The Business of Politics
Representative Tony Coelho has raised a lot of money for congressional
Democrats -- and roused a lot of debate
by Gregg Easterbrook
Although the decade began badly for the Democrats, the party's low point
did not come in November of 1980, when the Republicans won the presidency
and the Senate. It came the following spring, when Democrats in the House,
the party's sole remaining stronghold, engaged Republicans in a contest to
see which side could chop more business loopholes in the 1981 tax-cut
legislation. Democrats hoped to win back the hearts -- and open the
pocketbooks -- of businessmen, who in 1980 had overwhelmingly supported
Republicans. But the Republicans kept matching and raising the Democrats
in the tax-sweeteners game. The final version of the legislation was a
bonanza for business that reduced federal revenues even more than the
Administration had planned -- and, parenthetically, thereby encouraged our
current mega-deficits. Still, despite this ardent wooing, business
remained Republican in its giving habits. That was what made the tax
debate of 1981 the Democrats' low point. The party tried to sell its soul
Commentators, noting President Reagan's popularity, the mood swing of the
electorate, and the outpouring of conservative money, proclaimed in 1981
that the much prophesied "realignment" -- the Republicans' ascent to
majority-party status --
was finally at hand. The Democratic camp stood in even worse disorder than
usual, with a little-known Los Angeles lawyer, Charles Manatt, taking over
the Democratic National Committee (DNC) and the utterly anonymous Tony
Coelho, a thirty-nine
year-old California congressman with no organizational experience,
assuming leadership of the related Democratic Congressional Campaign
Committee (DCCC), which is charged with raising money for Democratic
congressmen. Twenty-five more seats in 1982 would have given the
Republicans the House, and with it full control over federal
decision-making. The conventional wisdom held that the Democratic Party
would not get out of the Reagan revolution alive.
Needless to say, the conventional wisdom was wrong. The Democrats kept the
House, and they stand a chance of recovering the Senate in next month's
election. Meanwhile the party's fund-raising for itself (there are several
other types of fund
raising, including the kind candidates do for themselves) has become
dramatically more effective. For the 1980 elections the DCCC raised $1.8
million, while its counterpart, the National Republican Campaign
Committee, took in more than ten times as much. For the 1986 elections the
DCCC expects to take in at least $15 million, around half the amount the
NRCC will raise. Though the Republicans retain the lead in most forms of
money-raising, it is an ever more modest one.
Most of the Democrats' gains stem from business gifts and direct-mail
exactly what powers Republican fund-raising. The gains have occurred as
Coelho (pronounced Quell-o) has thrown himself into campaign finance with
the kind of zealous stamina last seen when W. Clement Stone built a
pecuniary empire by selling insurance door-to-door. A man of unusual drive
and almost pious determination, Coelho has since 1981 tirelessly canvassed
the country, spending 150 days a year on the road, many of them devoted to
extracting contributions from businessmen and political-action-committee
It is commonly assumed that the reason for the increase in financial
support for right-wing candidates over the past decade is that businessmen
are all Republicans. Certainly, a high proportion of chief executive
officers and of the rich are Republicans, but most business men and women
are neither CEOs nor rich. Even in the Reagan era many mid-level managers
and independent businessmen and a few CEOs remain Democrats, either
because of upbringing or because of a preference for Democratic policies.
Yet in the years building up to their 1980 defeat the Democrats seemed to
write off the business community. Many businesses and PACs were simply
never called on by Democratic fund-raisers.
Voters think of PACs as institutions that exist to seduce congressmen. But
the system also works the other way around. Nearly all Washington dinners
held "in honor" of some senator or committee chairman, for instance, are
actually arranged by the honoree or a close affiliate and are attended
mainly by lobbyists and PAC officials whose invitations apprised them of
the $250 or $500 "donation" required at the door. Just as PACs have been
able to render congressmen timorous by implicitly threatening to back an
opponent, congressmen have learned to shake down the PACs with a
reciprocal insinuation that they'd better give or lose ground to a
competing PAC that did. Today it's probably more common for politicians to
put the touch on PACs than vice versa. The Republicans have seemed to
understand the possibilities since PACs began to proliferate in 1974; the
Democrats have come to understand them through Tony Coelho.
James Devlin, a Texas businessman, recalls meeting Coelho in 1981. Then
the chairman of U.S. Telephone Inc., Devlin was in Washington to lobby
congressmen about phone deregulation. While he was waiting to meet someone
for breakfast in the House dining room, Coelho walked up to Devlin cold
and started giving him a sales pitch on the Speaker's Club, a new group
Coelho was forming.
"Clubs" were just catching on in political circles as a polite way to
combine arm twisting and elbow rubbing. Coelho's club, a bargain at
$5,000, promised audiences with Speaker Tip O'Neill and other Democratic
big wheels. "Tony had these little index cards he was writing on, and
before I knew it, he was saying, 'I'll just put you down for $5,000,'"
Devlin says. "Suddenly I felt myself in the presence of a businessman."
Coelho, Devlin says, "has a style that's engaging to business people.
Tony's a guy who makes lists, who summarizes, who gets to the point
quickly and then moves on to the next item."
Devlin became one of Coelho's first converts. Soon Coelho was urging
O'Neill, who rarely travels, to go to Dallas for a fund-raiser. Devlin had
organized a party at the home of Starke Taylor, an old-money patrician and
now the mayor of Dallas. "The majority of the guests were Republicans who
had never had contact with Democratic leadership," Devlin explained. "I
think Starke Taylor's wife wanted to keep it secret from her friends that
Tip O'Neill was going to set foot in her home. Picture the setting. A
palatial Dallas home, a string orchestra performing, Texas Republicans in
evening clothes -- plus Tip O'Neill. And he charmed them, absolutely charmed
The party raised $125,000 for the DCCC. Devlin thinks it represented a
turning point in Coelho's evolving understanding of businessmen. "Tony
visualized that businessmen are businessmen, not ideologists," Devlin
says. "Businessmen are interested in results." If Coelho could provide
results -- whether consideration for legislative proposals or introductions
to the right people or simply the assurance that donations weren't being
squandered -- business PACs would be happy to invest a little to cover their
"There's a lot of ideology out there, but what drives business is
pragmatism," explains Walter Shorenstein, a San Francisco developer and
Democratic donor. "I say to my Republican friends in business, 'When was
the last time you had your Democratic congressman out to your golf club?'
The ones who do are always quite glad they did."
Coelho admits, with a frankness that has won him a minor celebrity status
among political cognoscenti, that in the dark days following the 1980
elections his appeal to donors was, as Robert Kuttner reported in The New
Republic, "Business has to deal with us whether they want to or not. I
tell them, 'You're going to need to work with us.'"
If that pitch sounds like a mixture of protection racket (nice little
multinational you have here; too bad if anything should happen to it) and
an offer to play ball, that's exactly how it was intended to sound.
Political fund-raising appeals often boil down to this formula, though
fund-raisers prefer lofty phrases about national purpose. In the period
following Reagan's election the most persuasive argument Democrats could
make to business leaders with conservative sympathies was that it would be
more cost-effective to buy Democratic good will than to try to wipe out
the party altogether. Democrats still had incumbency on their side in the
House, and going after dozens of them would be a very different matter
from going after one President or a few senators.
"The thing to do with business men and women is to appeal to their
business sense," Coelho told me recently. "You can't sell them H. R. 1236.
You can't sell them a legislative program. People aren't interested in
that. Business men and women want to be associated with success. If they
see you are going to be successful, they latch on to you. I basically went
out and said, 'I'm an entrepreneur in politics. I'm going to get the
Democratic Party into direct mail, media centers, computers'" Coelho
continued. "I went to Texas and California. Where are the entrepreneurs in
this country? The big numbers are in those states. I went to New York and
later Florida, as well, but Texas and California the most. Some people
will say that was where to find oil and gas money or conservative money.
But I was going after a mentality. It's just like anybody else who starts
a new business. Where do they find people who will invest in them? Among
"What I wanted was to make the DCCC like a business. What I have now is a
business that is successful. My business had no assets, and today has five
million dollars in assets. My business had no income, and today we open up
our doors every month and get three hundred thousand dollars in direct
mail. The business of politics is what I'm all about."
In the campaign-finance business it is donors who are the customers, and
what keeps the customers satisfied is access. Access in the Washington
subculture has more to do with personal courtesy and attention than with
"power" -- since even access to the President does not guarantee that you
will get your way -- and so, more than votes, the products that fund-raisers
sell are connections and ego strokes. Thomas Gaubert, a Dallas venture
capitalist, says, "I'm one of the biggest contributors to the Governor of
Texas, but can I get him on the telephone? Hell, no. Sometimes it takes a
week. I call Tony any hour of the day or night and he gets back to me
immediately. Some days he just calls to ask how I'm doing. That pleases me
Coelho tripled the take from DCCC fund-raising, from $2 million to $6
million, in his first two years. Among his first management decisions was
to insist that during the 1982 elections DCCC funds be used selectively:
test-marketed, as it were. Previously the committee had handed out a set
amount, usually a thousand dollars, to every Democratic candidate
regardless of need. This was both an attempt to avoid intramural bickering
and an admission that the committee had no larger blueprint. Coelho
decided to ignore those Democrats with "safe" seats and concentrate
resources on close races.
Many in the party old guard were furious. Senior incumbents who had served
faithfully found themselves rewarded with no party funds; green or
little-known candidates got the legal maximum of $50,000 in intra-party
help. It was a controversial decision, and Coelho took the heat for it -- "I
still have enemies in Congress because of it," he says -- though the party
leadership had privately concurred, reckoning that if the stratagem
failed, the young and expendable Coelho would make a handy fall guy.
When the stratagem succeeded, with the Democrats picking up twenty-six
House seats during the height of the Reagan revolution, Coelho was able to
claim a share of the credit. Just a few months later, in the winter of
1983, he threatened to quit as the DCCC head if he wasn't given a role in
party policymaking. Coelho was in a position strong enough that he won
this concession, although the DCCC chair had traditionally been strictly a
money post, divorced from the issues. Soon word began to circulate that
when O'Neill retired, Coelho would run for whip, the number
three position in the House leadership and a proven stepping-stone to the
speaker's chair. O'Neill will retire in 1987, and Coelho is at this
writing considered the favorite for whip. If he wins, it will be after
just eight years in Congress, an amazingly short tenure.
Another businesslike decision Coelho made early on was to invest a portion
of the DCCC's rapidly increasing income. Previously, the money had
immediately gone out to finance campaigns or to retire old debts; some of
these venerable obligations date to the days of the Humphrey-Nixon race.
Coelho set aside about $3.5 million of the first $6 million he raised to
finance a media center and a direct-mail operation; at the DNC, Charles
Manatt was doing much the same.
"In 1981 the average Democratic House contribution was about five hundred
dollars, while the comparable Republican average was thirty-eight
dollars," Coelho said. "That told me very quickly something was wrong.
Here we were the party of the little guy, yet the small contributors were
going Republican." By 1986 Democratic direct mail had recovered. Coelho
could boast that the DCCC's average contribution was "down" to $35, with
small contributors providing nearly half of the committee's take.
(Different schools of thought exist on the ultimate value of direct mail
as a fund-raising technique. Overhead is high, anywhere from 20 percent to
90 percent; the overhead involved in soliciting a PAC contribution,
usually $30 or $40 for steak, shrimp, and drinks, consumes a much smaller
proportion of the gift. The impact of direct mail appeals in general has
declined as the practice proliferates and people's mailboxes fill up with
unwanted and unread mail. What fund-raisers continue to like about direct
mail is that it can be operated on an automated basis. No traveling,
personal appearances, or handshaking is required.)
Meanwhile the DCCC, at Coelho's behest, was building his media center.
Here he was playing catch-up; the Republicans, many of whom have
backgrounds in marketing, had caught on much sooner to the importance of
controlling the means of video production.
As early as 1981 the Republican committee was transmitting "satellite
press releases" -- flattering clips of a senator or a representative that
are beamed out at comparatively little expense for any local television
station to use as if the station had reported the story itself. Republican
officials were sending camera crews to "cover" congressional activity in
such a way that their clients appeared to be at the center of the action:
artful filming can transform routine questioning during a routine hearing
into a face-to-face showdown between a congressman and a famous witness.
Coelho, who has six television sets in his office -- in addition to C-SPAN,
he watches NBC, CBS, ABC, CNN, and PBS news shows simultaneously, scanning
for pictures with political content -- preached to the Democrats the value
of media and of packaging ideas, and they began to listen. "Politics has
become the business of communication," he says. "If I make a sale, they
react by voting for us. I still think you ought to do what is
legislatively right, but the way you package your idea has become just as
Coelho was instrumental in fashioning Tip O'Neill into a visible media
counterpoint to Ronald Reagan. O'Neill had long been uncomfortable before
the camera, and no previous speaker of the House had had any standing on
TV. O'Neill's predecessors in the electronic age -- Carl Albert, John
McCormack, Sam Rayburn, and Joseph W. Martin -- were confirmed
One of Coelho's first acts at the DCCC was to hire Chris Matthews, a young
political operative with a keen understanding of television's need to
reduce issues to pictures and single sentences. Coelho pushed O'Neill to
take Matthews as his press secretary; Matthews, who is well liked by the
Washington press corps because of his ready wit, had soon sweet-talked the
networks into treating the Speaker as if he were an opposition leader in
the Philippines or Nicaragua, so that sundry evening-news clips of Reagan
were followed by ten-second retorts from O'Neill.
By the time Reagan's 1984 State of the Union address rolled around, Coelho
had helped persuade O'Neill to film his response on the streets of Boston,
talking to average voters. (But, as Barbara Matusow reported in the
Washington Journalism Review, it snowed the day of the address, and
O'Neill was unable to get a flight north. So the DCCC media center set up
fake Boston scenes in Washington, complete, in the finest packaging
tradition, with fake real people. One "typical Boston" scene, Matusow
wrote, was filmed on Capitol Hill in a bar that is a hangout for
congressional staffers. Cameramen had to shoot carefully around Washington
Redskins posters.) Polls show that 90 percent of Americans now recognize
O'Neill's name and give him approval ratings nearly as high as Reagan's.
That O'Neill, the speaker of the junior chamber of Congress and a man
without presidential possibilities, was able to emerge as the Democrats'
leading figure when several senators and governors were competing for the
distinction is a testament to the DCCC's studious exploitation of
Coelho has further preached to Democrats the value of "free media": rather
than pay for ads, get the networks to broadcast the message voluntarily.
He is especially proud of a free-media coup that took place when the DCCC
held a press conference, in March of 1984, announcing an advertising
campaign to embarrass Reagan on the "sleaze issue." The event was given
prominent play on the evening news; the three major networks ran excerpts
from tapes of the coming ad which Coelho had distributed. The ad itself
never ran -- network coverage had been the goal all along.
"Our sleaze ad cost about $800 to produce, and we got a million dollars
worth of publicity from it, because we put it out in a way the media could
use," Coelho says. "Video media has to deal with what the picture is.
Reagan understands this to perfection. If you control the picture, you in
effect control how the video media presents your issues. It's totally
different from the printed word."
Another example followed the first presidential debate in 1984. Coelho was
shown on many national newscasts saying that the President had "looked old
and acted old," a thought the Mondale camp wanted to plant but could not,
for obvious reasons, let Mondale himself say. Viewers got the impression
this was Coelho's spontaneous reaction to a news event and that cameramen
just happened to be nearby. In fact Coelho had informed Mondale advisers
that he would deliver the comment and had refined the phrasing to make it
as short and punchy as possible. (Later, after the Mondale ship began to
sink, Coelho distanced Democratic congressional candidates from their
party's presidential ticket -- for which he was criticized in the press,
though not by his fellow congressmen.)
Coelho probably could not have gotten the DCCC job in 1980 unless few
others had wanted it. Not only was the party in decline but the past two
DCCC chairmen, Wayne Hays and James Corman, had not been success stories.
Hays, of course, was finished the day his aide Elizabeth Ray admitted, "I
can't type, I can't file, I can't even answer the phone." Corman, a
twenty-year House veteran from Los Angeles, lost in 1980 by 752 votes when
Jimmy Carter conceded defeat while the California polls were still open,
causing an exodus of Democrats waiting in line at polling places.
But Coelho, a student of congressional history, knew that earlier DCCC
chairmen had included Tip O'Neill and Lyndon Johnson. The job allows a
congressman to woo his fellow party members with financial support. This
is a powerful, although imperfect, tool of self-advancement -- imperfect at
present because Coelho continues to take money from backers in the
districts of safe-seat congressmen and shift it to candidates whose
districts don't produce contributions, and these transactions cause only
headaches for him. In the 1986 election, for example, Coelho is "maxing
out" on intraparty contributions to several close North Carolina
races -- essentially shifting money from Texas, California, and New York to
North Carolina -- although the state's delegation is not expected to support
Coelho in his bid for whip.
The DCCC job is also renowned for allowing its holder to make the
acquaintance of benefactors who might later support his own ambitions.
Coelho's ambitions are a subject of considerable interest within party
circles. He first won the notice of Democratic leaders in 1979, when, in
his first term in the House, he sold $50,000 worth of tickets to the
party's annual dinner. Most congressmen considered this duty on a par with
having to unload 4-H raffle tickets; a single $1,000 sale was all that was
expected of anyone.
Born to a lower-middle-class dairy-farm family in the Central Valley of
California in 1942, Coelho while still a child distinguished himself as a
demonic worker even by the standards of an enterprise in which a
continuous tending of animals is the norm. He and his brother sometimes
rose as early as 2:30 A.M. to milk cows before heading off to school. The
family worshipped Franklin Roosevelt, whom they considered the savior of
small agriculture. In high school and later at Loyola University of Los
Angeles, a Catholic men's college, Coelho did very well both academically
and socially. He planned to enter law school.
In 1963 his father's farm went bankrupt, an event that Coelho -- with a
Reaganesque time sense -- blames on "Republican policies." Then, just before
graduation from Loyola, Coelho decided that he wanted to become a Jesuit
priest. Though it was 1964, the first big Vietnam draft year, Coelho says
his decision to enter the seminary was triggered by the death of John
"I loved everything about Kennedy," Coelho says. "I wouldn't go out on a
date if he was going to be on TV. I loved the way he sold himself and his
ideas. I loved his young family and the way he involved them. I didn't
know much about what he stood for, but I loved the charisma of the guy."
His memory of the day Kennedy was shot is still vivid: "I had to announce
that he had been assassinated. We had a ceremony in the campus chapel. The
church was packed. There were people out on the steps and all over the
grounds kneeling and praying that he would survive the bullet. I couldn't
believe they would take him away."
As he prepared to enter studies for the Jesuit order, Coelho, who had
suffered from convulsions for years, was diagnosed as having epilepsy. His
parents, both of Portuguese descent, clung to a superstition that epilepsy
is divine punishment for an ancestor's sin. "Their reaction hurt me -- they
said no son of theirs was an epileptic." Another shock came when the
Jesuits informed him that he could no longer join the priesthood, invoking
a canon dating to the Middle Ages that forbade the ordination of
"I went into the gutter," Coelho says. "I was suicidal. I learned what it
is to be discriminated against."
His period in the gutter didn't last long. Within a few months of
discovering his epilepsy he had a job working for -- of all people -- Bob
Hope. Hope's wife, an active Catholic and a supporter of Loyola
University, had heard about Coelho's misfortune.
Hope told Coelho that if he wanted to help people but couldn't be a
priest, he should work for a congressman. Coelho wrote to his hometown
representative, B. F. Sisk, and in 1965 was on his way to Washington,
where he rose to be the congressman's top aide. Because of Sisk's
committee assignment, Coelho soon found himself in charge of a potent
instrument for making early insider connections -- he controlled the
allocation of Capitol Hill parking places.
Sisk retired in 1978, and Coelho ran for his seat. When an opponent tried
to make epilepsy an issue by saying that Coelho might embarrass the
district by having a seizure during a visit to the White House, Coelho
replied, "A lot of people have gone to the White House and had fits. At
least I'd have an excuse." Reagan himself couldn't have made a better
comeback. In 1964 a benign tumor was surgically removed from Coelho's
brainstem. His seizures have diminished, and he now controls the condition
with daily medication. He is active in several epilepsy
Coelho makes considerable hay of his Portuguese ancestry, frequently
describing himself as "very Portuguese and very ethnic," though he was
born in the United States to American parents and his appearance is
typically middle American. In 1985 Coelho fought a minor political
struggle to be admitted to membership in the House Hispanic caucus. "True"
Hispanic members resisted, but their position was not helped by the fact
that the chairman of the caucus, Representative Edward Roybal, was himself
born in the United States to American parents.
As Coelho's influence with party policy-makers has increased, he has
become increasingly concerned that, as he says, "there's a perception I
can't do substance." The party left complains that Coelho must be a closet
conservative or he couldn't get along so well with the businessmen he
lobbies. His voting record, though, is mainly liberal. Coelho says that he
was instrumental in persuading Majority Leader Jim Wright, of Texas, Whip
Thomas Foley, of Washington, and Democratic leading light Richard
Gephardt, of Missouri, to fight deployment of the MX missile. He also
helped draw up the party's position paper on the 1985 Geneva summit
meeting. Recently Coelho has begun to be quoted as a party spokesman -- on
trade, aid to the contra rebels, agriculture, nuclear-reactor safety, and
a range of other issues.
Because Coelho has no compunctions about fund-raising -- "Money is part of
politics and always will be," he often says -- and does it so well, if he
were a Republican he would be one of the party's darlings. Many Democrats,
however, are uneasy about him.
Off the record, some Democrats maintain that Coelho is bartering away the
party's populist birthright. On the record, Kuttner has called him "the
Milo Minderbinder of campaign finance, with something to sell just about
everybody." Thomas Edsall, a congressional reporter for The Washington
Post and the author of The New Politics of Inequality, which argues that
money and legislative fairness are mutually exclusive, says that Coelho
"epitomizes a central tension within the beleaguered Democratic
Party -- between the party's reform wing that frowns on the campaign finance
world of special-interest PACs and the party's deep thirst for money."
Fred Wertheimer, the president of Common Cause, has called it
"institutional schizophrenia" for Democrats to rely on business funds.
There is, as well, schizophrenia within the business community that funds
the Democrats, as was demonstrated when Coelho brought conservative
oil-drillers and liberal Jewish financiers together into the Council for a
Secure America, a money conduit whose participants were united only in
their anxiety about the Arabs.
But if business funding is said to be bad for the Democratic Party now,
five years ago the lack of it was said to be bad for the party too. And
the phenomenon is hardly confined to Coelho's DCCC. Of the top twenty-five
contributors to the re-election campaign of New York Governor Mario Cuomo,
the paladin of orthodox liberalism, eighteen are business interests.
The political distinction between money accepted without strings and money
taken in trade can be as difficult to judge as the biblical distinction
between money itself (neutral) and the love of money (root of evil). If
the new Democratic fund-raising efforts are minted, the evidence would be
votes in Congress. So has the Democratic Party become more pro-business
since Coelho took over the DCCC?
The answer is a mild yes. But given the sentiments of the electorate and
the general concern over the economy, it's hard to believe that Democrats
wouldn't have grown more pro-business even if they had not received a dime
from the halls of commerce. Party positions in the House do not reflect
anything like the extreme rightward shift that might be expected if
business support -- of the cliched conservative, big-business kind -- were
truly corrupting Democratic thinking. Tax
reform legislation, for example, will effectively raise corporate taxes;
Democrats have resisted the Reagan Administration's attempts to lessen
environmental enforcement; and so on. Most House Democrats (including
Coelho) voted for the nuclear freeze, hardly an item high on corporate
Much of the animosity against Coelho seems to stem from apprehension over
hearing him speak candidly about political money and media, rather than in
the euphemisms that institutional Washington prefers. Coelho openly states
political facts of life that Democrats, among others, know to be true but
fear to do anything about -- by, for example enacting serious campaign
reforms. One such reform, championed by Senator David Boren, of Oklahoma,
would cap the total amount of contributions a congressional candidate
could accept. This approach sidesteps the vexing First Amendment issue of
money as speech, because individuals would still be able to give while
politicians would be rescued from the arms-race-like imperative to build
up ever bigger war chests. Hardly anybody professes to like the current
system of campaign financing; even Coelho is uneasy with it. He recently
told The Wall Street Journal, "The system at times forces Congressmen to
do things that they would rather not do. I think that the process buys you
out. But I don't think that you individually ... sell out. There is a big
difference." Most congressmen would probably agree, and then shrug their
shoulders, as if nothing could be done about this quandary. But "the
process" that "buys you out" is not a law of nature; neither is it
mandated by the Constitution. It is an invention of Congress and within
the power of Congress to change.
Copyright © 1986, Gregg Easterbrook. All rights
"The Business of Politics";
The Atlantic Monthly, October, 1986, issue.
Volume 258, Number 4 (pages 28-38).