In Three California House Races, Wealthy Democrats Have Spent $16 Million of Their Own Money So Far

Herbert Lee is a gastroenterologist with practices in Irvine and Rowland Heights, California. Sometime in 2018 — it’s not clear when — Dr. Lee decided that he wanted to become Rep. Lee. He built a website and filed as a Democratic candidate in the 39th Congressional District, where Hillary Clinton’s success in 2016 and the retirement of incumbent Republican Ed Royce created a prime pickup opportunity for the Democrats’ House takeover plans.

That was about all we heard from Lee until last week. He appeared at no candidate forums and received no endorsements. His calendar of events is blank. His Twitter account has 18 followers and contains five tweets, four of them from April 4. Messages to his campaign were not returned.

Lee did have one thing that makes people pay attention in politics, however: a checkbook. Out of nowhere, Lee filed with the Federal Election Commission in the final reporting period before the June 5 primary that he had raised $752,146.84 — all from himself. That brought his total self-funded receipts to $800,000, and he blew through $627,642.19 of that from April 1 to May 16. According to FEC disbursement disclosures, Lee bought freeway billboards, placed ads in Spanish- and Chinese-language newspapers, went on the radio and cable TV, and dropped $535,784 on campaign mailer materials, data for district voters, and postage.

The presence of an obscure, free-spending candidate on nobody’s radar could upset a delicate situation in the 39th, amid California’s unique top-two primary system. All candidates appear on voters’ primary ballots, and adding another candidate into the mix — the fourth to spend at least $730,000 of their own money on the race — could fragment the Democratic vote, allowing two Republicans to advance to the general election.

Lee’s story is an extreme version of what Democrats are seeing in the three southern California races where they risk being locked out of a chance in November — the 39th, the 48th, and the 49th Congressional Districts. All three races have been dominated on the Democratic side by first-time, self-funded candidates, who are throwing scads of cash into the waiting arms of consultants and media planners.

The numbers are extreme and unusual, even by the standards of a campaign finance system biased toward the wealthy. In CA-39, 48, and 49, the 14 active Democratic candidates have raised a total of $23.73 million, according to FEC data. A whopping $16.12 million — over two-thirds of the campaign war chests — comes from the candidates’ own wallets.

“It goes to show how out of balance the way we pay for campaigns is,” said Stephen Spaulding, chief of strategy and external affairs for the reform group Common Cause. “The system makes it easier for wealthy individuals to mount campaigns, and harder for ordinary people to do so.”

“If in Iowa you recruit self-funders, there are only a few rich guys in the state. In California, it’s one of the richest states in the country. So they start showing up.”

Observers have conjured up numerous reasons why Democrats are struggling in these races. They point to the maddening top-two primary, which the state party chair has vowed to “repeal or amend … ASAP!” They point to well-known, experienced Republican challengers, and anti-Trump enthusiasm on the Democratic side producing too many candidates. They attack the state and national party for failing to contain intra-party infighting and winnow the field. Conservatives point to the California legislature’s votes for a gas tax and sanctuary state provisions, intimating that a state where Republicans just dropped below independents in voter registration is poised for a right-wing comeback.

But the biggest reason is often left unsaid — the rules of campaign finance favor the superwealthy, drawing in inexperienced millionaires cheered on by the Democratic Congressional Campaign Committee to shoulder the mega-spending it takes to win congressional seats. And self-funded candidates happen to be bad at elections.

Data from the Center for Responsive Politics finds that candidates who put $500,000 or more of their own money into House and Senate races in 2016 won only 12.5 percent of the time. Unsurprisingly, voters aren’t inspired by rich folks trying to buy a seat in Congress. “Raising money from small donations makes you have to ask for people’s support,” said Daniel Newman, president of MapLight, which tracks money in politics. “It makes you as a candidate think about what people want from an elected official.”

Party committees like the DCCC have traditionally welcomed self-funders who have the resources to compete. But it can backfire in California, where inequality and extreme wealth have both been on the rise, as Sam Jammal, one of the few candidates in these races not self-funding, told me in February. “If in Iowa you recruit self-funders, there are only a few rich guys in the state,” he said. “In California, it’s one of the richest states in the country. So they start showing up.”

Self-funders rushed in partially because of the weak Democratic bench in this part of California. Hillary Clinton took Orange County for Democrats in the presidential race for the first time since 1936. As Ron Brownstein reports, Democrats have majorities on city councils in just two out of 34 Orange County cities. There hasn’t been much time or effort put into nurturing a bench of candidates in an area written off until recently as rock-ribbed Republican.

Changing demographics have made Orange County winnable. But Democrats sleepwalked through the opportunity, and candidates they could have elevated were targeted by the Republican noise machine. A prime example is state Sen. Josh Newman, who won a swing seat in the Fullerton area in 2016 by just 2,500 votes.

During his first term, Newman voted to raise the state gas tax to pay for infrastructure improvements. Right-wing radio hosts and conservative activists initiated a recall, which is on the ballot next week. If Newman didn’t have that hanging over his head, he would be a prime candidate for the 39th District. But because Republicans tied him up in a recall, it left the field to neophytes and dilettantes with money.

In addition to Lee, the 39th District race includes Mai Khanh Tran, a doctor who issued herself $730,000; insurance executive running as a Bernie-crat Andy Thorburn, with $2.79 million in self-funding; and Navy veteran, Frito-Lay executive and lottery winner Gil Cisneros, who recently increased his self-funding to $3.55 million. Only Jammal, a former congressional aide, has not contributed large sums to his campaign.

Democrats running for the California 39th Congressional District, from left, Mai Khanh Tran, Sam Jammal, and Andy Thorburn, speak to voters during a rally held by Swing Left in Rowland Heights, Calif., on May 19, 2018.

Out of the $9.91 million raised by Democrats in the 39th, $7.87 million of it is self-funded, an incredible 79.4 percent. None of the Democrats have run a campaign before, while Republican candidates include a former state Senate majority leader, a former assembly member, and a former Orange County supervisor.

The race has gotten heated, with accusations flying among Cisneros and Thorburn in particular, until the California Democratic Party mediated a truce, putting a halt to negative campaigning. Predictably, the allegations had concerned Cisneros’s and Thorburn’s personal finances, a healthy target when you have multimillionaires with diversified portfolios involved.

One candidate with electoral experience, former school board member Jay Chen, dropped out in March, citing the dangers of Democrats being locked out. Self-funded candidates aren’t as likely to respond to pressure from the party committees, as they have their own independent sources of money. If pressured to drop out, they can just write themselves another check. And telling someone worth several hundred million dollars to their name that if they don’t drop out, they’ll never work in this town again isn’t an easy threat for a party staffer to make land. So the self-funding that the DCCC cherishes can create an uncontrollable monster in certain situations.

Two self-funders are only running in the 39th, thanks to the DCCC. The House campaign committee opened an Orange County office in 2017 and sought to play kingmaker, shuffling around candidates in an attempt to clear the fields. It didn’t work.

Cisneros (a major Democratic donor who eventually got the DCCC endorsement) and Tran had lived in the 48th Congressional District, but were encouraged to move to the 39th to make way for businessman Harley Rouda in the 48th. The DCCC then soured on Rouda, recruiting a separate self-funder, stem cell scientist Hans Keirstead. Then an anonymous claim against Keirstead alleging sexual misconduct while he worked at the University of California, Irvine, pushed the DCCC back toward Rouda; they put him on the coveted “Red to Blue” list, though some fear it came too late in the primary to make a difference.

The 48th Congressional District, held by Republican Dana Rohrabacher, features three self-funders: Keirstead ($730,000 of his $1.63 million in receipts has come from himself), Rouda ($1.13 million out of a $1.94 million total), and lawyer Omar Siddiqui ($764,000 out of $944,000). Fifty-eight percent of the campaign donations to Democrats in the 48th are self-funded.

Hans Keirstead, left, and Harley Rouda, both Democrats running for California’s 48th Congressional District seat, participate in the DEMOC PAC’s candidate forum at the University Synagogue in Irvine, Calif., on May 22, 2018.

Keirstead blames Rouda’s campaign for circulating the anonymous whistleblower complaint; he was cleared of its charges. He insists that the misconduct allegation, which includes a charge that he struck a female graduate student, is demonstrably meritless — but it hasn’t been demonstrable enough to salvage him in the eyes of the national party.

Keirstead has vowed to fight the attacks with more money, telling the Washington Post that he would write his campaign a check for whatever the DCCC put into the race for Rouda. “If they put in another million, I’ll do the same damn thing,” he said.

Amid this infighting, well-known former Orange County Republican Party Chair and Assemblyman Scott Baugh could easily slip into the top two to face Rohrabacher in November. Also hurting the cause are three Democratic candidates who dropped out too late for their names to come off the ballot. The DCCC is sending mailers reminding voters that these candidates dropped out.

In the 49th District, vacated by incumbent Republican Darrell Issa, two candidates, real estate investor Paul Kerr and State Department contractor and nonprofit CEO Sara Jacobs, are self-funding. Kerr has put in $4.02 million; Jacobs, whose grandfather co-founded Fortune 500 mobile company Qualcomm, has dumped in $1.59 million of her family’s money. Jacobs has also benefited from $2.2 million in outside ads from the EMILY’s List Super PAC called Women Vote!, which began shortly after her grandfather Irwin Jacobs gave the group a $250,000 donation.

The self-funding total of $5.62 million in the 49th District represents 60.5 percent of the $9.3 million raised by all Democrats in the race.

The two other major candidates, retired Col. Doug Applegate (who came within 1,600 votes of defeating Issa in 2016) and attorney Mike Levin have fumed about the exorbitant self-funding of their two rivals. “I don’t have a billionaire for a grandfather. I’m not worth $300 million from my real estate empire,” said Levin at a house party reported on by the Washington Post. “I’m a regular person.”

Levin represented notoriously scummy subprime lender Countrywide in foreclosure cases that ended up evicting borrowers from their homes. Applegate had his own allegations of domestic violence that have dampened enthusiasm.

Democrats are scrambling to drag anyone into the top two in these races. More outside money has been spent in these three races than any nonspecial House election in America (with the exception of one race in Pennsylvania). Democratic groups have thrown in $10.04 million, nearly five times more than Republican groups’ $2.27 million. That’s on top of the $16.1 million in Democratic self-funding.

The outside attacks have mostly focused on bashing the Republicans in the races, in hopes of keeping down their vote share. An ad for House Majority PAC paints 48th District Republican hopeful Baugh as a “lawbreaker” with campaign finance violations.

Some of the attacks are more obscure bank shots. In the 39th District, House Majority PAC, the Super PAC linked to House Democratic leadership, is highlighting unknown Phil Liberatore and tying him to Donald Trump, an obvious attempt to pull Republican votes from better-known rivals. A TV ad from the DCCC in the 49th criticizes moderate Republican Rocky Chávez for voting with Democrats in the state legislature on a cap-and-trade bill, in a bid to lower his standing among Republicans.

But the millions in cash may not be convincing voters. A look at absentee ballot returns created by data analyst Paul Mitchell shows low turnout and disproportionate Republican votes in two of the three key districts. Republicans represent 37 percent of the ballots mailed in the 39th District, but 46 percent of the ballots returned; in the 48th, Republicans are 42 percent of the ballots mailed and 45 percent of those returned. In the 49th, the numbers are more even, but in all three districts the electorate of returned ballots skews older and whiter than the overall electorate.

It’s hard to target money at specific candidates in southern California, at least on television. The Los Angeles media market is not only expensive, it reaches 27 different congressional districts, meaning most of the investment is wasted. More traditional targeting like mailers, which are ubiquitous in the races, can frustrate voters in the weeks leading up to the election.

“There are diminishing returns to more money spent, more saturation of ads,” said Newman of MapLight. “But when other candidates are spending a lot of money, people feel pressured to keep up. It’s an arms race.”

The confusing top-two primary just heightens this, because candidates must find voters among the entire electorate, rather than just their political party, and must strategize which opponent to attack or which subgroup to target their appeals. It’s a playground for consultants to test messaging, but it gets expensive, which locks out ordinary people who might want to serve.

If a self-funder happens to get into Congress, they bring to Washington a worldview that aligns with the top 1 percent. “Congress does not at all reflect the community it represents,” said Stephen Spaulding of Common Cause. “We have to figure out ways to change the system.”

The Supreme Court in Buckley v. Valeo ruled that individuals can contribute unlimited amounts to their own campaigns. One way of counteracting that would be through small donor matching programs that use public funding to leverage millions of individual contributions. “That allows the public to be power players again,” said Rep. John Sarbanes, D-Md., author of the Government By the People Act, which would grant a $25 tax credit for campaign donations and amplify it with federal matching dollars. “If the $50 and $100 donor is the most important in a campaign, [politicians] will work for an agenda that improves their lives.”

Unfortunately, the past few years have taught that the most important donor to a campaign is the candidate himself. “The current president got elected with no previous political experience,” Newman said. “That has a lot of people who are wealthy looking at themselves in the mirror and thinking, I can do that too.”

Top photo: Some of the self-funded Democrats running for election in California include, clockwise from top left: Hans Keirstead, Mai Khanh Tran, Andy Thorburn, Harley Rouda, Gil Cisneros, and Omar Siddiqui.