Beyond Banning Soft Money

The campaign finance reform legislation moving through Congress is a major step toward getting money out of politics — but only the first that needs to be taken.


For some in Washington, Valentine’s Day was especially sweet this year. That’s because it was the day the US House of Representatives finally passed the Shays-Meehan campaign finance reform bill banning soft money. It was a stirring defeat for those who have profited most from the corrupt status quo. Assuming that Senate Majority Leader Tom Daschle is able to shepherd the bill to final passage, the enactment of this measure will have demonstrated that a broad citizens’ coalition and sheer persistence can triumph over recalcitrant, anti-reform incumbents in Congress.

Even so, the problems of money in politics have hardly been solved. Our elected representatives will still be beholden to wealthy donors. The difference will be that the most important people in politics will now be the ones who can write or gather large bundles of four-figure hard money checks instead of the super-rich and the corporate honchos who had been writing all the six-figure soft money checks. And so the attention of democracy reformers must turn now to finding alternatives to the hard-money campaign corruption.

That is not to underestimate the importance of the bill which will land on President Bush’s desk. The signal accomplishment of Shays-Meehan and its McCain-Feingold Senate counterpart is the banning of unlimited soft money donations to federal party committees. This loophole had expanded at a dizzying pace in the last few election cycles to reach $500 million in the 2000 elections — accounting for about one-sixth of the total raised. By allowing donors to pump unlimited amounts into the parties, which in turn spent that money on behalf of candidates, the soft money loophole had made a mockery of the very idea of limiting political contributions, an idea which campaign finance jurisprudence holds as necessary to avoid corruption or the appearance of corruption in the electoral process.

Big donors like AFSCME, AT&T, Philip Morris and Microsoft (who collectively gave over $11 million in soft money in 2000) will now be limited like everyone else to making direct, hard money contributions to federal candidates and parties, which will be capped at $2,000 per recipient per election. Shays-Meehan/McCain-Feingold does leave open a small loophole for soft money contributions to state and local party committees, but these are limited to $10,000 per election. A corporation or wealthy individual could still curry favor with politicians by spreading such checks around, and they can certainly funnel their money into politically-active issue organizations, legitimate and otherwise. But the cumulative impact of this fatcat spending will be smaller and more diffuse than today’s six-figure bribery of the national parties and their House and Senate fundraising arms.

With that battle won, anyone interested in further reducing the influence of big money in the electoral process has to turn to the $2 billion hard money side of the federal campaign equation. Hard money comes largely from the same sources as soft money, and it’s largely given for the same reasons: to influence policy. The people who give this money are not representative of the rest of America. Only one-quarter of one percent of the population of the United States gave a hard money contribution of $200 or more in the 2000 elections, according to the Center for Responsive Politics, a Washington, D.C.-based campaign finance watchdog group. A 1997 survey of such donors carried out by a team of political scientists sponsored by the Joyce Foundation of Chicago revealed that four-fifths had an annual family income of more than $100,000 a year and that more than nine out of ten were white. By comparison just 13 percent of US households have a total income of $100,000 or more; 30 percent are people of color.

Powerful industries and their lobbying groups have also been major traditional sources of hard money. For example, according to the Center for Responsive Politics, 75 percent of the $19 million contributed by the auto industry in 2000 came in the form of hard money gifts. Two-thirds of the real estate industry’s $79 million was hard money, as was 40 percent of Big Pharma’s $19 million.

Car buyers, on the other hand, don’t have a lobby. Nor do tenants or home-buyers, let alone senior citizens on fixed incomes facing astronomical prices for prescription drugs. Even when citizens’ groups manage to pool a little money to buy a little influence, they are vastly outspent by the other side. For example, environmental groups and alternative energy producers have given just over $2 million in hard money since 1999, compared to $44 million from oil, gas, utility, mining and waste management companies.

By shifting the focus of fundraising onto hard money, and raising the limit on those donations from $1000 to $2000 per election, the Shays-Meehan bill will inevitably enhance the role of people who can pull together “bundles” of those hard money checks by tapping their colleagues and friends. Bundling is already a major source of campaign funds. In the last election cycle, for instance, Sen. Joseph R. Biden (D-DE) received a total of $130,175 from executives of MBNA National Bank — the world’s largest credit card issuer — and their families. Is it any coincidence that Biden voted for last year’s Bankruptcy Reform Act, which many critics say will make it easier for credit card companies to seize debtors’ assets? Or take New York Democratic Rep. Charles Rangel, who got $10,000 from a group of 16 Philip Morris executives on August 30, 1999, and shortly thereafter introduced a bill that would exclude tobacco bought duty free from penalties.

So what is to be done? Various ideas are being kicked around, such as strengthening the enforcement machinery of the Federal Election Commission or pushing to require broadcasters to give candidates free air time.

These are worthy ideas, but the lesson of Shays-Meehan/McCain-Feingold ought to be to aim higher, at a comprehensive solution that can fundamentally alter how candidates run for office. To build the kind of coalitions and staying power it will take to win such a campaign, the issue must be framed around questions of power and equality, not just ethics in government.

Furthermore, instead of focusing on channeling private money’s role in elections and punishing people who break such regulations, reform should work toward making it possible for candidates without access to wealth to run competitive campaigns for office — to enable anyone with genuine public support to have a real voice on a more level playing field.

Toward that goal, the movement for public financing of campaigns — known as Clean Money/Clean Elections — is picking up steam. Under Clean Elections laws in Arizona, Maine, Massachusetts and Vermont, hard and soft money alike are eliminated for participating candidates. Candidates who agree to run without raising any private money can qualify for limited and equal grants of public funds. To qualify, they have to collect a fairly large number of small contributions from voters in their districts. Candidates who choose to raise private money can continue to do so, but to keep races competitive, additional matching funds (up to a limit) are provided to Clean Elections candidates if they are outspent by privately-financed candidates. The model bills for a federal Clean Money system, sponsored by Sen. Paul Wellstone (D-MN) and Rep. John Tierney (D-MA), also include provisions that would make the FEC more independent and responsive, and require broadcasters to give participating candidates free and discounted TV time.

Assuming that Shays-Meehan et al is enacted, pressure for further reform inside the Beltway will drop in the short run, while the lawyers, fundraisers and consultants who make the electoral-industrial complex hum figure out how best to keep their accounts flush. But outside the Beltway, the end of the debate over banning soft-money will allow a new debate about hard money to come to the fore. Victory in the House on Feb. 14 is only a beginning, proof to understandably cynical citizens that their voices (along with some well-timed scandals) can defeat the naysayers. Seeing the fatcats back off with their tails between their legs should only whet the public appetite for more comprehensive change.

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