July 22, 2016 / 2:41 AM / 2 years ago

Dumb money: How political mega-donors got it wrong

It was a hot Saturday morning when brawny, bearded Farris Wilks strode up to the altar of the Assembly of Yahweh, Seventh Day, an Old Testament-based church that equates homosexuality with bestiality and believes husbands should approve their wives’ clothing. On this particular day, Pastor Wilks was focusing on abortion, the “murder of our nation.” A slick Power Point instructing parishioners how they could help defund Planned Parenthood flashed above the altar.

The 200 or so church members - men mostly in pressed Wranglers and women in long skirts and bonnets - listened intently. Outside, swarms of shrieking black crickets besieged the dinner plates and bed covers of local homes and businesses. But at the church, cleaners kept the Assembly so pristine churchgoers could have eaten off the floor - if they could find the time between the offerings of a Christian rock band, a gym and a lavishly stocked banquet hall and soda fountain.

Watching the service, it would be easy to dismiss Wilks, 64, and his younger brother, Dan, 60, as backwater clods with too much cash. Farris’ church sits off a two-lane, 75 mile-per-hour highway outside of Cisco, a southern Texas town of empty storefronts, idled derricks and beat-up houses. Its potholed Main Street boasts a memorabilia shop that sells Confederate flags, two stoplights, 10 churches and a local newspaper with the motto “Fear God.” Raffle winners at the local rec center are awarded rifles.

The brothers, who grew up in a goat shed, now live in lavish gated compounds protected by a private security force. Farris’ home boasts an oversized pool with a cross covering the bottom. The Wilkses, though, are no naïfs. The former bricklayers turned fracking billionaires, who have 17 children between them, are now part of a growing elite of wealthy backers trying to turn their capital political. Their goal: to build a powerbase that will reach all the way to the White House. For awhile, the Wilks brothers were leading this pack. In the summer of 2015, a little-noticed federal filing revealed that Farris and Dan, together with their wives Joann and Staci, had given $15 million to a Super PAC supporting U.S. Senator Ted Cruz of Texas. The contributions vaulted them past the billionaire industrialist Koch brothers, long considered to be the GOP kingmakers, and made the Wilkses’ largesse the most generous in the 2016 election’s primary season.

The donation seemed like a smart strategy to help Cruz win the Republican nomination. After all, this was supposed to be the election of Big Money, the first one fully capitalizing on two 2010 Supreme Court decisions, known as “Citizens United,” that effectively paved the way for wealthy donors, corporations and unions to spend unlimited sums in support of their pet candidates so long as they did so through the affiliated political spending groups known as Super PACs. Super PACs are not legally allowed to coordinate directly with campaigns. But they can, and do, run ground games of local voter outreach, mailings and attack ads - making them, in effect, shadow campaign operations. Super PACs have been able to operate freely without having to anguish over penalties or punishment or regulatory scrutiny because the nation’s campaign finance watchdog, the Federal Election Commission, is mired in partisan gridlock to the point that one of its own commissioners describes it as “beyond broken and beyond dysfunctional.”

In the 2016 election, though, the “smart money” turned out to be dumb. Establishment-backed candidates (Jeb Bush) either sputtered out or had to spend more than expected (Hillary Clinton) to fend off rivals. Insurgents relying on their own pocketbooks (Donald Trump) and small-dollar donors (Bernie Sanders) prevailed beyond all expectations. And the cash dumps of people like the Wilkses wound up turning into cautionary tales in the campaign-finance industrial complex. Critics who predicted that Citizens United would amount to a billionaires’ pay-for-the-presidency melee turned out to be wrong, too. When former Florida Governor Bush announced in June 2015 that his Super PAC had raised more than $100 million in just six months, his fundraising juggernaut was expected to give him the edge that would lead to a GOP coronation. Instead, he performed so dismally in the nominating contests he dropped out after the third one.

Around the time that Bush World was bragging about its candidate’s unprecedented haul, some of it raised at jacket-and-tie private clubs or dinners at expensive celebrity restaurants, Florida Senator Marco Rubio was crisscrossing the country in a private plane. Wisconsin Governor Scott Walker shelled out nearly $133,000 to rent headquarters for a bid that lasted three months. He burned through another $6.4 million before quitting the race. Cruz, for his part, departed from the traditional candidate’s spending pattern. He flew low-cost Southwest Airlines, ate fast food and hauled his own bags onto campaign buses. Cruz also partly did away with compensation for staffers by giving them a commission on ad buys, an incentive structure that led to top consultants making millions a year. Cruz didn’t pay people for ads. He paid them for wins.

The Texas senator’s spending differed in other ways, too. While most campaigns used traditional TV ads to lionize their candidates and attack their rivals, Cruz focused largely on a data and digital operation to outflank them. Thanks to the generosity of donors like the Wilkses, Cruz’s campaign and Super PACs raised $158 million before the primaries ended. Neither spending nor frugality helped Trump’s rivals. One by one, they fell by the wayside; all were gone by May 4.

BLUE COLLAR BILLIONAIRE

Trump’s approach was unlike anything in the modern campaign playbook. Pledging to self-fund his run, he adopted the persona of the outsider, blue-collar billionaire clad in custom suits and chowing down on McDonald’s. During the primaries, he employed virtually no pollsters or strategists, flying around the country in his gold-embossed Boeing-turned-headquarters to attend rallies—then flying home each night to sleep in his own bed. Rather than lavishing pay and perks on high-priced consultants and policy wonks, he relied on the pointed politically incorrect statements that generated an estimated $2 billion in free media coverage for him during the primary alone. The result: Trump spent a fraction of his rivals, shelling out just $5.62 per vote through April to secure the nomination. Democratic Party candidate Hillary Clinton spent $14.97 per vote to do the same.

Trump wasn’t the only one giving big donors the finger. Just as the real estate tycoon startled his rivals with his unexpected wins, Vermont Senator Bernie Sanders rattled Democratic front-runner Hillary Clinton with his come-from-the-basement success, fueled by small donors who sent in an average of $27 each to his campaign. The $326 million raised by Clinton’s campaign and her main Super PAC, Priorities USA Action, helped her win enough delegates to clinch the nomination, but her race against Sanders was longer and tougher than anticipated.  Sanders’ total fundraising number through May: $229 million.

The Wilkses say their support for Cruz was motivated by politics, not religion. In an emailed statement, Farris told Reuters he was endorsing Cruz because he agreed with his policies and “because he has guts.” “The truth is, Ted Cruz has never been to our church or endorsed any of our specific doctrines, nor have we asked him to,” Farris said. When it became clear in May that Trump had won enough delegates to secure the nomination, the Wilks brothers declined to send money his way. The Kochs also made known to Reuters over the winter that they would not support the man that their donor network of 700 of the country’s richest, most conservative families refers to as “that reality TV star.” That network, which had planned to deploy $400 million on the presidential race before Trump’s ascendance, decided to stay out of the campaign for the White House and focus on state and local contests instead.

Other major Republican donors also begged off from funding Trump after his primary wins. (One notable exception: billionaire casino owner Sheldon Adelson, who spent more than $100 million in the 2012 presidential election and who indicated he may be willing to spend even more to help elect Trump—apparently because the candidate told Adelson over the winter that he shared Adelson’s strong pro-Israel stance.) Trump, meanwhile, changed his mind about financing his own campaign. Ahead of the conventions, he said he would aim to raise $1 billion on behalf of both his own campaign and the Republican National Committee, which could then use the funds to assist down-ballot races. Trump soon backed off that $1 billion figure, questioning whether he needed it, especially since it’s estimated he will receive $5 billion in free media coverage by Election Day, according to analytics firm mediaQuant. That’s more than double the amount of unpaid air time Clinton is expected to garner.

Trump’s first general election fundraising report, released in mid June, showed just $1.29 million in cash on hand, prompting a raft of media stories about the crippling disadvantage this would pose for him and Republican races as a whole. (Trump sent out his first personal fundraising email hours after reports of the shortfall.) For the Wilkses, their reluctance to back Trump is unlikely to curtail their political spending. The brothers’ nonprofits - set up after they sold their stake in a fracking supply company to a Singapore consortium for $3.2 billion in 2011 - have $270 million on hand to dole out among conservative groups and local politicians. In 2014, they contributed $800,000 to the campaigns of Texas state legislators opposing a fracking ban proposed by Denton residents for fear the oil and gas drilling technique could pollute their air and water. The Wilkses’ effort paid off in May 2015, when Texas Governor Greg Abbott signed a bill barring the state’s local authorities from stopping hydraulic fracturing—a move that became known as the “Fracking Ban Ban.” Coincidence or not, all 21 of the Texas legislators who received money from the Wilkses voted for the bill.

Farris’ recent donations include nearly a million to the American Family Association, which the Southern Poverty Law Center considers a hate group for its anti-LGBT views. He has also given $1.5 million to Liberty Counsel, the far-right conservative legal nonprofit that came to the aid of Kim Davis, the Kentucky county clerk jailed last fall for refusing to issue gay marriage licenses. The Wilkses’ spending extends beyond the political arena. Since 2011, the brothers have purchased hundreds of thousands of acres of ranch land in Texas, Montana and Idaho. Local land records show they are now the largest private land owners in Montana. Perhaps, as the race wore on, even the Wilkses got a sense of how the money game had changed. Their Super PAC spent 73 percent of its money on one firm for media and digital work supporting Cruz - about $7.7 million. The remaining $8.2 million? That money never got spent.

Additional reporting by Grant Smith

About the Author

Editing by Arlene Getz and Leslie Adler

The views expressed in this article are not those of Reuters News.

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