Feb. 2 (Bloomberg) -- More than 50 years ago, Joseph Kennedy used his wealth to advance the political career of his son, President John F. Kennedy. Last month, Jon Huntsman Sr. tried to do the same thing.
The senior Huntsman, a chemical company executive, and his candidate son, Republican Jon Huntsman Jr., invested a combined $4.4 million in his presidential primary candidacy -- a million more than the $3.3 million raised from supporters.
The strategy didn’t work; Huntsman came in third in the Jan. 10 New Hampshire primary and dropped out of the race six days later. What the maneuvering did accomplish was exposing how broken the campaign finance system installed in 1974 to diminish the influence of wealthy donors and corporations has become.
“Big changes to the campaign finance system have really all come together in the past two years,” said Michael Malbin, president of the Washington-based Campaign Finance Institute, which advocates for donation limits. “Clever lawyers are exploiting the edges of the law.”
In addition to Huntsman, two other Republican presidential hopefuls -- former U.S. House Speaker Newt Gingrich and former Pennsylvania Senator Rick Santorum -- have extended their stays in the primary race with help from one or two rich supporters.
“Gingrich, in particular, was able to avoid the Darwinian sorting that would have typically occurred after New Hampshire in large part due to the efforts of the super-PAC,” Anthony Corrado, professor of government at Colby College in Maine, said in a phone interview yesterday.
“In the past, candidates who didn’t catch on early tended to see their fundraising dry up,” he said. ’’Now, one merely has to retain the support of a few donors willing to write large checks.’’
The collapse of campaign finance laws began more than two decades ago as candidates first discovered loopholes in the strict donation limits imposed to level the playing field between wealthy and modest contributors. It accelerated in recent years after several court decisions and regulatory inaction.
In 2009, a federal appeals court in Emily’s List v. Federal Election Commission expanded on First Amendment grounds the role outside groups could play in political campaigns, provided they didn’t coordinate with candidates.
2010 Court Rulings
A year later, the U.S. Supreme Court in Citizens United v. Federal Election Commission ruled that corporations and labor unions could spend unlimited sums to help elect or defeat a candidate. Two months later, in March 2010, a federal appeals court found that independent groups could accept unlimited donations, paving the way for today’s so-called super-PACs.
The Federal Election Commission, an evenly-divided bipartisan panel charged with enforcing campaign finance laws, became deadlocked and failed to issue new regulations in light of those court rulings, leaving lawyers working for the groups to interpret them.
The upshot is a presidential campaign that is being financed in ways not seen for decades, with secret donors and multi-million-dollar donations to committees aligned with a single candidate.
Foster Friess, a fund manager based in Wyoming, helped Santorum win in Iowa Jan. 3 by giving $331,000 to the Red, White and Blue Fund, which supports the former senator. He gave more in January, which will be disclosed in FEC reports later this month, and intends to continue spending, he said in an email yesterday. He has an “open checkbook” for anyone who opposes Democratic President Barack Obama, he said in a Jan. 27 Bloomberg Television interview.
“I think super-PACs help level the playing field a little bit because without them it seems like the unions and the media had a huge advantage,” Freiss said yesterday. He also pointed to Democratic billionaires, including George Soros and Peter B. Lewis, who put millions into an unsuccessful effort to defeat Republican President George W. Bush in 2004.
In the case of Huntsman’s bid, the candidate last year provided about $2.5 million of his money through a loan, according to FEC disclosure reports. Also last year, the senior Huntsman donated $1.9 million to Our Destiny, a super-PAC that spent $1.3 million in New Hampshire on broadcast ads promoting his son. That’s almost 75 times the $18,300 the candidate spent on broadcast commercials, according to data from New York-based Kantar Media’s CMAG, a company that tracks advertising.
Gingrich Casino Backers
Gingrich’s presidential bid is being underwritten primarily by one set of donors: Las Vegas casino billionaire Sheldon Adelson, his wife, Miriam Ochshorn Adelson, and their family.
Yasmin Lukatz and Sivan Ochshorn, Miriam Adelson’s daughters from a previous marriage, and Oren Lukatz, who shares an address with Yasmin Lukatz, gave a combined $1 million to a pro-Gingrich super-PAC, Winning Our Future, on Dec. 22, at that point almost half of the committee’s receipts since its formation, FEC reports show.
After fourth-place finishes in Iowa and the Jan. 10 New Hampshire primary, Gingrich’s campaign was running out of cash - - until Adelson and his wife bailed him out.
The casino owner donated $5 million to Winning Our Future to carry Gingrich’s message in South Carolina. The super-PAC bought $1.3 million of broadcast TV time in the Palmetto State - - more than twice what Gingrich campaign spent, according to CMAG data.
$5 Million More
Gingrich won, and as the campaign moved to Florida, Adelson’s wife donated another $5 million to the pro-Gingrich super-PAC.
“Imagine if there were no super-PACs, his campaign would have ended before South Carolina,” said Bradley Smith, a Republican former FEC chairman and co-chairman of the Center for Competitive Politics who promotes looser campaign finance laws.
In a statement in January to Bloomberg News, the Adelsons said their “motivation for helping Newt is simple and should not be mistaken for anything other than the fact that we hold our friendship with him very dear and are doing what we can as private citizens to support his candidacy.”
“Our means of support might be more than others are able to offer, but like most Americans, words such as friendship and loyalty still mean something to us,” they said.
Rick Tyler, spokesman of Winning the Future, said in a Jan. 31 interview on Bloomberg Television that he has “no knowledge” of whether more Adelson money is on the way after the former speaker’s 14-point loss to former Massachusetts Governor Mitt Romney in Florida’s Jan. 31 primary. Adelson didn’t return calls and emails yesterday.
In an interview with MSNBC in January, Sig Rogich, Adelson’s government affairs consultant, said the Adelsons’ giving doesn’t come with strings.
“I don’t think it’s buying a presidency any more than it was when Joe Kennedy helped his son,” Rogich said.
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