Does 'Soft Money' Really Matter?

W A S H I N G T O N, March 19, 2001 -- Money has been called the "mother's milk" of American politics. And even the most ardent advocates of campaign finance reform concede it is all but impossible to end the influence of big bucks on politicians.

Public interest groups say "soft money" — the unlimited, unregulated donations from corporations, labor unions and wealthy individuals to political parties — is corrupting the nation's political system, allowing special interest groups to buy access, influence and action from congressmen, senators, even presidents.

"It comes in huge amounts — from $10,000 to a $1 million or more," says Frank Clemente, director of Congress Watch, a division of Public Citizen. "It's money that is powerful."

Not 'Charitable Giving'

The Republican and Democratic national committees took in a combined total of nearly a half billion dollars in soft money donations last year, with more than three dozen corporations or unions giving in excess of $1 million each.

"Why do they give it unless they expect a political benefit or policy benefit in return?" asks Nick Nyhart, executive director of Public Campaign. "This is not charitable giving to your local museum. This is political giving to elected officials."

Critics cite a slew of key legislative victories as evidence that special interests are indeed getting something for their money.

Finance and credit card companies, for example, gave $3.6 million in soft money during the 2000 election cycle, according to the Center for Responsive Politics. Last week, the Senate passed a bill to overhaul the nation's bankruptcy laws. One company alone — MBNA, the nation's largest credit card company — stands to boost its profits by $75 million a year if the bill is enacted.

"It is clear that the industry wanted this bankruptcy legislation," says Larry Noble, executive director of CRP. "They bought and paid for it."

Public Citizen points to the pharmaceutical industry, which has filled GOP coffers with more than $14.3 million in soft money since 1995. The Republican-controlled Congress last year rejected legislation opposed by drug companies that would have provided a guaranteed prescription drug benefit for Medicare recipients.

In 1998, the Senate killed legislation to regulate the use of tobacco. In 1997 and 1998, the tobacco industry contributed $4.6 million in soft money to Republicans and another $900,000 to Democrats, according to Public Citizen.

That same year, Congress passed a 10-year $316 million tax break for the casino gaming industry. During the 1998 and 1996 election cycles, the industry gave some $6.5 million in soft money to the two major parties.

Senate Considers Soft Money Ban

Sens. John McCain, R-Ariz., and Russ Feingold, D-Wis., who authored legislation to outlaw the controversial class of contributions, say a soft money ban would prevent people like Denise Rich — the ex-wife of pardoned fugitive Marc Rich who gave some $1.2 million, much of it in soft money, to various Democratic causes — from influencing, or at a minimum appearing to influence, elected officials.

"It's time for the parties to stop being a conduit for soft money," McCain said at a news conference in front of the Republican National Committee headquarters this morning. "It's time to be a party of the people again."

The Senate today opened two weeks of debate on the legislation. Nyhart says enacting the bill would be a good first step.

"It would mean that no one could write a check for a million dollars to a political party and then expect something in return," he says.

McCain-Feingold is but the latest in a string of attempts to curb the influence of money in the political system. Soft money itself is a byproduct — critics call it a "loophole" — of election reforms enacted in 1974 in the wake of the Watergate scandal.

When the Supreme Court struck down many of the newly imposed limits on campaign contributions and expenditures two years later, it upheld the right of political parties to raise unlimited amounts of money — now known as soft money — and spend it on "party-building activities." Those activities include running so-called "issue ads" that skirt restrictions on campaign spending by stopping just short of explicitly advocating the election or defeat of political candidates.

Even if soft money were made illegal, many fear the political parties and the monied special interests seeking to influence them would simply find another loophole.

"Money will always speak in politics," concedes Nyhart.

Clemente says unions and corporations would simply boost their own levels of political advertising.

"If we ban soft money now, we may see a bunch of money go into issue ads," he says. "It will be a new explosion in increased spending."

A provision of the McCain-Feingold bill seeks to block organizations from running issue ads in the 60 days prior to a general election. Critics say the measure is unconstitutional and would not hold up in court.

"We don't like the degree to which these outside groups get involved in our campaigns … We would like to control these campaigns," Sen. Mitch McConnell, R-Ky., the leading opponent of McCain-Feingold, said during this afternoon's floor debate. "But under the First Amendment, the campaigns [are] not ours to control."

President Bush, who also opposes the bill, is urging the Senate to pass legislation banning soft money contributions from corporations and unions, but allowing donations from individuals to continue.

Sen. Chuck Hagel, R-Neb., has offered a rival bill that would cap soft money contributions at $120,000 per year.