 t=3.972; p=0.000 t=-4.002; p=0.000 t=0.625; p=0.268 a For incumbents and challengers competitiveness is measured as the margin of the seat in 1996 and for open seats it is measured as the margin in the 1996 presidential race in that district.

36

Table 5. Party Coordinated Spending and the Competitiveness of Senate Campaigns. Percentage of Party

Coordinated Money Candidate’s Total Spending

Opponent’s Total Spending

Competitiveness (margin in last race)

Candidate’s General Election Percent

$50% (N=23) $6,779,364 $6,957,134 8.8% 50.00% All Candidates < 50% (N=44) $2,107,814 $1,972,280 20.5% 47.70%

t=3.902; p=0.000

t=3.874; p=0.000 t=-4.148; p=0.000 t=776; p=0.220

$50% (N=11) $8,188,823 $7,116,042 5.90% 51.18% Incumbents < 50% (N=18) $2,632,112 $321,881 23.222% 66.06%

t=2.991; p=0.006

t=3.982; p=0.001 t=-4.426; p=0.000 t=-7.365; p=0.000

$50% (N=7) $7,161,382 $9,898,653 4.14% 47.00% Challengers < 50% (N=21) $1,615,472 $3,155,905 20.09% 32.38%

t=2.997; p=0.003

t=2.487; p=0.023 t=-4.501; p=0.000 t=6.179; p=0.000

$50% (N=5) $3,143,729 $2,489,411 8.20% 51.60% Open Seats < 50% (N=5) $2,288,177 $2,942,459 10.60% 46.00%

t=0.666; p=0.262 t=-0.346; p=0.369 t=-0.505; p=0.313 t=0.681; p=0.261

37

Table 6. What Types of Candidates Receive Coordinated Contributions Incumbents Challengers Open Seats Did the candidate hire a consultant that the party paid in 1998

469.65 (1,500.75)

15,409.68**** (2,642.09)

-800.07 (8,346.07)

Competitivenessa -89.938*** (36.323)

-148.59**** (47.65)

-2.48.05* (196.12)

Did the opponent hire a consultant

9,072.12**** (2,289.33)

1,824.18 (2,356.99)

7,566.01 (8,886.85)

Opponent Quality -300.63 (371.621)

________b 1,518.80* (1,202.93)

Candidate’s Total Spending 0.002045**** (0.001)

0.02608**** (0.003)

0.02467**** (0.007)

Opponent’s Total Spending 0.001728**** (0.003)

0.0005691 (0.002)

0.01593*** (0.006)

Party 3,220.52 (1,427.88)

-11,280.1**** (1,794,59)

-7,615.28* (5,590.14)

Constant 2,599.95 (2,153.06)

11,189.55**** (3,442.89)

-5,615.37 (12,180.74)

Adj. R2 = .385 F7,376 = 35.312; P = 0.000 N = 383

Adj. R2 = .586 F6,287 = 70.103; P = 0.000 N = 293

Adj. R2 = .438 F7,60 = 8.463; p=0.000 N = 67

Note: Numbers in parentheses are standard errors. a For incumbents and challengers competitiveness is measured as the margin of the seat in 1996 and for open seats it is measured as the margin in the 1996 presidential race in that district. b No opponent quality variable is included for challenger candidates because they all face incumbents.

39

Figure 1. Coordinated Party Spending by Party Committees in Hosue Races, 1992-1998

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

DCCC1992

DNC1992

NRCC1992

RNC1992

DCCC1994

DNC1994

NRCC1994

RNC1994

DCCC1996

DNC1996

NRCC1996

RNC1996

DCCC1998

DNC1998

NRCC1998

RNC1998

Party Committees and Year

Dol

lars

Total Coordinated Spending Total Payments to Consultants