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2004 - Bush vs. Kerry

It’s the first presidential campaign under the new rules imposed by the Bipartisan Campaign Reform Act of 2002, better known as the McCain-Feingold Act. The law bars the soft-money contributions that the national party committees have used to pump additional millions into presidential campaigns, and requires independent groups to disclose contributors of $10,000 or more for television or radio “issue” ads supporting a candidate, within 24 hours of receiving the money. Additionally, corporations and labor unions are banned from underwriting such ads within 30 days of a primary and 60 days of a general election. (In 2007, the Supreme Court will strike down this portion of the law.) To compensate for the restrictions on soft money, however, McCain-Feingold raises the limit on hard-money contributions to candidates, from $1,000 to $2,000 per election cycle, and indexes the limits for inflation.

The last change directly benefits incumbent President George W. Bush in his quest for a second term, because his network of bundlers with deep-pocketed connections can raise a larger sum from each contributor. Bush’s 2004 money machine includes 327 “Pioneers” who each raise at least $100,000, and 221 “Rangers” who each raise $200,000 or more. They find plenty of eager contributors on Wall Street, where brokers and investment bankers have been further enriched by the cuts in income, dividend, and capital-gains taxes that Bush pushed through the GOP Congress.

By January 2004, Bush, who again has turned down public funding for the primary season to avoid restrictions on fundraising, already has collected $130 million. His total fundraising eventually tops out at $367 million, breaking the record that Nixon set by strong-arming corporate moguls three decades earlier. This orgy of solicitation is all the more remarkable because, like Nixon, Bush faces no real primary opposition — his declining popularity because of the developing quagmire in Iraq notwithstanding. The war chest enables Bush and the GOP to begin efforts to register and turn out new millions of new voters in the early spring, before the Democrats even have settled on a nominee.

On the Democratic side, a crowded field, which includes Senators John Kerry of Massachusetts and John Edwards of North Carolina, is led early on by former Vermont Governor Howard Dean. The antiwar Dean raises $41 million in the second half of 2003 — less than a third of Bush’s take, but a record by Democratic standards. Dean is the first presidential candidate to tap the financial potential of the Internet by raising large numbers of small donations from newbie contributors who are angry about Iraq.

In contrast, Kerry, who voted reluctantly for the 2002 resolution that authorized Bush to go to war, struggles to stay afloat in Dean’s wake. He’s forced to take out a second mortgage on his house in Boston to come up with a desperately needed $6.4 million to keep his campaign alive. The financial gamble pays off when Dean implodes in Iowa and New Hampshire, making Kerry the front-runner by virtue of his victories in both states.

Kerry goes on to win decisive victories in most of the remaining primaries, and by March he is the presumptive nominee. Faced with the daunting challenge of surviving the summer against the best-financed incumbent in history, Kerry quickly sets about seizing control of the Democratic Party’s fundraising machinery, wooing his rivals’ donors and bundlers, and setting up an Internet fundraising operation patterned after the Dean effort. Kerry can’t catch Bush in fundraising, but he comes surprisingly close, amassing a total of $328 million.

After the party conventions, Bush and Kerry each receive $74.6 million in public funding. But that amounts to less than 10 percent of the $2.2 billion ultimately spent in the most expensive election in history. To offset Bush’s huge early financial advantage, liberal and antiwar activists rely upon 527 organizations, named for the section of the federal tax code under which they operate, which can raise and spend unlimited amounts of money on Kerry’s behalf, as long as they don’t coordinate their efforts with him. One such 527 group, America Coming Together, raises and spends $135 million to mount a massive campaign to get out the Democratic vote. The Media Fund, run by Harold Ickes, the deputy chief of staff in the Clinton White House, raises another $57 million. (Billionaire currency trader and philanthropist George Soros picks up a hefty share of the tab for the independent pro-Kerry efforts, donating $27 million.)

Conservatives are slower to exploit the 527 loophole, but when they finally do, it’s with a vengeance. One 527 group, Swift Boat Veterans for Truth, airs TV commercials that question the military record of Kerry, who was awarded the Purple Heart and the Silver Star medals during his Navy service in Vietnam, and attacking him for later joining other ex-servicemen in protesting against the war. The accusations about Kerry’s service are later discredited by ABC News, The New York Times, and other news organizations, but the damage is done; a Republican polling firm finds that 75 percent of voters surveyed remember the ads. Another 527 group, Progress for America, airs a pro-Bush ad featuring a teenage girl whose mother was killed in the September 11 attacks. According to a study by the Center for Public Integrity, in the last three weeks before the election, pro-Bush 527s buy $30 million worth of such TV and radio spots — three times what the pro-Kerry groups are able to muster.

In the end, the edge gained from those ads — combined with an estimated $20 million that the GOP spends on a last-minute get-out-the-vote effort based on sophisticated marketing research — probably makes the difference in another close election. On Election Day, Bush achieves a razor-slim victory, taking the popular vote by 50.7 percent to 48.3 percent, and winning in the Electoral College by 286 to 251.