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The GOP empire strikes back
Billionaire Republicans are filling the GOP’s 527 gap

UNTIL MAY 13, Republicans were fighting desperately to squash 527 organizations — political groups, named for the tax-code section that defines them, which can raise and spend unlimited amounts of money. That spring day, the Federal Election Commission announced that it was postponing 527 regulation until after the November election, leaving Democratic-leaning groups free to keep right on raising and spending money by the bucketful.

Since that FEC decision, Republicans have reversed course and wallowed shamelessly in the mire they had previously condemned. They had little choice — otherwise, they were going to get killed on the airwaves. Left-leaning groups like MoveOn.org and America Coming Together were raking in dough not just in small donations from ordinary citizens, but in millions from the super-wealthy (see "The $50 Million Dems," News and Features, July 23). And they were pouring that money into political advertising.

Between March 4, when John Kerry effectively wrapped up the Democratic nomination, and June 20, the Bush/Cheney campaign ran more ads than Kerry did, according to a study by the University of Wisconsin Advertising Project and Nielsen Monitor-Plus. But, the study showed, when the Kerry campaign’s ads were combined with spots run by just three anti-Bush groups — Media Fund, MoveOn.org, and the AFL-CIO — the Democrats came out ahead in ad activity in most battleground media markets. "Republicans took a strategy early on that the 527s would not work out," says Ray La Raja, a political-science professor at UMass Amherst. "They flubbed."

The GOP has since recovered its fumble. Dozens of Republican-leaning groups filed as 527s after the FEC decision, and a group of super-rich supporters has funded them with massive donations. The Phoenix has identified 13 people who have donated over $1 million each to right-wing candidates or committees in just the past few months; eight are billionaires, according to the most recent Forbes list of America’s wealthiest people. Interestingly, these GOP donors include a conspicuous number of Texas energy moguls.

WHEN RICH REPUBLICANS give, it may seem easy to take a cynical view of their motives. After all, Republican policies tend to favor the wealthy: Wal-Mart heiress Alice Walton, for example, stands to gain nearly $200 million a year if Bush succeeds in his plan to eliminate dividend taxes, according to USA Today. Permanently eliminating the estate tax is obviously another critical issue to many members of this list (and even more so to their children). But they could also be genuine conservative ideologues. It’s difficult to know, because very few of them will speak publicly about their political views. (Indeed, none was available to comment for this article.)

By donating large sums to 527s, they have at least put themselves out there for public judgment. Liberals may choose to boycott products that put money into the pockets of people on this list — although they’ll have much to avoid: Omni hotels, Gold’s Gyms, Chiquita bananas, the local Univision station, Ameriquest loans, American Financial insurance, Amway products, Wal-Mart stores, and Sam’s Clubs, not to mention coal, oil, and natural gas. They may also have to change sports affiliations, since the Houston Texans, San Diego Chargers, Orlando Magic, and Cincinnati Reds are owned by members of this list.

In the end, however, any public backlash probably won’t matter. These donors are accustomed to negative publicity. "These guys give to controversial causes all the time," says La Raja. "They have no inhibitions."

Still, negative publicity may explain why other big donors choose to remain nameless by giving to groups that do not need to disclose their identities — the "educational organizations" that qualify as 501(c)(3) and 501(c)(4) nonprofits. FreedomWorks, born this July from the merger of Citizens for a Sound Economy and Empower America, created a 527 fund but has made little use of it, says spokesperson Chris Kinnan. Instead, the group does the bulk of its work through its 501s, but rejects the idea that this makes the group more "shadowy." "Anonymous speech is as important as any other kind of speech," Kinnan says.

At least FreedomWorks — backed by Dick Armey and Jack Kemp — is in it for the long haul. As Kinnan points out, that means it can be held accountable by potential donors for its actions. But short-term groups formed solely to take election-season potshots at John Kerry (such as Swift Boat Vets and POWs for Truth) can say and do just about anything without consequences.

Whether any of this will affect the result of the coming election remains to be seen. But La Raja suspects that we haven’t heard the last of the 527s. In fact, he thinks this cycle was only the awkward, experimental phase. "By 2008, they’ll have this down," he says.

The GOP’s dirty (baker’s) dozen

Dollar figures represent donations since July 1. "Hard money" refers to contributions to candidates or party committees. Wealth estimates are from the Forbes 400 list of the richest people in America.

Bob Perry

Owner, Perry Homes, Houston, Texas

$7,902,000 total contributions since July 1

— $7.9 million to 527s

$4.3 million Swift Boat Vets and POWs for Truth

$3 million Progress for America

$600,000 Club for Growth

— $2000 in hard money

Perry, who built a fortune in townhouse development, is no newcomer to big-money political contributing. Between 1998 and 2002 he gave nearly $5 million to Texas Republicans. In 1978, he served as campaign-finance manager for Texas gubernatorial candidate Bill Clements — through whom he met Karl Rove. But Bill Miller, who has been Perry’s spokesperson for 25 years, says that Rove has no influence on Perry’s giving — particularly to the Swift Boat group. Swift Boater John O’Neill, who knew Perry through Houston social circles, called Perry directly, Miller says: "Bob told me, ‘John O’Neill called me. I liked what he had to say, I agreed with him, I gave him some money.’"

Perry remains extremely private. He has never agreed to a press interview, says Miller, who describes him as "a Texas conservative Republican."

Dawn Arnall

Co-chair, Ameriquest, Orange, California

$5,001,000 total contributions since July 1

— $5 million to 527s

$5 million Progress for America

— $1000 in hard money

Over the years, Dawn Arnall and her husband, Roland, have given over a million dollars to the Democratic Party and its candidates, but something changed in 2002 — sometime between their half-million-dollar donation to the Democratic National Committee that June, and her million-dollar donation to the Republican National Committee that October.

That something appears to have been George W. Bush’s steadfast support for Israel and his war against terrorism; the couple released a statement calling Bush "a leader with great integrity" who "will rid the world of the scourge of terrorism." Since then, the Arnalls have raided their vault for the GOP. Most notably, they hosted a million-dollar fundraiser for Bush last year. They also gave nearly a million dollars to the California Republican Party, and $42,000 to Arnold Schwarzenegger’s gubernatorial campaign.

Alex Spanos

Owner, A.G. Spanos Companies, Stockton, California

$5,001,000 total contributions since July 1

— $5 million to 527s

$5 million Progress for America

— $1000 in hard money

Spanos’s autobiography, Sharing the Wealth, features a foreword by Rush Limbaugh. Spanos, 81, made his money — $860 million — in real estate and development, and has been a huge Republican donor. He was a "Republican Regents" donor, a "Bush Pioneer," and is now a "Bush Ranger." He gave $100,000 to the campaign to recall Democratic California governor Gray Davis, and another $100,000 to Arnold Schwarzenegger’s campaign.

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Issue Date: October 29 - November 4, 2004
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