In the arena of political contributions and campaign finance reform we apply the term "carpetbagger" to: Legislative candidates who accept most of their large contributions from sources outside of their districts, wealthy individuals who provide such contributions, and special interest groups that try to take over campaigns through expensive independent or “issue ad” activities.
March 27, 2000
The common definition of “carpetbagger” is someone who moves from one area to another strictly for profit. Politically, the term’s longstanding meaning refers to someone who moves into a particular area in order to run for public office. But in the arena of political contributions and campaign finance reform we apply the term to: Legislative candidates who accept most of their large contributions from sources outside of their districts, wealthy individuals who provide such contributions, and special interest groups that try to take over campaigns through expensive independent or “issue ad” activities. Legislative candidates who accept large amounts of out-of-district contributions are modern carpetbaggers in the sense that they are more dependent on outside money than on resources from the communities they represent. Individuals and groups that make frequent, large contributions to candidates outside their district do so to get candidates elected who will advance a political point of view that caters to their economic or ideological agenda, rather than the local constituents.
These new “carpetbaggers” contribute to many of the major problems on the campaign finance scene in Wisconsin that could be improved with increased public financing and more stringent spending limits. They erode the influence of small, constituent contributors and they fuel high-spending races and special interest influence. This presents candidates with a base of financial support built upon the few, rather than the many that they represent. For instance, only one in 100 voters made large contributions ($100 or more), but candidates have come to depend upon these cash cows because roughly four of five Wisconsin citizens contribute nothing to political campaigns. And only one in 10 Wisconsin taxpayers participated in the Wisconsin Election Campaign Fund check-off on state income tax forms in order to fund public grants for candidates.
The result is expensive campaigns that bring all of the extra baggage that so often discourages participation by the ordinary voter in the political process, including negative advertising, a loss of touch with voters and a reliance on well-heeled special interests.
Yet the only means to control the cause and the corresponding problems with the current system is to increase public participation through adequate public financing to make it more attractive for candidates to accept spending limits and thereby reduce special interest contributions and influence.
The purpose of this report, “Modern Carpetbaggers,” is to identify the legislators who accept large portions of their contributions from outside of their districts and as a result are the most vulnerable to the influence of the fat cats and special interests that make up the modern carpetbaggers.
Among the report’s key findings are:
The percentage of out-of-district contributions accepted by legislative campaigns in the 1998 election cycle was shocking. The majority of winning candidates in both parties and in both houses of the Legislature received more than half of their $100-plus individual contributions from outside of their districts.
Campaign contributions in 1999 followed a similar pattern, which indicates the amount and frequency of large out-of-district contributions in the months leading up to the year 2000 election are likely to escalate.
Surprisingly, veteran incumbents who should have a solid base of support in the areas they represent rely more heavily on out-of-district contributions than challengers.
A review of winning Assembly candidates who received $10,000 or more in large individual contributions found that 80 percent of those 48 Assembly candidates received more than half of all their individual money from outside of their districts in the 1997-98 election cycle (Table 1). Half of the candidates received 66 percent or more of their large contributions from out-of-district interests. Only nine of the 48 winners who collected more than $10,000 in large individual contributions received more than half of those contributions from within their districts.
In 1999, 20 representatives received large, individual contributions totaling $10,000 or more (Table 2). Of those, 13 received 66 percent or more of their large contributions from out-of-district interests. Only six representatives who collected $10,000 or more received more than half of their large individual contributions from within their districts.
Republican Assembly Speaker Scott Jensen of Waukesha collected the largest amount of out-of-district individual contributions - $133,789 - in 1997-98. That sum was 95 percent of the total $141,401 in large individual contributions he received in 1997-98. A similar pattern continued in 1999 when Jensen collected $124,154 in large individual contributions. More than $119,000, or 96 percent, of those contributions came from outside of his district. Jensen aggressively raised money throughout the state in 1999. His fundraising success is directly related to being the speaker and controlling the ultimate fate of all legislation acted on in the Assembly.
Other representatives with high amounts of out-of-district money for the 199 election are Republicans Rick Skindrud with $47,538 (75 percent) and Steven Foti with $45,538 (83 percent).
The highest percentage of large, individual contributions received from outside a candidate’s district was 98 percent by Democratic Rep. Antonio Riley of Milwaukee. From 1997-98, Riley received $15,122 in $100-plus contributions from outside of his district and only $250 in large contributions from within the district. The bulk of his large, individual contributions came from construction interests, which gave him at least $2,500 and banking and finance, which contributed at least $1,550 to his campaign. Riley’s acceptance of large amounts of out-of-district campaign funds - he represents a low-income district - further illustrates the need for comprehensive campaign reform that includes spending limits and adequate public funding so legislative candidates rely less on special interests for campaign support.
At the bottom of the list, Republican Rep. Joan Wade Spillner of Montello received the lowest amount and the lowest percentage of large, individual, out-of-district contributions. Spillner received $1,500, or 11 percent, of her $100-plus contributions from outside of her district.
In 1999, Riley again received the largest percentage (99 percent) of large, individual, out-of-district contributions. In addition to Riley, three legislative leaders received more than 90 percent of their individual campaign contributions from outside of their districts - a testament that money flows to power. They were Jensen, Assembly Minority Leader Shirley Krug, D-Milwaukee, and Republican Rep. John Gard of Peshtigo, who is co-chair of the budget-writing Joint Finance Committee.
Of Assembly incumbents who have raised at least $10,000 in individual contributions of $100 or more in preparation for the 2000 elections, Representative Jean Hundertmark took in the least from out of district with $2,800.
Unlike the Assembly whose 99 members are elected every two years, the 33-member Senate is elected to staggered, four-year terms. Sixteen seats are up for election in one election cycle and the remaining 17 are elected in the following election cycle.
An analysis of contributions to all 17 winning candidates in the 1998 elections showed that they collectively received 66 percent - $472,727 - of their large individual contributions from outside of their districts (Table 3). The winners included 14 incumbents and three candidates who won open seats. Twelve of them received more than half of their large, individual donations from outside of their districts. Nine of the 17 candidates received more than 66 percent of their large, individual contributions from out-of-district interests.
The greatest amount and percentage of large, individual contributions from outside the district was $70,908 collected by Democratic Sen. Jon Erpenbach of Middleton, who ran for an open seat. His out-of-district take represented 89 percent of the large, individual contributions that he received. Next was Republican Sen. Peggy Rosenzweig who raised $64,195, or 76 percent of her $100-and-over donations from outside of her district.
In an interesting contrast, the lowest amount and percentage of out-of-district contributions went to Democratic Sen. James Baumgart of Sheboygan, who also ran for an open seat. Baumgart received $1,900, or 23 percent, of his $100-plus contributions from outside of his district.
An analysis of 1997-99 contributions to the 16 incumbents who face reelection in the year 2000 showed that they collected 71 percent - $660,932 - of their large individual contributions from outside of their districts (Table 4). Eight of the 16 incumbent candidates received more than 66 percent of their large individual contributions from outside of their districts. Twelve of the 16 senators have received more than half of their large individual contributions from outside of their districts.
Among those who received the largest amounts of out-of-district contributions from 1997-1999 were Republican Sen. Mary Lazich of New Berlin, who received $228,334, or 86 percent, of her large individual contributions from outside of her district. The large amount of contributions she received was spurred by her special election to the Senate in April 1998. Democratic Sen. Alice Clausing of Menomonie, who chairs the Senate committee that considers campaign finance reform proposals, received more than $80,000, or 91 percent, of her large individual contributions from outside of her district. Clausing generally is considered a principle target by Republicans in the 2000 election. Democratic Senators Gary George and Gwendolynne Moore, both of whom represent many low-income Milwaukee voters, received more than 90 percent of their large contributions from outside their districts. Democratic Majority Leader Charles Chvala of Madison received just over $63,000, or 82 percent, of his large individual contributions from outside of the district. Like his fellow legislative leaders in the Assembly, Chvala accepted these large contributions from special interests outside his district during a 1999 legislative session in which he was largely responsible for determining the content and spending in the 1999-2001 state budget.
The lowest percentage of out-of-district contributions was received by Senate President Fred Risser, a Madison Democrat, who received $2,210, or 18 percent, of his $100-plus contributions from outside of his district. His district encompasses some of the most active contributors in the state.
Since the results of the 2000 elections could affect the Democrats’ slim 17-16 majority in the Senate, it’s likely that the amount of special interest contributions to these senators will increase in the year 2000, leading up to the November election.
Incumbent legislators in the 1998 elections drew substantially more large, out-of-district contributions than candidates in open seats or challengers. At first glance, one would think that incumbent legislators who have served multiple terms have a popularity advantage that should make them less dependent on out-of-district contributions. However, special interests tend to contribute to candidates whose party is in power.
They also contribute to candidates whose seniority - whether in the majority or in the minority - has made them influential and brought them key committee assignments or chairmanships. Why gamble on a challenger, and then wait for that individual to attain such a status?
In addition, incumbents often use the state budget to attract special interest contributions. For instance, legislators scheduled at least 91 fundraisers - an average of one every four days - in 1999. The bulk of those fundraisers were held when the 1999-2001 state budget was under consideration by state lawmakers who often met in closed party caucuses to make decisions on programs and funding. Special interests find the state budget a particularly good opportunity for pet programs and policies because the bill dictates most state spending for two years, and it is the only bill each session that the legislature must approve.
In the fall 1998 elections, legislative incumbents collected nearly $1.7 million, candidates for open seat elections received nearly $1.1 million and challengers received $419,007 (Chart 1 below). Both incumbents and open seat candidates received about 68 percent of these contributions from individuals outside of their districts, while challengers received about 51 percent from outside of their districts. A closer analysis of the contributions shows that if out-of-district contributions were excluded, the difference between contributions to the three categories of candidates is greatly reduced.
There was a total of $3.7 million in large, individual contributions to all legislative candidates in 1997-98. This total excludes money that the candidates gave to their own campaigns. These contributions came from 1,034 zip codes, including 653 Wisconsin zip codes. About $889,000, or 23 percent, of those contributions came from only 13 Wisconsin zip codes. More than half of those contributions, $486,712, went to winning candidates mostly in other districts.
People from Milwaukee’s North Shore suburbs - 53217 - contributed the most in large, individual contributions to winning legislative candidates, $72,561 in the 1998 election cycle. However, the bulk of those contributions - 82 percent - went to candidates in districts outside that area code (Table 5).
One of the most dramatic differences in district-versus-out-of-district contributions in the 1998 election cycle involved the downtown Milwaukee zip code - 53202. At first glance, only 10 percent of the $39,599 in contributions from that zip code went to candidates in legislative districts in that zip code area. However, a closer analysis of the geographic area that zip code represents reveals another problem in tracking the activities of large contributors. Most of the 53202 zip code covers Milwaukee’s downtown business district, not residences. So most of the contributions from this area are likely from individuals who used their business addresses rather than home addresses. Thus, the only means to accurately track out-of-district contributions from all Milwaukee-area zip codes would be if contributors were required to list their home, rather than business addresses, when they send contributions.
The candidates who received contributions in the 1998 election cycle from these zip codes tended to match the traditional voting trends in these areas. Contributors in Milwaukee’s wealthy North Shore Suburbs and those who sent contributions from the downtown business district gave mostly to Republicans. Meanwhile, contributors from the 53705 zip code, which covers much of Madison’s West Side, tend to vote mostly Democratic and gave mostly to Democratic candidates. Contributors from that zip code contributed 87 percent, or $36,572, of their contributions to candidates outside their districts, and only 13 percent, or $5,550, to candidates inside their districts.
All told, the bulk of the contributions from these top zip codes went to winning candidates in districts outside the zip code areas.
The greatest amount of out-of-state contributions to legislative candidates in 1997-98 came from contributors employed mostly by Golden Rule Insurance in the Indianapolis area. Large individual contributions from this area totaled $21,775. These contributions came during a period when legislators considered managed care and other key proposals that affected the quality and cost of health insurance coverage available to Wisconsin residents. Among the Golden Rule contributors was Chief Executive Officer J. Patrick Rooney, who is a well-known school choice advocate.
Most of the large individual contributors who are members of powerful special interest groups such as road builders, developers, bankers, realtors and lawyers gave most of their money to candidates, usually Republicans, hundreds of miles away in other legislative districts. In most cases, these contributors sent their money to races targeted by legislative leadership, and to other incumbents. About one third of their money was contributed through conduits, which special interests use to bundle and send large amounts of their members’ contributions to candidates. But unlike political action committees, conduits are not restricted by contribution limits and face looser reporting requirements.
An analysis of contributors who gave $7,500 or more to legislative candidates shows that for every $1 they contributed to candidates in their district, they gave nearly $6 to legislative candidates running in other districts. All told, these individuals or families contributed $145,634, or 85 percent, of their money to candidates in other districts and $25,642, or 15 percent, of their money to candidates in their own districts (Table 6).
The Zignego family contributed the most money to candidates outside of their district - more than $19,000 - in 1997-98. The family, which runs a road-building company, is made up of more than 20 politically active members who live in Waukesha County. Longtime conservative GOP activists Terry and Mary Kohler of Sheboygan contributed $15,000 or 83 percent of their total contributions to these candidates. Lobbyist Tom Hanson and his wife made $13,241 in large contributions to legislative candidates outside of their district.
These individuals funneled about $55,791, or 33 percent, of their $171,276 in contributions through conduits, which can transfer virtually unlimited, special interest cash to any candidate they choose. This “bundling” of contributions can be stopped by treating conduits like PACs in the future. Any comprehensive effort to reduce special interest influence must include such a provision.
Several legislative seats were the targets of another kind of “modern carpetbagger”. Outside special interest groups spent a record $1.13 million on independent expenditures in 1997-98, particularly in three Senate races. These groups and their money virtually took over the candidates’ campaigns and overshadowed their message to local voters.
In spite of the efforts to limit the influence of special interest groups through limiting their contributions to candidates, these groups continue to have undue influence in the legislative process. They, too, have become modern carpetbaggers by using their enormous resources to highjack campaigns through expensive independent election activities and unregulated “phony issue ad” campaigns.
The most egregious example of this new effort to influence elections by outside groups is the most expensive Senate election in state history - the race for the 27th Senate District in 1998 where total spending was $1.2 million. Spending by Democrat Jon Erpenbach and Republican Nancy Mistele came to close to $500,000, and much of this money came from contributors outside the district. The special interest groups, principally the Wisconsin Education Association Council (WEAC) and Wisconsin Manufacturers and Commerce (WMC), spent $700,000 in their attempts to dominant the race.
In addition to the 27th, the 9th and the 15th Senate districts were also key races where wealthy special interest groups weighed in. Counting all races nearly $1.13 million was spent on independent expenditures and issue ads in the 1998 elections. The two groups leading this effort were WEAC and WMC, the state’s largest teachers union and the state’s largest business organization, respectively. They traditionally oppose each other on many political issues and they weigh in heavily on targeted races that usually determine control of the Legislature. These races were important to these groups because of the teetering 17-16 Democratic majority.
The 1999 spring special election in the 35th Assembly District drew at least $100,224 in large individual contributions and independent spending. Again, much of the large individual contributions to both the Democratic and Republican candidates came from outside of the northern Wisconsin legislative district. In addition, the Washington D.C.-based Democratic Legislative Campaign Committee dumped $15,000 in independent spending into the race on behalf of the Democrat.
The figures for the 1998 election cycle represented a continued escalation in independent activities All indicators for the 2000 elections point to even larger carpetbags of cash ready to be poured into the important races. The clouds of special interest influence are likely to get thicker and stormier as these elections approach.