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Show CAMPAIGN FINANCE REFORM David A. Owen ry or defeat of any one candidate but rather attempt to "educate" the public about a specific issue. We will return to the topic of issue advocacy later in this paper, as it is at the center of the "soft money" reform debate. Table 2 Federal Contribution Limits Contribution By a Person By a Political ________________________Action Committee To a candidate $1,000 per election $5,000 per election To a political party (national committee) $20,000 per election $15,000 per year To a political action committee $5,000 per year $5,000 per year Overall limit $25,000 No limit Source: Ronald J. Hrebenar, Matthew J. Burbank, and Robert C. Benedict. Political Parties, Interest Groups, and Political Campaigns. Boulder, CO: Westview Press. 1999. p.136 The term "soft money" came about in response to the stringent limits placed by the Federal Elections Commission (FEC) on the amounts individuals, political action committees, labor unions, and corporations may contribute directly to federal candidates (commonly referred to as "hard money). Table 2 summarizes current FEC rules. An individual may contribute a maximum of $1,000 per cycle, which includes both the primary and general election, thus amounting to a total of $2,000 per election. However, individuals are prohibited from contributing an aggregate in excess of $25,000 per cycle unless it is to their own campaign in which case they can contribute an unlimited amount. Political Action Committees (PACs) that qualify as multi-candidate (meaning they meet certain heightened restrictions based on how many people contribute to them as well as how many candidates they contribute to) are able to donate up to $5,000 per cycle or a total of $10,000 an election to a federal candidate (Ortiz 1998, 64). While it may come as somewhat of a surprise to most people who are unfamiliar with the specifics of campaign fund-raising laws, current Federal Elections Commission rules prohibit corporations from making direct donations to candidates for federal offices. The basis for our current system of campaign financing laws is the Federal Election Campaign Act (FECA) of 1974 which, among other things, created the Federal Elections Commission to regulate fund-raising activities by federal candidates. While this law specifically prohibited corporate contributions to candidates for federal offices, it contained one very important loophole which opened the door some 4 years later to the rise of "soft money": FECA prohibited any non-individual contributions to federal candidates and/or parties with the exception of donations to party apparatuses for the purposes of "party building" activities, as was mentioned above (Corrado 1999, 175). This alone, how- ever, did not authorize unlimited contributions from corporations, unions, or individuals to national parties. The FEC in 1978, in a case involving the Republican Party of Kansas, reversed a previous decision and ruled that parties could use soft (or non-federal) funds to finance a share of their voter drives, so long as they allocated their costs to reflect the federal and nonfederal shares of any costs incurred. "The decision thus opened the door to the use of nonfederal money on election-related activity conducted in connection with a federal election" (Corrado 1999, 172). Following the FEC's ruling in the case of the Kansas Republican Party, what constituted financing "party building" activities was interpreted on the basis of state campaign finance laws, which differed from state to state. In addition, campaign financing laws on the state level are notoriously more lax than on the federal level. For instance, under current Utah state code, not only are there no limits on the amount of contributions individuals may make to candidates for state offices, but there are also no prohibitions restricting corporate or labor contributions either. Utah has arguably the most relaxed campaign finance laws of any state in the nation. That being said, as of 1978, federal parties were allowed to pour soft "non-federal" dollars into the non-federal coffers of individual state parties, to be used according to state laws regarding campaign financing (which generally were very loose or, in some cases, non-existent). In fact, to date, the only federal laws on the books with regards to the practice of national party committees raising unlimited amounts of "soft money" were established after an arduous rule-making process in 1990 that, Included considerable consultation with political party lawyers and accountants. Under these rules, all party committees raising and spending soft money in conjunction with federal elections must file regular disclosure reports of their contributions and disbursements with the FEC. These reports must identify any contributors who give more than $200 to soft money accounts or party building-fund accounts. Monies raised and spent by state and local committees that are unrelated to federal election activity, however, do not have to be reported to the FEC. These funds remain subject to the reporting requirements of applicable state disclosure laws (Corrado 1999, 174-75). Given the availability of virtually unlimited "non-federal" campaign dollars following the 1990 law, the major parties began raking in previously unseen and unbelievable amounts of soft dollars. The figures in Table 1 raise one essential question: where does all the money go? The answer is quite simple, and surprising. Flashback to the summer of 1996. President Clinton was running for reelection amid growing concerns about his personal life, his record on the economy, and on the heels of the massive Republican landslide in the 1994 midterm Congressional elections which switched control of Congress to the GOP for the first time in decades. Enter soft money, and loads of it. The Democratic National Committee spent millions of dollars of "non-federal" money promoting the "issue agenda" of the Democratic Party as well 58 |