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NATION
SEPTEMBER 6, 1999 VOL. 154 NO. 10

Dialing Back The Dollars

The Republicans--and Democrats too--are awash in soft-money contributions. But calls are mounting for an end to the deluge of campaign cash

BY VIVECA NOVAK/WASHINGTON

You'd think the people who collect checks over at the Republican Party would be having a terrific summer. After all, the money is coming in like bats to a barn at daybreak. In the first half of the year, the party hauled in $29.4 million in "soft money"--unlimited contributions that are used for getting out the vote, putting "issue" ads on the air and covering other big expenses. That's about 45% more than the party raised in the same period four years ago. Isn't it time to pour the margaritas, toast the revving economy and give thanks to the party's ultra-motivated electorate?

Well, maybe not. For one thing, the Democrats are doing nearly as well. In six months, their party committees have raised $24.2 million--up 130% from four years earlier, a far greater jump than the G.O.P. has made. What's worse, there's the prospect of rain on the whole dollar-driven parade. The black cloud comes in the form of a proposed ban on soft money, among other campaign-finance reforms being promoted by some in the Republicans' own camp, principally Senator John McCain and Representative Christopher Shays. These advocates of reform have long tried to shut the loophole through which as much as half a billion dollars in soft money could flow this year, most of it from Big Business and other special interests eager not to be forgotten when key legislation comes up for a vote. This fall they'll try again, and their chances for success are improving.

What's more, the campaign against soft money--which is given to the party rather than to specific candidates--is being aided by an unlikely new interest group, big donors. Corporate leaders are starting to balk at a system that many view as little more than a party-led protection racket. Deloitte Touche Tohmatsu International, which gave more than $225,000 in the '98 election cycle, mostly to the G.O.P., is likely to cease giving soft money this fall after a vote by its board of directors, predicts chairman Ed Kangas. Several other large companies are expected to do the same. About 100 corporate and academic trustees of the business-funded Committee for Economic Development, a policy group that includes leaders from such companies as Mobil, Honeywell and Sara Lee, have signed on to a proposal to ban soft money and pass other reforms--and have sent a pointed letter to that effect to House Speaker Dennis Hastert.

"The pressure to give soft money can be quite intense," says Kangas. "And the more a business is impacted by federal regulation, the more it feels it doesn't have a choice." While some donors give to candidates who support specific causes--Democrats who want a higher minimum wage, say, or Republicans who favor tort reform--many behave like AT&T. The telecommunications giant has doled out $305,350 to the Democrats in the first six months of the year and an additional $527,050 to the Republicans, cozying up to both parties at a time when the company is battling over access to high-speed cable lines and other communications issues.

A few companies have already closed their vaults. General Motors, Monsanto, AlliedSignal and Ameritech swore off soft money in 1997 and have largely stuck to their decision. Wall Street buyout pioneer Jerome Kohlberg has formed an advocacy group that backs candidates who favor campaign-finance reform, and has assembled a cadre of retired corporate chieftains, plus mega-investor Warren Buffett, in support of the effort. "This is the first time a significant number of people in the business community have said enough is enough," says Charles Kolb, president of the Committee for Economic Development.

On Capitol Hill, campaign-finance reform remains the crusade that can't quite succeed yet just won't die. Last year Shays' bill, co-sponsored by Democrat Martin Meehan, passed the House by a wide margin, even drawing 61 Republican votes. It is likely to pass again when it is brought up in September, despite attempts by the Republican leadership to kill it with parliamentary maneuvering. The real hang-up is in the Senate, where majority leader Trent Lott has promised that a bill co-sponsored by McCain and Democrat Russ Feingold will be voted on by Oct. 12. The measure got 52 votes last year, a majority but well short of the 60 votes needed to break the filibuster mounted by their main foe, Republican Mitch McConnell.

The pro-reform coalition is a fragile one, which may be tested by several proposed compromises. One would ban soft money but drop the other main provision of the bills, restrictions on "issue ads." These ads, run by the parties and by outside groups, usually stop just shy of telling voters to support or oppose a candidate, thus escaping most election-law oversight. This week, for instance, the conservative Americans for Tax Reform is running a $4.2 million televised ad campaign touting the Republicans' tax bill in seven states with vulnerable G.O.P. Senators, and other groups are running ads targeting legislators on the proposed Patients' Bill of Rights. If soft money is banned but issue ads are left unregulated, many experts believe, donors will simply route their money to outside groups, which will run such ads largely as surrogates for the parties. Another compromise proposal would ban soft money but increase the limit on direct "hard-money" contributions from $1,000 to $3,000--a deal that would probably draw the opposition of some Democrats.

Three presidential candidates--McCain and Democrats Al Gore and Bill Bradley--have staked out high-profile positions in favor of reform. Yet even they admit that while voters claim to be revolted by the system, reforming it does not seem to be at the top of their to-do list. "Voters have developed such low expectations of politicians that they don't think anybody is credible on campaign reform," Bradley told TIME. "It's kind of the ultimate triumph of interest-group politics that we've reached the point where people say it won't even work."

Still, the mere chance that Congress might turn off the soft-money spigot has made G.O.P. operatives extremely edgy. Though the legislation is intended to favor neither party, they fear it will fall hardest on Republicans, who consistently raise more in soft money. In July the party delivered computer presentations headlined "Soft Dollars: What It Means for Our Party" to each Republican member of Congress. Party chairman Jim Nicholson pressed his case at an Aug. 4 meeting of House Republicans, and party finance-staff members were dispatched recently to give members "education" sessions. And while the Republican National Committee strongly denied a report in the New York Times that it had started a category of $1 million donors, it has continued to recruit "Season Pass" holders--those who give $250,000 every two years--and "Team 100" members, who ante up $175,000 over four years. (Democrats have similar donor groups, such as "Leadership 2000" members, who have promised $350,000 for next year's election.)

Even if Congress moves to restrict the money flow, some experts say, the effect might not be what the reformers hope for. "Almost exactly the same amount would be spent but in different ways," predicts University of Virginia veteran campaign-finance watcher Larry Sabato. Companies, trade groups and unions would fund more grassroots organizing, phone banks, voter-registration drives and ads, among other things, he asserts. Assuming that ever creative political pros will always find--or make--a hole in the dike through which more money can pour, some argue that trying to limit contributions isn't the best approach. Yale law professor Ian Ayres and Stanford economist Jeremy Bulow proposed last year in an article in the Stanford Law Review that donors should be allowed to give as much money as they want, with one new rule: the money would come in through a blind trust, so the candidate could not find out who gave it. Just as politicians don't know who voted for them, they would not know who contributed to their campaign--and thus whom they "owe." It's a radical idea, but in this season of excess, it just might catch on.

The Top Donors By Party

DEMOCRATS
--Communication Workers of America
Seeking support on issues like raising the minimum wage $525,000

--American Federation of State, County and Municipal Employees
Like C.W.A., wants Gore and Dems to make organizing workers easier $460,000

--Walter H. Shorenstein and his pac
San Francisco real estate magnate and powerful party fund raiser $315,198

--Williams Bailey law firm
Personal-injury lawyers want protection from tort reform $315,000

--AT&T
Wants support in its fight over access to high-speed cable lines $305,350

REPUBLICANS
--AT&T
Is contributing to both parties for help on contentious telecom issues
$527,050

--American Financial Group and Carl Lindner
His Chiquita bananas are at the center of a trade dispute with Europe
$500,000

--Philip Morris Cos.
Wants protection against more smoking regulation and lawsuits $378,467

--United Parcel Service
Applauds G.O.P.'s bid to delay new workplace health standards $363,559

--Michael Kojaian and Kojaian Management Corp.
Real estate mogul and a fund raiser for Bush $300,000

Common Cause, 1/1/99-6/30/99