Big money and politics: a primer


October 15, 1999

With total fund raising for the 2000 election expected to top $3 billion, the Senate began consideration yesterday of a new proposal to overhaul the nation's campaign finance system. The House of Representatives recently approved a measure designed to curb the influence of big money in politics. And political reform is becoming a hot issue in the presidential campaign trail.

Throughout the decade of the '90s, campaign finance has been fought over in Washington almost every year. But the result has been a legislative stalemate and widespread confusion over the terms of the debate.

Concepts such as "hard" and "soft" money have made this "an arcane world for the average American," Sen. Richard J. Durban, an Illinois Democrat, remarked yesterday.

In an effort to clear away some of the mystery surrounding the issue, Paul West, of The Sun's Washington Bureau, provides a thumbnail guide to the jargon of money and politics.

Hard money

Because it is subject to strict federal limits, this money is the hardest to raise (which is how it got its name). The current rules, set out in the post-Watergate political reforms of the mid-1970s, succeeded, for a time, in outlawing large campaign donations.

An individual may give a candidate no more than $1,000 per election. The maximum amount of hard money an individual may contribute to all candidates and political parties is $25,000 a year.

Corporate and union donations to candidates are prohibited.

Political action committees (PACs) are set up by businesses, labor unions or other special-interest groups to solicit donations from their employees or members, who may give up to $5,000 per year. Each PAC, in turn, may contribute up to $5,000 to a candidate per election.

Since their peak in the 1980s, the number of PACs has declined; PAC money now represents a shrinking share of the total amount of money in politics. These days, interest groups are turning increasingly to other, more lucrative ways of funneling dollars into the political system.

Hard money remains the largest single source of campaign cash in American politics. Texas Gov. George W. Bush, blowing past all previous fund-raising records, has already piled up more than $56 million in hard dollars, from 135,000 individual donors. His final total could reach, or conceivably top, $100 million by next year.

Soft money

This is money given to political parties, rather than individual candidates. It is the fastest-growing category of campaign cash, because it is the quickest route for raising large sums of money. There are no legal restrictions on the amounts that may be given.

Corporations and labor unions, which are forbidden to give directly to candidates, may give as much soft money as they want. Wealthy individuals can also direct unlimited amounts to the political parties' soft-money accounts.

A key difference between hard and soft money is the way it can be used.

Soft money was conceived as a way to help the parties pay for get-out-the-vote drives, bumper stickers and other "party-building" activities, including generic TV commercials to "Vote Republican" or "Vote Democratic."

Increasingly, however, this has become the loophole through which tens of millions of dollars are channeled indirectly to presidential and congressional candidates, effectively bypassing the caps that were supposed to limit how much money candidates could receive from a single source.

Issue ads

The newest, and conceivably most popular loophole in 2000, are campaign commercials disguised as issue ads. They often attack a candidate around a particular issue (abortion, for instance, or gun control) without specifically calling for the candidate's defeat.

Sponsors of these ads don't have to disclose the sources of their funding. Corporations, labor unions and even foreign nationals, who are not permitted to contribute to American politics in other ways, may sponsor issue-ad campaigns, along with political parties, which often use soft money to do so.

Matching funds

During the primary season, contributions to presidential candidates are matched by the federal government (up to a maximum of $250 per contribution) until the candidate reaches the national spending ceiling. In 2000, that limit is expected to be about $40 million.

The presidential nominees of the Republican and Democratic parties will also receive about $68 million each for the general election, if they agree not to raise any private contributions for their campaign. The Reform Party nominee will be eligible for a federal subsidy of about $12 million.

This year, Bush became the first presidential front-runner to decline federal matching funds. As a result, he does not have to abide by the spending limits that apply to other candidates.

One of his Republican rivals, Steve Forbes, also isn't subject to spending limits, thanks to a 1976 Supreme Court ruling that frees candidates who finance their own campaigns from restrictions on how they use their own money.


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