Campaign Giving Fails Ethics Test Campaign Finance Laws So Full Of Loopholes Limits Are Meaningless

American elections are awash in money. It’s undermining the political process and jading the public’s view of politics, critics say.

But it’s almost all legal.

The past few months have focused attention on some contributions to President Clinton’s re-election campaign that may be illegal. But the biggest problem, say those who track contributions, comes from donations that meet the legal requirements of state and federal laws, but often are channeled through loopholes that make those limits meaningless.

“The drive for money reached unprecedented heights in the last election cycle,” said Ellen Miller, director of Public Campaign, a Washington, D.C., group that tracks political spending.

“If anybody thinks there are any limits, they are fooling themselves,” she said. “The wealthy ‘max out’ and look for other ways to give.”

A computer analysis by The Spokesman-Review of Inland Northwest contributions to the 1996 campaigns underscores that point. Although strict limits exist for donors to national and Washington state politicians, some large donors used legal avenues to funnel money to groups that in turn helped their favorite candidates.

Most of these contributions were not soft money - the hard-to-track funds which go to political parties and for which there are no limits.

They were, instead, donations to political organizations with the stated goal of helping their party’s candidates get elected.

“But you’ve got to check it six ways to Sunday to know who’s giving,” Miller said.

For example, an American citizen can give a candidate for Congress no more than $1,000 for a primary or general election - a total of $2,000 per election cycle. For a candidate for the House, that’s every two years; for a Senate candidate, six years.

But after reaching that $2,000 limit, donors can - and regularly do - give money to political action committees set up by members of Congress, caucus leaders or the party that also give money to their favorite candidate.

“It renders those thousand-dollar limits meaningless,” said Jennifer Lawson, vice president of Common Cause, a national government reform lobby.

‘It’s a personal matter’

Many of the area’s biggest donors were reluctant to discuss the philosophy behind their contributions, saying they did not want the publicity.

“I don’t need the exposure,” said one Democratic donor.

“It’s a personal matter,” said a GOP contributor.

Others, like James P. Cowles, the Inland Northwest’s top contributor, were unavailable for comment. Cowles was on vacation. He is the president of Cowles Publishing, which publishes The Spokesman-Review, but is not involved in the newspaper’s day-to-day operation.

Those who did agree to talk defended their right to spend their money to support candidates and causes important to them.

Donna Weaver, a semi-retired financier in Hayden Lake, Idaho, gave nearly $22,000 to Republican candidates and committees, including Rep. Helen Chenoweth and Republican presidential candidates Lamar Alexander, Steve Forbes and Bob Dole.

Weaver also contributed more than $65,000 to her state’s term limits initiative because she considers that “the fundamental reform that will change the culture of government.” Alexander and Forbes favored term limits terms so she supported them. Although Dole didn’t fit that mold, he was “the party’s man. If you’re a member of a party, that’s part of what you do.”

Betty Wheeler of Spokane, a 71-year-old widow who remains an active stock investor, said she supports candidates who “want the least controls and offer the most freedom.” For her, that means Republicans.

Wheeler added she thinks the amount of money spent on campaigns “is crazy. I do it because everybody else does it, but I do not like the way it’s run.”

The newspaper’s analysis showed that while both parties’ candidates benefited from legal loopholes, Inland Northwest Republicans were far more likely in 1996 to have donors who reached the $2,000 limit and then funneled additional money into party PACs.

PAC law a step backward

Donors to Rep. George Nethercutt who reached their limit for his reelection campaign also gave money to the National Republican Congressional Committee, the state GOP’s Federal Account and the Republican National Committee. Those groups, in turn, gave thousands of dollars to Nethercutt or spent it independently to counter ads attacking him.

Such a practice is legal under federal law, which allows a person to give a total of $25,000 per year to candidates or PACs that spend directly on campaigns.

Businesses cannot give money directly to federal candidates. In Washington state and Idaho, however, they can give directly to state candidates and initiatives.

A 1992 Washington initiative was touted by sponsors as strict campaign finance reform because it set limits on the amount a person, a PAC or a business could give to a candidate. But Ed Bender, research director for the Western States Center on Money and Politics, said the law was in many ways a step backward.

The law generated an explosion of new PACs, giving businesses new places to send money, which then was funneled to many of the same candidates the businesses supported directly, he said. The law also reduced the reporting requirements for PACs.

“From the public’s perspective, things are worse,” said Bender from his office in Helena. “It’s more difficult to go out and track who’s trying to influence legislation.”

Giving with big picture in mind

A spokesman for the area’s biggest corporate campaign donor, Washington Water Power Co., said the utility does not try to influence legislation with its donations.

“We make contributions with the big picture in mind - not with a short-term goal or an individual bill,” said Tom Paine, who handles campaign funds for WWP. It often gives to local candidates or members of committees who handle legislation important to the utility.

To that end, WWP contributed some $57,000 to state campaigns in the last election cycle. Although more than two-thirds of that money went to Republican candidates, Paine said there was not a conscious effort to be partisan. The utility gave money to both parties’ candidates for governor.

“Our overall objective is to have good relationships with those people who ultimately will be responsible for determining public policy.”

The practice of spreading money among various industry or business PACs was common before the initiative, Paine said. WWP has sent less to the committees in recent years, and concentrated on giving money directly to candidates.

But some businesses have increased their contributions to PACs as a way to overcome limits set by the initiative, Paine said.

“If you have a lot of money you want to spend, you can do it that way. But you don’t get the recognition from candidates,” he said. “We want recognition for the contributions we make.”

Abolish the limits

Proponents of campaign finance reform, candidates and even some donors denounce the current system. But they disagree on how to improve it.

Some candidates and campaign officers say the limits are so easily overcome that they should be eliminated altogether.

“The system was designed by people in Washington (D.C.) to hide the ball,” said Lowell Ruen, treasurer for Nethercutt’s two congressional campaigns.

“I’ve always thought it would be better to let everyone give as much as they want, but make the candidate publish every week in the public record a list of who gives what,” Ruen said.

Contributions could be cut off a week before the election to keep large donations from having an undue influence in the final days of a campaign, he said.

Nethercutt also said that donors should be allowed to give whatever they want - as long as it is quickly and fully reported. Independent groups that spend money for or against a candidate should be subjected to a truth test, although he’s not sure yet how to define that standard.

But Lawson of Common Cause argued that firm limits and better disclosure are at the heart of true campaign finance reform.

“A comprehensive approach is best,” Lawson said. That includes better funding for the government agencies that track campaign contributions so the public knows quickly who is giving large sums to candidates.

, DataTimes MEMO: These 2 sidebars appeared with the story:

1. TOP DONORS TO FEDERAL CAMPAIGNS Here are the top donors to last year’s presidential and congressional campaigns from Eastern Washington based on a computer analysis of federal records.

INDIVIDUAL DONORS Name, Occupation or business, amount, recipients James P. Cowles; President, Cowles Publishing and Inland Paper Co.; $33,482; George Nethercutt*, GOP presidential and congressional campaigns and GOP PACs Martin Howser; Owner, general manager, Community Cable Service; $13,805; Nethercutt, national GOP PACs Oscar H. Williams; retiree; $13,300; Nethercutt*, GOP congressional PACs Philip Stanton; Washington Trust Bank chairman; $9,850; Nethercutt*, GOP congressional PACs Betty Wheeler; retired investor; $9,101; Nethercutt, Pat Buchanan, GOP congressional PACs Eric Sari; President, Energy Technology System; $7,250; US Taxpayers Party, Buchanan, Nehtercutt*, GOP congressional PAC Rockne J. Timm; Gold Reserve mining company; $7,000; Nethercutt*, GOP congressional PAC Robin Corkery; Investment counselor; $6,440; Nethercutt*, GOP congressional PACs David Clack; Spokane investor; $5,000; Nethercutt, Lamar Alexander Marjorie Prestini; Spokane homemaker; $5,000; Buchanan, US Taxpayers Party, GOP Pro-Life PAC

BUSINESSES Name, Business, Amount, Recipients Itronix Corporation; Spokane computer manufacturer; $20,000; RNC national state elections PAC Washington Water Power; Spokane-based utility; $15,000; Two-thirds to RNC, one-third to DNC Momb Steel Buildings; Spokane manufacturer; $4,100; GOP senatorial committee Spokane Tribe; Native American tribe; $3,000; Democratic congressional candidates * means donor gave the maximum under law to that candidate SOURCES: Federal Election Commission, FEC information and staff research by Jim Camden

2. TOP DONORS TO STATE CAMPAIGNS Here are the top Eastern Washington donors to last year’s state and legislative campaigns based on a computer analysis of state records.

DONORS TO INITIATIVE CAMPAIGNS Corporations or PACs Name, Amount and recipients Inland Northwest Wildlife Council; $7,000; opposed to Bear Baiting Initiative Athletic Round Table, $1,000; against Indian Gaming Initiative Spokane Youth Sports Bingo; $1,000; against Indian Gaming Initiative Washington Water Power Co., $1,000; against Charter School and Voucher initiatives -There are no individuals above about $500

DONORS TO CANDIDATES Corporations or PACs Name, Amount and Recipients Washington Water Power Co., Regional utility; $57,064; 117 candidates (78 GOP) Iron Workers District Council, Union organization; $33,220; 56 candidates (52 Democrats) Metropolitan Mortgage, Spokane financial company; $24,775; 39 candidates (28 GOP) Capitol Fund, Spokane-based Republican PAC, $19,250, 29 candidates, (all GOP) Inland Northwest PAC, Spokane-based PAC, $17,050, 27 candidates, (17 Democrats) United Food & Commercial Workers, Spokane-based union, $11,400, 20 candidates (17 Democrats)

Individuals Name, Amount and recipients Lonnie Sparks, Spokane attorney; $17,291; to own state House race James P. Cowles, President, Cowles Publishing and Inland Empire Paper; $6,700; GOP candidates for legislature and governor Duane Alton, Owner, Alton Tire; $3,820; nine GOP candidates, including $2,000 to Ellen Craswell Judith Williams, Co-owner of Telect; $3,800; 11 candidates (seven GOP) Lawrence Stone, president of Scafco; $3,350; six Democratic candidates

SOURCES: Public Disclosure Commission and staff research by Jim Camden