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Originally published Sunday, October 19, 2008 at 12:00 AM

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Market downturn quiets some political groups, their attacks

The recent collapse on Wall Street appears to have found another victim: the independent political groups aiming to make an impact on the...

The Washington Post

WASHINGTON — The recent collapse on Wall Street appears to have found another victim: the independent political groups aiming to make an impact on the 2008 elections.

Expected to be a force in the final weeks of the presidential race, outside groups and the pointed advertising they brought to the airwaves in recent campaigns are barely evident this year. Political operatives say many wealthy potential donors have shied away from investing in efforts such as the infamous Swift Boat Veterans for Truth because they are too busy trying to salvage their financial portfolios.

"After the (GOP) convention, things looked good," said Phil Musser, a Republican fundraising consultant. "Major donors interested in issue advocacy were tuned in, political juices were flowing, polling looked good, and then, blammo! Most donors lost 20 or 30 percent of their net worth in eight days. With few exceptions, that pretty well shut down the money discussion for a lot of folks."

Four years ago, groups operating outside the party structure invested more than $130 million in television commercials, often carrying the kind of negative messages that the candidates themselves wished to avoid. This year, total spending by such groups is at about $17 million so far, according to Evan Tracey of the Campaign Media Analysis Group.

Several major players from past years announced they would not participate this time around. Most notable was T. Boone Pickens, the Texas oil man who helped back the Swift Boat Veterans ads targeting Sen. John Kerry, D-Mass., four years ago.

The legal climate also has changed. After the 2004 campaign, the Federal Election Commission (FEC) issued $2.6 million in fines against seven "527" groups, known as 527s because of their tax designation. This year, lawyers warned donors the FEC fines could be a precursor to action by the Justice Department.

The slowdown appears to have had a disproportionate impact on Republicans. Obama holds an enormous money advantage in the closing weeks of the campaign. His ads have been bolstered by mail and phone-bank efforts largely financed by labor unions.

Another source of support for Democrats has come from MoveOn.org, which in the past had raised its money almost entirely from wealthy donors.

In this cycle, the group shifted its approach, using its enormous e-mail list to raise "hard money" — direct donations that are within legal limits and reported to the FEC.

"Despite the much ballyhooed chill on 527s, there are a lot of groups with hard-money capacity," said Tom Matzzie, a Democratic operative who previously served as Washington, D.C., director for MoveOn.

The outside group that has spent the most on ads this cycle is the American Issues Project, the creation of another Swift Boat Veterans patron, Texas billionaire Harry Simmons.

When the group surfaced, it announced $2.6 million in ads, including the first TV ad linking Obama to the controversial Vietnam War-era radical William Ayers. But the effort has tailed off in recent days.

Copyright © 2008 The Seattle Times Company

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