‘96 Race Costliest In History ‘Soft Money’ Rules Make Joke Of Presidential Finance Limits

Even though Republicans and Democrats strongly argued for campaign finance reform this year, both parties are taking advantage of a variety of loopholes to get around federal campaign spending limitations, making the 1996 presidential race the most expensive in history.

These loopholes are allowing corporations to pour money into the presidential race at record levels - at far more than the $5,000 legal limit. This year each party expects to raise $120 million to $150 million in private donations - in addition to the $172 million in federal money given to both parties.

By November, some experts say, campaign spending may well surpass $600 million - money spent by the parties, by the candidates’ campaigns and by outside organizations, like labor unions or advocacy groups, on the candidates’ behalf.

The biggest force behind the surge in fund-raising is the growth of what are known as soft-money donations, money from rich individuals and corporations that goes to the parties, not the candidates.

Critics say that soft dollars have become a backdoor source of money in the presidential race that is easy to raise, hard to trace and makes a mockery of laws designed to prevent corporate influence peddling in Washington.

“The parties find it is a lot easier to raise $100,000 in soft money with one phone call to a corporation than to try to collect $1,000 donations from individuals,” said Ellen Miller, executive director at the Center for Responsive Politics, a non-profit research group.

“Soft dollars are like cyberspace accounting it’s hard to follow where it goes,” Miller added. “Soft money barely makes the letter of the law. And within the spirit of the law, it’s a joke.”

Under laws enacted in 1974, individuals can give only $1,000 to a presidential candidate and corporate political-action committees are limited to $5,000 donations. To offset the loss of that private financing, money from the federal government was made available to candidates starting in 1974. This year, each candidate will receive $74 million for the general-election campaign and $12 million for the convention.

But, a glaring loophole remained - corporations and individuals were allowed to give unlimited amounts to the national parties for activities like voter registration, television advertising and get-out-the-vote campaigns.

This soft money is supposed to promote the party, and not specific candidates, but many see this as a distinction with little difference.

Soft money was slow to catch on in the mid-1980s, and only became a force in the 1990s. Now, “the soft money numbers are off the charts,” said Charles Lewis, executive director of the Center for Public Integrity, a non-profit research group.

“This money is disbursed silently and mysteriously,” Lewis added. “It is hard to track where it goes, but it supports the candidates. That’s why it’s called soft money, because it is so squishy. It can grease the skids in Washington for some powerful companies, while the average citizen doesn’t have access.”

Between Jan. 1, 1995, and June 30, 1996, both parties already exceeded previous soft-dollar records, and fund-raising is still in full swing.

The Democratic Party has raised $70.3 million in soft dollars so far - more than twice the $34.5 million it raised in the entire 1992 presidential race, according to the Center for Responsive Politics.

By the end of June, the Republican Party raised $83.9 million in soft dollars, almost double the $49 million raised in 1992.

Party fund-raisers, while decrying the amounts spent this year, say both parties are caught in a financial version of an arms race - each wants a financial war chest as big as their opponent’s.

The growth of soft money is the inevitable outcome of two clashing factors: the $1,000 individual limit and $5,000 corporate limit on contributions to candidates that were set two decades ago and have not kept pace with inflation and the rising cost of waging a media-driven presidential campaign.

Already, some in the political process say the effect of soft dollars is corrupting. “There is just too much money being raised,” said Alfred C. DeCotiis, a lawyer from West Orange, N.J., who has raised more than $5 million for the Democrats.

“As a practical matter, if you write a large check, you get to be well known in the party and you get a certain amount of access.”

Added Sen. Bill Bradley, D-N.J.: “Money is distorting democracy now. Money not only determines who wins, but often who runs. If you’ve got a good idea and $10,000 and I’ve got a terrible idea and $1 million, I can convince people that the terrible idea is a good one.”

Soft dollars, however, are only one of several ways to raise money while getting around the donation limits.

Each party has set up a compliance committee, with a budget of about $6 million, to pay for the cost of complying with federal election laws. Individuals can make an additional $1,000 donation to one of these committees.

The two recent conventions saw the establishment of tax-deductible accounts for corporate donations to help offset the cost of running the political gatherings. About $25 million was raised for each convention by local host committees - in addition to the $12 million in federal money given to the parties.

“It seems like $12 million in public funds would be enough to buy a lot of balloons,” said Lewis, of the Center for Public Integrity. “But the parties have turned the conventions into Olympic sponsor-fests.”

A new wrinkle in loopholes opened just two months ago when the United States Supreme Court ruled that under the constitutional protection of free speech political parties could set up “independent committees” to solicit even more donations, as long as the fund-raising and the activities it financed were not coordinated with the presidential campaign. It is still too early to determine how big this loophole will be for the parties.

Then there are “in kind” donations of office space, phone banks and other equipment by businesses, which are difficult to value. AT&T, for instance, provided office space to the Republicans at their San Diego convention; Xerox provided photocopiers and General Motors provided cars to the Democrats.

“If you look at it, any spending limits that were put into the law are just not effective,” said Herbert Alexander, head of the Citizens Research Foundation at the University of Southern California. “Soft money, labor money, compliance money and independent committees. It’s all related to getting a presidential candidate elected.”