March 19, 2002
Campaign-finance law appears easy to evade
By Jim Drinkard, USA TODAY
WASHINGTON - Jane Fonda poured $12.2 million into the 2000 national elections,
most of it to help Democrats who support abortion rights. A new campaign-finance
law intended to wring big-bucks influence out of politics will make that
impossible in the future, right? Wrong. Even as the Senate votes this week to
send the measure to President Bush, election lawyers and political operatives
are probing for ways around it - and finding them. Many predict that
political dollars will be diverted into channels that are undisclosed and less
accountable. "Campaign money is like the Pillsbury Doughboy - you push it
in one place, and it pops out in another," says Ronald Kaufman, a
Washington lobbyist and Republican fundraiser. "After a period of time,
folks will figure out legal ways to spend money on elections."
Proponents of the landmark overhaul say their bill will help clean up politics
in two major ways. It will ban the unlimited "soft money"
contributions that make up more than four of every 10 dollars collected by the
Democratic and Republican parties. And it will restrict the slashing "issue
ads" ads" that saturate the TV airwaves every election season. The
bill is the first major overhaul of the way political money is raised since the
Watergate reforms of a generation ago. If Bush signs it, as aides have
predicted, it will take effect Nov. 6, the day after this fall's elections. But
more than two dozen election lawyers, consultants and party officials say the
changes likely will be more modest and short-lived than the reforms of the early
1970s. Among their predictions: Independent groups, particularly
politically active organizations with thousands of members, will get new power.
The AFL-CIO, National Rifle Association, Sierra Club and National Federation of
Independent Business are among those most often mentioned.
The national political parties might create "shadow" parties
that are technically independent and could still accept unlimited money.
Other advocacy groups that focus on hot-button issues such as abortion, the
environment, gun rights and immigration are likely to proliferate. They could
soak up money that previously went to the political parties.
Other serious hurdles also await the new law. Opponents spanning the political
spectrum, from organized labor to abortion-rights opponents, plan to challenge
it all the way to the Supreme Court. They argue the new restrictions on donating
and advertising violate free-speech guarantees. And some federal regulators say
the law is so complicated, and its terms so difficult to define, that it might
prove unenforceable.
"Anyone intent on circumventing the law runs little risk of
detection," says David Mason, chairman of the Federal Election Commission.
Money to buy access
Current law limits what political donors can give and requires disclosure.
Individuals are restricted to giving $1,000 per election to a candidate;
corporate and union contributions are outlawed. For more than a decade after the
law was passed in the early 1970s, the system worked. But by 1990, court
rulings, creative lawyers and lax enforcement had weakened many of the law's
restrictions. Today, political experts on all sides agree it is in tatters.
To the new law's authors, the most corrupting development in modern political
fundraising was the practice of federal elected officials - the president and
members of Congress - offering access to themselves in return for large,
unregulated contributions.
It happens at dinners like the affair March 5 in Washington that raised a record
$7.5 million for the National Republican Congressional Committee; lobbyists
there mingled with committee chairmen, and former New York City mayor Rudy
Giuliani basked in a standing ovation. It happened at a similar soiree March 12
for the Democratic Congressional Campaign Committee, which took in $5 million.
It happened during the Clinton administration, when $50,000 brought an
invitation to coffee with the president.
Proponents of changing the system argue that such soft-money fundraising raises
the appearance of corruption, which the existing law tried to eliminate three
decades ago.
"Soft money" refers to the unlimited contributions that corporations,
labor unions and wealthy individuals give to national political parties. It
differs from "hard money," which individuals give to candidates under
strict limits.
Wealthy interests give six- and even seven-figure contributions largely because
they don't want to say "no" to a powerful politician, reformers say.
They say that if politicians can't solicit it, much of the money will dry up -
particularly contributions from corporations.
"That was not ideological money," says Daniel Weiss, an environmental
and political consultant. "That was protection money."
But campaign-finance experts say that donors who are committed to political
involvement, or who believe their donations buy influence, are unlikely to give
up that easily.
In fact, the hunt for loopholes already is well under way. Election lawyers
scrutinizing the bill believe there are ways to keep the money spigot turned on.
While the measure would bar soft-money contributions to the national political
parties, it is silent on money flowing to independent groups, such as those
supporting abortion rights or gun rights, for political use.
That could turn non-profit groups into the new powerhouses of politics, taking
on tasks the parties no longer will be able to afford. It could lead the parties
to create their own non-profit groups - in effect, shadow political parties - to
take the big contributions they no longer can accept. Unlike the parties, the
groups would not be subject to detailed disclosure
rules.
"Money will be driven out of the political parties and into some of the
darkest corners of American politics," says Jim Jordan, executive director
of the Democratic Senatorial Campaign Committee, who opposes the bill because he
says it will weaken the parties.
Groups organized to do public education and promote "social welfare"
under the tax code can raise unlimited amounts of money and use it to pursue
political agendas. The new law allows federal officeholders to help raise money
for those non-profits.
"There are a number of organizations out there that already view themselves
as candidates for that role," says Mark Braden, a Republican election
lawyer who coined the term "soft money."
Fonda's money
That's how (Jane) Fonda was able to funnel money to help Democratic presidential
candidate Al Gore and a list of Democratic congressional candidates in 2000.
Fonda's money, channeled through non-profit groups like Planned Parenthood and
the National Abortion and Reproductive Rights Action League, paid for TV, radio
and newspaper ads across the country. Most voters who saw the ads had no
idea who was behind them.
The American Conservative Union Foundation argues that the arrangement runs
afoul of existing election laws and is preparing to file a complaint with the
FEC.
For an idea of what the future might look like, go back to 1998 in Colorado.
Voters approved campaign-finance rules that banned corporate contributions,
limited individual gifts to $1,000 and capped spending by candidates for
governor at $2 million each. Almost immediately, two new non-profit groups
sprang up to raise and spend money in the governor's race. One, calling itself
Centennial Spirit, was formed by several prominent Republicans, including a
former state party
chairman. The other, called Save Colorado First, was directed by a former state
Democratic chairman. Both used undisclosed contributions to air a combined $1.8
million in TV ads promoting their respective candidates.
"That's exactly what's going to happen" at the national level, says
Cleta Mitchell, a Republican election lawyer. "It's the Balkanization of
politics in America."
In at least one other way, the future is likely to resemble the past. For the
first time since the 1970s, the bill will increase the amounts of regulated
"hard money" that individuals can donate to their favored candidates
and parties. Stuck at $1,000 for nearly three decades, the maximum candidate
contribution per election will be doubled to $2,000 and indexed for inflation.
Overall, an individual will be allowed to give up to $95,000 to parties,
candidates and political action committees over two
years, up from $50,000.
That "hard money" will be the focus of a new gold rush, fundraising
experts predict. Among the biggest beneficiaries: President Bush, who raised a
record $101 million that way for his primary campaign in 2000 and is likely to
more than double that total in 2004 under the bill's increased hard-money
limits.
If big-check writers were the kings of the soft-money system, solicitors with a
Rolodex of small-check writers are likely to reign over the new world of
political money. Fundraising consultants, direct-mail experts and those with
broad networks of politically active friends will be more important than ever.
The newly powerful will be people like Bush's "Pioneers" - mostly
well-connected businessmen or lobbyists who raised at least $100,000 in checks
of $1,000 or less for the 2000 campaign. Or they will be people like Ellen
Malcolm, the president of EMILY's List, which bundles small checks from a mostly
female base of donors and funnels them to Democratic female
candidates who support abortion rights. The group raised more than $9 million in
the last elections from its 68,000 members. "The people who have that donor
base are in a very strong position," Malcolm says.
Court fights and complexity
Knowing their handiwork would be challenged in court, the bill's authors added a
section calling for expedited judicial review. Sen. Mitch McConnell, R-Ky., the
bill's leading opponent in Congress, is already working with lawyers on his
attack. He may be joined by groups as diverse as the AFL-CIO, the National Right
to Life Committee and the American Civil Liberties Union, which view parts of
the law as hampering free speech.
"The history of this issue is for the courts to leave these things in
shreds," the Federal Election Commission's Mason says. "We are going
to be left with a law that has some pieces there, and some pieces not
there."
Another pitfall awaits regulators. Those charged with enforcing the new law -
the six members of the bipartisan FEC - aren't all sure it can be done. Mason
said the commission's enforcement office, already stretched thin, will be unable
to keep up with the new burden. "We are taking an already complex law and
adding another 95 pages of complexity," he says. He
and fellow commissioner Bradley Smith, both Republicans, contend that it is
unenforceable.
"This doesn't close every loophole," Mason says. "That's obvious
to anybody
who wants to look at