Funding Liberty! Table of Contents
Funding Liberty!
Chapter 10
$1,000,000 by 2000
In early 1997, Harry Browne had identified two specific requirements for launching a good campaign: National Party membership needed to increase from 27,000 to 200,000. By January 2000, the Browne campaign needed to have a million dollars cash on hand for a significant advertising campaign.
At the end of 1999, Party membership was only 33,000. After mid-1999, membership stopped increasing. The Campaign's membership requirement—200,000 by 2000—was not attained.
What happened to the second objective? What about the $1,000,000 target for the campaign launch? A short table based on Browne's FEC reports tells the sad truth.
|
PRIVATEResults for Year |
Cash on Hand Start of Year |
Income for the Year |
Spending for the Year |
Cash on Hand Last Day of Year |
|
1997 |
$0 |
$83,367 |
$64,290 |
$19,076 |
|
1998 |
$19,076 |
$270,090 |
$263,298 |
$25,868 |
|
1999 |
$25,868 |
$561,030 |
$542,228 |
$44,670 |
At the start of 2000, the campaign had only $44,670 on hand, nothing near the $1,000,000 Browne had wanted. Money had been raised. It was spent almost as quickly. (Analysis of FEC reports is based in part on published work of Ken Sturzenacker.)
In 1997-1999 the Browne campaign had raised more than $900,000. Where did the money go? In short, they spent it.
During 1997-1999, the number of paid campaign staff and outside experts rose from three to nine. Staff salaries and expenses came to more than $433,000. More than 20% of all spending went to a single address: Perry Willis got $104,175, Willis's Optopia firm got $29,788, and Willis's cohabitant Stephanie Yanik got $41,000. Willis relatives received an additional $20,683. Browne Campaign web site provider Web Commanders and reported co-owner Jack Dean received $87,754, more than 10% of every dollar spent. Libertarian motivator and professional fundraiser Michael Cloud received $32,946 for travel and commissions.
Beyond these salaries, more than $75,000 (not quite 9% of spending), went to people associated with the back office. Another $101,500 went to Polaris productions, which in 1999 was producing a half-hour infomercial 'The Great Libertarian Offer'. Most of the remaining money went for mailing services, printing and duplicating, and travel and event costs associated with Hotel based fundraising events.
There was also spending with 'advertising' as the identified purpose. This spending involved consulting, not the purchase of air time. This spending came to $1000, far less than I spent in my 1998 Congressional campaign. Of course, I also got four times Browne's vote percentage in a near-two-million-dollar (as spent by my opponents) three-way race. And, unlike Brown, I had an hour debate on national television— CSPAN 2, coast-to-coast, 7PM EST, the Thursday before the election.
After all his money flew out the door, in January 2000 Harry Browne had less than $45,000 with which to launch his campaign. Let's look at a timeline leading up to 2000. The financial information you are about to see became available in May 2000, well before the National Convention.
1997
In 1997, the Browne campaign raised $83,367 and spent $64,290. In a way, 1997 was the high water mark for the campaign's effectiveness at accumulating funds. In 1997, more than 20% of the money raised by the campaign was set aside towards Browne's goal. After 1997, less and less of each dollar raised by the campaign went into its cash reserve. At the end of 1997, more than 60% of the campaign's spending had gone to staff costs, namely
WHO AMOUNT PERCENT AND WHY
Jack Dean Consulting $37,600 (58%, phone and campaign services)
Stuart Reges $ 8,901 (14%, phone, supplies, and payroll)
Shannon Davis $ 5,178 ( 8%, data entry and printing)
Total $51,679
Mailing and other expenses accounted for the rest:
WHO AMOUNT PERCENT
Diversified Mailing $5,520 ( 9%)
Harry Browne $2,197 ( 3%, travel, supplies, and phone)
Travel and Hotel $2,070 ( 3%)
There are modest expenses for producing and mailing, but no charges for list rental. Of course, Browne could have begun his campaign by mailing to his established donors.
1998
Writing on January 26, 1998, the Browne Campaign's "A Personal Message from Harry Browne about the 2000 Presidential Campaign" laid out tactics for the next two years. His remarks included:
"When the mercury reaches the top (of my $1,500,000 campaign momentum thermometer) and when LP membership reaches at least 100,000, we'll be in a position to run a first-rate campaign.
Will I announce then? No, we'll do it when the timing is best, and when we have all the elements in place—when we have the people, the equipment, the test procedures, the literature, the media kits, the audio and video tapes, and the commercials.
We'll do it when we've booked and paid for commercials in advance, so they can begin running on the very day....
I announce I'm running for President of the United States.
In order for this to happen, we must do the following things during the next two years....
· Hold 100 fund-raising receptions around the country to move the mercury in our Momentum Thermometer higher and higher.
· Produce a political book that will inspire libertarian activists everywhere to join our cause.
· Spend very little money. Instead, we must stockpile money."
The 'campaign thermometer' was a graphical gimmick seen on some Browne fundraising letters. It was a line sketch of a thermometer, graduated in dollars, the bright red 'mercury' creeping up the outline as Browne raised more money. To the author's knowledge, the meaning of the mercury level was never specified. However, Browne said he wanted $1,000,000 in cash reserves and 100,000 or more Party members for the campaign. When Browne wrote of the thermometer, he said "...When the mercury reaches the top...and when LP membership reaches at last 100,000..."
A reasonable reader might well have inferred from the parallelism in Browne's words that the mercury level symbolized the campaign cash reserve, the money set aside to launch the campaign.
A reasonable reader would have been wrong.
We can find out what the thermometer meant by comparing it with Browne's FEC reports. The thermometer matches the amount of money that had been raised by the Browne campaign, not how much had been saved. Browne's money went out the door almost as fast as it was raised. For most of the campaign, the meaning of the thermometer remained Browne's secret. Until May 2000, no reader could learn that the thermometer did not mean what it appeared to be saying, because until May 2000 the Browne Campaign did not file the legally-mandated reports with the Federal Election Commission. Legal obligations of Presidential campaigns to file with the FEC are discussed in Chapter 13.
We'll see below that none of Browne's goals for 1998-1989 were accomplished: One Libertarian activist counting Browne fund-raisers concluded that there were more like 50 than 100. Browne's book did not appear in 1998 or 1999. Indeed, the book was not available in late May 2000, a month before the Libertarian National Convention. Finally, the Browne campaign made almost no progress toward accumulating a cash reserve.
In 1998, all these failures still lay in the future. What did the 1998 campaign do?
Overall, the 1998 campaign raised $270,090 and spent $263,298, increasing the cash reserve from $19,076 at the start of 1998 to $25,868 at the end of 1998. The payroll grew from three to seven. In addition to staff spending, several staffers showed their fine entrepreneurial tendencies: Companies that they owned or formed successfully solicited business from the Browne campaign. Optopia used Campaign Manager Perry Willis's address as its own; Web Commanders, providers of Internet services, is reportedly owned in part by Jack Dean. Among the staff, reported addresses for Perry Willis and Stephanie Yanik, and for Stuart Reges and Robert DeVoil, were the same.
How much were the campaign staffers paid for 1998? Payments to the staff exceeded $150,000, and consumed 57% of all funds raised by the Browne campaign in 1998. Payments to Perry Willis alone, not counting other persons and organizations housed at his 3092 South Glebe Road, Arlington, Virginia address, came to more than $54,000. Recall that from late 1997 to mid-1999 Willis also received $57,000 from the National Party as severance pay and royalties. That $57,000 is in addition to the 20% of all 1998 funds raised by the Browne campaign that went straight through the bank to the Campaign Manager, his firm, and his relatives. Payments to persons and groups at the Campaign Manager's home address exceeded $80,000.
Who all got what? As taken from the FEC reports:
WHO AMOUNT PERCENT AND WHY
Perry Willis $54,171 (20.6%, campaign management)
Optopia $ 9,197 (3.5%, phone travel, insurance, supplies)
Jack Dean $24,649 (9.4%, phone and campaign services)
WebCommanders $ 6,652 (2.5%, Internet services)
Stephanie Yanik $17,500 (6.6%, administrative services)
Michael Cloud $16,596 (6.3%, travel and fundraising commissions)
Shannon Davis $12,051 (4.6%, data entry and printing)
Stuart Reges $ 7,901 (3.0% phone, supplies, payroll)
Robert DeVoil $ 1,402 (0.5%, printing, supplies, data entry)
Total $150,119 (57.0% )
In the Browne Campaign's FEC filings, payroll, telephone, supplies, and other expenses are often commingled. We can tell how much each of the above people was paid, but don't know how much of each payment was a reimbursement for orthodox expenses or how much was part of personal income. Commingling is not a routine procedure in political campaigns. Liberty magazine reported making a search but did not find another Presidential campaign in which salaries and reimbursements were comingled in the manner done by the Browne campaign.
Purchases from vendors, directly and indirectly, included
WHO AMOUNT PERCENT AND WHY
Hotels and Travel $25,586 9.7% of funds raised
Merkle Mailing $21,262 8.1%
postage/shipping $19,456 7.4%
Harry Browne $ 8,610 3.3% phone, travel, and supplies
vonHoltzbrink $ 7,500 2.8% books
Liam Works $ 7,209 2.7% books and mailing
computer equipment $ 4,853
Williams $ 4,550 books
Cardservice Intl $ 4,213 credit card processing
mailing list rent $ 2,841
Web World $ 1,435 Internet services
Besides paying its staff, in 1998 the Browne Campaign made substantial payments to vendors. It is not surprising that a campaign based heavily on direct mail fundraising spent nearly $50,000 on direct-mailing type expenses. The direct cost of raising the money based on expenses reported here is in the vicinity of 20% of funds raised. The apparent return on investment in direct mail is around 5:1, which is extremely good for a Libertarian political campaign. Recall that some money was also raised by the candidate in personal encounters, so that actual return on investment in direct mail is probably less than 5:1. Relative to spending for printing and mailing, list rental charges are extremely small, less than 6% of the mailing and postage costs.
Browne had targeted 100 fundraising events. Visits to 28 hotels are evident in 1998. The campaign spent a solid 10% of its income on hotels and travel.
In early 1998, Harry Browne set the objective "Spend very little money." The 1998 Browne campaign instead spent almost everything it received.
1999
We now reach 1999, the last year before the Presidential Campaign would be launched. If the campaign were to accumulate a million dollars in cash, it had to do so now. In 1999, the Browne Campaign raised $561,030, which could have taken it half-way to its million dollar goal. It also spent $542,228, ending the year with $44,670 cash on hand, less than 5% of its objective for the start of 2000.
How was the money spent? Once again, staff and staff-associated firm expenses led the way. The total count of people on the payroll rose to nine. Payments to staff came to 42.6% of spending
PRIVATEWHO AMOUNT PERCENT AND WHY
Perry Willis $49,837 campaign management
Optopia $20,591 phone, travel, insurance, and supplies
Stephanie Yanik $23,500 for administrative services
Robert DeVoil $19,610 data entry and related costs
Michael Cloud $16,351 travel and fund-raising commissions
Stuart Reges $15,580 phone, payroll, and supplies
Jim Babka $15,860 Press Secretary
Debra Greeson $14,114 Salary
Jennifer Willis $12,500 Volunteer Coordinator
Steve Willis $8,183 phone, supplies, and salary
J Harris Dean $9,700 consulting
Web Commanders $9,173 Internet services
TOTAL $231,230 or 41% of total spending
In addition, expenses that could have paid for relocation totaled over $4100. Total campaign cash channeled to the campaign manager, his cohabitant, his business, and his relatives came to more than $114,000, more than 20% of all of the Browne campaign's receipts for 1999.
There is nothing wrong with paying people with an honest wage for an honest day's work. However, most Americans have long since concluded that when they see a list of a politician's relatives on the political payroll that there is cause for concern.
At the start of 1998, Harry Browne had emphasized he would not declare his candidacy until all elements of his campaign were in place, including in particular "...the audio and video tapes, and the commercials." Browne's Spring 1999 letter emphasized the great progress his campaign had made. Writing "a little over 200 days" before January, 2000, he reported "Our Momentum 2000 fund now stands at $703,000." While your interpretation depends what you think is meant by "fund" and "stands", a reasonable Libertarian could readily interpret this sentence to mean that Browne 2000 had over $700,000 in bankable money in storage.
Such an interpretation was incorrect.
In Fall 1999, production began on 'The Great Libertarian Offer', a campaign infomercial videotape. The infomercial's producer was Kristen Overn, who in addition to other services signed a letter to potential donors describing the project. In the letter, she emphasized that the total cost of the project could be held under $100,000.
Why did the campaign change its emphasis from members and fundraising to a 30-minute commercial? In his LibertyWire of January 20, 2001, the "Campaign Report", Perry Willis wrote "...During the Spring and Summer of 1999, as it became obvious that we were not going to meet our most important goals for the Exploratory Committee, we began to shift gears. We needed a new direction to substitute for the goals we were abandoning...The most obvious thing was to shift to the next major project, which was the production of a 30-minute informercial...By the time we finished it we had little money left with which to broadcast it."
Overn's fundraising letter assured potential donors that "more than three quarters of a million dollars" in "cash and pledges" had already been raised. This amount was "roughly enough money to handle all the day-to-day expenses of the campaign through election day". This money would not be touched for producing the infomercial. On the other hand, given that the campaign had this huge financial reserve for campaign operations, the majority of future money raised was said to be available for advertising and promoting the campaign.
A suspicious mind might have wondered what it meant to set aside a reserve fund. What would happen to the million dollars the campaign had planned to accumulate by January, 2000 for an advertising campaign? Was the reserve fund additional money, or a change in objectives? How was the money being set aside?
In fact, "cash or pledges" must have been almost all "pledges". Of the $750,000 being set aside in September 1999, the cash component could be no more than the campaign's $10,783 total cash on hand at the end of September. Worse, the pledges proved highly volatile. When the Browne campaign went broke the next April, the $750,000 reserve fund turned to smoke and mirrors. The reserve fund was not there.
Older readers may find that the 'cash and pledges' phrase echoes a claim of that great American President, Franklin Delano Roosevelt. As World War II began, Roosevelt promised that the United States had enough weapons 'on hand and on order' to protect the country. Roosevelt neglected to emphasize that almost all of the weaponry in question was 'on order', not 'on hand' and that purchase contracts are a militarily ineffective substitute for guns, beans, and bullets.
Where did the rest of the campaign's 1999 spending go?
WHO AMOUNT PERCENT AND WHY
Polaris Productions $101,500 18.7% TV ad production
printing and mailing $ 47,297 printing, mailing, postage, and shipping
Merkle Mail $ 34,229 7.1% direct mail
hotels $ 26,686 4.9% two dozen hotels
rent and moving $ 20,961 3.9% staff expense
Harry Browne $ 11,123 2.1% reimbursement for phone, supplies, etc.
computers and $ 11,441 2.1% including some office supplies
furniture
phone services $ 11,006 2.0%
Cardservice Int $ 7,798 1.5% credit card charging
Travel $ 7,586 1.5%
List Rental $ 6,924 1.4% LNC, Walter Karl List Rentals, LPCA
and finally
The Firm Multimedia $ 1,000 Media Services and Advertising
Other miscellaneous expenses included lapel pins, office maintenance, and $3,058 in refunds to contributors.
At the end of 1999, the campaign had $45,674 in cash on hand.
A New Anomaly
Recall that in the first half of 1996, there had been an oddity in the Browne campaign's mailing expenses. For February-July, there were almost no payments for list rental. Browne had done pre-convention mailings, but his FEC reports gave no hint of payments for list rentals. As we now know, Browne's campaign had been allowed to use the LNC's mailing list, without paying for it until well after it had been used.
A similar oddity appears three years later. In 1999 the Browne campaign spent more than $81,000 on printing and mailing, but only $7300 on renting lists to which to do direct mail. Based on precedent, corresponding to the $81,000 in printing on would expect to find $15,000 or more in list rental. Furthermore, essentially all of the list rentals were paid in the second quarter of 1999. The Browne campaign made very large mailings in the third and fourth quarters of 1999, but paid nothing in list rental. Of course, part of their large January 2000 list rental payment could correspond to their December 1999 mailings. But what of the rest of the year? Did the Browne campaign mail only to its historic donors?
There are rumors that in 1996 the Browne campaign cut a deal, giving it permanent use of the National Committee's full 1996 mailing list in exchange for giving the party a list of all contacts generated by the Browne Campaign. Browne did give the National Party a list of his contacts, discussed above as the P Transaction, but there is no mention in National Committee minutes that Browne would get the National Party Membership list in exchange. After all, Browne had already been given Party membership extensions and subscriptions for all his donors. I have been unable to confirm what truth lies behind this rumored exchange, which would have given the Browne 2000 Campaign an enormous financial advantage over any competitors.
In 1999, the Libertarian National Committee made several large membership recruitment drives. One might have expected that the Browne campaign would have wanted to rent the expanded LNC list as soon as possible to prospect for additional donors among the new members. After all, supposedly the whole point of Project Archimedes was to develop additional Party members who would donate to Browne's campaign. Now the Party had developed extensive lists of new names. There is no indication in Browne's FEC reports that the Browne campaign pursued the names, for example by renting the expanded LNC mailing list .
1997-1999, A Summary: Browne's 5% Financial Solution
In 1997, Harry Browne had set his campaign's financial goal for 2000. By the start of 2000, it was to have accumulated one million dollars cash in hand for a spectacular campaign launch.
The campaign had accumulated less than 5% of its financial target. Now Browne needed a new campaign solution, a 5% solution that worked with 5% of the cash on hand.
Over the first three years of the Browne 2000 campaign, $914,487 had come in through the door, and $869,816 had gone the other way. After nearly three years of work, the Browne campaign had indeed raised almost a million dollars. But it didn't have a million dollars in hand. Instead of spending very little money and saving the remainder, the way Browne had said was necessary, the campaign had saved very little and spent the rest. At the end of 1999 the campaign had only $44,670 in the bank.
From 1997 to 1998, the Browne Campaign more than tripled its income. From 1998 to 1999, the campaign again more than doubled its income. Unfortunately, over the same period 1997-1999 campaign spending increased almost ninefold. Instead of accumulating a million dollars, the campaign went through a near-million dollars almost as fast as it was raised.
Browne had identified two mandatory objectives for running a good campaign in 2000: A million dollars cash on hand; 200,000 members by 2000. The Browne Campaign totally failed to reach either objective. Cash on hand was less than 5% of the campaign’s original objective. The increase in membership was only 6% of its original objective. At the end of 1999, the Browne campaign had neither significant money in the bank nor a Libertarian Party of even 50,000 members. It had totally failed to meet the primary goals Browne had set.
The Browne campaign had also ignored the unspoken problems created by its 1996 Presidential and 1998 National Chair campaigns. In 1996, Browne ran for the nomination against Rick Tompkins, Irwin Schiff, and several others. Having defeated them at the 1996 National convention, Browne did not make an effort post-convention to reach out to their partisans or support them in their other political activities.
In 1996, Browne made political enemies. In 1995, he had promised the Libertarians of New Hampshire that he would vigorously contest the 1996 Presidential Primary. Many New Hampshire Libertarians made large contributions to his campaign to help carry out this promise. As Fall 1995 approached, Browne changed course 180 degrees, and suddenly announced that he would not contest the New Hampshire primary. The New Hampshire contest could have been a quarter of Browne's campaign year. It would instead not be significant part of the campaign.
In 1996 Browne had available a swarm of sycophants and lickspittles, who promptly, vigorously repeated Browne's assertion that changing strategy showed the maturity of Browne's thinking. The sycophants and lickspittles had forgotten a fundamental principle of politics. Politicians often break promises to constituents. Those promises don't count. For a politician to break a promise to a fellow politician is a mortal sin. Between politicians, promises are the sole stock in trade. The New Hampshire Libertarians with whom Browne broke faith were not his constituents. They were Party activists, Browne's fellow politicians.
Browne had an opportunity to redeem himself with some New Hampshire Libertarians. Come 1998, Browne could have gone to New Hampshire and campaigned for New Hampshire candidates for other offices, helping New Hampshire to recover the major party status that it had lost in 1996. Browne chose not to do so.
Critics have suggested that Browne's actions reflected his desire to avoid having a New Hampshire primary in 2000. Whether that was his desire or not, the goal was attained. In 1998, New Hampshire did not regain major party status, so in 2000 New Hampshire Libertarians did not have a Presidential Primary. Many New Hampshire Libertarians neither forgave nor forgot. At their State Convention, some spoke well of Browne’s plans, but when it came time to do work most New Hampshire activists sat on their hands.
Browne paid in 2000 for his decisions. Many prominent New Hampshire Libertarians closed their checkbooks to Browne. The Browne volunteer effort in New Hampshire was chaired by Richard Watras, Jr. of Massachusetts, because—as Watras has stated to me—Browne could find no New Hampshire activist to lead his effort.
Along the same lines, in Fall 1996 Browne had committed for a major speaking tour of Pennsylvania. Pennsylvania Libertarians invested major efforts in preparing for the tour, which would have supported many Libertarian candidates. At the last moment, Browne cancelled his tour. The work of dozens of Pennsylvania Libertarians went up in smoke. Browne made no effort to make up to Pennsylvania Libertarians for his cancellation. In 2000 Browne was de facto repaid for his inaction. Thanks to its emphasis on local organization and self-reliance, Pennsylvania has one of the strongest state parties in the country. According to several of my sources, including one of the Party's major candidates and his campaign manager, Pennsylvania Libertarians sat on their hands rather than supporting Browne's ballot access petitions. Some of my other sources, also distinguished Pennsylvania activists, say that they vigorously supported Browne’s campaign. I spent substantial time trying to work out what happened, and conclude that all sources are telling the truth as best they know it. As a practical matter, the State Party did limited petitioning. The National Party inherited a ballot access emergency that cost $68,000 to solve. Come November 2000, Browne's vote count in Pennsylvania fell 60% relative to 1996, one of his worst outcomes in the United States.
In 1998, Browne had involved himself in Party internal politics. He campaigned vigorously to install David Bergland as National Chair, with the promise of installing Steve Dasbach as National Director and retaining Bill Winter as editor of LP News. Bergland faced vigorous opposition from Gene Cisewski and his Grassroots Libertarianism approach. Instead of reaching out after the convention to Cisewski and supporters, by offering them at least token support, the Browne-Bergland team simply ignored them. Come 2000, it was said with only moderate exaggeration that some of these people supported 'ABB'— 'Anybody But Browne'. This slogan resurfaced at the 2002 National Convention, with some leading activists from another camp circulating 'ABE'—'Anybody But Eli'—buttons. (I asked my supporters not to wear them.)
Browne's treatment of New Hampshire and Pennsylvania Libertarians is consistent with his more recent actions. In 2000-2001 Tennessee Libertarians organized a campaign against efforts of the high-tax Republican Party to bring an income tax to Tennessee. The state Capital Building in Knoxville was physically besieged by outraged taxpayers, people incited by the Tennessee Libertarian Party and local radio talk show hosts. Browne was repeatedly invited, privately and publicly, to drive the hour from his home to join a peaceful demonstration. He never went to Knoxville.
Where did these failures leave the Browne campaign? Where did these failures leave the Libertarian Party's membership? They left us at the start of Election Year 2000…