$200 Million Pyramid Scheme

Craig Aaron

The language and logic of Wall Street have so infected the political discourse that most campaign coverage is now indistinguishable from the squawking heads of CNBC.

“Follow the money” long has been the mantra of every wannabe Woodward or Bernstein, and more reporters are on the campaign-finance beat than ever before. The public certainly would benefit from knowing who’s backing which candidate—and what favors they might expect in return. But instead of investigating the pernicious influence of money in politics, these stories are riddled with incomprehensible inside baseball about which candidates are moving into the mythical “top tier.”

The “money primary”—the year of corporate panhandling prior to the New Hampshire primary—offers the press easily quantifiable statistics and a simple narrative of obvious winners and losers. It allows reporters to avoid messy policy discussions or “biased” evaluations of a candidate’s record. Like CEOs being celebrated solely on the basis of their companies’ stock prices—no matter how many jobs they’ve slashed or what accounting acrobatics they’ve used—the presidential candidates must prove their fundraising prowess. Who’s got the best health plan? Who understands foreign policy? Who cares? What really matters is who’s got the most “cash on hand.”

On Wall Street, it’s relatively unimportant whether a company actually makes a useful product—or even a profit. Stock prices go up, and shareholders stay happy, as long as a company exceeds the expectations of the analysts. The same logic is now being applied to the presidential campaign.

Witness the drubbing Dick Gephardt took following the release of second-quarter fundraising numbers by the Federal Election Commission. His “unexpectedly weak performance”—as the Washington Post put it—had nothing to do with his health care policy, ability to attract union supporters, or standing among likely voters. But when Gephardt & Co. failed to meet quarterly earnings projections, their stock plummeted.

John Edwards dodged a Gephardt-like disappointment only by collecting last-minute checks from his wife and campaign staff. And even though he has less money in the bank than Gephardt, Joe Lieberman’s late fundraising push left him with “a bigger-than-anticipated sum that will allow him to remain a key player,” according to the Hartford Courant.

Howard Dean’s strong showing shocked the analysts, who quickly branded him the rebel leader of an Internet “revolution.” The pundits split over whether Dr. Dean’s Money Machine was the next eBay or Pets.com. John Kerry was generally considered less of a “risk.”

The only blue-chip stock in the field belongs to Bush Inc. The president’s re-election effort is attracting prudent investors looking to cash in during a second term. The administration has already issued dividends in the form of tax cuts for the richest 1 percent—whose average tax reduction over the next four years will total $103,899, according to Citizens for Tax Justice.

The president flexed his fundraising muscle in the six weeks before the June 30 close of the second quarter, raking in $34.4 million—even though he doesn’t face a single opponent in the primaries. Bush Inc. lauded the fact that 105,000 individuals donated at least a dollar as evidence of the “broad support” and “overwhelming enthusiasm” for the president. But more than two-thirds of the total money came in $2,000 checks—the maximum individual contribution allowed under the law. (By comparison, Dean raised more than 50 percent of his $7.6 million in contributions of less than $200.)

Bush, who opted out of the public matching funds, plans to raise and spend at least $200 million before the September 2004 Republican National Convention. (Afterward he will take $74 million in public funding for a two-month sprint to the general election.) Twenty-three individuals have already qualified as “Rangers” by collecting $200,000 for the president; another 45 have passed the $100,000 “Pioneer” threshold. “[It’s] sort of like pyramid fundraising,” first-time Ranger Eric Tanenblatt told The Associated Press. “If you find 10 people and they each raise $20,000, that’s $200,000 right there.” (It’s worth noting here that Amway founder Richard M. DeVos was one of the original Pioneers.)

For $2,000, you might get a lukewarm hot dog. A snapshot with Dubya goes for $20,000. Closer to the top of the pyramid scheme, the Rangers and Pioneers are eyeing ambassadorships and access to Dick Cheney’s undisclosed locations. The energy traders and oil barons who populated the Pioneer list in 2000 can testify to priceless returns on their donations in the form of loosened regulations and no-bid federal contracts.

In the language of Wall Street, Bush is a “screaming buy.” Just ask the investment bankers and analysts whose firms comprise 12 of the top 20 groups of Bush donors so far. Merrill Lynch led the way with $264,750 in donations from employees and their family members, according to the Center for Responsive Politics, and CEO Stan O’Neal was deputized a Ranger. O’Neal—whose firm has paid out $280 million over the past two years to settle state and federal charges of fraud and financial wrongdoing—didn’t contribute to any presidential candidate in 2000. But he knows a good investment when he sees one.

With the media’s help, the “money primary” allows big corporations and the wealthy to cast their ballots early and often. What’s left for the 99 percent of us who don’t play the political market by contributing to any federal candidate? We’ve still got a vote—just not many choices.

Craig Aaron is senior pro­gram direc­tor of the nation­al media reform group Free Press and a for­mer man­ag­ing edi­tor of In These Times.
Limited Time:

SUBSCRIBE TO IN THESE TIMES MAGAZINE FOR JUST $1 A MONTH