Senate Panel Backs Vote Fund Curbs : Politics: The bill, offered by Democrats, would limit spending and PAC donations. It is likely to cause a partisan fight.

The Senate Rules Committee Thursday approved a Democratic measure to limit campaign spending and special interest influence in congressional elections, opening what is certain to be a contentious partisan battle over election financing reform.

The measure is certain to be altered drastically when it comes to the Senate floor later this month, and leading proponents of campaign finance reform saw the panel’s 7-3 party-line vote as the first step toward forging a bipartisan compromise.

“I’m more optimistic than ever that we will pass real campaign reform,” declared Sen. David L. Boren (D-Okla.), who has been leading the drive to change the current rules.

The Senate last considered campaign finance reform in 1988, but Republicans defeated a Democratic bill by filibuster.

However, Senate support for reform has grown considerably on both sides of the aisle as a direct result of the so-called Keating Five scandal, in which five senators--including Alan Cranston (D-Calif.)--are accused of improperly interfering with a government investigation of Lincoln Savings & Loan after receiving large donations from Charles H. Keating Jr., owner of the Irvine, Calif., thrift.

Although members of both parties--including President Bush--and leaders in both houses of Congress are advocating enactment of a campaign finance reform bill, Democrats and Republicans remain deeply divided over what should be done. Even the Democrats, whose leaders are heading the drive for such legislation, cannot agree on many of the major provisions.

In the House, Democratic and Republican leaders recently reached a deadlock in their efforts to achieve a bipartisan compromise on campaign financing. As a result, Democrats are beginning to draft a bill that will be brought to the floor later this year, but not before the Senate acts on its proposals.

The bill approved by the Senate committee was co-written by Senate Majority Leader George J. Mitchell (D-Me.) and Boren, who characterized the measure as a “vehicle” for compromise. He said that he is already engaged in serious negotiations with senators on both sides of the aisle to develop a measure that would be acceptable to a majority.

Boren said he hopes to offer a bipartisan substitute to the Boren-Mitchell bill as soon as the Senate opens debate on the measure, but he refused to predict the provisions of such a compromise.

The committee-approved bill would impose state-by-state limits, based on population, on total campaign spending by Senate candidates and on the PAC contributions they receive. If any candidate did not agree in advance to comply with “voluntary” limits, his opponent would be granted public funding.

In California, for example, no Senate candidate could spend more than $8.2 million or receive more than $825,000 from PACs. In 1988, Sen. Pete Wilson (R-Calif.) spent an estimated $17 million on his reelection--more than $2 million of it from PACs.

Many Republicans oppose the bill’s limits on spending because they fear that it will hamper their efforts to regain a majority in both the Senate and House. However, the GOP supports restrictions on PAC funding because PACs give primarily to incumbents and thus have been a source of strength for Democrats.

Not surprisingly, many Democrats oppose strict limits on PAC funding.

Another highly controversial provision of the Boren-Mitchell bill would close a loophole in federal law that permits congressional and presidential candidates to raise and spend unlimited amounts of so-called “soft” money by funneling it through state party organizations for such activities as voter registration and get-out-the-vote drives.

In acknowledging that most Republicans and Democrats oppose a ban on soft money, Boren said for the first time Thursday that he would be willing to consider a compromise being proposed by Democratic state party chairmen. The compromise would limit--but not ban--soft money.

The Boren-Mitchell bill seeks also to halt “bundling,” the system whereby one prominent giver will persuade members of his family and business associates to make coordinated donations to a particular candidate and thus circumvent the $2,000 limit on individual donations to a candidate.

Both parties support restrictions on bundling, which was used by Keating to contribute large sums to the campaigns of Cranston and the four other senators currently under investigation by the Senate Ethics Committee.