Q: I mean, how did you know that the Bush campaign people were —
LACIVITA: You just hear. Oh yeah, there was —
Q: Because you couldn’t talk to them.
LACIVITA: Well, you couldn’t — well, I mean, you could just — you would hear it. I mean, you know, Washington in a presidential campaign is a very small town. During a presidential year, it’s a very small town. And, you know, we’re all talking to the same reporters, and the press is a conduit. They’re a conduit. You know, they’ll share with you things off the record, and you share things with them off the record, and they’ll be like “Man, Karl’s really pissed about this.” And, you know, stuff like that. (laughter)
LACIVITA: Well, because in some — I mean, I’m not going to speak for Karl, but — I clearly can’t, but you know, you would hear things like, well, they hijacked the campaign. You know, which is a legitimate criticism, and a legitimate concern. As someone who runs political campaigns all over the country, I hate it [00:13:00] when an outside group comes in and throws a wrench in the works, and they start talking about something that I’m not talking about. I don’t like that. Because that takes control away from me. So, it’s not like any of the concerns that may have been expressed were unfounded, quite frankly. I mean, I probably would have had the same exact — and I have had the same, you know, whether it be the US Chamber, or whether it be whoever would come in and play in a particular race. You — as a political operative, you want to maintain control as much as possible, you know, over every aspect of the campaign. And so when you lose that to an outside group that legally you’re not even allowed to blink, excuse me, at, you have those concerns. So — and again, not unfounded ones. But we would hear things, and — but, you know, and of course there were all kinds of accusations about, you know, that we were coordinating, [00:14:00] and it was all Karl’s grand idea. And that was the other thing. I was like, you know, Karl’s a smart guy, but he ain’t the only smart guy in politics, right? There’s a couple other people that may know a little bit. So, you know, we got a kick out of that. But, you know, and we had some of those same issues that arise again in — when I did something similar in 2008 in the presidential race. But, you know, they — you know, you would expect — you expect the opposition to make — you expect them to make an accusation that there’s illegal coordination, or that there’s something in order — I mean, it’s a smokescreen.
Q: Let me back up.
Q: To — and we will get the Swift Boat story at length. But you mentioned McCainFeingold, and it was new for ’04, right? What was new? In other words, in banning soft money, money that — in large amounts that could be [00:15:00] given to the political party organizations, what effect did that have on the 2004 elections?
LACIVITA: The effect it had on the 2004 — well, yes, so McCain-Feingold, first campaign season that — the first campaign cycle that it was in effect was the 2004 presidential campaign. And essentially there were two types of political money. There is money that’s regulated by the Federal Election Commission for federal elections, and that’s called hard money, and this quote unquote “soft money” which is regulated by the states. It’s not like it’s unregulated money. You know, but it’s just not regulated by the Federal Election Commission. And so basically, McCain-Feingold eliminated the parties’ ability to use this money, and to raise this money, and to spend this money, and the committees became reliant clearly on hard money, which is raised in $22-, $2,400 levels, as opposed to an unlimited [00:16:00] level. You know, or even a corporation check, you couldn’t take corporate money, anything like that. So at that point, previous to McCain-Feingold, campaigns and the party system were the movers and shakers in Washington. The Republican Party and the Democrat Party exercised discipline and control over their candidates and over their, you know, from a political standpoint. Because they were the center of the universe, and they raised money.
Q: And how do you — I’m sorry. And in ’02, you said —
LACIVITA: I had a $90 million budget.
Q: Soft money?
LACIVITA: Soft money. And that just required that I couldn’t specifically for the election — the defeat of a candidate in a TV commercial, and so we did issue ads. But those issue ads, the vast majority of the issue ads, you spend a lot of that on negatives as a political committee, but the campaigns then spend more of their money on the positives, about why [00:17:00] they’re running. So McCain-Feingold I think really undercut the heart of American politics by essentially cutting — weakening, I believe, the two party system by taking the money out of the parties and just allowing people like me, to be perfectly blunt, establish (c)(4)s, (c)(3)s, (c)(6)s; if there’s a code cite in the IRS, we’ll find it and set up a committee behind it. And so, it takes the money out of the party process, and puts it in the hands of a few, or too many folks. I mean, it just depends. But — and, you know, whether it’s a corporate interest or a personal interest, or I mean, it runs the gamut. And so, in 2004, we were still in the infancy of figuring out how we deal with campaign finance, but 527s, there were two mechanisms that you could use. You could use a (c)(4) or a (c)(6), which are nonprofit social welfare organizations.
Q: And these are IRS?
LACIVITA: [00:18:00] These are IRS codes, or categories. It’s what they’re named for. And then there was this particular, you know, 527, which was relatively new. Our campaign lawyer was Ben Ginsberg, who’s the one who brought me into the whole Swift Boat thing. But he is — you know, he’s probably one of the foremost, you know, experts in campaign finance law, and so helped devise the proper legal way to initiate this, and to initiate, you know, the organization as it was as a 527. Interestingly enough, it was in 1996 that issue advocacy, the use of soft dollars, was used extensively, and that was basically done by Dick Morris when he was doing issue advocacy on behalf of President Clinton. They were spending money to go after Newt Gingrich. But, so I’d had a long history, and of course [00:19:00] 2004 changed everything so, you know, we set up our group under this particular code of the IRS, and a lot of — and then there were, you know, there was another group that I was involved with, Progress for America, they were engaged, they were more of a — they were a (c)(3) or a (c)(6) organization, which is based on the IRS code. So a little different than us, but we had to report our donors. And within a certain window.
Q: As a 527?
LACIVITA: As a 527, had to report them. Yeah.
Q: So it was tens of millions of — hundreds of millions probably, that prior to McCainFeingold, were going to party committees like the RNC and the Democratic equivalents, and so on. Now that money is going to —
LACIVITA: Organizations set up by consultants.
Q: And you mentioned Swift Boats, and you mentioned Progress for America, which was another, if you will, loosely defined pro-Bush or anti-Kerry program, really.
LACIVITA: Right. Oh yeah.
Q: But the Democrats had their own, right?
LACIVITA: Oh yeah, no, no, [00:20:00] and to be fair, these political committees and these (c)(4) organizations, they existed prior to McCain-Feingold. Because I mean, from — you know, the Founders clearly want normal people involved in the political process, not just, you know, the consultancy, if you will, or the professional politician, be it an elected official or a consultant or, you know, an operative. So, these organizations have always existed, it’s just that there are so many more now. They dominate — the parties used to dominate the political scene, they don’t anymore, they’re bit players now. And so, 2004 was the start of that, and, you know, and of course it became the — I’m trying to remember some of the groups that came out of — that were on the Democrat side in 2004, there were so many of them. [00:21:00]
LACIVITA: Well, MoveOn was huge, that’s right, had started up earlier. You know, it’s funny, because they were — that — part of the concern going into the 2004 election cycle was Republicans don’t have the equivalent, you know, that we were the ones that were under gunned, we didn’t have — because the administration had basically said, we don’t want to have anything to do with them, and you know, the political class was going, well why are we going to fight with one hand tied behind our back? And of course, Progress for America had been around, and was very much involved in pushing the agenda post-2001, but — and very involved in 2002, but — and then the Swift Boat’s just sort of one of those things that happened.