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Q3 fundraising winner: political industrial complex

At the federal level, the term “campaign fundraising” is a partial misnomer. That’s because the majority of such funds does little to run competitive political campaigns. Instead most simply “feeds the beast,” meaning the vast political industrial complex of attorneys, accountants, pollsters, consultants, marketers, fundraisers, message gurus, web service professionals, and retained campaign staffers who get paid in and out of campaign season and whether or not a candidate runs in a competitive race.

Think of the political industrial complex like the “Feed me, Seymour” plant in the musical Little Shop of Horrors. It eventually has grown so large it dominates everything else, including its so-called master. This explosive growth can be seen in the raw amounts spent during the last four presidential election years:

A great example of this out-of-control gigantism is found in a recent tout by the National Republican Senate Committee (NRSC). It trumpeted raising $76 million in the first three quarters of this year as part of its effort to win back control of the 50-50 Senate in the 2022 midterm elections. Given Senate campaigns won’t start in earnest until after New Year’s Day, you’d think the vast majority of this haul is being banked. But that’s not the case. However, the NRSC has already spent nearly $50 million – or nearly two-thirds.

Some money has been spent on polling, focus groups, strategy consultants and some very surgical early ad spends in key states, but the vast majority is spent essentially as retainers to the political industrial complex. And members of this political service class are very well paid indeed. Consider that the three richest counties in the U.S. are in the D.C. Metro area (Loudon, Howard, and Fairfax counties). Include Arlington County, and that’s four of the six richest counties.

For a closer look, let’s examine the fundraising and spending patterns of the California Congressional delegation as a whole and a couple niche groups.

Entire California Delegation

California currently contributes 53 members to the House of Representatives – which will drop to 52 next Congress. In the first three quarters this year, California’s House incumbents raised a whopping $72 million, but have already spent $42 million of it, or just about 60%.

Of course, skewing this slightly is this includes the huge donation hauls by the two most powerful members of the House, Speaker Nancy Pelosi and Minority Leader Kevin McCarthy. For just their campaign accounts, both have raised more than $9 million each and spent roughly $7 million each.

Excluding these two unique cases, the average California House member raised more than $1 million each in the first nine months this year and have spent more than half of it. And little of it on any concrete campaign work. Given no more than eight California’s House seats will be competitive in the 2020 midterms, very little of this money – and what will be raised in the remaining five quarters – will be spent on actual campaign work.

Why do donors keep giving it? Well for the very rich and corporate donors, they don’t care how their donations are spent, just as long as the recipients know how to return their deep-pocketed favors. For individual smaller amount donors, many are well-meaning, earnestly feel their donations are helping fix a broken system, and that their representative is different from all the rest. But would they keep giving if they knew the majority of what they give is simply feeds an ever-growing beast that handcuffs any real change?

For an illustration of how exactly an incumbent in a safe seat spends all that money, see this piece “How Ami Bera dropped $1M in cash without really trying.” And here are also the spend rates for the three Sacramento area incumbents in the safest seats:

The Competitive Districts

As noted before, at most eight of California’s House seats may be competitive in the 2020 midterms (though this could maybe change based on the final district boundaries approved by the nonpartisan California Citizens Redistricting Commission). Below are the four Democratically held districts the GOP is targeting in the midterms and the four Republican-held districts that have swung back and forth between the parties each of the last two cycles.

A tip-off these campaigns will be more competitive is the fourth column, the “burn rate.” This is what percentage of money raised so far has already been spent. Naturally, the more money that is needed, the more candidates want to bank for the prime campaign season. But note, in gross dollar amounts, still a lot of money is being spent very early. Some of this goes to the fundraisers, who typically get 15% of every dollar raised. Some goes to pre-campaign strategic work and campaign infrastructure, but the rest goes to feed the political industrial complex.

The above list does include two big outlying numbers worth noting. The first is Mike Garcia who has an atypically high spend rate (61%) for a competitive seat. His district though is the most up-in-the-air due to redistricting. California will lose a House district and most of the population decline that caused this happened in the Los Angeles area. Thus a decent chance exists Garcia’s district largely merges with a neighboring Democratic district and/or the Republican parts of his district merges into McCarthy’s district to the north.

But none of this is guaranteed. So it is anyone’s guess why Garcia is spending so lavishly so early. The other big number on this list is Orange County Rep. Katie Porter. Her burn rate is a tad higher than most on this list, but she has also raised by far the most and spent the most. The explanation for some of this is related to our next subtopic:

The Feinstein Watch

California’s senior Senator Dianne Feinstein has not officially announced her retirement at the end of her current term that expires after the 2024 election, but she doesn’t have to. Her funding raising does all the talking. According to the Federal Election Commission (FEC), Feinstein has reported raising this year a grand total of $3,045.83.

She has also disbursed just $30,000 this year, which normally would be unacceptable amount for feeding the political industrial complex. She also has yet to donate anything to Democratic campaign committees over the last three years.

But the political industrial complex is not completely upset. Two of the top expected contenders for Feinstein’s seat are Reps. Adam Schiff and Katie Porter. Schiff has more than $15 million on hand, even after spending $5 million this year — including $400,000 donated to the DCCC. Porter has spent $3.3 million so far this year, including $125,000 donated to the DCCC, and has $14.5 million in cash on hand. However, Porter also will have a more competitive midterm re-election campaign that will eat into that total.

Then there’s the question what happens if Feinstein retires early and Newsom fills the seat? If Feinstein’s successor isn’t either Schiff or Porter, then Newsom’s appointee will have a lot of fundraising catchup to do — and a lot of feeding of the beast. So from any angle this is all win-win for the political industrial complex.

The Longer Shots

A few last notes on some Sacramento-area opponents of incumbent members of Congress. At the moment, all of following three would be described as longshots, but with the caveat that much can change quickly in politics from redistricting shifts to major fundraising quarters to the emergence of hot-button issues. Here’s a fundraising snapshot of the trio:

There’s intriguing in the numbers of each candidate. Tamika Hamilton has raised – and spent – the most. Dr. Kermit Jones in just two months has the most on hand, but has the steepest hill to climb. And Jimmy Fremgen posted an interesting first quarter but is trying to excite a large but historically uninspired Progressive base.

In terms of Hamilton, her first-time showing in 2020 surprised most by losing by just single digits (9 points). This is partly why the National Republican Congressional Committee (NRCC) flagged her race as one of four Democratic held California Congressional seats they are targeting. But her sky-high burn rate (78%) shows that despite the NRCC spotlight, she has had to spend an awful lot to raised her first $300,000. In the third quarter alone, she spent nearly $115,000 on political consultants and other political services.

Hamilton told the Sacto Politico in July she feels her campaign needs to spend a lot to raise a lot, and she has faith it will click soon. It probably will need to because the NRCC has a history of backing away from early “target districts” in California to focus on retaining currently held seats. See Andrew Grant in 2018 who faced a scandal-tainted incumbent in Ami Bera. Bera narrowly won in 2016 against an equally tainted Republican, but during the general election, the party put its attention and fundraising elsewhere leaving Grant without enough money to mount TV advertising. He lost by 10 points.

In the CA-4, Dr. Kermit Jones would appear to be off to a great fundraising advantage with $314,000 raised in his first two months and a low burn rate. However, Democrats love showering money on this solidly red district and it has proven a money pit of losses. In the last two election cycles combined, Tom McClintock has been outspent by $2.5 million, but the closest the Democrat came was an 8-point defeat in 2018. Redistricting could help Jones a point or two, but since he is less moderate than Brynne Kennedy in 2020, he will need a lot to break his way.

Numbers-wise, the greatest opportunity to upset a local incumbent is the least obvious. It’s Doris Matsui in Sacramento who is opposed by Jimmy Fremjen. Her middle of the pack voting record, rich corporate backing and marriage to energy industry billionaire Roger Sant makes her far more moderate than her district. Consider that slightly more than half of Democrats in her district voted for either Bernie Sanders or Elizabeth Warren in the 2020 presidential primary, and Matsui is one of the biggest takers of money from the nation’s largest opioid makers and distributors. So there has long been an opportunity for a well-backed Progressive challenger.

But in federal races, Sacramento Progressives generally disregard the political truism to “think globally, act locally.” Last cycle, Sacramento County Progressives sent millions of dollars in donations to support Progressive candidates and causes outside the county, but did little to make this fight locally against Matsui and Bera. Can politically experienced but first-time candidate Fremjen inspire interest from Sacramento County Progressives? That will be his challenge.

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