The hard reality of 'soft money'

By Tom Hamburger and Peter Wallsten

Aug. 16, 2008 12 AM PT

Times Staff Writers

WASHINGTON —

Facing a large deficit in the Democratic National Convention budget, officials from Barack Obama’s campaign have begun personally soliciting labor unions and others for contributions of up to $1 million. In exchange, donors could get stadium skyboxes for Obama’s acceptance speech and other perks.

Obama has regularly criticized politicians seeking large donations outside the framework of campaign finance regulations -- so-called soft money -- while touting the virtues of relying on small donations.

But campaign officials last month reluctantly decided they had to take a hand in raising large donations from individuals, unions and corporations. Some of the donors get special bundles of perks, including use of the party suites at Denver’s Invesco Field, as well as special policy briefings by Obama advisors, choice hotel rooms and party invitations.

What caused the shift was evidence that the Denver Host Committee was having trouble raising the estimated $60 million in cash and in-kind contributions needed to fund the convention, which runs Aug. 24-29.

Partly as a result of the boost from Obama’s campaign, most of the goal has now been met, said Steve Farber, the Denver lawyer helping to lead the effort. In mid-June, the Denver Host Committee’s fundraising team reported that it was $11.6 million short of reaching a funding goal.

In an example of the campaign’s late-innings effort, a very senior Obama campaign official called the political director of one of the largest labor unions about two weeks ago and asked for a $500,000 contribution on top of a similar amount that had been committed just a few weeks before, according to the union official.

Lawrence Scanlon, the political director of the American Federation of State, County and Municipal Employees, said that since AFSCME had already contributed, he declined to contribute more, urging the campaign to seek donations from wealthy individuals or corporations to help pay for the convention so that the union could spend its funds on voter outreach.

A spokesman for the campaign, Hari Sevugan, declined to say whether Obama himself had become involved in these fundraising efforts or to confirm any details of work done by others from the campaign.

“We are working together with the convention committee on many levels to ensure a successful convention this year,” Sevugan said. “As we announced earlier, moving forward, one of Sen. Obama’s reform priorities will include changes in the way party conventions are funded to assure they can be run without dependence” on soft money.

Donations made to convention host committees are not covered by federal donation limits. As a result, corporations and wealthy individuals can donate unlimited sums under the premise that the committee is promoting civic pride and economic growth, not a political cause.

However, the leadership ranks of these local fundraising committees are dominated by political partisans and elected officials.

In Minnesota, similar appeals are being made by Republicans to fund their September convention in Minneapolis-St. Paul.

“Both conventions are bringing in new fundraisers connected with the presidential candidate to go the last mile,” said Steve Weissman, a reform advocate with the Campaign Finance Institute. Weissman said that the campaigns’ involvement in raising these large-dollar contributions contradicts the reform rhetoric both candidates employ to win votes.

Big-dollar donations from corporations and wealthy individuals hark back to the days before the Watergate scandal when big checks from such sources were a staple of campaign fundraising.

Rules now limit the amount individuals or groups can donate, but there remains a loophole for conventions.

The Service Employees International Union has already committed $500,000 to the Democratic convention and an undisclosed sum to the Republicans.

In addition, a new labor consortium it belongs to, Change to Win, has been asked to donate. Other unions that are members of Change to Win, including New York-based Unite Here, have made unspecified donations to the Democrats’ host committee. The American Federation of Teachers donated $750,000 last month.

For the GOP convention, the Twin Cities Host Committee recently turned for help to a strong supporter of Sen. John McCain’s candidacy, Robert Wood “Woody” Johnson IV, owner of the New York Jets. Committee Chief Executive Jeff Larson said it now is close to meeting its fundraising goals.

After Obama became the clear nominee, a member of the Denver Host Committee’s executive panel, Rep. Diana DeGette (D-Colo.), approached the Illinois senator, telling him that the committee would need the campaign’s assistance in raising funds. Obama did not respond in any detail, she said.

Since that conversation, Farber has been in touch with Obama’s chief campaign finance advisor, Julianna Smoot, and others from the finance team.

The campaign team provided the host committee with the names, addresses and telephone numbers of likely donors and dispatched a fundraising expert, Jon Rotenberg, to help.

Use of Invesco Field skyboxes as a fundraising tool provides a positive ending to what was at first considered a financial headache. When Obama announced that he planned to deliver his acceptance speech at the outdoor stadium, campaign officials estimated that it would add about $6 million to the convention’s cost. Since then, the sale of the $1-million packages has been highly successful, with many of the boxes selling out.

Those paying the $1-million price tag will get skybox tickets for 25 people and an additional 50 regular tickets to Invesco Field.

What’s more, donors will get occasional access to skyboxes at the Pepsi Center, where the rest of the convention will take place. Donors will also have access to private parties and receptions.

Obama spokesman Sevugan insisted that none of the campaign’s involvement with large-dollar convention funding indicated a weakening of Obama’s resolve to reform the system.

Sevugan said: “In addition to his commitment to reform the convention funding process, Sen. Obama has also taken unprecedented steps to curb the influence of money on the political process in refusing contributions from PACs and Washington lobbyists, money raised by them, and asking the DNC to do the same -- all steps that John McCain refuses to take.

“While we recognize that the steps we have taken are not perfect or even a perfect symbol, they do reflect the fact that Barack Obama shares the urgent desire of the American people to change the way Washington operates.”

tom.hamburger@latimes.com

peter.wallsten@latimes.com

Times staff writers Peter Nicholas and Vimal Patel contributed to this report.

(BEGIN TEXT OF INFOBOX)

Convention funding

Some top donors to both upcoming events:

For Democrats

Qwest Communications: $6 million

Xcel Energy: $1 million

Level 3 Communications: $1 million

Molson Coors: $1 million

Union Pacific: $1 million