For Democrats of an earlier era, "follow the money" was a phrase that neatly captured the sins of Watergate. As Nixon fell, Democrats rose. Running on a platform of reform in 1974, Democrats boosted their majority in Congress, maintaining control for two decades.
Now, in the wake of a crushing defeat, Democrats can turn the phrase on its head to find their way back to control of Congress and the White House. For Democrats, the path to electoral victory may be to capitalize on a revolution in political fund-raising.
In the last election there was a fundamental shift in the composition of funds raised by Democratic candidates and the party itself. More money was raised overall in the 2004 election than ever before: a whopping $1.5 billion by the two major parties and another $690 million for the Bush and Kerry campaigns. One can debate the plus or minus impact of that much money on the political system. But the most important question is not how much money was raised, rather where it came from.
Looking just at direct contributions to the Democratic National Committee, in 2000 donations of more than $5000 made up over 80 per cent of the total; in 2004 gifts of less than $5000 made up over 70 per cent of total giving.
How did this happen? The simplest explanation is the DNC re-tooled its technology platform, making it much easier to raise money online. The result: in the past four years, the number of small donors increased from 400,000 to 2.7 million. And not a moment too soon.
McCain-Feingold campaign finance rules threatened to put Democrats at an enormous disadvantage. Under the new rules, soft-money gifts to the parties, which had been unlimited, are now capped at $25,000. At the same time, hard-money gifts to the candidates, which had been limited to $1,000 per person, per candidate, are now allowed up to $2000. Democrats had competed favorably in the soft money category, before new limits were enacted. And Republicans already had a big advantage in direct contributions to candidates, where the limits were doubled.
Even more pronounced is the shift in business giving to the parties, with Republicans gaining far more from corporate political action committees than their Democratic counterparts. In the old days, business leaders would spread their money around, giving to Republicans who shared their goals and values and Democrats who held the power. There has been a natural migration of corporate dollars from Democrats to Republicans since 1994, the last time Democrats held a majority in both houses of Congress. At that point, Democrats held a small edge in business contributions. Now, Republican have achieved a nearly two-to-one advantage.
Already, the Democratic party has seen a major shift away from wealthy individuals and corporations. This basic fact has not been fully digested by the party itself, much less the broader population. But it is the subtext of the raging battle for control of the party. Some Democrats - especially followers of Howard Dean - seek to embrace this new people-powered model, while others are seeking to steer the party back to the center, where they hope to recapture the affection and donations of wealthy individuals and corporations.
For years, Democrats have known that they would not win the race for large contributions. Still, they felt a need to compete for as much of the big money as they could get their hands on, often pursuing tax and regulatory policies that benefited well-heeled contributors to the exclusion of the interests of poor and middle-class working families.
Everybody wants to know "What's the matter with Kansas?" as the title of a current best-selling political manifesto asks. The book explores the irony wherein blue-collar voters side with the party of big business, over and over again. Surely, it is explained in part by the masterful way the current administration has fused cultural and moral values onto a political crusade.
But perhaps equally important, viewed from Kansas, it may appear that, in Washington, both parties are equally beholden to wealthy special interest groups. Average people might conclude that, at least on issues of economic policy, there is no difference between the parties.
This notion has been reinforced in a number of ways in recent years, from the way the Clinton Administration rented out the Lincoln Bedroom in the White House as a way of thanking big donors, to the way that John Kerry jets around from one mansion to another for his vacations, sail-boarding off Nantucket and skiing in the Rockies. Each time Democrats send a signal that shows them to be the party of Brie and Chardonnay, they lose touch with voters who prefer barbecue and beer.
If the Democratic party can demonstrate - in advancing popular policies and in the source of political donations - that they truly are the party of the people, then perhaps the people may begin to believe them.