Take the Money and Run
By Robert Bryce
AUGUST 2, 1999: The news of Governor George W. Bush's fundraising exploits has dumbfounded his political rivals and sent pundits looking for suitable adjectives. Bush has raised more money, faster and with greater ease, than any other presidential wannabe in American history. Between April 1 and June 31, the governor took in $29.6 million; since March he has raised $36.4 million. With that much cash on hand, it's not surprising that he's expected to beat the Democratic nominee like a red-headed stepchild and waltz into the White House.
While there's no question that Bush's fundraising has been impressive, his spending has also been prodigious. The campaign's expense report covers more than 260 pages of items ranging from payroll and stamps to flowers and air travel. Between April 1 and June 30, Bush's campaign spent $6.3 million, or about three times as much as rival Steve Forbes raised from all sources other than his own pocket.
The vast majority of that money is spent here in Austin, on such things as salaries, travel, and other basic campaign expenses. But when it comes to spending related to the party primaries in various states, the Federal Election Commission requires candidates to disclose their primary expenditures by state (see chart on facing page). And the way Bush is spending his money provides some clues to his campaign strategy. Bush has spent more money in California than any other state. According to his expenditure report, Bush has spent $157,109 in California -- almost five times what he has spent in the key early primary states of Iowa and New Hampshire combined, and over three times what he has allocated to Connecticut, his second biggest target for investment.
Given that Bush is spending major coin in the Golden State and is also committing significant sums to Iowa and New Hampshire, it's also telling to note where Bush is not spending his cash. And so far, he is virtually ignoring the Deep South. In Mississippi, Bush has spent a grand total of $3.75. In Alabama, he's spent $233; Louisiana, $300; Oklahoma, $88; and Arkansas, $59. But Bush isn't ignoring his brother's home state of Florida, where he's invested $25,767.
The spending pattern suggests that Bush is counting on Texas and Florida as his base. And indeed, if he wins those two states, he'll have a fifth of the electoral votes he needs to win the presidency. His lack of spending in the other Southern states probably indicates that Bush believes he will win those states with little effort. Thus Bush appears to be using the same strategy that Ronald Reagan used in the Eighties: Capture the South. With the South in hand, you only have to worry about winning a third or so of the electoral votes in the rest of the country. But by running hard in California, which has 54 electoral votes, Bush may be hoping to take some starch out of the Democrats. If he wins Texas -- which is virtually certain -- and Florida, where his brother, Jeb, is governor, the Democrats are put in a position where they absolutely must win California if they are to have any hope of keeping the White House.
Where Bush spends his money is interesting. How he's spending it is also key. So far, the biggest expenses in Bush's campaign appear to be postage, travel, and payroll. With more than 70,000 donors already on the books, Bush is spending heavily to make sure those donors get proper thank you notes. The campaign has paid the U.S. Postal Service over $439,000, and that doesn't count expenses incurred by individuals who were then later reimbursed by the campaign. Nor does it include the amounts paid to various direct mail outfits. The campaign paid $51,573 to Praxis List Company, a direct mail list service owned by Olsen & Delisi, the Austin-based direct mail and consulting company that bought out political strategist Karl Rove's consulting firm earlier this year. The campaign also paid Olsen & Delisi another $155,000 for direct mail work. Add in another $20,000 or more that was paid to other direct mail firms, plus $13,000 to Federal Express for delivery services, and it's clear that direct mail expertise is one reason why Bush's campaign has become the fundraising dreadnought of presidential politics.
The Democratic Party, meanwhile, has vowed to counter Bush's hand-over-fist fundraising abilities by amassing as much as $200 million in "soft" or unregulated funding, such as from well-to-do individuals or corporations, that is not subject to federal election law.
Travel and PayrollWhile the Dems are scrambling to catch up, Bush continues his stump across the country. Getting to Iowa, New Hampshire, Maine, and California with a huge entourage is expensive. While a complete figure isn't broken down in the expense report, it's clear that the campaign has spent at least $1 million on travel and travel-related expenses. Among the big ticket items that stand out are $300,000 paid to McNair Travel of Alexandria, Virginia, for aircraft charters, and $162,000 paid to the Century Plaza in Los Angeles, where the campaign held a fundraising event. (Campaign Study Group, a Virginia-based research and consulting firm, is currently analyzing Bush's expenditures, with first publication rights going to the Los Angeles Times and CNN.)
In addition, the campaign spent tens of thousands more on airplane tickets, hotels, and reimbursements to individuals who traveled on behalf of the campaign. One of the more prominent names among those reimbursed is former President George H.W. Bush, who was paid $4,465 for travel costs he incurred on behalf of his son the candidate.
Now that we know where and how Bush is spending his money, it's important to see whom he's spending it on. Bush's payroll is huge; the campaign now employs about 100 people in Austin, with another 25 spread across the country. To get an idea of the payroll, consider that the campaign paid the Internal Revenue Service more than $289,000 over the last three months.
It's no surprise that the biggest payroll checks are going to the people closest to Bush. The highest-paid staffer on Bush's payroll is campaign manager Joe Allbaugh, who was paid $19,637 during the reporting period. Allbaugh, who acted as Bush's chief of staff before going to work full time on the campaign, managed Bush's 1994 gubernatorial campaign. He is now drawing slightly more than $2,500 per week for his expertise.
After Allbaugh, the top-paid staffers are communications director Karen Hughes and chief strategist Karl Rove, each of whom is being paid slightly more than $2,100 per week. Following Hughes and Rove is former Bush spokesman David Beckwith, who was being paid about $1,900 per week until he left the campaign in mid-July after making disparaging remarks about the straw poll in Iowa. Sources close to the campaign say that Beckwith was also blamed for the bad press that Bush got after he briefly visited a conference for minority journalists in Seattle. Bush had been invited to the event, but declined to attend. After he was criticized for his decision, Bush showed up at the event for about 20 minutes, and his brief appearance was later jokingly called a "drive-by photo op." Whether Beckwith deserved the criticism, it was clear the events in Iowa and Seattle sealed his fate. Mindy Tucker, who is now handling many of Beckwith's duties, is being paid $935 per week.
While Hughes is definitely Bush's chief press operative, Rove is perhaps even more important to Bush's presidential hopes. Since April, the campaign has paid Rove $26,996, with the vast majority of that being payroll. Like Hughes, Rove is taking home $4,255 every two weeks. Interestingly, that's less than Allbaugh gets, although it's arguable that Rove is the more important player. After all, Rove has been with Bush longer than any of the other advisers. Rove has also designed Bush's direct mail campaign. When he still operated Karl Rove & Company, Rove was Bush's highest-paid consultant. During the first reporting period of the year, which ended March 31, the campaign paid Rove's company $220,000, or about a quarter of all of the campaign's expenses during the first quarter. In the most recent reporting period, the campaign paid Rove's company $1,724.
Bush's payroll shows who he trusts and who will be pushing the buttons if and when he gets to the White House. But the small expenses in Bush's report also tell a story. For instance, the campaign paid Austin lawyer/lobbyist Kent Hance $31.47 for a "direct mail expense." Hance is a Pioneer, one of the more than 100 people tapped by the Bush campaign to raise $100,000 each for the governor's presidential bid (see list below). Hance told the Chronicle that he got reimbursed for the postage expense to make sure that he stayed under the $1,000 contribution limit.
Hance, incidentally, is the only politician ever to defeat Bush in an election. He beat Bush when the two were vying for a congressional seat in 1978. He is also a minority shareholder in Waste Control Specialists, one of the companies vying for a chance to dispose of low-level radioactive waste in West Texas. Waste Control pushed hard during the last legislative session for a bill that would have allowed them to set up a waste disposal site in Andrews County. But the Legislature did not pass the bill the company was pushing. Hance says his business interests are not motivating him to support Bush, and that he was among the first donors to give money to Bush's first gubernatorial campaign.
But now that he's a Pioneer, Hance admits that he's running behind schedule in reaching the $100,000 goal. "I'll probably make it or come close. The problem is, I got started late. Half the people I called, somebody had already called them," Hance said.
Hance is also confident that his candidate will be the next president. "I don't have any doubts. It's the most phenomenal thing I've ever seen. I don't see him having much of a problem in the primary. I think he can beat Gore or Bradley." Will Bush win because he has raised so much money? Says Hance, "It certainly helps in getting the message out."
That fact is indisputable. So is the fact that, in politics, money matters. And if money equals votes, it appears that George W. Bush's huge campaign coffers have further solidified his position as the odds-on favorite to be the next president.
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