Evan Vitale Consulting: Business PAC Dollars Move to GOP Senate Candidates in Key Races

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Democratic Sen. Mark Udall of Colorado, shown campaigning in Denver this month, has seen support from business PACs diminish in recent weeks, as those groups gave money to his Republican challenger, Rep. Cory Gardner.

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Rebecca Ballhaus,

Rebecca Ballhaus

The Wall Street Journal

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Amy Harder and

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Brody Mullins

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Oct. 28, 2014 8:37 p.m. ET

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In a significant shift, business groups gave more money to Republican candidates than to Democrats in seven of the most competitive Senate races in recent months, in some cases taking the unusual step of betting against sitting senators.

Political-action committees created by businesses had given 61% of their donations in those races to Democrats this election cycle through June. That reversed in the closing months of the campaign, with only 42% going to Democrats and 58% to Republicans in the July-to-September quarter, a Wall Street Journal analysis of Federal Election Commission filings shows.

The change in money flow from business PACs is partly a signal of the groups’ policy preferences and partly a sign of expectations of who is likeliest to win. “Wall Street expects return on investment,” said

Nicholas Colas,

chief market strategist at ConvergEx Group, a brokerage firm. “It makes no sense to contribute to a losing campaign.”

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Shifts in business donations have foreshadowed the outcome of several recent elections. Business PACs began shifting toward Democrats late in the 2006 midterm cycle, ahead of a political wave in which Democrats regained control of both the House and Senate. Business contributions swung again early in 2010, ahead of a wave that year that gave Republicans a House majority and gains in the Senate.

Justin Barasky,

a spokesman for the Democratic Senatorial Campaign Committee, said other types of money spent in the election indicate Democrats are far outspending their GOP counterparts. “The DSCC has outraised [its GOP counterpart] by $30 million,” he said in an email.

Still, in several races, incumbent Democratic senators drew less money in recent months from business PACs than did their GOP challengers, signaling a bet that the incumbents were in danger of losing. Business PACs gave less money to Sens.

Kay Hagan

of North Carolina and

Mark Udall

of Colorado in the third quarter than to their GOP opponents, and nearly as much to the Republican challenger in Alaska as to incumbent Sen. Mark Begich.

The contributions to GOP candidates helps offset the hefty advantage Democrats traditionally hold among labor PACs, which gave 99% of their contributions to Democratic candidates in the seven Senate races this election cycle through June. Several unions offered no sign they had given any more support to Republicans in the third quarter.Labor unions typically contribute far less in total to candidates than do corporate PACs.

Mike Podhorzer,

political director of the AFL-CIO, said the labor organization is supporting Democrats because “in each particular race, the Democrat has a more pro-worker point of view.”

Business lobbyists said the current political climate favors the GOP, and that companies see backing Republican challengers over Democratic incumbents as less of a risky move.

“It’s increasingly likely we’re going to reestablish a pro-business majority in the Senate,” said

Rob Engstrom,

national political director of the U.S. Chamber of Commerce, which mostly backs conservative candidates. He said President

Barack Obama

and other party leaders had made Democratic candidates “vulnerable, so companies aren’t going to write PAC checks to candidates who fundamentally don’t represent their interests.”

The Journal analysis included donations—limited to $5,000 in a primary and $5,000 in a general election per candidate—from business PACs directly to candidates. The portion of the analysis covering donations through June was based on numbers provided by the nonpartisan Center for Responsive Politics. The analysis didn’t include spending on behalf of candidates by super PACs or other outside groups, which often make large-dollar TV ad buys but aren’t permitted to donate directly to candidates.

The business PAC shift to Republicans was especially visible in the final weeks of September, as polls began to show GOP candidates with a slight advantage.

In Alaska,

Mr. Begich

retained a lead in business PAC donations in the third quarter, but the pace of giving to his GOP challenger,

Dan Sullivan,

jumped significantly late in the period. Mr. Begich drew 53% of business contributions, to 47% for Mr. Sullivan. Some $145,000 of Mr. Sullivan’s $190,000 total came in the last 10 days of September.

In North Carolina, Ms. Hagan’s share of business PAC money dropped to 44% in the third quarter, down from the 82% between January, 2013 and June of this year. Ms. Hagan is trying to fend off a challenge from Republican

Thom Tillis.

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In several instances, companies that had backed Ms. Hagan shifted their support to Mr. Tillis late in the third quarter. American Airlines PAC gave $4,500 to Ms. Hagan in the first six months of 2013. On Sept. 26, the PAC gave $5,000 to Mr. Tillis.

Chicago-based power company

Exelon

gave $1,000 to Ms. Hagan through its PAC at the end of 2013. On Sept. 30, it gave $2,500 to Mr. Tillis. Ms. Hagan’s campaign didn’t respond to a request for comment.

An Exelon spokesman said the company bases its donation decisions on “specific criteria’’ and looks for candidates “who can impact energy policy through their roles, or who have stated their support for sound energy policy.” American Airlines declined to comment.

After initially supporting Mr. Udall, of Colorado, businesses—especially those in the energy industry—have moved toward his GOP challenger, Rep.

Cory Gardner.

Through the end of June, Mr. Udall had received 56% of business PAC contributions, compared with Mr. Gardner’s 44%. In the third quarter, those shares flipped: Mr. Udall received 46% of business PAC money, and Mr. Gardner attracted 54%. Mr. Udall’s campaign didn’t respond to a request for comment.

In energy-rich Louisiana, businesses largely stuck by Democratic Sen.

Mary Landrieu

,

who leads the Senate’s energy committee. Ms. Landrieu received 68% of business PAC contributions in the third quarter. Her main challenger, Republican Rep.

Bill Cassidy,

drew 32%.

“For fossil-fuel energy PACs, there are no credible Democratic alternatives in close Senate races such as Colorado, Iowa, New Hampshire and North Carolina, so the choice is easy,” said

Stephen Brown,

a vice president for Tesoro, a San Antonio-based oil-refining company. “For races in Alaska, Arkansas, and Louisiana, fossil-fuel folks get more conflicted, as credible Democratic incumbents in those states unfortunately appear to be fading.” Early in the election cycle, the Tesoro PAC contributed the maximum $10,000 to both Ms. Landrieu and Mr. Begich.

Among the seven races, the Democrat who fared poorest in third-quarter business PACs donations was

Alison Lundergan Grimes

in Kentucky. She received $3,350 from business PACs in the third quarter, reflecting incumbent Sen.

Mitch McConnell

’s strength in the state’s business community and position as the Republican leader in the Senate.

—Peter Nicholas contributed to this article.

Write to Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com, Amy Harder at amy.harder@wsj.com and Brody Mullins at brody.mullins@wsj.com

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