Sept. 7 (Bloomberg) -- Boosted by technology and social media, political campaigns have broadened and deepened their funding bases in recent years. Democrats have even rolled out a new text-to-give promotion aimed at soliciting small donations by encouraging voters to text 62262 -- key strokes that spell out President Barack Obama’s last name.
Broadening the funding base has long been a goal of politicians and parties, although some innovations have been more successful than others. In the late 1970s, both parties signed on to an ill-fated plan to actually put party-branded credit cards in constituent hands.
The strategy was devised by consultant Edward Shelton, who pioneered the “affinity” card concept in the late 1970s. At the time, banks were flooding the market with Visas and Master Cards, but putting credit cards in consumers’ wallets didn’t guarantee that they would pull them out again at the sales counter. Shelton believed that tying a card to a group or product that consumers had an affinity for would make them more likely to use it, thus making the card more profitable for its issuing bank.
Shelton had already run a successful pilot program in Virginia for the American Automotive Association, and in 1978 turned his sights on the nation’s two largest affinity organizations -- the Republican and Democratic parties.
‘Way of Life’
The Republicans, long in the minority, were the first to pursue the idea. “We’ve been reaching for ways in which we could broaden the base of the party,” Republican National Committee Chairman Bill Brock told the Republican Governors Association, adding, “Credit cards are a way of life.”
In November 1978, the party came to an agreement with Manufacturers Hanover Trust Co., then the country’s fourth-largest bank, to run a pilot program in New York. The RNC agreed to provide the bank with the state’s voter rolls, which would then be processed by an independent marketing firm. The firm agreed to pull all of the registered Republicans off the list and screen them according to Manufacturers Hanover’s credit guidelines.
Those Republicans who practiced the party’s mantra of fiscal responsibility would then receive an offer with Brock’s signature inviting them to request a Republican Visa. Each customer that signed up would receive a card from Manufactures Hanover with the Visa logo on one side and “Preferred Member, Republican Party,” emblazoned on the other. The RNC would receive a $2.50 finder’s fee for each consumer who asked for a card.
Although clearly beneficial to the RNC, Manufacturers Hanover too had good reason to pursue the deal. Citibank, one of the bank’s chief rivals, had recently blanketed the nation in Visa applications, scooping up 4 million new accounts in the process. Eager to catch up, Manufacturers Hanover executives saw a successful Republican card program as an opportunity to expand the bank’s Visa network across the country in the run-up to the 1980 election.
Not to be outdone, the Democratic National Committee joined the party in December, announcing its own branded card just in time for the holiday shopping season. The DNC planned to issue cards to attendees of its mid-term convention in Memphis, Tennessee. Chip Carter, President Jimmy Carter’s son, was due to receive the first one.
Featuring the slogan, “Democratic Party -- United in Victory,” the DNC Visa would yield 0.5 percent of each dollar purchased to the party, an arrangement that more strongly embraced Shelton’s affinity-card concept.
But not all Democrats embraced the plan. Senator William Proxmire of Wisconsin, chairman of the Senate banking committee, called for hearings to examine both parties’ cards. He questioned whether such programs might provide card-issuing banks undue influence over the politicians who regulated them, and if the parties should be pushing credit at all during a time of rising inflation.
Moreover, the DNC’s deputy council, Cecil Cheves, “sensed” some opposition to the card promotion within the Carter administration, which, along with legal concerns, caused the DNC to postpone its plan almost as soon as it was announced.
Although the Democrats bowed out, the RNC pushed forward, seeking an official ruling from the Federal Election Commission. In June 1979, the commission rejected the Republican plan, deciding it violated a federal law barring national banks from contributing to political campaigns.
Carter himself never commented publically on the affinity-card issue, but a month after the FEC ruling, he made his well-known “Malaise” speech, staking out his personal opposition to the profligate 1970s culture that credit cards often symbolized. “Too many of us now tend to worship self-indulgence and consumption,” Carter famously chided.
Nine months later, the president went further, asking the Federal Reserve to restrict credit card use in the economy, employing powers granted under the now largely forgotten Credit Control Act and demonstrating firmly the administration’s opposition.
The irony of fiscally responsible Republicans pushing credit cards while Carter tried to slam the door on them went largely unmentioned for the rest of that campaign. Nor has Carter’s anti-credit-card stance been embraced by candidates since, if the recent campaigns are any indication.
And with the weakening of campaign-finance rules in the wake of the Supreme Court’s Citizens United ruling, we may yet see card-carrying Republicans and Democrats proffering their party’s preferred plastic.
(Sean Vanatta is a graduate student at Princeton University. The opinions expressed are his own.) Read more Echoes columns online.
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