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Washington Journal: Election Campaigns Rely On "Hard" and "Soft" Money

Washington, 30 October 1998 (RFE/RL) -- In 1994, candidates, parties and political-action committees raised $1.3 billion across the U.S. for congressional campaigns. In 1996, that total jumped to $1.6 billion dollars without counting the millions spent on the presidential campaigns. This year promises to set new records.

Yet U.S. federal law sets strict limits on the amount of money any one person can donate to a candidate for national office -- $1,000 for any one election.

Further, the law limits an individual to $5,000 in contributions in any one year to state party or special interest political groups. And it limits to $20,000 per year the contribution a person can make to the national political parties.

Overall, the law puts a yearly total limit on all political contributions for federal purposes at $25,000.

An outsider might assume that the huge amounts of campaign spending are achieved by donations from a large segment of the U.S. population of over 268 million people. But in fact, according to the Center for Responsive Politics, a total of only 235,000 people or one-tenth of one percent of the population, actually gave $1,000 or more to political campaigns in 1996. Their total contributions were $638 million.

That was only 40 percent of what was raised for U.S. House of Representatives and Senate candidates alone. The candidates in the various Presidential primary elections that year spent another $137 million and that was even before the general election campaign for President.

(Presidential elections are different. The campaigns of the two major party candidates, and any significant independents, are paid for by the U.S. government. In 1996, the two major candidates Bill Clinton and Bob Dole each got federal grants of $61.8 million while independent candidate Ross Perot got $29 million.

(Even with fully funded campaigns, each presidential candidate is allowed to raise extra money for accounting and legal services and they collected $11 million between them for these in 1996.)

What is going on here is that the loopholes in U.S. federal campaign fund raising laws are so large that the law now only covers a small part of what is actually gathered and spent.

The law's limits do not apply to what are called "independent" expenditures, where money is spent to support or oppose a candidate independently of the candidate. Nor do they apply to money spent on "issues" as opposed to calling for the election of a particular candidate.

Court rulings and creative political minds have turned those two exceptions into loopholes so big that the money has been named according to the route it follows: "hard" money is that which comes in under the law's limits, while "soft" money is that raised through the loopholes.

The Executive Director of the nonpartisan Center for Responsive Politics, Larry Mackinson, says soft money has become the life-blood of the political parties because there are no limits on who gives it or how much is raised.

Mackinson says because there is no limit, the parties go after the really big donors. And if a company writes a check for $200,000, he says, you have to ask if it is really for better government or part of a business strategy. The fact that the tobacco giant Philip Morris company is this year's largest donor of soft money (nearly $2 million so far this year) says a lot.

Mackinson says these kinds of donations are business decisions and when a company or labor union -- which can't give money directly to a campaign under the federal law -- gives a million dollars to a political party, many people logically ask what they get in return.

President Bill Clinton, a Democrat, and House Speaker Newt Gingrich, a Republic, shook hands in 1995 on a bipartisan promise to do away with hard and soft money and to reform the way campaigns are financed. But three years later, after no campaign fund raising reforms have made it through congress, some say that promise has become just a symbol of the hypocrisy on the issue. Ann McBride, President of Common Cause, a group pushing reforms in the political process, says that in retrospect, the handshake was really agreement to "go out and raise as much money as we can."

One major attempt at a comprehensive campaign finance reform measure -- a bipartisan proposal put together by Senators Russell Feingold (D-Wisconsin) and John McCain (R-Arizona) -- was killed in both chambers of the congress.

Ironically, Feingold now finds his re-election bid in trouble because of his attempt to end the abuses in the present system.

Feingold started his campaign by adopting the limits his proposal would have imposed, including refusing to accept soft money from his party's national committee or any other group.

He gave away other advantages of incumbency by agreeing with his opponent to limit their own campaign spending to about a dollar for each state voter and to limit direct contributions by political action committees. (Political action committees, or PACs, are groups formed specifically to raise and spend money on specific issues. Through the end of June, PACs had raised over 136 million dollars across the U.S. for the current election.)

Feingold's opponent, Republican Congressman Mark Neumann, has accepted no such limitations. The Center for Responsive Politics' Larry Mackinson calls the race the "most interesting" in the entire country because of Feingold's stand:

Mackinson says Feingold has decided to run by the rules and not use the loop-holes while his opponent is using every loop-hole in the book. He says Feingold and Neumann both agreed to a spending limit, and they've kept to it. But Neumann is benefiting from a huge number of independent issue ads that are being paid for by soft money the Republican party is pouring into Wisconsin. He says Feingold's reaction was to tell his own Democratic party to stay out of the state, that he'd rather lose and run on principle than use the tactics he's worked against in Congress.

Neumann's campaign so far has raised only about $300,000 more than Feingold's. But outside of their agreed spending limits, far more money -- six million dollars from the national Republican party alone so far, twice each candidate's agreed limit -- is being spent on television and newspaper saturation advertisements opposing Feingold. Technically, those are considered "issue" ads because they are not coordinated with Neumann's campaign and don't specifically urge a vote for Neumann or a vote against Feingold.

But the Governmental Studies Director of the Brookings Institution in Washington, Thomas Mann, says that when ads are indirect and use humor against a candidate such as Feingold, they are far more effective than direct ads. Mann says that using these soft money ads helped Neumann "close the gap" with Feingold.

Before the campaign began in earnest, the polls showed Feingold leading by 15 percentage points. Now, it is too close to call, say the same polls.

The race is considered critical by those opposed to the reforms as well. The National Republican Senatorial Committee has sent more than a million dollars into the campaign on behalf of Neumann. The committee is chaired by the main opponent of the Feingold-McCain reform bill, Senator Mitch McConnell (R-Kentucky).

Mackinson says that's what make it such a significant race. He says: "The question everyone wants answered is, 'Can you maintain your principles in a real tough battleground and win with one hand tied behind your back?'"

Don Kettl, director of the LaFolette Institute of Public Affairs at the University of Wisconsin says that if Feingold wins, "it proves it's possible to stand up against these outside ads and survive." He says that if Feingold loses, "it proves the playing field is inevitably not level when outside groups have the ability to bomb away."

The Democratic Senate Campaign Committee, whose soft money Feingold refused to accept, warned that he was jeopardizing his own seat. It's an important issue nationally because of its implications in shaping the balance of power in the Senate. Republicans hold 55 seats in the upper chamber and if they gain five more in this election, the majority party would have the power to cut off debate and wield far more authority there.

Meantime, those who have been pushing for reform of campaign financing say the present cynical financing system seriously distorts the political process. Says Makinson, "you couldn't design a system more dangerous to what civics-book democracy is supposed to be -- it's like sanctioned bribery."

(Another in RFE/RL's series previewing 1998 general election in US)