Money in politics: a new route

Campaign-finance law reduces the role of parties, but creates funding back-channels.

It took seven years and the most protracted legislative struggle since the civil rights movement to get a new campaign-finance bill through the Congress.

Now, the hard part begins.

After President Bush signs the new bill into law – as he has said he will – campaign-finance reform faces a legal challenge that is certain to go to the Supreme Court.

Its practical effect will also be partly shaped by how it is translated into specific rules by the Federal Election Commission (FEC), where two of six commissioners have publicly argued against the reform.

But ultimately its implications will likely be determined by the rough and tumble of high-stakes politics. In the end, its results may be neither as dramatic as supporters hope, nor as damaging as critics contend.

"The biggest change will be the removal of big checks from the political process, and perhaps the rebirth of grassroots political activity," says Marshall Wittmann, a a political analyst at the Hudson Institute. Coming shifts in the political landscape now possibly include:

• A decline in the influence of national party headquarters. Deprived by law of big, unregulated soft money donations, they may have less money to fund party activities and pass along to candidates.

• A rise in the influence of state party leaders. State parties will still be allowed to collect soft-money checks of up to $10,000 per contribution, under the law. Their position in the political pecking order may correspondingly rise.

• A change in the definition of "fat cat." After the campaign-finance law takes effect following this fall's election, the most courted donors may no longer be rich individuals or corporate leaders willing to write six-figure checks on their own. Instead, the true "fat cats" may be the so-called "bundlers" – people who have the contacts and skill to elicit hard-money donations of up to $2,000 apiece from many individuals.

If nothing else, that means political contributions may now be more difficult to track.

"The new focus will be on the bundling of many large, but not enormous, contributions – the [$2,000] contributions coming from the wage earner, their spouse and their children," says Sheila Krumholz, a researcher at the Center for Responsive Politics, which tracks political spending. "That's the most challenging part of what we do."

• Uncertainty about the future of nonparty interest groups. The National Rifle Association, the American Civil Liberties Union, and other organizations may lose influence if the new law's restrictions on "issue ads" financed by nonparty money stand. But this provision of the law is sure to face tough scrutiny in the courts, as a possible infringement on free speech rights.

"I'm relatively confident this bill will be struck down in the Supreme Court," says Sen. Phil Gramm (R) of Texas.

The NRA and others may also get richer after the law takes effect, as some of the cash that used to flow into politics via the soft-money loophole flows to them instead.

If the new law works as reformers hope it will, it will drive nearly a half billion dollars of previously unregulated soft money out of American politics and attract voters back into it.

No more senators phoning up titans of industry for $1 million contributions, sponsors say. Instead, national political parties will get back to retail politics, ringing doorbells instead of wooing big donors who can write checks with five zeros.

But critics say there are many hurdles before such an outcome can be reached, and there may not be enough political will in the system to clear them.

Even within the reform community, there are doubts over whether this bill will be a net improvement, especially if key features are ruled out by the Supreme Court. Some worry that the increase in hard-money limits may encourage well-connected candidates to opt out of public financing altogether, removing one of the last restraints on runaway campaign spending.

"We really feel it's a step backwards, because of the increase in hard-money limits," says Adam Lioz of the US Public Interest Research Group, a watchdog organization. "The average American cannot afford to make a $200 contribution, let alone $2,000. We should be setting limits at what average Americans can afford to contribute to the process."

ONE of the unintended consequences of the new law could be to strengthen the influence of outside groups, at the expense of political parties. Even sponsors worry that unrestricted contributions could shift to outside groups, who could covertly coordinate with candidates their campaign strategy, newspaper ad buys, polling, or mass mailings.

"The commissioners on the FEC will need to use their intelligence and good sense to implement this law. If they do not, we'll be there to move more legislation," says Rep. Christopher Shays (R) of Connecticut, one of the leaders of the reform effort on the House side.

The law directs the FEC to come up with new rules within 270 days of its enactment, including procedures to prevent coordination between candidates and outside groups in violation of this law.

"The FEC got us into this soft money mess in the first place [by creating a loophole in the law in 1988], had opportunities to correct it, and did not," Mr. Shays says.

But in the end, the success of this reform will also depend on the willingness of those in the political culture to abide by its spirit. Some businessmen say they are already glad that the soft-money "shakedown" is nearly over.

"More than 50 percent of businessmen we surveyed said that the only reason soft money is given is to buy access or avoid some kind of adverse consequence," says Charles Kolb, president of the Committee for Economic Development (CED), a New York-based nonprofit group.

Harry Freeman, a retired executive vice president of the American Express Company and a member of the CED board of trustees, adds: "There will always be ways to get money into the political system. This law just makes it a lot easier to say no."

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