Herbert Alexander
The Alexander Collection
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Item Number
Donated by Herbert E. Alexander,2008
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9t I'- assuming this alt got rolling, this idea of putting some kind of timit on contributions,
during \ilatergate.
Alexander: The limits go back to 1940. They have been in federal law since then. But under the
federal election campaign amendments of l974,they were enacted with real teeth. There was a federal
election commission to enforce the law, and there were other kinds of cultures which came into play in
the 1970s, which had not existed prior.
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Q:
Sor when Congress was
reacting to something, what were they reacting to in t74?
Alexander: In part,-to Watergate, although the Federal Election Campaign Act of l97l predated
Watergate. [Some Nixon supporters] used corporate funds which *.tã piohibited, and filtered them
out into political contributions. In one very famous case, George Steinbïenner, who was chief
executive officer of American Shipbuilding Company in Cleváand, paid extra money to employees
to
cover their political contributions. And not only $2,500 contributions that were received in exträ pay,
but $2,500 extra to cover the taxes that were involved on these individual salaries.
f.t me try to understand this. He said,I want everybody in this company to give to Richard
Nixon's candidacy, give x amount of dollars, and I'll pây you back and l^'ll pay your taxes on it?
9i
Alexander: That's right...When Congress looks at a scene like that, or looks at a scene where people,
that was money in bags or something, or briefcases, some of it was in cash, and there's no ceft;inti
about the source of the money, but it's understood that some of the money ôame from corporate f*dr,
and therefore was illegal. Because since 1907 there has been a federal próhibition of corpärate
contributions.
Q: So, one thing that came out of that was, rl,etrs limit the amount of money that anybody can
give to a Presidential campaign, or make it $1,000 tops.' Is that number stili in ptacet
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Herbert Alexander
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Alexander: That number is still in place.
Q: And itrs never been adjusted for inflation?
Alexander: It has not been indexed, and it should have been. The reason is that if one counts a
thousand dollar contribution today, considering the value of the dollar as of January I,l97S,when that
law went into effect, a $1,000 contribution today is worth about $300. And that acóounts for some of
the excess activity by candidates, the amounts of time that they spend. Because, in order to get $1,000
value, they have to raise three times as many contributions today as they did back in 1975 o1,76.
Q: So, putting a thousand dollars as a cap, which made perfect sense in l974rat this point means
you turn these people who want to be in public office into scurrying rabbits.
Alexander¡ One ofthe things that the contribution limits have done, they have exchanged the big
giver for the big solicitor. And prior to that introduction of contribution iimits which wére enforc-eable
-- of course, an individual could give25,50 and $100,000 and that would be ample. Today there are
networks of people who are able to raise contributions up to the maximum, in amounts of $1,000.
Some people can have a fund-raiser at their home, and not everybody who comes will give $i,OOO
because they like the candidate. They may want to see the homè, it may be a fabulous ñorn, to visit.
But the point is, there are networks of people, and what the contribution limits have done has put a
premium on networking on lists. And the lists, of course, apply not just to individuals that¡1eãt ¡¡ndraisers, but also to direct mail specialists, also to political aclión committee managers, because they
have lists of employees in the company who are in the union.
Q: So' the valuable fellow says, 'You need money and I've got 51000 people that
you $100?'
I know will
give
Alexander: Well, I at least know 5,000 people to whom I can ask for money. Maybe not all will give.
Q: So, the paladin of the Rolodex, he who has the Rolodex is more valuable now?
Alexander: Yes, he who has the Rolodex and has the network of friends is most able to raise big
money in thousand dollar amounts. But the same thing applies to selling tickets to a fundraising"event,
a thousand dollar-a-plate dinner, five hundred dollar-a-plate dinner, whãtever the event. The po-int
is,
that the people who you will note who are the sponsorJare the people that may have some business
connections that may be helpful as well. They may not have 5,000 hiends. nut ttrey may go to their
creditors, they may go to their purchasers and others, suppliers and others.
Q: What has happened to the life of the candidate that needs a thousand dollars?
Alexander: The candidate today tends to spend a greatdeal of time raising money.
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Q: Would that have been in lg41?
Alexander: Well, just because of the erosion of the value of the dollar that I mentioned, I think that
mayþe they're spending three times as much as they were twenty years ago, raising money. But
that's
not the whole story, because in these twenty years ihere's also bãen an eõaiation õf costs, political
costs have risen. And so in that circumstance it's not just a question of raising maybe u ¡nitiion
dollars,
but maybe today two or three million dollars.
Q: So you know yo_u've got to pay those TV people and those radio people to get heard, and
you've got to get a lot of air time to get really heard, and you stilt have ihis thóusand dollars.
I
mean' you are like a hamster running around, raising and raising, it seems like. Is that right?
Alexander: 'Well, there is a whole list of stories and some horror stories that can be told about the
extent to which fundraising takes place, particularly within the Washington, DC area, what's called
the
Beltway, but elsewhere around the country as well. And in Presidentiaicampaigns, oîcourse, this
system is widely used to enable candidates to raise enough money in order tä cõntést effectivãly. The
impg{ant thing for candidates, from their point of view,ìs to have sufficient funds to tell their iory.
And, it's worth stating that commercials on television, for example, have to compete with all other
kindsof advertising on television, and the purpose is to gain the viewer's attention. And sometimes in
only thirty seconds, sometimes even fifteen seconds.
Q: But meanwhile you're stuck with these $1,000 limits.
Alexande-r: Today a campaign headquarters is a lot different than it was 30 or 50 years ago. The
proverbial people, we used to say housewives, who went to the campaign headquarters
to lick
envelopes aren't needed anymore. Because tgday so much of the potìticãt campâigning for a major
offtce is parceled out-. A professional campaign manager is hired, professional poltrt.Ã ur" ur"d,
advertising people wlo
\1ory the ways i¡r whlch to gain attention.-So there areã number of skillÁ,
computer experts, and with the complexity of the laws, now political lawyers and political accouítants.
And so all these skills are_ necessary in a major campaign. And in fact, in order foia campaign to
be
considered serious, there has to be suffrcient money up front to hire some of these experts.
Q: Let's pretend that lrm a serious candidate for President and I want to be taken seriously. I'm
going to appoint you as my fund-raiser. How much money would I need to get a serious
shät at a
nomÍnation of a major political party? Just front money.
Alexander: I would say l5 to $20 million, plus matching funds.
Q¡
If I only could raise
$3 million, would I just not be noticeable?
Alexander: Well, that's not the case. In 1991 and l992,for exampl e,PatBuchanan spent
about 5 or 6
million' but was certainly noticed as a contestant againit the incumbónt presid.nt, Grãrg" Bush.
But
you see, some campaigns, such as Buchanan,.and maybe now Forbes, are
utilizrd u,
on
issues and not necessarily with a view to getting nominated. And so one has
"ru"ruding
to recognize
thatîot all
candidates necessarily deceive themselvei into thinking that they're going to
bothe chosen one at the
Democratic or Republican Convention.
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Herbert Alexander
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Q: The original limits were $1,000 for individuals, and then there was another limit for political
action committees, $51000. Does this mean that if lrm a candidate I should concentrate more
on
the PAC money than on the individual money because I get a five-fold yield from the pAC
money?
Alexander: In the case of Presidential campaigns, PACs are not big players. pACs are much larger
players with respect to campaigns for Senaie and House.
Q: In addition to making the candidate have to work harder for the dough, doesn't this system
where they have to ask make them seem like theyrre offering something lo"
-orr.y? It's just an
undignified way to do it, it would seem to me.
Alexander: Well, it. may be undignified, and some candidates berate the system and say that they need
to spend too much time.raising money and they don't like to ask for money. But on the-other hanã,
the
United States has a tradition of volunteerism, in charities as well as in polítics. Most of the money
does
come from the private sector, and so there are long histories of the abifity of charities and politicíans
to
raise money from the private sector. Money, in thõ pofitical sense, is a sðarce resource.
It's hard to
raise, but nevertheless is essential in order to enable campaigns to do the things that they
think
necessary in order to gain attention.
Q; Does it diminish the dignify of government? If I look at the US Senate, I see all these guys
have traded their time and money for something, so I donrt trust the whoie lot of
them.
Alexander: Well, for example, from 1972 until l 986, it was possible, if I made a political
contribution, that I could take a tax credit for that. In other wôrds, thiÁ was un e**rpl. of the
tax
system being utilized on behalfof politics. But it was also dignifiing the process of contributing
in
small amounts, by saying_that giving to politics is somewhat simitaito giving to a charity,
and I-can
take a deduction or a credit for it. But thãt law was repealed in 1986 unðhur'not been
on ittr books
since. And so there is less government involvement iñ digni$ing the act of contributing.
But that was
a conscious effort back in the seventies and eighties, to gãt pãopI" to contribute
small aãounts and get
a tax benefit from it.
Q: Well' that's a technical answer to n{y q_uestion. Irm just asking for the gross standpoÍnt. If you
look at the US Senate, there are a hundreä guys, and tñey've got-a trillion"dollars
they got from
somebody and you trust them to govern you honestly?
Alexander: The gross answer is that a lot of people perceive that the system is gross, if not
corrupt.
And therefore, it is true that a lot of these candidãtri*. out there sctoúnginjfoi dollars. part
reason.is that money is a scarce resource, it's hard to raise, and therefotr
more time raising it as costs escalate.
of the
i'hrf n..d to spend moreand
Q: Now, we have a whole other section of activity that seems unlimited. How come there aren,t
any limits in that zonerthe so-called soft money íone?
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Alexander: If you're referring to soft money, I don't call it a loophole, it was a conscious effort on the
part of Congress to enable the political palie¡ to participate in piesidential campaigns.
Soft,,non.y i.
now used_for other purposes as well, but the initiã purpose in tÎre 1979 amendmenls, the Federal
Election
Çafnalen Act, were to give the parties a majôr role in the presidential campaign. Because
after the Federal Election Campaign ect òf 1974 --
Q: No limits at all?
Alexander: No limits at all. And in fact, until 1991, there was not even disclosure, there was some
voluntary disclosure of the soft money that was raised by political parties. But until the Federal
Election Committee in l99l initiated the system of disciosure, we ãidn't even know for sure how much
money was being raised and spent in this regard.
Q: Let's suppose' knowing that I can only raise $1,000 per person and $5,000 for the pack, let's
suppose' instead of a dinner for me, Bob Dole, I have añ inñer core, the
'Republican Ñatioíal
Get Out the Vote Committeer and I invite everybody I know to a $200,000-a-ptate dinner. Can I
do that?
Alexander: You can do that.
Q:"$500,000?
Alexander: You can do that.
Q: A million dollars a plate?
Alexander: No limit. But the purposes for which the money is being used ostensibly are good reasons.
In other
lords, the purposes are to enable the parties to help registeivoters, to get out the vote on
Election Day.
happgne{ to the original purpose, which was we donrt want people to give
Y4! what
to a campaign? And now, under this may I catl it a ruse? undõr tñis I'võ got the
899'9gq
$500,000 magically freed up
9:
for me.
Alexander: If that's the case, but the money is being used for purposes that are considered in
some
cases non-partisan, because they're used for registration, get oùt tñe vote activities.
The money cannot
be spent directly to say, Vote for Dole, Vote for Clinton. Án¿ ttr. result is that money
is filteräd
through the state party committees for pu{pose of registration, get out the vote primarily.
And for those
circumstances it is considered to be a good functionãf the pary.Now wheth.rìt', gooá
fo,
contributions to be made in.such large sums is another_quætion, and in that regard
íwould say that it,s
unfortunate that the parties have come to rely on such lárge contributions for
tñese good purpóses that
they use the money.
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Q: What proportion of a Presidential campaign is now in this sort of unlimited category?
Alexander: First of all, it's not in the pre-nomination period in which this soft money is used, but it's
in the general election period, from the time the candidates are nominated in July anã august, through
November. In 1992 the federal law set limits on the amounts that candidates could spenA,"roughlv $3S
million, and all that was taxpayer dollars in the public ftrnding. Another $10 million that ihe nãtiónal
parties could spend on their behalf in coordinated expenditures. And then, from the time the candidates
were known, that is when it was known that Bush would be re-nominated, it was known that Clinton
would be nominated, both the major parties raised and spent something on the order of $20 million
each. So, out of $65 million you had another $20 million in soft money. And that may vary. In some
years it may be $20 million, in some years it may be 30. It's about a quarter as much,-again.
Q: So, a fourth of the money comes in without limit?
Alexander: Yes. And the bulk of the rest of the money comes from public money.
just give yol a couple of other for instances. We've already had my dinner with
Q: Noyt let me
the million, trillion dollars. Suppose I have a charity that I'm very interesied in and people give
money to my charityr perhaps only to get my attention and my favor later. Is that wiitrout lim¡tf
Alexander: Absolutely. And Senator Dole has had a charity through the years for disabled people, and
he himself is disabled, as you know. So this is one of his inierests. Ând hð has raised many mittiois of
dollars over the years for that purpose. But to throw that in with political contributions, eiiher hard or
soft money seems to me an exaggeration. And there are studies which begin to put together apples and
oranges and bananas.
Ilm just asking as a matter of fact. Suppose lrm fascinated by economics, like Bitt Clinton was
!:
just before he was inaugurated.
So I hold a big conference called the Economic Summit.
someone contributes to that conference, can they contribute without campaign limit?
If
Alexander: That was during the transition period in l992,and yes, unlimited contributions could have
I think the Clinton people put limits on the amounts that any corporation could give.
However, some of the people who were invited to attend that Summit wereþeopie who had
contributed either directly to the Clinton campaign, or soft money for the Dåmocratic National
been made. But
Committee.
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