Political Mercenaries: The Inside Story of How Fundraisers Allowed Billionaires to Take Over Politics

Political Mercenaries: The Inside Story of How Fundraisers Allowed Billionaires to Take Over Politics

by Lindsay Mark Lewis, Jim Arkedis

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Product Details

ISBN-13: 9781137474643
Publisher: St. Martin's Press
Publication date: 10/21/2014
Sold by: Macmillan
Format: NOOK Book
Pages: 272
File size: 1 MB

About the Author

Lindsay Mark Lewis is the executive director of the Progressive Policy Institute, a center-left think tank in Washington, DC. His thoughts on money in politics have appeared in The New York Times , Daily Beast , and Politico . He has raised over $150 million for the Democratic party, its candidates, and its causes.
Jim Arkedis is a writer, political analyst, and consultant based in Washington, DC. His work has appeared in The Washington Post, The New York Times, and The Los Angeles Times, among others.

Read an Excerpt

Political Mercenaries

The Inside Story of How Fundraisers Allowed Billionaires to Take Over Politics

By Lindsay Mark Lewis, Jim Arkedis

Palgrave Macmillan

Copyright © 2014 Lindsay Mark Lewis and Jim Arkedis
All rights reserved.
ISBN: 978-1-137-47464-3





The sense of history, power, and even the sight of the building itself sent chills through my body. It was June of 1992, and I was twenty-two and had arrived at the U.S. Capitol. Well, I wasn't some policy wonk or power broker; I sat out front as one of the official greeters for Majority Leader Richard A. Gephardt (D-MO), my working-class hero. My incredibly important duties included answering the phones, greeting visitors, and snipping newspaper stories about politics. Even from the lowest spot on the totem pole, it sure beat my friends' jobs: selling cars, working in hotels, delivering pizzas. I was in a very different place, at an institution I revered—the U.S. Congress, the people's House.

I had no idea what went on in Leader Gephardt's closed-door meetings. Not many of his seventy-plus staffers did, either, for that matter, or even had much interaction with him. But I provided customer service to his visitors with a smile. I felt like a butler, but was honored to play my role.

Money has always been in politics, that's not a secret. But things started to change in the 1970s. First, Watergate happened. Few remember it was actually a campaign finance scandal that unraveled when $25,000 was discovered in the burglars' bank account from Nixon's Committee to Re-Elect the President (CREEP). Reforms followed, which set up donation limits and political action committees (PACs). PACs were a new, legal way for unions and companies to funnel their employees' or members' money to politicians. They favor big organizations. The larger the company or union, the more employees or members there are to donate to the PAC. The Federal Election Committee was created to oversee these new rules. It was and continues to be a weak regulatory body that is driven by partisan politics more than a desire to regulate money.

In 1976, the Supreme Court ruled in Buckley v. Valeo that political giving was a form of free speech, a precedent enhanced by Citizens United in 2010. Buckley opened the possibility for "soft money" to come into play—essentially unlimited cash that could be used for vague "party building activities" and "advocacy" but not directly for campaigning. Soon PACs had "hard" and "soft" money accounts. Hard money paid for the campaigns (rallies, ads, get out the vote), soft money paid for everything else, including staff salaries, benefits, travel, and overhead. It took a long time for politicians to really begin to recognize the power of soft money. When soft money got out of control, Senators John McCain (R-AZ) and Russ Feingold (D-WI) tried to limit it in 2002 through the law unofficially known as McCain-Feingold. It capped donations to parties and essentially killed soft money as we knew it. But the law really just forced soft money away from the parties, as billionaires set up their own outside organizations. A lot more on this later.

In the summer of 1992, Congress was nervous about the role of money in politics. DC had spent the previous summer enthralled by the Keating Five Hearings, a major campaign finance scandal that snared five U.S. Senators for swapping favors for money and time spent with Charles Keating. He looked for help for his business from what would become known as the Keating Five: U.S. Senators Alan Cranston (D-CA), Dennis DeConcini (D-AZ), John Glenn (D-OH), John McCain, and Donald W. Riegle (D-MI). Keating had made legal political contributions of about $1.3 million to the senators, and he called on them to help him resist regulators who were trying to close his savings and loan operation, Lincoln Savings and American Continental. Keating became a personal friend of McCain following their initial contacts in 1981; McCain and his family made several trips at Keating's expense, sometimes aboard American Continental's private jet, for vacations at Keating's opulent Bahamas retreat at Cat Cay. Senator McCain would spend years after this scandal finding ways to look clean when it comes to political money. He has been so effective that few if any still remember that McCain had such a close relationship with one wealthy donor.

In the end, the senators were found technically innocent of breaking ethics rules. But it was clear from the hearings—and I watched them all—that money had influenced them. It wasn't corruption as most understand it—I give you money, you vote for my issue—but rather Charles Keating had influenced them by demanding so much of their time. With meetings in DC and Arizona and vacations with Senator McCain, Charles Keating was getting more bang for his money than the average donor, never mind the average constituent.

I didn't understand why a group of bipartisan senators would be so focused on one person, one donor. Democrats and Republicans alike got caught up in Charles Keating's drive to make close friends on Capitol Hill. In hindsight, the net result was that big donors split along partisan lines. Since Senator McCain managed to drag a few Democrats down with him, McCain had accidentally protected himself from the Left's attacks. Politicians noticed. Democrats did not want to be dragged into scandals created by Republicans, and Republicans didn't want to be dragged into scandals created by Democrats. Politicians shied away from wealthy donors who played both sides. The Keating scandal forced donors to become more partisan. Today, the only groups that give money to both sides are corporations and industry associations.

Accused of doing something illegal or unethical, donors and politicians started defending themselves by turning the accusation into a partisan attack. Members of Congress and staffers worried that they might be implicated in a similar scandal with one false move, so they shied away from even the appearance of campaign finance impropriety. Money had been a minor annoyance to senior Hill staff up to this point, but they used the Keating Five as a last stand against the increasing influence of money: It would be the Hill policy staffs' Alamo.

Running for election to Congress in the late 1980s or early 1990s required raising campaign money, but not like today. In 1992, the candidates running for the U.S. House couldn't compete with the big boys running for Senate or governor, so House candidates saved the money and spent it more wisely. The average incumbent Democratic member of the U.S. House in 1990 spent about $425,000 on a campaign. Incumbents always have an easier time raising money because they hold power. Throw out a few of the biggest Democratic money raisers (like Dick Gephardt), and the real average was closer to $250,000. Viable challengers could raise half that. Over a two-year election cycle back then, raising money was a part-time undertaking. Your average House of Representatives incumbents would have one event in DC every year and a few smaller ones back home in their districts. Members of Congress didn't make a ton of calls to big donors outside their district or state and celebrated the $5,000 PAC checks they rarely saw.

With fundraising budgets under $425,000 for House members, power rested with groups that could cobble together contributions of $50,000 to $100,000. For Democrats in 1992, that was the labor movement. This was the high point of their influence. Over seventy-five different international unions, each with a federal PAC, collected smaller donations from their membership that they bundled in one lump donation of $5,000 or $10,000. A Democratic candidate could easily raise $200,000 of a $500,000 campaign just from labor. As campaign spending has increased, labor's same $200,000 has meant less and less and labor has lost influence to the big donors around the country.

The labor movement never fully adjusted for the changing landscape of political money. With PAC donations limited to $10,000 to each member of Congress, labor today has become the equivalent of the "nice aunt" of Democratic politics: She sends you that little check on your birthday and you will say thank you, but in the end it doesn't make much difference. Ten $10,000 checks from different unions made labor important in 1992; it could add up to almost 50 percent of the budget for a Democratic candidate for the House. That same $100,000 from Auntie Union in 2014 will be under 10 percent of the million-dollar (or more) budget. The change has been significant, and the failure of the labor movement—the home to middle-class America—to adapt to the modern realities of political money has meant that members of Congress don't reflect its values. In 1992, you had real champions of the working class: Dick Gephardt and David Bonior (D-MI) both had leadership positions. Today, House Democrats have no labor champion in the House leadership, they have only "friends."

DC in 1992 had only a few fundraising consultants, and the firm Fraioli-Jost was their king. The rest of the Democratic fundraising class in the early '90s could fit into a Volkswagen Bug. Besides Mr. Gephardt and Joe Kennedy (D-MA), Fraioli-Jost worked for nearly every House Democrat. Mike Fraioli and Steve Jost developed the first large sweatshop fundraising firm business model. Each of their clients would get one big cattle-call event every year. That was it. Congress was in session for about two weeks a month. Then take out April, August, November, and December, when Congress was basically not in DC, and that left eight months with two available weeks each, or sixteen weeks, to hold one event for each of their clients. During those two-week windows, Fraioli-Jost would host about twenty separate fundraising events for twenty different members. They'd make sure not to schedule fundraising events at the same time or have events for members of the same committee in the House on the same night. At best, a DC donor or lobbyist might have one or two events in a week to attend. Today it's hard to find a Tuesday, Wednesday, or Thursday (days of the week Congress is in session) that doesn't offer twenty to twenty-five fundraising events, breakfast through dessert.

To rally money from labor unions, rich people, and companies, the firm hired recent college grads for about seven bucks an hour to mail invites and cold-call donors. Because the firm was hosting so many events, tracking the RSVPs could be confusing. So the phone bank boiler rooms got creative. They'd invent names on the "RSVP to" line of each invite; "RSVP to Steve," for example. So if a donor called the boiler room and asked for "Steve," the kid would say, "I'm sorry, Steve's not in, but can I help you with the congressman's event next week?" And no matter what the donor said next, the kid would know anyone calling for "Steve" was RSVPing for Representative X's event. Calls for "Anna" were RSVPs for Congressman Y's event, and so on.

Fraioli-Jost worked part time for each client, at $2,500 a month. The firm would usually be hired for three months to plan an event, host it, and follow up to collect late checks. The total fundraising bill for a member of Congress was about $7,500 every year, although some members paid for their services throughout the year. Most members now pay at least $7,500 a month for fundraising salaries, with travel and event costs on top of that.

Much of the DC donor community would not contribute or attend fundraising events in the "off year," the year with no elections. And since election season didn't begin until late spring of the election year, candidates would raise most of their money in the final two months of the campaign. Of that $425,000 average incumbent member's budget, a candidate could expect to raise $200,000 in the late summer and fall, in the last few weeks leading up to election day.

This system—one big cattle call of an event per year—created a pretty innocent relationship between the donor and the member of Congress: Donors would get one opportunity to be in a room with a member, and they'd be surrounded by hundreds of others just like them. This arrangement limited the influence of any one donor. If a donor or lobbyist wanted to see a member of Congress or their staff, they'd go directly to the member's office on the Hill and ask for a meeting. Although lobbyists donated, turning one down for a meeting wasn't a big deal. If you pissed off one donor, there were so many giving relatively small amounts that it wasn't going to destroy your chances for reelection. Chiefs of staff and legislative assistants were powerful, and they didn't associate much with the lobbyist donor world; that was just beneath them.

It was more important to know the key leaders of groups that could endorse members. Labor unions, senior citizens' groups, women's groups, and some environmental leaders made the cut for the influence of senior Hill staff. Endorsements mattered much more than money, because these groups could turn out the voters.

Today, the most important person on members' staff is the fundraiser. Almost all members of Congress employ full-time consultants or direct staff to raise money 365 days a year. Most top donors are on a first-name basis with the fundraiser but would struggle to name a member's chief of staff.

In 2012, the average price of winning a seat in the U.S. Congress was $1.6 million, a 380 percent increase in just twenty years. Since 1990, the number of individual donors who have given more than $10,000 to politics has quadrupled, from 6,500 to nearly 27,000 by 2010. All those rich people didn't appear out of thin air. They didn't spontaneously decide that they were going to start forking over massive amounts of money, changing politics, and increasing the influence of donors on the democratic process. The self-fulfilling industry of political fundraisers created the need for the billionaires to donate and the need for politicians to appease the donors.

This is how it happened.


Midmorning on a sweltering DC day in July of 1992, Steve Elmendorf, Mr. Gephardt's deputy chief of staff, asked me to take an envelope from Gephardt's office on Capitol Hill over to something called the Effective Government Committee at 80 F Street, NW, on the eighth floor of the American Federation of Teachers building. I jumped at the chance—as a twenty-two-year-old dogooder, the Effective Government Committee (EGC) sounded like a perfect organization for me.

Turns out I'd be disappointed. EGC was Mr. Gephardt's fundraising shop, his own political action committee. I walked in to my own little Hotel California. I would spend the next fifteen years trying to check out but could never leave.

The EGC office was set up with four desks out front and one large private office in back. Three men in their early twenties were all on phones and looked up in unison as I walked in, but they kept talking and pitching prospects. The man in the big office, John O'Hanlon, a burly guy in his late thirties, peered over his sports section of the Washington Post and invited me in to see him.

"I'm from Mr. Gephardt's office," I said, beaming, as I handed him my envelope.

He pried it open and pulled out ten checks for Mr. Gephardt's campaign totaling $15,000. My heart sank; had I just broken the law? Taking contributions in the Capitol? That, as the Keating hearings had made clear to me, was illegal: Federal officials can't solicit or receive political money on federal property, which includes congressional offices. What had I done? Was this the beginning of a new Keating Five scandal? Although I was just the courier, I was sure I'd taken part in something dirty.

"Thanks for bringing this over ... So what's your deal?" John asked in his slight New England accent. He was the first person from any part of Gephardt's operation to show any interest in me, the reception desk jockey.

"What do you mean?"

"You know ... Where are you from? How'd you get into this business? What do you do for Gephardt? What do you do when you're not here?"

"Oh," I replied. "Not much ... I'm from Maryland ... decided that I really liked Tom Harkin so I volunteered on his campaign, then I got an internship over here after it ended ... and I play a lot of ice hockey. I'm a goalie."

"Awesome. You're a goalie, that's great. I'm a big Bruins fan ... Now let me tell you about this operation ..."

I couldn't help but like him. This was my kind of guy, engaging, relaxed, Irish, and he clearly loved sports. He explained he was in charge of raising money for Mr. Gephardt. John made me feel wanted, which is the brilliance of any good fundraiser. He had a knack for becoming your best friend in mere seconds. Then he pitched me.

"Look, Lindsay, you can go back, answer the phones, and clip newspapers in that big, boring office where nobody knows who you are. But I'm sensing that it sounds like you want to be in the action. The action is here, at the Effective Government Committee."

No one in the Capitol office had ever given me a we-want-you speech. I was a cheap date, and John smelled it all over me. In just five minutes I went from despising "dirty money" in politics to desperately wanting to join the guys who raised it. John called the Capitol office and explained to my boss that I was now going to be working at the EGC.

John introduced me to the three other staffers: David Jones, Peter Maroney, and David Poger. All in their early twenties, Peter and Poger wore decked-out suits, David Jones wore jeans and a wrinkled sport coat. Instantly I picked out the real star: David Jones—Jonesy—beamed an aggressive confidence that underlined an honest, All-American quality. If David wanted to sell me a used car, I would have bought it on the spot. He was the most creative young fundraiser the party would have over the next few years, and he would lead the charge to revolutionize fundraising for Democrats.


Excerpted from Political Mercenaries by Lindsay Mark Lewis, Jim Arkedis. Copyright © 2014 Lindsay Mark Lewis and Jim Arkedis. Excerpted by permission of Palgrave Macmillan.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Political Mercenaries: The Inside Story of How Fundraisers Allowed Billionaires to Take Over Politics 5 out of 5 based on 0 ratings. 1 reviews.
ElizabethGe More than 1 year ago
Political Mercenaries is a fascinating book; a page-turner with tons of insight into the seedy world of money and politics. Every voter should read this book to understand how American politics got so screwed up...