Microsoft Is Source of 'Soft Money' Funds
Behind Ads in Michigan's Senate Race
By JOHN R. WILKE
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- Microsoft Corp. quietly pumped cash into the hotly contested Michigan Senate race, funding negative ads targeting Republican Spencer Abraham's Democratic challenger.

The unregulated "soft money" contributions were funneled through the Michigan Chamber of Commerce, whose name appears on the ads. Microsoft also helped pay for a new wave of ads due to run in the final two weeks of the campaign targeting Rep. Debbie Stabenow, the Michigan Democrat running to unseat Sen. Abraham, people familiar with the fund-raising effort said.


Microsoft's involvement in the race underscores its increasing political clout and sophistication. The company has spent nearly $16 million on lobbying, cash donations to candidates and unregulated soft-money gifts in state and federal races since it came under government antitrust scrutiny in 1997. Sen. Abraham's re-election is critically important to the Republican party and to Senate Majority Leader Trent Lott, who has pressed high-technology companies for help.

The effort brought a huge influx of special-interest money into the Michigan race in support of Sen. Abraham, who has long championed high-tech companies on Capitol Hill. As chairman of the Senate immigration subcommittee, he recently led the effort to enact legislation granting tens of thousands of new visas for foreign workers, a bill strongly backed by companies desperate for engineers and other skilled workers.

Microsoft, Intel Corp., and other big technology firms that benefited from the bill have been strong supporters of Sen. Abraham. In addition to direct contributions to his campaign, most of these companies gave money to groups buying air time for issue ads in support of Sen. Abraham.

The senator also benefited from soft money from drug makers, which paid for a separate Michigan ad campaign through the U.S. Chamber of Commerce.

A Microsoft official confirmed that the company is a member of the Michigan chamber, but wouldn't disclose what it paid the group. Others close to the fund-raising effort said Microsoft committed an initial $250,000 in August and has contributed more since then. The Microsoft official noted that any such gifts were completely legal and didn't have to be disclosed under campaign-finance laws.

Bob LaBrant, general counsel for the Michigan chamber, said, "we can't confirm who's participated in our issue-advocacy effort related to the Senate campaign, how much we spend, when ads will run or who is on our membership list," adding, "we do now have numerous high-tech companies" as members.

Sen. Abraham's campaign manager, Joe McMonigle, said both sides in the race have benefited from unregulated soft money. "It's been a carnival of special interests out here." He said technology companies "have been very supportive," and that the senator is proud of Microsoft's support, including that of Steve Ballmer, its chief executive.

Mr. McMonigle said Ms. Stabenow benefited from the support of labor unions, and organizations such as the Sierra Club, Planned Parenthood and Emily's List, a Democratic fund-raising group. Sen. Abraham was targeted by outside anti-immigration groups as well. The Stabenow campaign responds that it had nothing to do with the anti-immigration ads and have been far outspent by Sen. Abraham and that the air war by outside interests is beginning to make a difference in the polls, where Sen. Abraham has pulled into the lead after running neck and neck.

All of the negative special-interest advertising "generates cynicism among voters," says her campaign manager, Carol Butler. "This campaign is being dominated by spending by outsiders, more than anyone in Michigan has ever seen before."

There is more to come. A new ad contract from just one station, WDIV in Detroit, shows that the Michigan Chamber of Commerce paid $245,750 for a huge new ad blitz scheduled to run during the next two weeks. The chamber also has been running a smaller ad campaign aimed at legislative and state supreme court races.

Typical of the Michigan chamber's ads is one that criticizes Rep. Stabenow for opposing a Republican-led effort to ease inheritance taxes. It quotes the owner of a small, family-owned company saying that the "death tax" could force him to sell his business and maybe his home. "Working families are suffering," it says.

Microsoft's political involvement has risen sharply since 1977, according to Common Cause, a campaign-reform group. The group's president, Scott Harshbarger, says, "the software giant has become a soft-money giant." Microsoft officials say its widening political involvement goes far beyond antitrust issues. The immigration bill was a major legislative priority this year, they said, along with such issues as federal copyright law, taxes, technology exports and Internet policy.

Write to John R. Wilke at john.wilke@wsj.com