Political Bailout: Did Mitt Romney Save Rick Perry's Job?
WASHINGTON -- In an increasingly bitter Republican presidential primary, Gov. Rick Perry has made his record of job creation a top selling point for the nomination. The Texas Republican has chosen, as a tag line for his candidacy, the pledge to “get this country working again.” He’s touted Texas as a model of economic growth, and noted ad nauseum that during his tenure he helped add one million jobs in the state. He’s contrasted it all to the record of his nearest rival, former Massachusetts Gov. Mitt Romney, who as CEO of Bain Capital earned a reputation for sending jobs overseas as often as he created them domestically. On Wednesday, Perry claimed that he created more private sector jobs in two months than Romney did during four years as governor.
Romney has been left arguing that Perry was handed the equivalent of a stacked deck, with Texas’ ample energy resources and lenient tax laws boosting the stats. It’s a defensive posture and one that leaves the best retort unused. After all, if anyone should know about Romney’s acumen at job creation, it’s Perry. The Texas Republican’s governorship may have been saved by his now bitter rival.
Perry needed saving late in his 2006 race for governor. He was in a four-way race in which he didn't need anywhere close to 51 percent to win. His three challengers varied in experience and credibility; he faced former Texas Rep. Chris Bell (D) and two wild cards running as independents -- the humorist Kinky Friedman and the former state comptroller Carole Keeton Strayhorn. All were distractions that muddled a clear path for a Perry victory.
And what did he do? He called on Romney.
Two prominent members of Perry's inner circle met with Romney, who was the then-chairman of the Republican Governors Association. Perry's long-time top strategist Dave Carney, along with Deirdre Delisi, his campaign operations manager, visited with the future rival to talk cash. They came asking for a hefty handout, court records show.
Romney eventually signed off on giving the Perry campaign $1 million. The RGA sent one $500,000 payment in late October 2006. Perry picked up the second $500,000 contribution on Nov. 1 in Washington, D.C. Court records show the campaign had looted its war chest as Bell began to surge. On Oct. 1, the campaign had $9.1 million. The day after the RGA made its first contribution, the campaign had $2.9 million. By Nov. 1, the Perry camp was down to roughly $1 million.
The contributions couldn't have come at a better time.
At the same time that the Perry campaign was picking up RGA checks, it was using campaign funds for an attack ad on Bell for taking a $1 million contribution from Houston trial lawyer John O'Quinn. In the ad, according to a Perry press release, a voiceover says:
Just when you thought it was safe...the sharks are back in the water. A scandal plagued personal injury trial lawyer is funneling millions of dollars to Democrat Chris Bell.
Chris Bell -- One giant Washington liberal. Bell wants to raise your taxes. Rick Perry continues the fight for lower taxes.
Chris Bell voted against securing our border from terrorists and drug gangs. Governor Perry is securing our border.
Chris Bell...wrong on taxes...weak on security...two liberal for Texans.
The Perry campaign highlighted the O'Quinn contribution throughout October 2006 and continued to press the shark theme. On Halloween, the campaign sent out a press release professing to be amazed by "Chris Bell's ability to maintain a straight face while claiming his torpedoed campaign is not rapidly disappearing into the salty abyss."
The shark ad and the continued pounding on the O'Quinn issue ate up whatever momentum Bell had gained after a winning debate performance. Bell just couldn't catch up. Perry kept his job with 39 percent of the vote.
"The Bell Campaign, including myself, reviewed all ads attacking Bell," stated Jason Stanford, Bell's campaign manager, in a February 2009 affidavit. "Bell was gaining in the polls and was being increasingly attacked by Perry. I looked at the Perry Campaign finance disclosures filed at the [Texas Ethics Commission] for anything that would allow our campaign to respond to the Perry attacks."
Stanford went on about the Romney-approved contributions from the RGA. "I did see the two $500,000 contributions from the Republican Governors Association. The reports, however, listed the contribution as being from the Republican Governors Association PAC. It further stated that the PAC was an out-of-state PAC and it listed a FEC account identification number that appeared regular on its face. Nothing alerted me to investigate further."
But there's a reason Romney hasn't used the contribution as a rebuttal to Perry's job-creation talking points in the current race for a GOP presidential nomination -- and may not at Thursday night's debate. The contributions would become a costly and public embarrassment for both governors.
The RGA had not registered as a PAC, nor had it made the contribution through a qualified PAC at the federal or state level, which Texas election law requires; If you donate money to a Texas candidate, it has to be documented. The FEC account number -- the number the Perry campaign used -- had been defunct since 2002. For the second $500,000 payment, the Perry campaign did not even bother trying to explain exactly where it got the money. It submitted no contributor list -- another election law requirement.
In the harsh light of day, the obscuring of the RGA's contributions to Perry appeared as a bungled coverup. The Perry campaign had an interest in keeping the true identity of the contributions a secret. It may not have been able to cost him the election, but it did spark a lawsuit. Bell filed a complaint in 2007.
"The RGA would never have made a contribution if Perry hadn't demanded it," Bell's attorney Buck Wood told The Huffingon Post. "Once that demand was made, the RGA should have had somebody look at Texas law."
In a Jan. 28, 2009, deposition obtained by HufffPost, Perry's strategist Carney characterized the whole controversy in more prosaic terms: "I think the principal is there was -- paperwork was misfiled...something like that."
The "misfiled" papers proved costly for both Perry and Romney's RGA. In July 2010, Bell would win a $426,000 settlement from Perry's campaign over the violations. In less than two months, after a subsequent bench trial, a judge would rule against the Republican Governors Association for its part in facilitating the scheme. The judge ended up awarding Bell an additional $2 million in damages, plus court costs and attorneys fees.
Both the Romney and Perry campaigns did not return requests for comment.
THE MONEY MAN
Campaign finance disclosures can be a key way for reporters to tease out both a candidate's viability as well as connect the dots between candidate and corporate influence. The data is the DNA of every campaign. To reporters, it's more useful than a week's worth of stump speeches and staged photo ops.
"I just saw it as part of the routine stuff I did," recalled R.G. Ratcliffe, an investigative journalist who worked the Austin beat for the Houston Chronicle at the time. "I did a lot of those stories through the years."
In the waning days of the 2006 election, Perry's campaign had released its contributions and Ratcliffe took note. The $1 million haul in the final days of the race stuck out, he said. It may have come from the RGA, but that wasn't the whole story. How did the RGA get the money? Who gave the RGA the money? And was there a Perry connection? Ratcliffe had to wait until the RGA made its disclosure filing in early 2007.
"It was one of the things on my to-do list," Ratcliffe said. "Finding somebody in Texas doing backdoor money is just not all that unusual. The dollar amount was unusual."
On Jan. 18, 2007, Ratcliffe broke the story for the Chronicle, tracing the money back to its alleged source: Houston construction mogul Bob Perry, no relation to Rick Perry. The conservative homebuilder has close ties to the governor. He was the biggest single contributor to Perry's campaigns during his tenure as governor; he has poured more than $2.5 million into Perry's war chest.
Early on, Perry made clear his commitment to the builder's priorities by setting up the Texas Residential Construction Commission, an entity pushed by Bob Perry. If residents had a complaint about shoddy construction of their home, they were required to take their grievances to the commission before filing a lawsuit. Not only were Bob Perry's lobbyists key to the commission's creation, but his company's lawyer served on it. The commission was eventually dismantled; few saw it as anything more than a gift to the builder.
In a three-way, even four-way race, straight-ticket voting would be a factor. One way of assuring a possible surge in Democratic votes was to mention of Bob Perry's name, according to the Bell campaign.
Bob Perry wasn't just a symbol of pay-to-play politics in Texas -- he was a hated figure among Democrats for his role in funding the swiftboat campaign against Sen. John Kerry. According to Texans for Public Justice, Perry contributed $200,000 to the Swift Boat Veterans for Truth, which attacked Kerry's war record as fraudulent and was widely discredited for trading in bogus information. At the very least, if word got out about the mogul's money, it would have killed the Perry campaign's shark attacks.
Bob Perry's lawyer did not return a request for comment.
In answers to Bell's attorney's questions, the Perry campaign left little doubt about who was behind the contribution, court records show. The Oct. 4, 2006, meeting between Romney and Perry's inner circle produced one not-so-mysterious donor:
"During that meeting, Gov. Romney stated that, on behalf of the RGA, he was about to accept a $1 million contribution from an individual Texas contributor. Gov. Romney did not identify who the contributor was, and [Texans for Rick Perry] had no knowledge prior to that time that any individual was planning to contribute $1 million to the RGA."
Romney didn't have to say anymore. Team Perry admitted in court records they knew exactly who gave the money. They wrote:
"Following the meeting with Gov. Romney, Ms. Delisi contacted Bob Perry's attorney Buddy Jones to ask whether Mr. Perry had contributed this money to the RGA. Mr. Jones ultimately confirmed that Mr. Perry had indeed made such a contribution, and Ms. Delisi asked Mr. Jones to encourage the RGA to make some contributions in Texas since the RGA had raised such significant funds from Texas."
By the end of the month, Bob Perry would come through.
HAGGLING OVER MILLIONS
In his deposition, Carney stated that fundraising did not fall under his duties for the Perry campaign. "No, not -- no, that's usually done by the fund-raising professionals...I usually want to talk to people, ask for their support, but I don't do real fund-raising," he said.
But Carney did state that he had regular contact with the RGA. In his deposition, he did not dispute the notion that he had asked for $2 million in October 2006. Carney testified that it was his idea to call the RGA and he determined what "the best number to ask for was."
Carney recalled that the RGA's initial response was not kind. ""They laughed," he said in his deposition. "You know, they weren't specifically having us on their target list at the time because of the other races in the country."
Perry was an incumbent Republican in a Republican state. In his October 2008 deposition, the RGA's then-executive director Philip Musser admitted that the association hadn't banked on the Perry campaign needing financial aid. "Well, our original plan was to actually -- our original hope was that we wouldn't have to spend money in Texas," he stated. "And so we started the year, we had nothing in the budget for Texas."
Carney remembered that Musser told him that they didn't think Perry had real competition. "I think that their thought was...we were so far ahead that we didn't necessarily need the money," he stated in the deposition.
At least in his deposition, Carney could not explicitly explain what the campaign would do with the RGA's cash. He only offered this boilerplate to defense attorney Wood: "Texas is an extremely expensive state to, you know, campaign in" and argued that Strayhorn, one of the independents, could have been well funded.
Delisi, another Perry insider in on the dealings, claimed in her deposition that she "had no formal role with the campaign." But she was aware of the donation pitch from Carney. "Towards the end of the campaign Dave Carney had conversations with the RGA about financial support as had been previously discussed earlier in the year," she stated. She said she heard about the details of the transactions from Carney.
Carney recalled Musser finally committing to giving the Perry campaign $1 million. Musser stated that he had to win the approval of the RGA's executive committtee, which included the then-chairman Romney. But it had to be done in two payments of $500,000 each.
On Oct. 27, the Perry campaign received its first check from the RGA, along with the list of contributors and a short note from Musser. The note read, according to copy in the court record, "We are pleased to support you and proud of your leadership for the people of Texas."
That month, Bob Perry contributed $1.5 million to the RGA.
On Oct. 30, telephone records show that the RGA made three calls to Bob Perry's office. The last call was placed at 4:06 p.m. The next day, the RGA received a check from Perry for $500,000. Bob Perry explained the contribution in his own deposition:
"Somebody -- somebody -- RGA -- RGA they requested the contributions, raising money, and I responded according to this. I don't remember if they wrote me a letter. I don't remember if I just gave it. But I gave many contributions especially toward the election time. I don't recall anyone calling me and asking me specific contributions, specific dates.
I recall Phil Musser. I don't recall him asking me for any amounts. He was trying -- he sold me on the good work that they were doing. He was the executive director of the RGA during this period. And I was favorable to the work they were doing.
I'm almost certain -- almost certain I never talked to anyone in the campaign -- in the Rick Perry campaign. Almost certain I did not talk to one single person in the campaign.
I've talked to Rick Perry. I talk to him several times a year. He has not made a practice of personally soliciting money from me...
I'm 99 percent -- 99.9 percent sure that I never talked to anybody on the staff. I wasn't part of the campaign. I didn't talk to them. They didn't talk to me."
The day after the RGA received Bob Perry's check, Gov. Rick Perry met with Musser in Washington, D.C. Musser stated in his deposition that he handed over a check to Rick Perry. The check's amount was for $500,000 -- the exact amount that Bob Perry had just sent in.
Within a week, Rick Perry had pocketed $1 million dollars from the RGA. Soon after, he won re-election over Bell. "The conventional wisdom was Chris Bell can't become viable," explained Bell's campaign manager Jason Stanford to The Huffington Post. "It was only on election day people thought, 'Oh yeah, he could have won.' That was as close as Rick Perry ever came to losing a race for governor."
Bell said his lawsuit was more than justified. "They were obviously trying to get around those laws," he explained. "The motive was pretty clear. It wasn't an effort to shield the contribution or the source of the contribution."
Maybe Bell would never have closed things out. He ended up losing to Perry by nine points. He'd heard that internal polls from an opposing campaign had him within five points of Perry in the closing days. He said he thinks the last-minute money grab was proof that he at least had momentum going into the final week. "The only thing we can figure in the closing weeks of the campaign is that we were surging," he said. Carney disputed this in his deposition -- arguing that Bell "was never a factor."
The lawsuit cost the RGA and Perry's campaign $2.46 million and spotlighted the cronyism that has become a now-frequent charge against the governor among his fellow presidential candidates.
Still, the case did not seem to have any long-term ramifications on the governor's famed money-raising apparatus. When asked if he had discussed the lawsuit with anyone, Carney stated in his deposition that he had at least one friendly chat with one of D.C.'s most powerful law firms, Patton Boggs -- which had an attorney representing the RGA -- during which it was made clear that the fundraising flow wasn’t going to dry up because of the legal controversy.
"A senior partner at Patton Boggs called to apologize for one of their attorneys suing us," Carney stated, "and offering to do a fundraiser for us up in Washington with [founding partner] Tommy Boggs."
The firm declined to comment for this story.