One Cheer for Soft Money

Washington Monthly, July, 2000 by Steven E. Schier

The case for strong political parties

TO LISTEN TO JOHN McCAIN, YOU'D think that the fate of the republic hinges on the immediate ban of soft-money contributions to political parties. His Web page, www.itsyourcountry.com, boldly asserts: "Ban soft money and your voice will be heard in Washington again" Why? "Without reining in soft money and reducing the role of money in politics, we will never have a government that works as hard for the average American as it does for the special interests."

Translation: national government is corrupt largely because of soft money and by clamping down on soft money, political corruption will shrivel. It's a simple and appealing formula. As with most such formulas, however, it misreads reality and promises more than it can deliver. Though we do need to address any possible corruption resulting from campaign contributions, we need to do it in a way that doesn't damage the ability of our already-weak political parties to add some coherence to America's peculiarly complex, candidate-centered politics.

The Hard Goods on Soft Money

Soft money refers to unlimited contributions directly from corporations, unions, and individuals to party committees. A series of Congressional amendments and Federal Election Commission rulings in the 1970s and 1980s permitted political parties to raise unlimited funds for "election related activities' by state and local parties. These monies, held in "nonfederal" accounts, are not subject to the "hard money" limits of the funds in "federal" accounts. Hard money limits cap annual individual contributions at $25,000. They require interest groups to contribute to candidates and parties through regulated Political Action Committees at a maximum pate of $5,000 per candidate per (primary or general) election and limit individual contributions to $1,000 per candidate per election. Though wealthy individuals, corporations, and unions are thus sharply limited in their hard money contributions, the sky is the contribution limit with soft money.

Since 1980 the parties' national committees and their House and Senate campaign committees have raised increasingly mammoth amounts of soft money, cresting at $262 million in 1996 and $250 million in 1998. Where does all of this money go? Originally, soft money was to be spent on grassroots campaigning by state and local parties for brochures, door knocking, and get-out-the-vote efforts.

The real explosion in soft-money fund raising occurred after a 1995 Federal Election Commission ruling that permitted the parties to spend soft money on "issue advocacy" advertising, an obscure government action that had huge consequences. Though issue-advocacy advertising legally cannot expressly advocate the election or defeat of a candidate, it can link candidates to issues in a way that supports or opposes their election. What is express advocacy? The FEC defined it as any communication that uses phrases like "vote for," "vote against," "elect," or "defeat," and "can have no other reasonable meaning than to urge the election or defeat of one or more clearly identified candidates" Creative campaign minds found all sorts of ways around those restrictions in 1996. The race for soft money to fund issue-advocacy advertising had begun.

The campaign finance scandals afflicting the Clinton presidency in recent years have involved raising soft money from dubious, often overseas sources in large amounts. But the real lesson for candidates from the Clinton experience in 1996 is that soft-money spending works. The Democratic party committees spent over $46.5 million on soft-money-funded ads aiding Clinton's re-election in 1996, many of which appeared early in the election year before Dole and the Republicans were able to respond (they eventually did, but with a comparatively meager $18 million in soft-money ads).

Soft money can spell the difference between victory and defeat, as the 1998 Kentucky Senate race revealed. Pitting two House incumbents, Democrat Scotty Baesler and Republican Jim Bunning, against each other, the race featured an orgy of soft-money spending by the state parties. Though Baesler began the fall campaign with a double-digit lead over Bunning, he was short on funds after winning a competitive primary. Bunning was assisted by over $1.5 million worth of ads paid for by the Kentucky Republican Party, raised with the help of Republican Sen. Mitch McConnell, an outspoken defender of soft money. One GOP soft money ad attacked Baesler for supporting NAFTA, concluding with a stereotypical Mexican saying, "Muchas Gracias, Senor Baesler." The state Democratic Party could only spend one-third of the Republican total for ads. The money disparity helped Bunning earn a narrow victory in November.

What's Bad about Soft Money?

McCain and his fellow reformers have some good arguments against the current soft-money regime. It's not wise to allow corporations and unions to give unlimited amounts to parties. Large corporations give huge amounts to parties to secure or defend favorable governmental treatment. The publicly owned digital television spectrum was recently distributed for free to television broadcasters, who have given $5 million in soft money in recent years. Agribusiness companies have given over $4.5 million in soft-money in recent years, helping to maintain federal ethanol subsidies worth $500 million annually. Even if these actions aren't out-and-out bribes, they certainly present an "appearance of corruption" to many citizens.