The race has narrowed since the first Follow the Money report, but the press is so focused on delegates that no one is asking where are the donors going? It is another example of the mainstream media and mainstream blogdom’s tendency to behave like a herd of spooked sheep, running from one story to another so it doesn’t really matter which paper or blog you pick up they all will be focused on the same thing. Right now “superdelegates” is the new buzzword.
So are there any trends in the donors of the candidates who have dropped out? Are they moving to either Clinton or Obama? Which ones are moving? The January funding reports have just been released, so the entire impact of the candidate withdrawals does not show. However, there are some interesting trends.
The major one has received enough comment that it is redundant to say much other than to note in January Obama raised twice as much money as Clinton–$36 million to $18 million– and by the end of the month had pulled ahead of her in total funds raised–$138 million to $134 million. A plug here that all these data come from Open Secrets.org.
Contrary to several media reports, the data show Obama outspent Clinton, $113 million to $105 million and that at the end of the month Clinton had $5 million more cash in hand. The ominous sign for Clinton is that her campaign had $7 million in debts at the end of last month, while Obama’s debt was only $1 million.
Barack Obama Comparisons
As for the big donors here are the comparisons from December with the new report.
Charts: Center for Responsive Politics
For Obama, the interesting trend is the large jump in contributions from UBS AG, a Swiss company that, according to their web page, is the leading global wealth manager and one of the largest global asset managers. UBS employs over 80,000 people, with 39% in the Americas. The firm has existed for over a hundred years, but until the 1990s, was mainly a Swiss company. Then it went on a global mergers and acquisitions spree, much of it in the United States. Among its biggest acquisitions were Paine Webber and Dillon Read. But the firm’s history notes:
The alliance with the Chicago-based derivatives house, ’Connor & Associates, was a pivotal event in the bank’s
evolution. When it entered into a joint venture with O’Connor n 1989, SBC started a process that would ultimately transform not only the bank but the entire Swiss financial sector.
Two interesting skeletons in UBS’ closet have political implications. According to a February 27, 2007 story by World Law Direct (a major online provider of legal services) :
Swiss banking giant UBS has agreed to pay $100 million, one of the largest fines ever against a securities firm, after admitting that some former employees had violated Federal Reserve Board rules by transferring U.S. currency to Cuba, Libya, and Iran.
In other words, Obama’s second largest campaign contributor was illegally funneling money to three of the world’s more notorious dictatorships.
Not long after that, UBS head Peter Wuffli resigned after revelations surfaced about UBS’ involvement in the subprime lending fiasco.
Massachusetts Secretary of State William F. Galvin said Tuesday he had ordered UBS Securities and Bear Stearns to turn over documents concerning their analysts’ recommendations on subprime lenders such as New Century Financial.
Hillary Clinton Comparisons
As for Hillary Clinton, her top four contributors are exactly the same as they were in December, with the world’s largest law firm (and lobbying firm) DLA Piper at the top of the list.
Charts: Center for Responsive Politics
What is notable about Clinton’s contributors is the drop in rank of EMILY’s List, the organization dedicated to electing pro-choice, female candidates. From December to January, EMILY’s List increased its contribution by only $2,000 at a time when Clinton desperately needed their support. Whether EMILY’s List is running short on cash or this represents a shift in donations by members is an interesting question. The shift does seem significant. Yet one of the major stories on the EMILY’s List website trumpets the organization’s stumping for Clinton in Texas:
The 2008 WOMEN VOTE! program, a nationwide voter mobilization and education project of EMILY’s List, will continue its efforts to reach out to women voters and mobilize their support for Senator Hillary Clinton in the Democratic presidential primary. Similar to the successful program run in New Hampshire, Connecticut, and New Jersey, EMILY’s List will use a targeted radio buy to blanket the state of Texas and reach women voters during the final days leading up to the March 4th Texas primary.
A similar campaign is also underway in Ohio. After Super Tuesday, EMILY’s List announced:
The country saw tonight what EMILY’s List has known for more than two decades – when women vote women win!
Until the recent announcements about Texas and Ohio, EMILY’s List has had little to say about the candidacy of Hillary Clinton. There is a sense that, as so many have commented, these two states will make or break the Clinton campaign.
The Trends
The other notable “Follow the Money” trend has been how the firms that have been contributing to both candidates have shifted their donations. A side-by-side comparison is illuminating.
Charts: Center for Responsive Politics
Goldman Sachs, for example, has switched from Clinton to Obama, donating more in January to Obama than Clinton–a shift of its December funding.
A second interesting trend is that internet rivals Google and Microsoft have each chosen to back different candidates. Google enters Obama’s top donor list for the first time in January, while Microsoft continues to be a major Clinton contributor. It is interesting to Google the two candidates. For Obama the search engine lists his books right after the campaign website, but according to Google you would not know Hillary Clinton had written any books. A MSN search turns up pages for the two candidates that are almost identical.
The third trend is what has happened to the donors for the candidates who dropped out. Chris Dodd’s main backer, Connecticut hedge fund trader Steven Cohen, has not signed on with either Clinton or Obama.
ActBlue, which was a major contributor to both John Edwards and Bill Richardson, does not appear as a top January contributor to either of the remaining candidates, probably because Edwards was still in the race until the end of the month. A journey to Act Blue’s website, however, list Barack Obama as number five on its current “hot candidates list.” A mouse click away is the information that Obama has drawn 2,800 ActBlue donations to Hillary Clinton’s 169. John Edwards may still not have endorsed a candidate, but one major group of supporters has moved to Barack Obama.
So here is another of this site’s predictions: I would not be surprised to see John Edwards endorse Barack Obama at a key moment before the Texas and Ohio contests.
The Contrast in Donors
As has been commented on elsewhere, there is a huge contrast between the two campaigns in terms of donors. Eighty percent of Clinton’s funds come from donations of $2,300 or above, versus only 60% for Obama. Obama is raising twice as much money from $200-499 donors as Clinton, while Clinton is raising three times as much from donors giving over $4,600. What the Democratic Party has on its hands is a grassroots campaign versus a big money campaign. This bodes well for Obama, not merely because it indicates he has broad support, but also because these are people he can depend on to help with the Presidential campaign and who will be there to support him when he gets elected.
What we could be seeing is that the people are about to take back the Democratic Party. The Goldman-Sachs will always be there, but if current trends continue Barack Obama will owe his election to the small donors not the big ones. That is not true for Hillary Clinton.
Meanwhile the financial giants are investing heavily in both campaigns. If you review Bill Clinton’s big donors in 1996, they are a more diverse group than the big donors for either Hillary Clinton or Barack Obama. Among Bill Clinton’s top twenty donors were AT&T, Sprint, Raytheon, Energy Corp, and Walt Disney. His number one contributor was the accounting firm of Ernst and Young. Of Clinton and Obama’s top five donors; four of them are financial firms. This is not a healthy sign, especially given that the current economic crisis is largely due to these firms. Virtually the same cast of characters also appears on John McCain’s top five list.
Meet Goldman Sachs–Investing in the White House
Between Obama, McCain and Clinton, Goldman Sachs has put a million dollars into this campaign. Why? Goldman was right in the middle of the subprime loan crisis. In 2006 it strung together over $500 billion of these loans into GSAMP Trust. Washington Post financial columnist Allan Sloan has all the gory details which include:
The average equity the second-mortgage borrowers had in their homes was 0.71 percent.
These are people Congress and certain Presidential candidates funded by Goldman now want to bail out!
Goldman then turned around, unloaded GSAMP just as the bubble began to burst and then jumped horses in midstream and bet the market would get worse. In short, they helped to cause the problem, bailed out on it and then made money betting the problem they helped cause would worsen! We should all be so wise.
The Main Issue
Of the candidates left in the race, it is clear only one is not heavily reliant on funding from big donors and that candidate is Barack Obama. This series began when an Iowa friend said to me last fall, “I would know better who to vote for if I knew who was funding them (she used more colorful language).” We now have a definitive answer to that question. On the basis of this research it is clear only one candidate offers any hope of leveling America’s tilted playing field. That candidate is Barack Obama.
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