The $100,000 Club : How an Audacious Goal--and a Legal Loophole--Helped the Democrats Land the State’s Most Generous Donors

LATE LAST SPRING, when Robert A. Farmer, chief fund-raiser for Michael S. Dukakis, developed his plan to raise $50 million for the general election--$20 million of that by canvassing the wealthiest Democrats in the nation for $100,000 each--John L. Battaglino Sr., like most people, was taken aback. But Battaglino, Dukakis’ lead fund-raiser in California, dutifully sat down with his key players and mapped out a list of targets--still unsure whether people would laugh, scream, or reach for their checkbooks when he asked for a sum that large.

The first person Battaglino went to see was Lew R. Wasserman, the venerable chairman of MCA Inc., whose blessing was worth as much as his check. When Battaglino asked him if he might consider contributing $100,000, Wasserman didn’t blanch. “Fine,” he said. “When do you want it?” Battaglino went back to his office and thought: Maybe Farmer isn’t crazy.

He wasn’t. Farmer came out to Los Angeles on June 8 and, with the California team in tow, went to see Wasserman, Robert L. Burkett (political aide to investor / producer Ted Field), Fox Inc. Chairman Barry Diller, savings and loan executive Carl Rheuban, Korean businessman Richard Park and developer Eli Broad. A few of them breathed deeply, but no one blinked when Farmer came to the bottom line.

Broad wanted to think about it for a while. Broad has long been a major figure in Los Angeles civic and cultural affairs--he was the founding chairman of MOCA--but he hadn’t been involved in a presidential campaign since 1968. He had considered helping Dukakis earlier, but his conversations with the campaign hadn’t worked out. Then Burkett called and asked him to give the Massachusetts governor another look.

When the Dukakis entourage came to his Brentwood home and “asked for $100,000, I thought they were a little ambitious,” he recalls. After they left, Broad thought about the issues that concerned him: affordable housing, federal support for the arts, education. He concluded: Better to take a flyer on Dukakis, who might make a difference on all of them, than “to give to MOCA or tidbits to education.” And another name was enrolled in the Dukakis $100,000 club. Through Oct. 1, the Dukakis fund-raisers had persuaded 31 Californians--of 131 people nationwide--to part with $100,000.

Why can an individual donate so much to the presidential campaign? Would you believe bumper stickers? Both parties are amassing their millions this year through a loophole Congress opened to remedy the great bumper-sticker dearth of the 1976 presidential campaign, the first one conducted under the public financing laws. In that campaign, the state political parties were only allowed to spend $1,000 promoting the presidential tickets. Since President Gerald Ford and Jimmy Carter spent most of their money on television, there was no money for the paraphernalia of grass-roots campaigning.

Congress reacted in 1979 by passing legislation that allowed the state and local parties to make unlimited expenditures on “party building” activities--such as printing brochures, or more important, running campaigns to register voters and turn them out on Election Day.

Here’s where it gets complicated. Since those “party building” activities theoretically assist all candidates on the ballot, only the portion of those expenditures that help federal candidates have to be paid for with “hard” money--that is, contributions subject to the limits and disclosure requirements that govern federal elections. Individuals cannot give more than $5,000 to a state party in hard money.

But the remaining portion of party-building expenditures--the share that assists state and local candidates--can be funded with so-called “soft money,” which is not subject to the federal rules.

It is through the soft-money loophole that the candidates are able to raise unlimited funds from big-money donors in the general election. Because the Federal Election Commission has not issued strong guidelines on the subject, the parties have allocated most of the expenditures to state candidates, which allows them to be funded with unregulated soft money. If they allocated the expenditures to the presidential campaign--which is, in fact, their real focus--the parties would have to pay for them with the more stringently regulated hard money.

Many donors are overwhelmed by the uninhibited fervor of the presidential campaigns’ fund-raising this year. “I believe that the federal election laws have been subverted legally,” Barry Diller says. “There’s not a good thing to be said about the amount of money that’s spent, as well as the money-gathering that it necessitates. It’s rotten--rotten to the core. I don’t think that the American public knows the election is being run on this basis.”