So Much for Campaign Finance Reform
By Tania Valdemoro
Larry Noble
Robert Biersack
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While the Bipartisan Campaign Reform Act of 2002 (BCRA) may have removed a large measure of soft money from federal elections, it hasn’t fundamentally changed the act of giving money to political candidates and causes, according to two experts familiar with the flow of money in federal politics.
The usual donors continue to fund federal candidates while the national parties are still raising lots of money, Bob Biersack, deputy press officer at the Federal Election Commission (FEC), told a group of journalists attending the Western Knight Center seminar on covering campaign finance. The FEC enforces campaign finance laws, and it collects and disseminates campaign finance information.
The stakes in the upcoming November 2004 election have encouraged a new industry of special interest groups and partisan supporters to circumvent campaign finance reform to ensure their preferred candidates will win, said Larry Noble, executive director for the Washington, DC-based nonpartisan Center for Responsive Politics.
The Democratic and Republican parties spent $250 million in soft money, or money raised outside federal election law limits, to influence federal elections in both 2000 and 2002, said Biersack. Soft money accounted for 50 percent of Democratic and 36 percent of Republican national receipts, he added.
To date, President Bush has raised $158 million while Democratic challenger Sen. John F. Kerry (D-MA) has raised $41 million, according to the Center for Responsive Politics. Both candidates have eschewed the primary matching fund system because of the $47-million ceiling.
BCRA, commonly known as McCain-Feingold, was intended to regulate the campaign finance system that spiraled out of control in the previous decade. The law was a specific reaction to several developments, notably national parties raising soft money for federal elections and for “sham” issue ads attacking candidates, said Noble.
Supporters of the law believe it closed other loopholes that formed after the Federal Election Campaign Act was amended in 1976, whereas opponents of the law claim it violates the First Amendment’s free speech provision, he said.
McCain-Feingold implemented soft-money restrictions in several ways. The law banned national party committees from soliciting, receiving or spending soft money. It also banned federal officeholders and candidates from raising soft money in federal elections. They can only raise money that complies with federal limits and prohibitions for state and local candidates.
The law also raised hard money contribution limits to $2,000 from $1,000 for individuals, and to $95,000 from $50,000 per two-year cycle for overall individual contributions to national party committees and political action committees. It limited to $20,000 the amount of money candidates and officeholders could accept from 501 or 527 organizations for get-out-the-vote or voter registration efforts, and banned unions and corporations from giving money to officeholders and candidates for these activities.
Perhaps the most noticeable impact of McCain-Feingold is the soft-money ban and the tighter definition of campaign ads. All ads that are broadcast over television, radio, cable and satellite are subject to contribution limits and disclosure if the ad mentions a candidate’s name within 60 days of a general election or 30 days of a primary. The law eliminates the loophole of sham “issue” ads that are intended to influence the outcomes of elections but they never say the words, “vote for” or “vote against” a specific candidate. Under the old system such sham issue ads were allowed. The tighter rules on election ads, however, do not apply to newspapers, direct mail or the Internet, where since last year harsh political ads have been reaching voters to influence public opinion before state primaries.
McCain-Feingold has made both major parties rely on hard money fund-raising, said Noble. This is an acute problem for Democrats, who have historically relied on soft money in the form of large contributions from unions and corporations.
On the other hand, Republicans have mastered the art of getting small donations, Biersack said. In particular, they have raised a lot of funds through “bundling,” whereby fund-raisers known as “mavericks,” “rangers” or “pioneers” (based on the fund-raising goals) collect $1,000 to $2,000 donations from their family, friends, co-workers and acquaintances. The Democrats have a similar operation with Sen. Kerry’s “co-chairs.” And, leading up to the Democratic primaries, former Vermont Gov. Howard Dean led his party in successfully collecting small donations online, a practice that other politicians have since adopted.
Furthermore, special interest groups have become creative at circumventing campaign finance restrictions under McCain-Feingold, said Noble. In particular, organizations under Section 527 of the Internal Revenue Code, like Americans Coming Together and MoveOn.org, have mushroomed. They are independent or unaffiliated political groups whose sole purpose is to “directly or indirectly influence or attempt to influence the selection, nomination, election or appointment of any individual to public office,” according to the Center for Responsive Politics.
These 527 organizations are raising unlimited amounts of soft money to pay for their activities, which include producing and running candidate-specific issue ads, get-out-the-vote efforts and voter mobilization campaigns, Noble said. Since they don’t have to register as political committees with the Federal Election Commission, these groups are not restricted in their efforts to raise money like PACs are. To date, the FEC has not issued a ruling on the status of 527s, he added.
During this election cycle, new 527 organizations have been created with the purpose of ousting President Bush, although Republicans have set up their own 527s to prevent Democrats from gaining elective office. However, 527s cannot coordinate their activities with the presidential campaigns because that would subject them to the soft money ban, the hard money limits, and the new tighter rules on election advertising. Nevertheless, coordination is difficult to prove, said Noble.
The national parties are also exploiting a provision in the McCain-Feingold law called the “Levin Amendment,” which allows state and local parties to spend up to $10,000 each of soft money contributions donated in accordance with state laws for voter registration, voter identification and other generic campaign activities, Noble said.
And if your opponent is a self-financed millionaire, the law also allows people to contribute more to your campaign to level the playing field, Biersack said. For example, because Blair Hull spent $23 million on his Illinois Senate campaign, his opponents enjoyed a $12,000 limit on individual contributions rather than the standard $2,000 limit, he said. Hull lost the primary to Barack Obama.
“Politics is the only industry regulated by the people who control the funding,” Noble said of the flurry of activity to raise large sums of hard money and bypass McCain-Feingold prohibitions.
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