CAMPAIGN FINANCE
A Law Survives. Now, Let's Subvert It.
By JILL ABRAMSON New York Times
JUSTICES Sandra Day O'Connor and John Paul Stevens invoked the spirit of the late House Speaker Tip O'Neill in their exceedingly pragmatic majority opinion upholding the two pillars of the McCain-Feingold campaign finance legislation.
Mr. O'Neill, a godfather to many political axioms, made the famous observation that money is ''the mother's milk of politics." Even as the two justices hailed the new law as an effective tool to fight the appearance (or reality) of political corruption, they conceded in their 5-to-4 decision that ''Money, like water, will always find an outlet."
Indeed, just as the stock market has usually already reacted to a Federal Reserve rate increase or cut by the time it actually happens, leading fund-raisers from both parties had already adjusted to life under the new McCain-Feingold bill before the Supreme Court decision. They had also already found inventive new loopholes and outlets for big contributions and new ways to amplify their own role in the political culture.
Neither Senator John McCain, Republican of Arizona, nor Senator Russell Feingold, Democrat of Wisconsin, both realists as well as reformers, thought their bill would shut down the political money hunt. Its major provisions aim to slow the chase and clean up the system by banning the unregulated contributions to the national political parties known as soft money and by restricting certain kinds of political ads in the period immediately before elections. They did believe that ending the soft money race, which has pumped hundreds of millions of dollars from wealthy individuals, corporations and labor unions into party committees in recent elections, would end the spectacle of members of Congress spending their energies directly soliciting huge individual, corporate and union donations.
Five justices and even some political insiders, who had grown increasingly weary of and cynical about the endless chase for unrestricted political gifts, agreed.
''Money does always find a way," said Karen Watson, a Washington lobbyist who has raised money for candidates from both parties, ''but it makes the democratic process more fair."
Trevor Potter, a former chairman of the Federal Election Commission and Republican backer of the McCain-Feingold bill, said: ''Washington is now different because members are not out there asking for these donations. Many corporations viewed soft money as protection, and there feels like there is less pressure. That's different."
Although soft money contributions can no longer go to the parties, other entities, operating in theoretical independence from them, have been set up by prominent Democrats and Republicans as receptacles for unrestricted donations. Many of these organizations, known as 527's for the section of the tax code that regulates them, do not even have to disclose their donors.
Soft money was always just one spigot of the fundraising pipeline and shutting it off has moved the highest pressure points elsewhere in the system. Before McCain-Feingold, the most powerful figures in the campaign finance firmament, besides Washington lawmakers, were fund-raisers like the Julie Finley, a former co-chairman of Team 100, once the top donor club of the Republican Party, and Terry McAuliffe, who greatly expanded the role of big Democratic Party donors during the Clinton era.
Now, Mr. McAuliffe, as chairman of the Democratic National Committee, is busily retooling his party's fundraising machine to be more adept at collecting small checks through the mail and the Internet under the new rules of the game. It is a painful transition: the Democratic Party had become addicted to soft money, while the Republicans have enjoyed a robust small donor program for decades, even as the ranks of Team 100 swelled. Operating under the strictures of McCain-Feingold this year, the Republican Party has enjoyed a 2-to-1 fund-raising edge over the Democrats, a wider gap than in the recent past. (Doubtlessly, control of the White House and the Congress has also been a big magnet for Republican contributions).
The new kings and queens of the hard money realm are the bundlers, people who have fund-raising networks and can raise huge numbers of contributions in $2,000 increments. This fund-raising can be even more time-consuming than calling donors and asking for one large check. So, the upholding of McCain-Feingold does not actually mean that politicians and their finance chairmen will necessarily spend less time raising money.
Will there be substantially less money in the system? That is hard to predict. The parties, which were the chief beneficiaries of soft money, may take a large hit. But President Bush's squad of Rangers, fund-raisers who pledge to collect at least $200,000 for his re-election campaign, are already outpacing the brisk levels of 2000, and Howard Dean has used the Internet to become one of the biggest Democratic money-raising stars ever.
The system was last overhauled in such a dramatic way in 1974, after Watergate. Those changes, which included the public financing of presidential elections, restrictions on individual contributions to candidates of $1,000 (raised to $2,000 by McCain-Feingold), stiff disclosure requirements for all donations, and the creation of the Federal Election Commission to enforce the rules, remained in force for quite a while.
But in 1988, the soft money floodgates opened, and both parties were suddenly awash in $100,000 checks from all manner of special interests and wealthy donors. (Fund-raisers for Michael Dukakis first exploited an ignored loophole in the new rules, approved with little fanfare by the F.E.C. in the late 1970's, and the Bush campaign quickly followed suit.) With each new presidential election, the amounts of soft money raised by the political parties grew like a nuclear arms race. The loophole came to overshadow the law.
It took more than a decade for a bipartisan consensus to develop to close the loophole. With McCain-Feingold now blessed by a closely divided Court, critics of the system are going after new targets, including the F.E.C., which has long been criticized as toothless. Democracy 21, a group that helped push g McCain-Feingold, is seeking to abolish the paneli, and Senators McCain and Feingold want to replace it with a new agency.
Those displeased by last week's decision include, perhaps predictably, Mr. Feingold's three would-be Republican challengers for the Senate. The law "makes a bad system even worse," one challenger, Robert Welch, a Wisconsin state senator, told the local media. "In only a few months on the books, Russ Feingold's pet project has done nothing but increase the money and influence of special interests."
He said the chief beneficiaries were lawyers charging clients money to find loopholes in the law.
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