The $31 million week: big for Ted Cruz, but also for his super PAC donors

Mega-donors aren’t just cutting big checks. Some of them want to take an active role in how their political investments are spent. What's not clear is how much the public will ever know about it. 

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Nati Harnik/AP
Presidential candidate and Sen. Ted Cruz (r.) of Texas speaks in Sioux City, Iowa, on April 1, 2015. Senator Cruz raised an unprecedented $31 million in a single week in April through a series of super-PAC.

That's a lot of money in a hurry. In a surprise surge, groups aligned with Republican presidential candidate Ted Cruz are saying they have amassed $31 million to spend in his behalf – even though the groups have been in existence only for a few days.

The US senator himself has been an official candidate only since late March.

Most obviously, this big-money influx is a sign that the Texas conservative is becoming more formidable within the roster of Republican hopefuls for 2016.

But it’s also a sign of something more: an increasingly direct role taken by mega-donors in the American political process. They aren’t just cutting big checks. Some of them want to take an active role in how their millions are spent.

So, in addition to the fundraising "pull" from candidates, the money surge reflects a "push" factor as well – as ultra-rich donors help to guide the political committees they fund.

The news from the Cruz camp this week hints at the trend: The pro-Cruz money is flowing into not one, but four super PACs – all united by the name “Keep the Promise” but offering distinctive channels for donor money to be deployed.

A Bloomberg report, which broke word of the candidate’s fundraising coup Wednesday, quoted “an internal document describing the groups’ intentions” as follows:

“The use of multiple PACS ... will allow Keep the Promise to uniquely and flexibly tailor its activities in support of Senator Cruz and afford donors greater control over PAC operations.”

Separately, Bloomberg quoted a Keep the Promise strategist saying the multipart structure allows different donor families to control each super PAC, and for each group to evolve different specialties like data mining and TV ads.

All this doesn’t mean Cruz will fade into the background while donors call all the shots that determine his campaign strategy. Nor does the sheer size of money flows mean that a few rich people can now “buy” the nomination or campaign agenda for Cruz or any other candidate.

But as an in-depth Monitor report this week explained, presidential politics is now in an era where money affects campaign equations in new ways, such as making candidates relatively immune to what the party establishment wants.

A related shift is the growing reliance of campaigns on independent groups that can raise unlimited sums (thanks to 2010 US Supreme Court rulings) as long as they remain legally at arm’s length from the candidates or parties they support.

As these “outside” groups have gained in importance, so have the ultra-wealthy people who are willing and able to pump millions into them.

Often their names can remain relatively secret, since some of the independent groups operate under a nonprofit “social welfare” status and aren’t required to disclose their donors.

But at least some large donors are perfectly happy to have their names be public and, increasingly, to take an active role in how their political investments are spent, just as the ultra-rich often do in their philanthropic ventures. 

Cruz’s benefactors aren’t public yet. But the groups are super PACs, a type of political-action committee that makes funding disclosures to the Federal Election Commission. Names and amounts will be visible in July, a disclosure deadline for the newly formed groups.

One of the key funders, according to Bloomberg, appears to be the family of Robert Mercer, a leader of the hedge fund Renaissance Technologies in New York. The Mercer role may explain why one of the Cruz-aligned groups, Keep the Promise I, has a New York address, while Texas is home to the others (Keep the Promise, Keep the Promise II, and Keep the Promise III).

The Mercer family has given mightily to conservative super PACs in the past, including groups that aren’t candidate-specific.

For example, Mr. Mercer is a key backer of the Ending Spending Action Fund, a group supported heavily by other donors from the financial and real estate industries. The group spent big against Democrats who lost 2014 Senate races in Louisiana, Colorado, and Georgia, but its money failed to turn the tide against Sen. Gary Peters (D) of Michigan or Sen. Jeanne Shaheen (D) of New Hampshire in her race against former US Sen. Scott Brown, a Republican viewed as a Wall Street ally.

Mercer's interests go beyond the economy or Wall Street regulation. In 2012, he was the lead funder of a group called Women Speak Out, a super PAC describing itself as “aimed at amplifying the voices of women opposed to abortion extremists in Congress."

Among mega-donors, the ones who take a hands-on approach to how their money is spent aren't all on the Republican side.

Hedge fund billionaire Tom Steyer of California is a key source of outside money for Democrats – and he aims to promote policy action against the threat of climate change. At $73.7 million, he was the top donor to outside groups in the 2014 campaign cycle, according to the Center for Responsive Politics, which tracks political spending. 

Heading into next year's election, a Steyer-created super PAC has “one of the biggest political infrastructures in the country in the key ’16 states,” according to Steyer political strategist Chris Lehane.

Now the Cruz money surge is serving as a reminder that outside money can play a big role in presidential primaries and the pre-primary efforts by candidates to attract support and build organizations.

A statement released Wednesday by Dathan Voelter, an attorney who is treasurer and the public face for the Keep the Promise groups, describes them as led by a “group of close, personal friends and strong supporters of Senator Cruz from around the country, who share his vision of restoring ‘the Miracle of America.’ ”

Mr. Voelter said the groups will receive deposits “in excess of $31 million this week from multiple donors.”

Cruz’s team still wants to raise millions more in money the candidate can spend directly, but this puts the total resources backing him in impressive territory for such an early stage in the process.

By some estimates, a well-funded candidate should amass about $75 million in resources to mount a full-fledged primary campaign, says Michael Malbin, executive director of the Campaign Finance Institute, a Washington-based research group.

That money goes toward advertising and building ground organizations in more than a few primary states. Without such funds, Mr. Malbin says, a candidate might do well in early venues like Iowa and then be caught flat-footed as the race moves quickly to new states.

Even ahead of the primaries, money has its uses.

In an indirect way, it helps Cruz by raising his media profile. At this stage in the game, when opinion polls aren’t very meaningful and with months to go before actual primary voting, money is an important tangible measure of support used by the press and political handicappers in gauging the candidates.

Former Florida Gov. Jeb Bush is perceived as a front-runner so far because of fundraising, especially the buzz that he is likely to raise more than $100 million. Now Cruz, though he hasn’t polled nearly as high in opinion surveys, looks more like a threat from the right against the more moderate Mr. Bush.

Voelter’s statement says the Keep the Promise network’s “goal is to guarantee Senator Cruz can compete against any candidate,” by getting his message out and providing “appropriate air cover” against opponents.

For Cruz – and his rivals once they become candidates – one challenge is that, by law, a candidate can't coordinate directly with outside groups supporting him or her. Those groups will surely tap political pros on how to best assist their candidate. Keep the Promise groups can take cues from Cruz's public campaign approach.

The new donors may have achieved one tactical victory for Cruz already. By the timing of their announcement, they stole some thunder from the candidacy announcement this week of Sen. Rand Paul (R) of Kentucky.

The timing also gives Cruz some perceived momentum ahead of pending announcements by Sen. Marco Rubio (R) of Florida and other GOP rivals, who may have big-money backing of their own.

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