Big outside money fundamentally changed American politics in 2012 — just not the way the Republicans who planned a $1 billion blitz to defeat President Barack Obama wanted.
Ultimately, in fact, it may have hurt Republicans almost as much as it helped.
The high-dollar barrage spurred once wary Democrats to launch their own big money machine — which ended up nearly matching the GOP’s overall spending and actually put more ads on the air than the Republicans.
Mega-donors dragged out the primary and exposed Mitt Romney to damaging attacks on Bain Capital and social issues, some of the same attacks that Obama used to take him down. And outside money weakened the traditional party establishment’s hold on the process and propped up insurgent Senate candidates who lost on Tuesday.
Both sides are already planning their next big money pushes, but some of the top GOP donors are asking whether they wasted their time and money in 2012, and are considering changing their ways somewhat going forward.
“I have not been a big fan of ads from Day One,” said Foster Friess, whose money kept Rick Santorum alive in the Republican primary, adding he was planning to shift his cash from television ads to grass-roots organizing.
“I’m sort of burned out right now — just how much effort and resources I put into it — but I think it’s money well spent because it’s part of the process. And you don’t always win,” the retired mutual fund pioneer told POLITICO.
Karl Rove’s Crossroads outfit is holding a phone call for its big donors Thursday to sum up the race, said Stan Hubbard, a Minnesota media mogul and mega-donor. “Obviously, somebody made a mistake and didn’t do things right. There’s no question about that,” he said.
Romney and his allies spent $1.2 billion on the race, compared with $1 billion spent by Obama and his allies, according to a POLITICO analysis of records on Federal Election Commission data and public statements. Nearly 40 percent of Team Romney’s spending came from super PACs and other unlimited outside money groups, compared with about 12 percent for Team Obama.
But the final tally for 2012 might never be known because some of the biggest spending outfits, particularly on the right, are nonprofit groups that are allowed to keep their donors and many details of their spending a secret from the public.
With slim prospects for any significant clampdown on campaign cash from Congress, the Internal Revenue Service or the courts, a $2 billion presidential campaign could seem quaint in 2016, especially with competitive primaries on both sides.
Rove, for one, isn’t backing down. The unofficial GOP outside money boss argues the efforts by his Crossroads outfits prevented a bigger electoral blowout.
“Crossroads, which you helped found, spent what, $325 million, and we’ve ended up with the same president, the same Democratic majority in the Senate and the same Republican majority in the House. Was it worth it?” Chris Wallace asked Rove on Fox News about an hour after most media had called the race for Obama.
“Yeah,” Rove responded. “Look, if groups like Crossroads were not active, this race would have been over a long time ago. President Obama came out of the box on May 15 with $215 million of advertising over a 2½-month period, designed to demonize Mitt Romney.”
Democrats — who set aside their qualms about outside money en route to proving that the best way to beat a $1 billion blitz is with $1 billion of their own — said they’ll be ready for the next arms race.
If wealthy Republican donors go big in 2014 or 2016, Democrats “will be more willing to participate in super PACs early and more than they did this time,” said Steve Mostyn, a Houston trial lawyer who lent his plane for fundraising trips to the operatives running the pro-Obama super PAC Priorities USA Action and donated $4.2 million to the super PAC and others backing Democratic congressional candidates.
And despite Hubbard and Friess’s reservations, Mostyn is convinced the big GOP money will be back in force by the midterms. “After a while, they will double down and we’ll double down. These things get ridiculous,” he said.
That said, 2012 shows that even unlimited cash has some limits — candidates and message still matter, and just because one might have more money doesn’t mean there’s more room for error.
Flawed GOP Senate candidates like Todd Akin and Richard Mourdock lost despite investments from Crossroads and other outside groups.
Meanwhile, the president’s campaign, lacking outside group backing on par with Romney’s, spent wisely, investing in an effective ground game that delivered key states Tuesday. It also spent heavily on ads during the summer and then kept raising enough money to blanket the airwaves in the fall, having locked in buys when rates were cheaper.
Romney’s campaign, meanwhile, had cash flow problems in the summer, requiring a $20 million loan in August, operated a haphazard TV ad-buying campaign and paid out big bonuses to top staffers in September and October.
Republicans had embraced outside spending immediately after a series of 2010 federal court rulings — most notably the Supreme Court’s Citizens United decision — allowed unlimited campaign spending by corporations and unions and paved the way for super PACs. But after heavy spending by the groups helped Republicans capture the majority in the House of Representatives that year, things got complicated.
The outside groups began playing heavily in the Republican presidential and Senate primaries, with single super rich backers propping up super PACs that extended the race. While the Republican establishment desperately tried to rally around Romney, the super PACs kept Santorum, Newt Gingrich and Jon Huntsman alive, and they damaged Romney with hard-hitting assaults on Bain Capital and forced him to tack right on social issues such as contraception that repelled general election swing voters.
Friess — who donated $2.2 million to a pair of super PACs credited with helping lift Santorum to a surprise win over Romney in the pivotal Iowa caucuses before donating $100,000 to a pro-Romney super PAC — said he’d likely support Santorum if he ran again in 2016. And he rejected the suggestion that his early giving or the bitter and protracted primary hurt the eventual nominee.
“I think that process was a huge help to Romney because a lot of issues were able to come up in the primary that honed him and got him ready for the general,” Friess said. “He became a lot more effective.”
Yet polls showed the Bain attacks — first levied during the primaries by a pro-Gingrich super PAC funded by $21 million from the family of Las Vegas casino mogul Sheldon Adelson — continued to resonate into the general election, when they were picked up by the pro-Obama Priorities USA Action.
“I thought for sure after the Bain attacks of the primary Romney would have a response for us,” said veteran Democratic operative Paul Begala, a strategist for Priorities, which spent $65 million on anti-Romney ads after a slow fundraising start. “And yet he didn’t.”
The Republicans’ unsuccessful effort to capture a Senate majority arguably also was hindered by outside cash boosting anti-establishment primary candidates.
John Brunner, the Republican viewed as the most viable challenger to vulnerable Democratic Sen. Claire McCaskill of Missouri, fell prey to a bipartisan attack ad barrage. The Now or Never PAC — a super PAC supporting Sarah Steelman — spent $504,000 attacking Brunner while the Democratic super PAC Majority PAC spent more than $1.1 million against him.
That helped Akin, a socially conservative congressman, emerge from the crowded primary a somewhat unlikely winner. Less than a month later, Akin’s general election campaign imploded when he asserted that victims of “legitimate rape” very rarely get pregnant because their bodies prevent them from doing so. Democratic super PACs poured $5 million into the race and McCaskill cruised to a second term that appeared far out of reach just a few months ago.
Likewise, in Indiana, moderate Republican Sen. Dick Lugar was toppled in the primary by an anti-establishment challenger, Mourdock, who was buoyed by $3.2 million in ads supporting him or ripping Lugar from the National Rifle Association, the Club for Growth and other groups.
During the general election, Mourdock benefited from $11 million in spending from outside groups, but Democratic opponent Joe Donnelly pulled off the upset Tuesday, thanks in part to Mourdock’s controversial comments about pregnancies resulting from rape being “something God intended to happen.”
More than half the ads attacking Donnelly were paid for by American Crossroads and Crossroads GPS.
Those groups and others in the loose network presided over by Rove spent most of their cash on ads and, toward the end of the cycle, some big GOP donors started raising questions about the effectiveness of the record ad barrage and began expressing more interest in grass-roots organizing, which Rove’s groups mostly eschewed.
But Adelson displayed no such concerns when asked on election night by a reporter from Norway’s Dagbladet newspaper: “How do you think your money was spent? Was it well spent?”
Adelson responded: “By paying bills. That’s how you spend money. Either that or become a Jewish husband — you spend a lot of money.”
A source close to Adelson rejected the suggestion that the Las Vegas Sands CEO had squandered the record $70 million or more he had donated to outside GOP groups, which included $20 million to the pro-Romney Restore Our Future super PAC, $10 million to Crossroads GPS and a total of $2 million to the super PACs supporting George Allen, Connie Mack and Rabbi Shmuley Boteach — who all lost on Tuesday.
The source, who did not want to speak publicly on behalf of Adelson, declined to say whether the mogul was disappointed, but pointed out “House Republicans kept their majority and Sheldon Adelson gave big to the Boehner and Cantor super PACs, plus his presumed giving to other entities supporting other House Republicans.” The reference was to $10 million Adelson’s family donated to a pair of super PACs affiliated with House GOP leaders John Boehner and Eric Cantor, Congressional Leadership Fund and YG Action Fund, respectively.
Those PACs — combined with their secret-money affiliates, American Action Network and YG Network — reported spending more than $31 million combined to attack Democratic House candidates and boost Republican ones. That tally was $10 million less than a super PAC boosting Democratic House candidates, House Majority PAC, reported spending — one of the few places on the outside money playing field where Democrats had an edge.
A number of vulnerable House Democrats targeted by outside spending appeared to stave off challenges with House Majority PAC air cover, including Reps. John Tierney of Massachusetts, Jim Matheson of Utah and Tim Bishop of New York. In another House race with heavy outside spending, Democratic Rep. Mike McIntyre held a slim lead that appeared headed for a recount.
Republican outside groups also claimed their fair share of House race successes, with Reps. Larry Kissell (D-N.C.) and Mark Critz (D-Pa.) going down in defeat amid nearly $3.6 million in attacks from YG Action Fund, YG Network and American Action Network.
“We successfully served as a counterbalance to the left’s army of outside spenders,” said Dan Conston, a spokesman for American Action Network and Congressional Leadership Fund. He cited “unions and environmentalists” that “have poured resources into House races” over the years.
The GOP-allied groups that targeted Obama also saw themselves as a counter to Big Labor allies, which have long functioned as a sort of permanent Democratic mobilizing force. But Tuesday seemed to prove that Democrat still had the edge in the ground game, thanks to labor unions and four years of building an Obama-centric Democratic National Committee.
Obama’s campaign got out to a huge financial head start over Romney’s, which had to spend heavily to survive the bruising primary. And while Obama long cast himself as a small-donor-powered politician, as opposed to big outside money in politics, his team made a couple key concessions that enabled them to go toe-to-toe with Romney, Rove and the Koch brothers’ conservative political machine.
Obama in February dropped his opposition to super PACs and blessed Priorities USA Action in an effort to jump-start its lethargic fundraising.
The Obama campaign in March also quietly restructured the Obama Victory Fund, its joint fundraising vehicle with the DNC, to increase the maximum-size donation it could accept from $35,800 to $75,800. That matched the maximum contribution as Romney’s joint committee with the Republican National Committee, which Romney used to outraise Obama a few months running. Fundraising for Obama’s campaign and super PAC kicked into high gear around the Democratic National Convention, where big donors were offered a host of traditional perks emblematic of the type of donor maintenance once abhorred by the Obama team.
Through Tuesday, Obama’s campaign, combined with the DNC and a pair of joint committees, reported raising $1.022 billion, versus $950.2 million raised by Romney’s campaign, the RNC and a joint committee.
But because Obama raised his money through smaller average contribution sizes, his campaign maintained more control over it, allowing it to purchase ads for lower rates reserved for candidates and not available to either party committees or super PACs.
Notwithstanding the president’s campaign fundraising haul, Obama’s political guru David Axelrod on Wednesday afternoon allowed himself a bit of gloating about withstanding the GOP’s big money surge.
“POTUS re-elected. More Ds in Senate and House,” he tweeted. “There are a bunch of pissed off billionaires this morning, looking for the refund window!”
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