Sunday, October 10, 2004

Texas is known as an "ATM state" in the lingo of 527s, the often-partisan, nonprofit groups behind many of the television advertisements attacking President Bush or Democrat John Kerry.

City, state give big to maverick 527 groups

Houston leans left in its support of independent, partisan advocates

By JOHN FRANK, Houston Chronicle
October 10, 2004

WASHINGTON - Texas is known as an "ATM state" in the lingo of 527s, the often-partisan, nonprofit groups behind many of the television advertisements attacking President Bush or Democrat John Kerry.

Wealthy residents of the state, led by several from Houston, have given about $36 million to the maverick advocacy organizations over the past four years, a rate of political giving that puts Texas in the top three states nationally.

Although more Texans give to Republican-oriented or conservative groups, a Houston Chronicle analysis of campaign finance records found money from Houston more often ends up on the Democratic or liberal side of the political ledger.

The Chronicle's examination of thousands of records found that Houston ranked fourth among major cities in giving to 527 groups. Not counting Washington, D.C., home to major lobby firms and most major political givers, the top three were New York, Los Angeles and Atlanta. Dallas ranked eighth.

Most donated funds going outside the state

So far in this election cycle, the records indicate Texans have provided 6 percent of the money that has vaulted these virtually unregulated 527s into a high-profile role in the 2004 campaign. Most of this money is going outside the state, with little being spent locally to influence elections.

Texas is "where a lot of wealth resides, and yet the state is almost a political given" for Republicans, said Craig Holman, one of the nation's leading campaign finance experts. "So it makes no sense for the campaigns to spend much money (in Texas), but it makes every sense in the world to fund-raise from these people."

The most prominent 527 groups, so called by the section of the federal tax code that allows them to raise unlimited amounts of tax-free money for political purposes, are left-leaning Media Fund and and conservative Swift Boat Veterans for Truth and Progress for America Voter Fund.

Although 527s have gained notoriety for attack-dog roles in national campaigns this year, they have long been active in Texas. Four years ago, brothers Sam and Charles Wyly of Dallas bankrolled Republicans for Clean Air, which paid for TV ads attacking Sen. John McCain in the Republican presidential primary Bush eventually won.

Operations of 527s went public in 2000

In the highly partisan battle for control of the state House of Representatives in 2002, about 20 Republican candidates were aided by a 527 called Texans for a Republican Majority, a group founded by U.S. House Majority Leader Tom DeLay. Two of that organization's officers have been indicted by a grand jury in Austin on charges they violated campaign finance law.

While 527s have been involved in politics for about 30 years, their operations were largely covert until 2000, when a law was passed over the objections of DeLay and other House leaders to require the groups to publicly disclose their donors and how their money is spent.

In 2002, when campaign finance law changes put an end to unlimited "soft money" donations to political parties, 527s became the beneficiaries. Early in the current election cycle, these independent groups became the key fund-raising vehicle for Democrats wanting to counter the financial advantage Republicans have at the national level. Not wanting to be outspent, Republicans launched their own 527s.

Through end of September, 527s spent $274 million

Backed by wealthy individuals, corporations and labor unions, 527s have spent $274 million through the end of September, according to The Center for Public Integrity, a nonpartisan public interest group. By comparison, Bush's campaign spent $260 million through the end of August; Kerry's campaign, $248 million through the end of July.

Most of the 527 money has paid for radio and TV ads attacking Bush or Kerry, but a large part is being spent on a so-called ground war — identifying favorable voters, then getting them to the polls.

"The biggest 527s are really receptacles for people who are particularly partisan," said Craig McDonald, executive director of Texans for Public Justice, a liberal watchdog group based in Austin. "The goal for these big donors is to elect a particular candidate or defeat a candidate. It's different than a traditional pork-and-beans fund-raiser where you give a $100 contribution."

Nationally, contributions to these groups are expected to reach new highs before the Nov. 2 election, but they are not likely to jump dramatically from previous years.

In Texas, the support for 527s has already reached new levels, according to the Chronicle analysis. The $12.5 million given to these groups by state residents by the end of September is three times higher than in 2000. In this election cycle alone, almost 1,100 Texans have given money to 527 groups in amounts ranging from $1 to $3.1 million. The number of donations to Republican or conservative groups has outpaced donations to Democratic or left-leaning groups 6 to 1.

Among Houstonians, Bob Perry is the top donor to 527 groups, having given more than $12.5 million since 2000.

The Chronicle's analysis shows through the end of September, Perry has given $485,000 to the Club for Growth Inc. and Swift Boat Veterans for Truth, a group founded by Houston lawyer John O'Neill.

Early this month, the veterans group reported receiving another $250,000 from the Houston home builder.

Texans' owner McNair among top donors

Also ranking high among givers to right-leaning 527s is Houston Texans owner Bob McNair, who has given $551,000 to the groups over the past four years.

Of that amount, he gave $526,000 this year to two groups — the Swift Boat Veterans and the Progress for America Voter Fund.

Both Perry and McNair have given the maximum $5,000 apiece to Bush's re-election campaign this year.

On the Democratic side, Linda Pritzker and Maconda O'Connor are the major 527 donors from Houston.

Pritzker, who lists her occupation as "Houston investor" but lives in Montana, gave $1 million this year, mostly to the Joint Victory Campaign.

She also funneled $4.1 million to the Democratic group through her Sustainable World Corp., which lists a Houston post office box but doesn't disclose its business purpose.

O'Connor, a retired child therapist and daughter of Houston business icon and philanthropist George R. Brown, has given $600,000 during the current election cycle to Emily's List, a national political action committee that works to elect Democratic women who favor abortion rights.

Also making major donations to Democratic-leaning 527s over the past four years were plaintiffs attorneys John O'Quinn and John Eddie Williams, along with Houston-based Waste Management.

The ultimate effect of the 527 money will not be measured until Election Day, but some experts say it'll drive down voter participation.