Under Howard Dean’s leadership last year, the Democratic National Committee (DNC) raised about $50 million less than the Republican National Committee (RNC). And the DNC spent every dime (and then some) that it did raise last year. Mr. Dean and the DNC entered the 2006 election year with less than $6 million in cash on hand. Indeed, the DNC had less money in the bank at the beginning of 2006 than it had on Jan. 1, 2005, just several weeks before Mr. Dean arrived. Meanwhile, with $34 million in cash on hand at the beginning of 2006, the RNC had nearly six times as much cash as the DNC.
Political parties entered a new fund-raising era immediately after the 2002 elections. At that moment, the McCain-Feingold campaign-finance legislation prohibited national party committees from accepting the unlimited, unregulated “soft-money” contributions from wealthy individuals, corporations and labor unions — often donated in multimillion-dollar increments. Henceforth, national party committees, including the parties’ national Senate and House campaign committees, would have to rely solely on “hard money” contributions, which are limited funds donated by individuals (a maximum of $26,700 per year per national committee, subject to a two-year aggregate total of $61,400) and by political action committees ($15,000 per year per national committee).
Over the four years from 1999 through 2002, the RNC collected nearly $50 million more in soft money ($280 million) than the DNC ($231 million) received. But the RNC advantage over the DNC in “hard money” was much bigger. In fact, the RNC’s hard-money contributions for the 1999-2002 period ($383 million) were twice the level of the DNC’s hard-money total ($191 million). Notwithstanding the RNC’s gargantuan hard-money advantage through 2002, the DNC defied all conventional wisdom by raising more hard money ($394 million) than the RNC collected ($392 million) during the 2003-2004 cycle.
Interestingly, the DNC’s 2005 fund-raising receipts of $56 million were nearly 30 percent above its 2003 total, while the RNC actually raised less money in 2005 ($105 million) than it did in 2003 ($108 million). Because the DNC under Mr. Dean had spent nearly 65 percent more money during 2005 than the DNC spent in 2003, the DNC is entering the 2006 election year with $5 million less than it had entering 2004.
The real party money, of course, is raised in an election year. In 2004 alone, admittedly a presidential year, the DNC raised about $350 million in hard money. That was $65 million more than the RNC raised in 2004. Beyond the nearly $400 million the DNC raised during the 2003-2004 cycle, Democratic presidential candidates collected another $343 million in hard money from individuals, who could contribute no more than $2,000 per candidate. John Kerry alone raised $196 million in hard money during just seven months in 2004 (and foolishly finished the campaign with $16 million in the bank, money that could have been legally diverted to Ohio, which he lost by 2.1 percentage points, costing him the presidency).
If 2004 is any guide, there clearly are hundreds of millions of Democratic hard-money dollars potentially available to the DNC this year. Whether Mr. Dean can pry that money loose may prove to be the biggest factor determining which party can claim victory in November.
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