Democrats Lead By $100 Million In Money Race

By MARY JACOBY and BRODY MULLINS

WASHINGTON -- With more than a year to go before the 2008 elections, Democratic candidates have raised $100 million more in campaign contributions than Republicans, putting them on track to win the money race for the White House and Congress for the first time since the government began detailed accounting of campaign fund raising three decades ago.

Democrats have taken the lead by exploiting widespread disapproval of President Bush and the Iraq war to develop a more robust online network of new, small donors, as well as to gain traction with deep-pocketed business contributors.

If their fund-raising advantage continues -- so far, Democrats have been pulling in about 58% of overall donations to federal-office seekers -- they will have more resources for pricey advertising, organization building and voter outreach next November to buttress their edge in the polls. Moreover, Democrats' focus on small donors leaves them room to raise more cash over the next year, since many contributors have yet to hit the legal limit of $2,300 per candidate per election, and could potentially keep giving.

One Democratic presidential candidate, Illinois Sen. Barack Obama, says he has a quarter-million contributors, more than the top three Republican candidates combined -- though Mr. Obama's numbers may be inflated by the fact that his campaign counts as "donors" people who buy T-shirts or other campaign merchandise, something other campaigns don't generally do. Only half of Mr. Obama's donors have hit the giving limit for the primaries; about a quarter have given him less than $200, according to the Center for Responsive Politics, a nonpartisan group that analyzes campaign contributions.

By contrast, about two-thirds of those contributing to the campaign of former New York Mayor Rudy Giuliani have already hit their maximum; just 8% have given less than $200.

Of course, it is still early in the campaign, and big business could well ramp up funding to Republicans, who have been its longtime allies. Moreover, a financial victory doesn't always guarantee electoral victory: Republicans lost control of the House and Senate last year despite outraising Democrats $1.2 billion to $1.1 billion.

In fact, candidate and party fund raising is only part of the political balance sheet. Lightly regulated independent groups with wealthy backers can also shape political contests. During the 2004 campaign, advertising by a group called Swift Boat Veterans for Truth damaged Democrat candidate John Kerry's reputation as a war hero.

Balance Their Appeal

Another open question is how long and how well Democrats can balance their appeal to small donors -- often lower- and middle-income households and liberal activists -- with efforts to reach out to more-affluent and conservative business leaders. An early test may be the growing calls in the party to raise taxes on hedge funds and private-equity firms, an industry that has grown increasingly politically active, and has tended to favor Democrats in contributions.

But for now, the political environment strongly favors Democrats. President Bush's low popularity is energizing the Democratic base and damping morale among Republican voters and donors. That could create a situation in which a growing perception of the Democrats' chances for success next year encourages special interests to give them more money, in hopes of winning influence with those expected to be in power.

"Money flow shifts with agenda control," says Michael Malbin, the executive director of the Campaign Finance Institute, a nonprofit group that tracks political contributions.

So far in the 2008 campaign, Democratic candidates for the White House and Congress, along with the Democratic National Committee and other party committees, have raised a total of $388.8 million, compared with $287.3 million for Republicans, according to reports filed with the Federal Election Commission. The figures include reports filed Friday by the House and Senate party committees for fund raising through June 30.

Should that gap persist through the end of next year, it would be the first time in the 30-year history of the FEC that Democrats outraised Republicans overall in federal elections, says FEC spokesman Bob Biersack.

The disparity is particularly sharp in the presidential race, where the eight Democratic presidential candidates raised $179.3 million through June 30, compared with $118 million for the nine declared Republican candidates. That figure doesn't include former Tennessee Sen. Fred Thompson, who is expected to enter the race around Labor Day, and hasn't yet filed any fund-raising reports.

The Republican money leader, former Massachusetts Gov. Mitt Romney, lags far behind the top two Democrats, New York Sen. Hillary Rodham Clinton and Mr. Obama. Mr. Romney has raised $44 million, including nearly $9 million of his own money, to their $63 million and $59 million, respectively.

The Democratic lead is especially striking because Republicans have long been viewed as closer to affluent donors and corporate sources of campaign cash -- and because 2002 campaign-finance reforms were originally expected to hurt Democrats more than Republicans. Those reforms banned unlimited "soft money" contributions to the parties for political advertising, which sometimes added up to several million dollars. Democrats were relatively more dependent on soft money, which they got mainly from unions and a handful of wealthy liberals, including Hollywood moguls.

Since then, Democrats -- led by Terry McAuliffe, then chairman of the DNC -- have invested heavily in building databases and Internet fund-raising tools to reach out to smaller donors. Mr. McAuliffe has proudly touted his "Demzilla" database, which includes detailed profiles of more than 150 million potential voters and donors and was credited with helping Mr. Kerry come close to matching President Bush in fund raising during the last presidential election.

Internet Activists

Democrats have also benefited because of their comparative strength with Internet activists. While Republican voters tend to gravitate toward traditional media like talk radio, Democratic voters with strong opinions are more likely to go online to read blogs. That, in turn, has led to an explosion in online giving to Democrats, who are building lists of thousands of small-dollar donors for a fraction of the cost of traditional direct mail.

Many Democrats give by clicking links to candidates on the Web site ActBlue, a clearinghouse for small donors. ActBlue has raised $5.6 million for Democratic House, Senate and presidential candidates, according to PoliticalMoneyLine, a Web site that tracks donations. It was the single biggest source of contributions to the party's presidential candidates during the first six months of the year, according to the Center for Responsive Politics. In a report last week, the center said ActBlue donors gave more in aggregate than the total from employees of heavy corporate contributors like Goldman Sachs Group Inc.

Among presidential candidates, Sen. Obama is the online star, raising $17 million, or 29%, of his donations this year over the Web. His campaign has a list of 258,000 donors, about half of whom are eligible to give him more money if they choose. But since many of those his campaign counts as donors were just buyers of campaign paraphernalia, it is difficult to assess the depth of either their commitment or their pockets. The campaign wouldn't say how many people on its list of donors gave money, and how many just purchased something.

Combined, the three leading Democratic presidential candidates -- Mr. Obama, Mrs. Clinton and former North Carolina Sen. John Edwards -- have raised more than $28 million online through June 30.

The top three Republican candidates -- Mr. Giuliani, Mr. Romney, and Arizona Sen. John McCain -- raised $9.4 million online, though that figure doesn't include money Mr. Romney says he raised through a proprietary Web-based software program that lets supporters solicit friends and family for donations.

The Democrats' more-aggressive push for online donations has filtered down to congressional races as well. The Democratic Senatorial Campaign Committee, for example, hired a "director of online communications" in 2005. It wasn't until a few months ago that the National Republican Senatorial Committee hired its first "ePress Secretary" to deal exclusively with conservative online media.

In a memo sent to Republican campaigns earlier this year advising them how to engage bloggers, the NRSC said: "In comparison to the left, the center-right has an underutilized online fundraising apparatus." An NRSC spokeswoman confirmed the authenticity of the memo, which is posted on Politico, a political Web site.

Party committees in the House and Senate won't disclose how much they have raised online.

In addition to online fund raising, Democrats are also gaining among large donors, often with business and regulatory interests that make it important for them to be on the winning side.

Blackstone Group, Carlyle Group and other members of the Private Equity Council trade group gave 69% of their $3.4 million in campaign donations to Democrats last year, up from 51% of $2.7 million in 2000, data from the Center for Responsive Politics show. Separate data for large hedge funds show a similar pattern of giving.

Other sectors are following suit. The securities industry flipped its allegiance to Democrats in 2006, giving more to Democrats than Republicans for the first time in a decade, the Center for Responsive Politics said.

Switching Sides

Some wealthy Republicans also are switching sides, including business executives who want access to the levers of power, or who simply don't mind crossing party lines to support candidates they like. Many say they are disturbed by the steep growth in government spending under President Bush, as well as the perceived erosion of America's standing in the world.

New York venture capitalist and former American Express Co. Chief Executive James D. Robinson III, a lifelong Republican, says he is backing Mrs. Clinton. "She's been very involved in business development and sensitive to our issues," Mr. Robinson says.

Other Republicans supporting the New York Democrat for president include Terrence A. Duffy, executive chairman of CME Group, the Chicago-based commodities market; John Mack, Morgan Stanley Chairman and Chief Executive Officer; and Jeffrey Volk, who heads Citigroup Inc.'s global agency and trust business.