IN an editorial yesterday we discussed the central cause of the impasse in congressional attempts to enact campaign-reform legislation. Namely, that the bills passed this year in the Senate and House, providing for spending caps in congressional races, appear to favor incumbents (mainly Democrats) over challengers (mainly Republicans).The First Amendment prohibits mandatory campaign-spending caps, since campaign spending has been deemed a form of candidates' speech. But voluntary caps, coupled with federal matching funds as an inducement to compliance, might succeed in draining off some of the money sloshing around in American politics, which threatens to corrupt the system. Critics counter, though, that the spending would just be driven off-books. And caps could prevent challengers from undertaking levels of spending necessary to offset the many advantages enjoyed by incumbents, including name recognition, ready access to the media, and free mailing privileges. Meaningful campaign reform has to make races more competitive as well as reduce the clout of deep-pocketed special interests. Here are a few ideas for ways to further both goals: * Spending caps may be okay, provided that they are not so low as to handcuff challengers. Also, they should be calibrated to the population of districts and states and to media costs in different markets. * There should be an exception to spending caps for small contributions (e.g., under $250) from residents of a candidate's own district, or state in the case of Senate races. Candidates should be permitted to spend any amounts thus raised, since the money comes from potential constituents who are participating in the political process without expectation of special favors. * While current limits on individual contributions to candidates should remain, challengers should get an exception for "seed money" raised early in a campaign - say, amounts up to $10,000 received more than six months before the election. Early money is more valuable to a challenger than late money (and most incumbents have been filling their war chests since the previous election). The gifts would have to be disclosed, and incumbents could make a campaign issue out of them. But challengers could get a running start. * Provide challengers with free mailing credits, to offset incumbents' franking privilege. * Require the media, especially radio and television, to grant all candidates designated amounts of advertising time. Most other democracies do this. If reasonable government compensation of the media is required, the money would be well spent. * Perhaps reduce donations by political action committees, but don't eliminate them. These are among the most public and easily accounted for political contributions. PAC money shouldn't be driven into murky channels. * Put much tougher limits on "soft money" contributions to purportedly independent voter-education and get-out-the-vote groups actually controlled by candidates. Yes, this ambitious "wish list" faces long odds. Too bad, because it just might help restore both integrity and competitiveness to congressional races.