Chinagate's Big Winner

Politics and policy.
March 30 1997 3:30 AM

Chinagate's Big Winner

All that Clinton's sleazy fund raising accomplished was to make Dick Morris rich.

In the summer of 1995, candidate Bill Clinton made a strategic decision to spend tens of millions of dollars on early television advertising. This unprecedented media blitz, which began in 20 cities nearly a year and a half before the election, had far-ranging consequences for Clinton's future.

According to Dick Morris, the chief effect was Clinton's re-election. "In my opinion," he writes in Behind the Oval Office, "the key to Clinton's victory was his early television advertising." Morris argues that by stealthily airing the ads in places where they wouldn't be noticed by the national media, Clinton gained an advantage that Bob Dole was never able to counter. This claim is highly debatable. But two other results of Morris' early ad strategy are harder to dispute. One, which was unintended, is the campaign-finance scandal that is ruining Clinton's second term. The other, very much intended, is Dick Morris' rise to riches.

Jacob  Weisberg Jacob Weisberg
Illustrations by Robert Neubecker.

Though it is now conventional wisdom that the ads worked, the evidence for this consists entirely of unsubstantiated assertions by the people who made the ads. Morris, whom I spoke to this week, continues to make extravagant claims. In the areas where they ran, Morris says, the ads boosted Clinton's numbers 7 percent, compared with places where they did not run. This seven-point difference, he says, held through Election Day. Others who watched the numbers with a professional eye are dubious of this boast. "There's no question they were great ads," says Mark Mellman, a Democratic pollster. "But there's a lot of question about how central they were to Clinton's ultimate victory." Another well-regarded Democratic pollster, Geoff Garin, expresses his doubts more strongly: "My sense is that Clinton's situation improved in places where they weren't advertising pretty much to the extent that they did in places where they were advertising."

Morris bases his explanations on polls done by Mark Penn and Doug Schoen. Neither he nor they are willing to share the numbers. But independent comparisons of places where Morris says the ads ran and places where they didn't do not appear to substantiate his claim. In Ohio, where the early ads did run, Clinton's net favorable rating dropped from nine points in March 1995 to six points in June and four points in November. In Maryland, where the ads did not run, the Clinton-Dole matchup poll went from a one-point lead for Clinton in the early spring to a nine-point lead in mid-October--that is, Clinton did significantly better in the state where there were no early ads. Of course, these numbers don't prove the ads were useless. For one thing, the ads ran in media markets, which are generally only parts of states and are sometimes made up of parts of more than one state. But even if Penn and Schoen's secret data support Morris' claim of a seven-point bump "in-buy," it doesn't prove the ads worked. All the early ads ran in swing states, where you would expect Clinton's numbers to move more. As Morris himself acknowledges, "It's easier to change someone's mind in Ohio."

Defending a fallback position, Morris argues that the ads helped because they strengthened Clinton's hand in resisting a budget deal on Republican terms. "We had to win the battle of budget to win the war of re-election," he says. "The ads helped win the battle." What Morris conveniently forgets is that at the time, he had wanted Clinton to compromise with Republicans on the budget. The purpose of the ads can hardly have been to achieve a result Morris opposed.

Amore demonstrable effect of the ads was the incitement of the campaign-financing scandal that now dominates Washington. In the summer and fall of 1995, Morris' nemesis Harold Ickes opposed the early ad strategy, because he thought it was a waste of money. As one source involved in Democratic fund raising explains: "Asking contributors for money in August 1995 raised a question of whether they would be tapped out in 1996. You either have to go back to the same corporations and ask for an even bigger percentage, or you have to find new systems, new pockets of money." Corporations that have budgeted for contributions of a certain size are loath to allot large amounts of additional cash in the middle of the year. To get more soft money out of them, the Democratic National Committee turned to new perks, like White House coffees. But fund-raisers leaned more heavily on the second alternative--finding new, untapped pools of cash. That's where John Huang came in.

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The one indisputable consequence of the ads was that they generated a great deal of money for those who created them. As a rule, media buyers get a 15 percent commission. In a presidential campaign, with tens of millions being spent, these fees can be enormous. Ordinarily, a political consultant like Morris would not share in them. But in 1995, Morris set up a consortium called the November 5 Group Inc. to split the rake-off. This group was composed of Bob Squier and Bill Knapp, who did the actual station buys; Hank Sheinkopf and Marius Penczner, who collaborated with Knapp in producing the spots; the pollsters Penn and Schoen; and Morris himself. Details of this partnership are not subject to disclosure under federal election laws. But, according to a source with knowledge of the deal, the split was 50-25-10-10-5. Half of the commission went to Squier and Knapp. A quarter went to Morris. A tenth went to Penn and Schoen, and another tenth went to Sheinkopf. The final 5 percent went to Penczner.

Consider this deal from the perspective of June 1995: Morris was making a 3.75 percent commission (25 percent of 15 percent) on as much commercial time as Clinton bought. That means that when Morris urged the president to spend an unprecedented $20 million in early ads, he stood to earn $750,000 for himself on top of the several hundred thousand being paid to him as salary by the campaign. According to Bob Woodward's The Choice: "Morris was so anxious for Clinton to have as much money as possible for political advertising on television that he proposed that Clinton forgo federal matching funds of some $15 million so the president would not have to abide by the approximately $30 million limit on fund raising during the primary season." Unfortunately for Morris, Clinton ignored this particular advice and decided to stay within the limits.

In the end, Morris made somewhat less than he might have hoped. Ickes pushed hard to whittle down the group's commission, reducing it to 5 percent by the end of the campaign. According to Knapp, the total commission shared by the various consultants worked out to an average of 7.5 percent per dollar spent. And Morris did not get his 25 percent cut on the full $85 million he says was spent on Clinton's TV advertising. After he resigned in disgrace in August 1996, Morris' November 5 Group colleagues cut him out of the action. As it was, according to a knowledgeable source, Morris earned approximately $1.5 million on the ads.

Morris says the real profligacy was Ickes' insistence on keeping large staffs in key states long after the danger of a primary threat to Clinton had evaporated. He disputes that the ads played a role in the current scandal. On the subject of Clinton's aggressive fund raising, Morris recently told the New York Daily News, "I just think he overdid it." That's some chutzpah, considering who the chief beneficiary was. Morris' commission alone amounts to more than all the money Democrats have had to give back to suspicious contributors.