Democrats jarred by drop in fundraising
Complacency and absence of big donors cited as key factors
Sept . 25, 2009

WASHINGTON - Democratic political committees have seen a decline in their fundraising fortunes this year, a result of complacency among their rank-and-file donors and a de facto boycott by many of their wealthiest givers, who have been put off by the party's harsh rhetoric about big business.

The trend is a marked reversal from recent history, in which Democrats have erased the GOP's long-standing fundraising advantage. In the first six months of 2009, Democratic campaign committees' receipts have dropped compared with the same period two years earlier.

The vast majority of those declines were accounted for by the absence of large donors who, strategists say, have shut their checkbooks in part because Democrats have heightened their attacks on the conduct of major financial firms and set their sights on rewriting the laws that regulate their behavior.

As the battle over President Obama's effort to overhaul the health-care system reached a fever pitch this summer, the three national Republican committees combined to bring in $1.7 million more than their Democratic counterparts in August. The pair of Democratic committees tasked with raising money for House and Senate candidates -- and doing so at a time when the party holds its strongest position on Capitol Hill in a generation -- have watched their receipts plummet by a combined 20 percent with little more than a year to go before the November 2010 midterm elections.

Large-scale defeats in the midterms could be a crippling blow to the ambitious agenda mapped out by Obama's top advisers, particularly if they happen in the Senate, where Democrats caucus with a 60-seat filibuster-proof majority. The party will have to work furiously to defend at least six Senate seats and as many as 40 in the House, including many snatched from Republicans.

"If they take them back, this is the end of the road for what Barack and I are trying to do," Vice President Biden said Monday at a fundraiser for Rep. Gabrielle Giffords (D-Ariz.), whose district was held by a Republican for more than two decades before her 2006 victory.

Sense of complacency
Democrats said a struggling economy is only partly to blame for the poor fundraising performance and acknowledged a more perilous problem: satisfaction among activists that the party now holds the White House, 60 votes in the Senate and 60 percent of the House.

"There was a little sense of complacency that set in despite our best efforts to warn people," said Rep. Chris Van Hollen (Md.), chairman of the Democratic Congressional Campaign Committee. "We made it very clear: Beware."

Democrats had watched the party's campaign committees rake in increasing amounts of money throughout this decade, culminating in the 2007-2008 election cycle, when their congressional committees raised a combined $125 million more than their GOP counterparts. They used that financial edge to boost their candidates with seven- and sometimes eight-figure advertising budgets, often using that money to run negative ads that candidates shy away from airing.

Now there are signs that such advantages may not be there next year.

The Democratic Senatorial Campaign Committee was considered the party's best-run organization as it oversaw pickups of 14 Republican seats in 2006 and 2008. But through August, the DSCC had raised just $27.5 million, a drop of more than 25 percent, or $9.2 million, from the same point two years ago. While donations from special interest political action committees have increased, individual donors are disappearing at a rate that has alarmed party leaders: The DSCC's contributions from individuals was $18.5 million through August, a drop of $12.6 million, or nearly 40 percent, from two years earlier, according to reports filed with the Federal Election Commission.

A midyear analysis by the FEC showed that the DSCC declines at that stage had come entirely from individuals who gave $10,000 or more, a small slice of overall contributors but a group that traditionally provides about half the committee's fundraising total. Through June, those individual donors' contributions had declined by more than 50 percent from 2007. The committee is running 12 percent behind its 2005 pace among large donors.

Orin Kramer, the head of a private investment management company in New Jersey, said there has been a mutual belief among those collecting checks and those writing them that now is the time for deep-pocketed people involved in business and finance to steer clear of the political arena. "If there's been a point in time since Teddy Roosevelt when an administration cannot afford to be perceived as being manipulated by the financial community, it's now. There's an understandable sensitivity, because it's critical to avoid any sense that Wall Street has been empowered," said Kramer, a longtime fundraiser for Senate Democrats and one of Obama's earliest financial backers.

Big business rhetoric blamed
Other Democrats and their aides, who spoke on the condition of anonymity to discuss internal party strategy, said that rhetoric toward big business has grown so antagonistic that it has become increasingly difficult to raise money on Wall Street, particularly after the controversy about bonuses and executive compensation. The DSCC has also established a rule that forbids accepting donations from the handful of financial firms that received money from the Troubled Assets Relief Program, the $700 billion bailout effort approved last fall, and have not yet repaid the government.

Democrats continue to collect more from big donors than Republicans do, with their trio of national committees almost tripling the amount taken in by the GOP committees in first half of the year, according to the FEC. But Republicans are benefiting from much more energized small-dollar contributors.

The National Republican Senatorial Committee, which has been pitching itself to conservative donors as the only check against Obama's agenda, has stayed roughly even with the DSCC in overall receipts, and its cash flow is 30 percent ahead of its 2007 level.

Democrats remain optimistic that they will have the resources needed to wage a forceful campaign next fall, particularly in most of the six seats that are being vacated by retiring GOP senators.

"The further we get into the cycle, the clearer it becomes that we will have more than enough funds to run competitive campaigns in each of our targeted races," said Eric Schultz, a DSCC spokesman. "In fact, every day that Republicans wash their hands of any responsibility to deal with the economy and the health-care crisis, our supporters grow more and more motivated to help us."

2008 bonanza seen as an anomaly
Some Democrats characterized the fundraising bonanza they experienced during the 2008 election cycle as an anomaly, saying Obama's campaign -- which shattered records by raising more than $700 million -- brought so many new donors to the party fold that some contributors have understandably drifted away without the charismatic candidate at the top of the ticket in 2010. They also said a busy fall fundraising season for the president and vice president began in earnest last week with Obama's trip to Philadelphia, which raised $2.5 million split between Sen. Arlen Specter (D-Pa.) and the DSCC, and Biden's fundraising work for House members.

However, the need for cash is more urgent than it has been in recent cycles, when Democrats had few vulnerable senators facing reelection. In 2010, the DSCC must defend seats in some of the nation's most expensive media markets -- New York, Philadelphia, Chicago, Denver and Las Vegas -- before it can even think of going after GOP-held seats.

House Democrats have seen donations to the DCCC drop 16 percent, with individual contributions more than 25 percent off their 2007 pace. But party leaders saw a 50 percent increase in small-dollar donations in August, after what they hope was a wake-up call to liberals who watched endless cable news footage of conservative protesters dominating town hall meetings.

"Our supporters around the country realized they have a fight on their hands," Van Hollen said. "People are rallying."