Election 2010: Most expensive elections ever?

House and Senate candidates in this election cycle raised nearly $1.2 billion, ahead of the pace for contests in 2008. Republican Meg Whitman is pumping $104 million of her own money into her campaign for California governor.

Turns out politics, for all its focus on the gloomy economy, is a recession-proof industry.

This year's volatile election is bursting with money, setting fundraising and spending records in a high-stakes struggle for control of Congress amid looser but still fuzzy campaign finance rules.

Based on the latest financial reports, House and Senate candidates in this election cycle raised nearly $1.2 billion, well ahead of the pace for contests in 2008, 2006 and 2004.

Races for governor in 37 states - more than half of those for open seats - are also setting fundraising records. Billionaire Republican Meg Whitman leads the way, pumping $104 million of her own money into her campaign for California governor.

"We may be on track for the most expensive cycle ever, even more than '08, which is really hard to believe," said Michael Toner, a campaign finance lawyer at Bryan Cave and a former Federal Election Commission chairman.

Bitter intraparty fights, up to 100 competitive House races, a large number of open seats and early partisan attacks have created a growing demand for cash. The national parties are competing for dollars with outside groups and their often-anonymous contributors. And while Democrats have an advantage at the national party level, Republican-leaning groups seem to have more than filled the void.

The money has been flowing into political battlegrounds since early this year, from a special Senate election in Massachusetts to a Democratic primary fight for a Senate seat in Arkansas, from the race for Florida governor to the gubernatorial and Senate contests in California. The spending will now shift to the general election.

Millions of dollars are pouring into campaigns that have been dominated by discussions about the government's fiscal prudence. There's no such thing as restraint when it comes to getting elected.

Among the factors affecting the role of money:

Court decisions:

The Supreme Court earlier this year freed corporations and unions to spend their money on ads targeting candidates for president and Congress. A subsequent lower court ruling said individuals are also free to spend unlimited amounts on independent election ads.

So far, however, corporations have generally avoided overt politicking.
"The whole notion of 'Vote against Snodgrass by Gillette shaving cream' ó it's just not going to happen," said Kenneth Goldstein, a University of Wisconsin-Madison political scientist who specializes in political media.

Instead, corporations are funneling their money to trade associations such as the U.S. Chamber of Commerce or other groups that can air election ads, often without having to disclose their donors.

The desire for anonymity may have gotten an extra push when Target Corp. faced a backlash for its $150,000 donation to a Minnesota political group that was running ads in support of conservative Republican gubernatorial candidate Tom Emmer.
"

What we will see is corporations not wanting to anger their shareholders, not wanting to anger their retail customer by getting involved in partisan elections," said Paul Ryan, a senior lawyer at the Campaign Legal Center. "Instead they will employ strategies to obscure the fact, or hide completely the fact that they are dumping money into politics by routing their money through groups like the Chamber of Commerce."

The Chamber plans to spend $70 million in elections this year. It has already devoted more than $5 million to advertising campaigns helping Republicans in Senate races in Massachusetts, Colorado, Pennsylvania, Illinois, Ohio and New Hampshire, and for Democratic Sen. Blanche Lincoln in Arkansas.

Last week, an anti-abortion group aired among the first ads to specifically call for the defeat of candidates. The radio ads were broadcast in Ohio, Indiana and Pennsylvania and targeted three Democratic House incumbents.

The Federal Election Commission has yet to write rules on how to apply the Supreme Court's ruling. Democrats in Congress have tried to pass legislation that would require groups that run ads to reveal their donors. The legislation has stalled in the Senate, but strategists in both parties and campaign finance lawyers say the effort may have given some potential corporate donors second thoughts.

Still, Larry Noble, former general counsel at the FEC and a lawyer at Skadden Arps, said more corporations are seeking advice on how and when to donate.

"My guess is we're going to see more corporate money spent on elections," he said. "If it's successful and you don't see a lot of real pushback, then in 2012 you'll see even more of it. So this is a test election."

Outside groups

Since 2000, Republicans had relied on President George W. Bush's prodigious fundraising to keep the party well supplied with money. Now, however, the GOP lags behind the Democratic Party. That has created a web of outside groups, a shadow party of sorts weighing in with millions of dollars to help Republican candidates.

Among the most prominent is American Crossroads and its allied groups. It was created under the direction of former Bush political strategist Karl Rove and former Republican National Committee Chairman Ed Gillespie. The operation is run out of offices two blocks from the White House.
"We wanted to create a group that was monolithically focused on helping get Republicans elected," said Steve Law, the president and CEO of American Crossroads and a former U.S. Chamber of Commerce lawyer.

Politicians often point to their small-dollar donations as evidence of broad appeal. But American Crossroads and its affiliates are relying on large corporate and individual donors, the fastest and most efficient way to build their budgets. Law said he has seen some increase in small-dollar giving to his groups, but added, "We haven't spent a lot of time cultivating that."

While American Crossroads and groups like it represent the mainstream of the Republican Party, the Tea Party Express is the party's occasional ally but more regularly a thorn in its side. Its Our Country Deserves Better PAC spent nearly $600,000 to help Republican Joe Miller defeat Sen. Lisa Murkowski in the Alaska primary. Murkowski had the GOP's backing.

The PAC also helped tea party favorites Sharron Angle in Nevada over GOP establishment-supported Senate candidates and is now backing conservative Christine O'Donnell in a Senate primary in Delaware over party-backed Rep. Mike Castle.

The Parties

The Democratic National Committee and its Senate and House party affiliates have the advantage over their GOP counterparts in fundraising and cash on hand. That puts an additional burden on outside Republican groups such as American Crossroads.

Republicans can also look to another quarter for help. The Republican Governors Association, which can raise unlimited sums from corporations, has outraised its Democratic rival and is prepared to spend $65 million by Election Day, compared with $50 million for the Democrats.

While the governors' group cannot use the money to help federal candidates, its get-out-the-vote efforts will inevitably help all Republicans on the ballot. With the mood running against Democrats, that can't hurt.