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James A. Johnson

James A. Johnson, a Democrat, was the chairman of Walter Mondale’s 1984 presidential campaign and led John Kerry’s vice presidential selection process in 2004. He is a vice chairman of Perseus, L.L.C., which describes itself as “a merchant bank and private equity fund management company headquartered in Washington, D.C.” From 1991 to 1998 Johnson was the chairman and chief executive officer of Fannie Mae.

Jules Witcover interviewed Johnson on April 9, 2007.

For the 2008 elections, what do you think are the prospects for the public-finance system in the race?

Well, it’s a great question. I think you probably know all of this already, but I did the [Eugene] McCarthy, [Ed] Muskie, and [George] McGovern races before the passage of the law in ’73. And I can still remember when people had a lot of cash that they carried around. And we moved from rally to rally with buckets, where you would take money from everybody as you went. And that would fund your next stop, or your next round of commercials, or whatever.

Most people are not trying to prove they are old. But I have been with this for a long time, so I have seen a lot of different versions of it. I was the chair, as you recall, in 1983-84 for [Walter] Mondale. We spent about $200 million total from beginning to end on that effort, including all of the DNC money and other money, but of course took public funds and were very happy to have the matching funds as we went through the primary process. I have watched, through the Clinton period, and obviously now had the great privilege of contributing to four of the people for their March 31 reports, and with the new $2,300 limit.

So I have seen kind of all sides of it. And how do people survive? At this stage, it seems to me it would be a towering question. I just got off the phone with somebody who is a Biden supporter. And apparently he has raised even less than has been in the public eye and is going to have a lot of trouble sustaining even a basic operation.

On the other hand, having played so many positions in so many different races over the years, there are times when money is defining and there are times when money isn’t defining. And if you look at the situation I know the best, the ’83-’84 dynamic, when [John] Glenn was eliminated in ’83 — and you know so much about it this you may disagree with part of my premise here — the fact that we were better organized, better staffed, better funded, got an earlier start, and were able to put resources on the ground in all of those straw-ballot contests, and endorsement contests, and so on, I believe did play a role in Mondale defeating Glenn. So that’s certainly one on the positive side of money matters, and money trumps other assets.

I would contend, and I am sure Gary Hart if he were sitting here wouldn’t agree, but the entire time we were losing to Gary Hart, which I think you would have to say started sometime in late ’83, going through the middle of March ’84, we were outspending Gary Hart substantially. The entire time Gary Hart was losing to us, he was outspending us substantially. In fact, we had one commercial out in New York when we had virtually no money to spend in Illinois. When we were taking the race back from Hart after his surprising performance in New Hampshire, we were doing it on old-fashioned sentiment, and organization, and traditional politics, and debates, and all of those other dimensions where Mondale proved to be a better candidate than people had expected, when he was under duress.

Last time, I don’t think there is anything about money that caused Howard Dean to collapse. His ranting, obviously, was after he had collapsed, not before he collapsed. I don’t think there was anything about Dick Gephardt’s financial situation that caused him not to be an attractive nominee. Likewise, I don’t think there is anything in particular about John Edwards’s or John Kerry’s Iowa campaign that represented the triumph of money.

So I think there are situations in which it can be a proxy for support. It can be a proxy for enthusiasm. There are times when muscle matters. There are times when you can simply outgun somebody, in a limited dynamic. And there certainly are people over the years who have said they had to withdraw because they couldn’t afford to compete. Now I don’t know what the balance is of those people withdrawing because they couldn’t get financial support and withdrawing because they couldn’t get support. There is an interaction there between the sort of expressions of support.

If you look at what was happening when I first got involved, McCarthy, in fact, as you know from having covered [the campaign] way back then, was reasonably well-funded. But I don’t think anybody would say McCarthy, riding that antiwar wave, was a factor of the size he was, in 1968, because of money. I think you could say, well, he got to a threshold. But I think a lot of that was not unlike what’s happening with [Barack] Obama today. There was simply an enormous amount of enthusiasm, and a mission, and a crusade, and a feeling that something had to be done to stop the war in Vietnam.

Likewise, when I was one of the three or four national political directors for Muskie, moving into the ’71-’72 time period, we were better funded. On the other hand, if you say the first Iowa caucuses, when I was there doing the Muskie effort, Gary Hart was there doing the McGovern effort. We outpolled him almost two to one and [R.W. “Johnny”] Apple, and you, and others wrote the next day, “McGovern surprises.” Now, I don’t know of a single thing that money had to do with that, because this was a dynamic of the establishment having a candidate, a vehicle, in the Muskie candidacy that was certainly adequately funded, certainly better staffed or more comprehensively staffed than the McGovern effort.

Well, wasn’t that on a much smaller scale than what you see now?

Well, the question is whether the big scale makes small things more important or less important. And I don’t think we know that yet. I would argue, not unlike what was on the front page of [The New York] Times on Sunday, that February 5 is in the process of making Iowa more important, not less important. And if you look now and say, What are the prospects of Nevada, South Carolina, New Hampshire, and Iowa producing a major dynamic in coverage, or a major stumble on the national stage, by a politician, which will further nationalize February 5? And take this from a phenomenon of, sort of, buying television station by television [station], precinct by precinct, phone bank by phone bank. And what are the chances that this is going to be something that clicks or doesn’t click in those first four that has a bigger effect on California, or New York, or other places, New Jersey, than what happens in those states?

The concept you have to relate to is, what’s the likelihood of in-state activities controlling and what’s the likelihood of out-of-state activities controlling? And I would say that February 5, lining up the way it is now, makes it more likely than ever that it’s out-of-state activities. And if it is out-of-state activities, it’s more likely than not that they won’t be purchased. In many respects, what we have learned every time I have done this is that money is basically about in-state; momentum is basically about out-of-state.

So I don’t know now. If I were John Edwards and I wanted to break through on February 5, with half as much money, say, I would thank God for Iowa. I would thank God for New Hampshire. And I would want Iowa to move up a week, from [February] 20 to [February] 13 or 14, or whatever that Monday is. And I would want New Hampshire to be standalone. And if I could get another week out of the interim between New Hampshire and February 5, I would do everything I could to get it. And at that point, money on the ground in the states of February 5, I think, is highly unlikely to be controlling.

I know the popular wisdom now, in many people’s minds is that more and more and more money is going to be extremely important as you go in more and more big states. In my experience, we didn’t even run in California in ’84. And Gary Hart won California, which to this day has been largely unreported. We won New Jersey. Mondale says, “I am the nominee.” California results weren’t even in. And so could we have spent $5 million in California and made no difference? Sure. We could have spent $10 million and it made no difference. Because of the scale of what you have to spend, I think the unreported story of the last two weeks is spending, because, as you know, this is not even about raising [money]. This is about cash on hand.

We don’t know that yet.

We don’t know that yet. But let me put it this way: if I were The New York Times’s political editor, at this point I would have my people on the ground looking at what happens when Hillary [Clinton] arrives, when Edwards arrives, and beginning to get some sense here of how fast people are eating through the primary money they are raising. We spent basically everything that we raised in ’83 in order to do Glenn and a lot of the other stuff that we were doing. And so people would say, “Well, you front-loaded too much spending.” Well, we front-loaded too much spending when Gary Hart did better than expected. If Gary Hart hadn’t done better than expected, everybody would have said we muscled everybody into the ground, and we had the nomination early, and wasn’t that a brilliant strategy. In the end, we got the nomination without the money. So as you can see, I have sort of, at least in my own mind, somewhat unconventional views here about how controlling money is.

But look what George W. Bush did in 2000. He chased a number of candidates out even before the election year started; the amount he raised was so overwhelming they just threw up their hands.
Well, tell me if I am wrong on this, but there has always been a fascination with a late-starting candidacy by everybody from Ted Kennedy who started, as you recall, in the fall of ’79. Frank Church, Dale Bumpers, Jerry Brown: There is lots of stuff about late-starting candidacies. And, of course, there is a lot written about all of the people who didn’t run in ’91 making way for Bill Clinton. Let me put it this way: If I were Al Gore or Joe Biden, I think it would be a fair question to ask to either of them: “What’s too early? What’s too late? How much money do you need to play?” I don’t happen to think that Joe Biden is what America is looking for at the moment. But nevertheless, he’s got a couple of million transferred, a couple million raised. So say he’s got $2.5 million on hand, could he make it into the October or November public events in a way that allowed him to be considered to be a serious possible nominee in terms of qualifications? Yeah. The way the system works — I mean, they give Dennis Kucinich unlimited airtime, right?

So I think if you play the standard game, and you get out there and spend on staff and give the big behemoth that needs a couple of million dollars a month to survive, you can’t do it. And I think in that sense [Tom] Vilsack was probably right to get out. I think Biden probably will get out. But if Biden were a slightly different candidate, I am not sure he would be required to get out.

Because of low expectations of a candidate?

It’s a combination of low expectations, easy access to the main events, and the fact that the press and the informed electorate are fickle. Since you asked for the time, I’ll just blather on. I think two months ago, there was a serious possibility that Gore could have gotten in, in September or October, and probably made a very impressive run for the nomination and maybe gotten the nomination. I think the chances now of that are dramatically less. And these things ebb and flow. I think it’s not at all impossible that, in either party, there will be a time in Labor Day to Thanksgiving where people will be yearning for a different cast, a different look, a different person, a different representative of what they believe in.

Well, under that theory, why wouldn’t Gore be able to do it as well?

Because I think what has happened now is that the level of interest in Edwards is up. I think the level of interest and enthusiasm in Obama is up. I think the grind-it-out, money-spending capacity of the Clinton effort is more substantial than many people perhaps have thought. And she has not been derailed in the early going. And so I simply think there are fewer open-to-spend money people and activists, because I think they are more and more engaged in the other three efforts. If Obama had had a false start, yes to Gore in the fall. If Edwards had been languishing, which I think he was in January and February to some degree, but I think he has had a big up move in the last six weeks, then maybe there is more interest in Gore.

What you are talking about is really the phenomenon going on with Fred Thompson on the Republican side, right?

Yes, exactly. And I think if you don’t have money, it’s a higher risk of humiliation. I mean, John Connally notwithstanding, where you can get high risk of humiliation if you have the money. But if you are simply saying, “I know I’d be a better nominee, I know I would be a better president, I have the right position on Iraq, I have the right position on health care, I have the right position on the environment, I have the way of unlocking activist energy,” and you are going out in the fall, dramatically less well-funded, dramatically less well-staffed, I don’t think it’s necessarily a fool’s errand.

So that all goes to the notion that I think the amount of money now that is being raised and spent is totally unparalleled. As of ’84, we were the best-funded, best-staffed effort, ever. And that’s nothing now compared to where we are in the current competition. But I still think there are a lot of people who are looking for a combination of an impressive performer and somebody who is aligned with them on the key issues and somebody who looks like they could be a winner. I think that’s what Iowa was doing in 2004 when they said Edwards and Kerry. As you know, Edwards was coming on very fast at the end, could very easily have overtaken Kerry, 36-32. Dean and Gephardt were over with in Iowa. And a lot of this stuff has to do, I think, with the ebb and flow of politics and public issues more than it does with incremental dollars.

What about the Internet, not just in terms of the money that it can raise, but the free media that it provides for a candidate who doesn’t have a lot of money?

I think it’s a big deal. I mean, are you going to see [Joe] Trippi on this round? He and a bunch of other people, and Joe more, rode the wave and then created the wave. But Dean created a wave. And people around Dean created a wave. And that’s what’s going on now with Obama. The fact that he has twice as many contributors as Clinton is an Internet phenomenon.

But I’m talking not only about the money that you can raise, but the access to free use of the Internet for a candidate, whether it’s on YouFace [YouTube] or any of these other things that I don’t even know the names of.

Yeah, YourSpace [MySpace] and Facebook.

But there is an explosion here where people who are inclined to speak out for a candidate, who may not have much money, I would think could make up for a lot.

I think it’s a big deal. I think it’s a very big deal. My son lives out in California now. He was at an Obama event out there three weeks ago. And this is a story. I happened to be in Austin, Texas, five weeks ago. Obama had been there and had 20,000 people the day before. That was all Internet-driven. I mean, that was crowd-building now as opposed to blogging or people simply e-mailing their whole list or whatever.

But I did a lot of crowds in my day. That’s what I spent the summer of ’68 doing, establishing that you couldn’t turn Gene McCarthy down because we could fill baseball stadiums. And we did. But I think the wide variety of money, organizational, crowds, persuasion, news that flows from the Internet connection, has been nowhere near fully explored. And I think if I were advising somebody who I thought was really right, [it] would be a big part of my argument not to drop out because they were way behind on money.

Also, on the idea that a late candidate could get started if these other candidates are burning their money up, isn’t it better just to lay off, and when people are really paying attention — I mean, I think candidates are force-feeding the public now, because most people don’t think about presidential campaigns a year before the election year.

Well, you should get this for your project. Andy Kohut [of The Pew Research Center for the People and the Press] has some really good data on that, saying the opposite of what you just said is true.

Really?

Yeah, that there has never been interest like this before, that this has superseded all other measures of paying attention. He’s been doing all of this paying-attention stuff for 30 years, and he claims that there has never been anything like this level of interest in a presidential race nine months in advance of Iowa.

Driven by what? The war?

Driven by the war. [My wife,] Maxine [Isaacs], also did a big project on who were the Dean supporters, for Harvard. And the same answer there. That was heavily war-related.

Is she still up there?

Yeah. Fourteen years now, teaching at the [John F.] Kennedy School [of Government]. Let me put it this way: I don’t think a gap presents itself without a candidate collapse of somebody who is major. I mean if Hillary, Obama, or Edwards collapses during the summer, that is one of the avenues through which there might be an opening, or what I would call a policy collapse. If all of a sudden you get something like Romney’s mistake last week with the NRA [National Rifle Association], “I’ve been a hunter all of my life.” Hillary or Obama stands up and says, “I have a lifelong record of blah, blah, blah,” and not a word of it’s true. Or if you get everybody out there kind of doing what the Democratic Party does from time to time, deciding that appearing to be strong on defense trumps dealing with base concerns about antiwar efforts. I think Obama is not going to make that mistake. I think Hillary is making that mistake at the moment refusing to apologize for the vote.

How can she do that for so long?

I have no idea.

I think it’s really hurt her.

So do I. Absolutely right.

She came into the thing looking unbeatable. And she doesn’t look that way anymore.

Doesn’t look unbeatable. How much is she spending? As you know, from being a veteran here, with all of the spending laws in the world, there is still a reporting lag on the spending side. And there isn’t the reporting lag on the raising side. And you can have millions of dollars of commitments, and due bills, and so on, that aren’t quite there yet. And somebody should look very, very hard at the spending side, because it is so critical.

Well, if you were running a campaign for one of these second- or third-tier guys, maybe even somebody who doesn’t have the résumé of Joe Biden, what would you do to keep them going and give them some kind of a shot, under the circumstances that exist now?

Well, suppose it were Mark Warner, suppose it’s Chris Dodd.

Chris Dodd’s a good example.

I think Chris Dodd’s a great example. If I were Chris Dodd, I wouldn’t even consider getting out. Chris Dodd has enormous capacity, intellectually. He has great experience. I think he has a good sense of politics, a good sense of the issues. And when the politics of differentiation really kicks in, he is going to have every chance in the world to say, “Here is why I am better.”

The entire 1983-84 time period, I had in the top drawer of my desk a pile of legal pads. And on the top one it said, “Glenn.” First line, “Why Mondale? Why not Glenn?” Next legal pad, “Why Mondale? Why not Hart?” “Why Mondale? Why not [Alan] Cranston?” It’s not just the why, it’s the why not. Because when you are going into county chairs, or you are going into an activist group of environmentalists, or feminists, or whatever is, it’s not just good enough to say, “Why Witcover?” You have also got to say, “Why not Johnson?”

So when it gets to that phase, which it will at Labor Day or before, one thing that everybody has forgotten — you might have been there that night in January, but everybody is saying, “Oh my God, the intensity of this is getting going too soon.” It was January of ’83 when Mondale, in Des Moines, said, “Why Mondale?” and then, “Why not Glenn?” From the podium he said, “Voted against SALT II, voted for Reaganomics, and voted for poison nerve gas.” I mean, talk about the gloves off. People say, “Oh my God, they are actually talking about each other now.” And that never happened before. Mondale stood up, in his own mouth, and said, “Why not Glenn? Because he was for Reaganomics, because he voted against SALT II, and he’s for poison nerve gas.”

Well, another version of why not is “Where’s the beef?”

Yeah, exactly. That was later. I am just saying this was in ’83 when he did this with Glenn.

So I think what you are saying, then, is that a guy like Dodd would be better keeping his head down until the fall.

Well, and choose times very carefully.

Not spending a lot of money.

Not spending himself into oblivion. Everybody flips at some point where they get more worried about debt than winning. And so they get out there. And they think they can spend. And they think they can raise. And they don’t have the spending controls. And for a late-starter here, or somebody who is dramatically less able to raise big money, they have to conserve their firepower.

But the whole game of inevitability works against a candidate if he buys into it.

I think it’s so right. Did you see The [Wall Street] Journal’s story this morning? Big front-page story about how Hillary’s hired everybody who has ever done anything in politics, and therefore she is going to be inevitable. And she is getting endorsements. How many times did we go through the pattern where the more endorsements you got, the worse it got?

Muskie, particularly.

Muskie, Mondale, I mean, another endorsement, oh my God. Right? And here is this reporter on the front page of The Wall Street Journal this morning saying Hillary is winning because she is getting more endorsements.

That’s amazing.

It’s totally amazing.

At this stage, yeah, with all that’s happened in the past.

Right. I mean, Barack is a not totally shaped vehicle. But he has said he wants to do a different kind of politics. He is a different generation. He is a different race. He is a different commodity. He is a whole different matter. And the notion that somehow he is losing because the fat cat-politicians like [Hillary Clinton] better? It’s only going to hurt her. I got to the point in ’84 where I said, “No more white men on the podium anywhere, anytime, for any reason.” We don’t ever want to see another white man on the podium. And that’s right where they are now.