For Iowa, campaign brings more attention than money

Reuters News
Posted: Dec 27, 2011 4:28 PM
For Iowa, campaign brings more attention than money

By Samuel P. Jacobs

DES MOINES (Reuters) - Late on a recent Wednesday afternoon, Rick Perry walked into De Brito Baking Bistro in Mount Pleasant, Iowa, looking for its owner.

"Thank you, sir, for allowing us to come into your little bistro," the Texas governor and Republican presidential candidate said to his host, Jose Moreira. "I hope we generated a little business for you. One of our goals is to create jobs and in turn to create wealth and ... get the American economy moving again."

However much the January 3 Iowa caucuses boost the state's economy, Perry is certainly doing his part.

Desperate to give a jolt to a campaign that has struggled for traction after his poor performances in recent debates, Perry is outpacing all rivals in spending on TV ads - $2.86 million in December alone, according to the Des Moines Register. And this week, Perry's campaign is bringing in fellow Texans by the busload to tout his conservative credentials.

The caucuses that kick off the presidential nominating process can be a money-maker for a few Iowa businesses, as candidates and media flood the state for weeks of close-to-the-ground campaigning.

It's unclear how great the impact will be this year but business owners say they do know this: It's unlikely to come close to the boost they got in 2008, when Democrats and Republicans had contested caucuses here.

In 2008, the caucuses generated $25 million for the Des Moines area alone, according to Greater Des Moines Visitor and Convention Bureau.

That year, 2,500 members of the media visited the state. Iowa State University economist David Swenson estimates the candidates spent $15.5 million in Iowa then.

This time around, President Barack Obama is uncontested on the Democratic side. With only the Republicans competing, officials here say they expect less spending by campaigns and fewer members of the media to come here - roughly 1,500 by the time the causes are held.

Meanwhile, the campaigns generally have spent less time here with fewer staff members, partly a reflection of how different media strategies are coming into play this year.

Republican Newt Gingrich, for example, has had few staff members in Iowa but at one point was leading in the polls because of strong performances in nationally televised debates.

During the first nine months of 2011, Republican candidates spent $2.7 million in Iowa, less than 5 percent of the $55.8 million they spent nationwide.

Even so, some businesses in Des Moines, the state's capital and transportation hub, often manage to turn the caucuses into cash.

"It can be a real boon to local businesses," said an employee at the Village Bean Co. in Des Moines's East Village neighborhood.

Back in 2007, the Barack Obama campaign set up its headquarters next to the Baby Boomer Café.

"If it wasn't for the caucus and election last time I wouldn't be here today," owner Rodney Maxfield told local television station WHO-TV. Maxfield's restaurant gained renown when Obama's daughters began asking for his cookies by name.

Around the corner, the Raygun clothing store overflows with caucus-related apparel.

For $19, you can buy a T-shirt proclaiming "Corporations are people too" - a now famous comment made by candidate Mitt Romney, a former Massachusetts governor, at the Iowa State Fair this summer.

The store was packed last week as visitors finished their Christmas shopping.


Outside Des Moines, midwestern chain Pizza Ranch has secured its own prominent role in the presidential nominating process.

In March, The New York Times declared "The Road to the White House is Paved With Pizza" because the self-described Christian business and its 71 Iowa restaurants offer free space for candidates to meet with potential voters.

According to the Des Moines Register, Rick Santorum, a former U.S. senator from Pennsylvania, has popped into a Pizza Ranch 11 times during his tour of the state's 99 counties.

Michele Bachmann, a congresswoman from Minnesota, has made at least 18 visits to Pizza Ranch restaurants.

A few weeks ago, aides to Texas congressman Ron Paul told the Register they knew their candidate was surging in the Iowa polls because his crowds no longer could fit inside Pizza Ranch's dining rooms.

Despite Iowa's prominence as the first contest in presidential nominations, campaigns typically are tentative in their spending here, compared with the spending that takes place later in the process once the true contenders emerge.

During the early part of the 2008 election cycle - the third and fourth quarters of 2007 - Republican candidates spent six times as much in Virginia as they did in Iowa, according to Swenson, the Iowa State economist.

Even the millions spent on television ads in Iowa - $5 million so far this cycle, according to the Kantar Media Campaign Media Advisory Group - does not represent the true economic impact here, analysts say.

Although campaigns spend money for time on local TV stations, most of the advertising consultants and producers involved in such projects live elsewhere, so that money never really benefits Iowa.

Reporters' daily spending can give a slight bump to the local economy.

If those 1,500 members of the media spend an average of one week each in Iowa, they would generate 45 low-paying jobs for the state this year, Swenson said.

Citing Iowa's gross domestic product of $147 billion in 2010, Swenson predicts that the caucuses will contribute less than 0.01 percent of that amount to the state's economy.

Luckily, Iowa needs the business far less than other states this year. With an unemployment rate of 5.7 percent, Iowa has better jobless numbers than all but five states.

"I don't know that anybody out there can say we have a significantly greater amount of business activity as the consequence of the caucuses," Swenson said. "It's dinky."

(Editing by David Lindsey and Cynthia Osterman)