Democrats Millions in Debt

Posted November 5, 2004 at 5:27pm

One week after suffering devastating losses in the House and Senate, Democratic campaign committees in both chambers find themselves mired in debt.

Late in the campaign, the Democratic Congressional Campaign Committee took out a $10 million line of credit — the largest ever by a party committee at the conclusion of an election cycle.

Greg Speed, communications director at the DCCC, said his organization’s decision to spend roughly $7 million to defend the five endangered Texas Democrats was the primary reason for the establishment of the large line of credit. Four of the “Texas Five” were defeated.

The Democratic Senatorial Campaign Committee took out a $5 million line of credit to finance its final campaign push, informed sources say.

Debt figures for the National Republican Senatorial Committee and the National Republican Congressional Committee were not available at press time, although neither was expected to be as indebted as the Democratic groups.

All four campaign committees must file their official post-general election reports to the Federal Election Commission by Dec. 2.

Democrats were surprisingly competitive in fundraising throughout the cycle, but the party got burned at the ballot box, losing a net of four Senate seats and two House seats.

Senate Democrats received another blow Friday when DSCC Chairman Jon Corzine (D-N.J.) said he would not use his personal wealth to erase the debt the committee ran up in the 2004 cycle.

“Corzine is not going to do that,” said Steve Adamske, a spokesman for the New Jersey Senator.

Under federal campaign finance law, Corzine, who is widely expected to announce his intention to run for Garden State governor in 2005 soon, could have written a huge check to his personal campaign committee and then transferred that money to the DSCC as a parting gift of sorts.

While committees taking on a large debt at the end of a cycle is hardly unprecedented, the extent of the borrowing by the Democratic organizations — especially the DCCC — shocked some party loyalists.

“So much for ruthless decision-making,” said one House Democratic strategist when informed of the line of credit, referring to House Minority Leader Nancy Pelosi’s (Calif.) pledge earlier this year to be “cold-blooded” when making funding decisions on House races.

The strategist added that taking such a large line of credit was “irresponsible.”

Speed explained that the circumstances surrounding the 2004 election were unique because of the re-redistricting in Texas, which wound up costing the party five seats.

“We had to spend $7 million in Texas to defend our incumbents, and a decision was made that we could not allow that to prevent us from pursuing Republican seats and protecting our other endangered seats,” Speed said.

Democratic Reps. Martin Frost, Charlie Stenholm, Nick Lampson and Max Sandlin all lost last Tuesday. Democratic Rep. Jim Turner retired because the Republican-led redraw in 2003 left him no district to run in.

None of the four targeted Democrats broke 45 percent of the vote last week.

Frost, who faced fellow Rep. Pete Sessions (R) in the 32nd district, put up the best showing, losing 54 percent to 44 percent.

Sandlin had the worst day, losing the eastern Texas 1st district 61 percent to 38 percent in a race against former state district judge Louie Gohmert (R).

Not everyone in the party was supportive of spending so much money on races that in the end were not truly competitive.

“Spending all that money in Texas has nothing to do with winning the House back — it is all about internal Caucus politics,” said a Democratic strategist, who spoke on the condition of anonymity.

Frost had chaired the DCCC in the 1996 and 1998 cycles and is the ranking member of the House Rules Committee. Stenholm is the ranking member of the Agriculture Committee.

Criticism aside, Speed insisted that the DCCC will have little trouble paying off any debt that remains when its post-election report is filed.

“There was a plan for using these resources and there is a clear plan for retiring any debt,” said Speed. “Due to the investments we made this cycle, we are in a much stronger position to retire any debt.”

Brad Woodhouse, Speed’s counterpart at the DSCC, echoed that sentiment.

“One thing we proved this election cycle is that we [have] a strong fundraising operation,” said Woodhouse. “We have a lot of institutional support among our donors.”

In an e-mail sent to supporters Friday, Corzine congratulated them for their record-setting generosity but made no mention of the committee’s debt.

“Your unprecedented support has left an enduring legacy on the DSCC,” Corzine writes. “Because of your generous contributions, we matched the NRSC dollar for dollar and point for point on the air with campaign ads.”