Fed up with Washington, wealthy boycott campaign fundraising
(Reuters) – They might not be among the jobless protesting against Wall Street, but the rich are angry, too. Furious over U.S. government gridlock, the wealthy have their own form of protest: Refusing to make political contributions.
A number of financial advisers say their wealthy clients have told them they will not make political contributions this year, many for the first time ever.
Bessemer Trust CEO John Hilton says in his 42 years advising ultra high-net worth investors, he has never seen clients so frustrated with the state of affairs in Washington.
He said a number of the firm’s clients – who have an average of $30 million in investable assets – say they believe a lack of leadership and political wrangling are the primary cause of recent market problems – and the declines in their portfolios. Because of that, they say they’re saying no to requests to make political contributions.
“People are pissed,” said Alan Ungar, an adviser with Critical Capital Management Inc. in Calabasas, California. His clients have an average $1.6 million or more in assets invested with the firm. “This isn’t about taxes,” he said. “It’s about the partisan dynamic.”
Political contributions from wealthy donors are crucial for presidential campaigns, said Michael Beckel, spokesman for the Center for Responsive Politics, a research group that tracks donations and their impact on elections and policy in the U.S.
Thirty-one percent of all individual donations came from people who donated $2,000 or more during the 2008 presidential elections, according to the Federal Election Commission. “We are definitely seeing a slower start in donors giving money than we did four years ago,” Beckel said.
In the second quarter of 2007, Republican candidates raised about $115 million from individual donors. In the second quarter of this year, the latest crop of candidates raised about a third of that, according to the Campaign Finance Institute.
ON THE SIDELINES
The frustration among wealthy donors has been building throughout the year.
For months, Congress fought about raising the federal government’s borrowing limit. An agreement to raise the debt ceiling and cut spending in August came just in time to avert a possible debt default but concerns about the gridlock and the nation’s budget deficits led credit rating agency Standard & Poor’s to remove the United States’ triple-A rating.
In the weeks that followed, stock indexes have seen wild swings, including a record number of days of 400-plus point swings in the Dow Jones industrial average.
Markets have remained volatile since and the gridlock continues. On Tuesday, the Senate blocked President Barack Obama’s $447 billion jobs bill.
One client told Hilton that he was recently contacted by the political party he is affiliated with to make a contribution. He told Hilton that he declined, telling the caller that considering the situation in Washington and with his retirement account down 25 percent partly because of it, he didn’t want to contribute.
In the Washington, D.C. area, wealthy donors are often active in fund-raising for presidential campaigns. This year, many are sitting on the sidelines, said Ted Halpern, a Rockville, Maryland-based financial adviser whose average client has more than $2 million in assets.
“My clients are the ones who are usually hosting fund-raisers at their homes,” he said. Many have historically been staunch Democrats, but Halpern said this year some say they might vote for a Republican because they hope a change will lead to action of some kind in Washington, Halpern said.
“There is just a lot of resentment out there,” he said.
Jim Heitman, an adviser with Compass Financial Planning in Alta Loma, California, whose average account size is $1.3 million, said several of his clients are usually active in their parties. But this year, they’re doing less and some are using the money they earmark for political contributions to pay off mortgages on vacation homes or to invest in alternative assets like gold, he said.
“The attitude is increasingly ‘a pox on both their houses,'” Heitman said.