Campaign Finance Reform May Be Clinton’s Hardest Sell : Elections: President faces possible Senate GOP filibuster and Democratic revolt in House. A key obstacle is the ban on special interest money.

Never mind the budget battles, the fight over spending cuts and tax increases or the awkward stalemate over gays in the military. What could be one of President Clinton’s toughest confrontations with Congress is just beginning.

Threatened by a Republican filibuster in the Senate and a Democratic revolt in the House, Clinton’s proposals for radical reform of federal election financing laws face what even their most optimistic supporters concede is an uphill struggle of Sisyphean proportions. While most factions agree that the system needs reforming, Democrats, Republicans, academics and public interest groups disagree sharply over how it should be done.

In the Senate, where consideration of the measure resumes this week, conservative Democrats are negotiating with Republican moderates in the hope of putting together a coalition that can overcome a filibuster threat and push through Clinton’s campaign finance reforms more or less intact. Their chances appear to be slim. But even if they succeed, the reforms face strong opposition in the House, where Democrats are particularly dependent on the special interest money that the Senate bill would ban from future election campaigns.

“Expecting members of Congress to reform a system that got them elected and helps to keep them in office is a little like telling a crack addict to ‘Just say no,’ ” said a Senate Democratic aide who follows the reform debate closely.

For the Administration, the stakes are exceedingly high. The White House, unable so far to get its major initiatives through Congress, needs a legislative victory. And winning one on an issue championed by Ross Perot would be doubly pleasing.

Despite the likelihood of a rancorous battle, several new developments have transformed the old debate over campaign finance reform enough so that its advocates are guardedly optimistic that they can squeak a bill through the Senate.

The most important of the changes is the growing pressure from constituents to clean up what they perceive as a corrupt, money-driven system. In that view, one encouraged by Perot, Congress has fallen too deeply under the influence of the new bogymen of the political process--lobbyists, political action committees and other special interest groups.

“When most Americans think about what is wrong with the political process, they can think of only three things: money, money and more money,” said Sen. Wendell H. Ford (D-Ky.) one of the co-sponsors of the Clinton reform package. “Political reform must occur if we are to reconnect the American people with their government.”

The unprecedented turnover of House and Senate seats in last year’s elections, coupled with the success of term-limit initiatives in all of the 14 states where they were on the ballot, is cited by the reformers as a potent warning that lawmakers must “limit campaign spending and the influence of special interests” or face the possibility that “the American people will limit us,” Ford added.

Another catalyst for the debate has been the soaring cost of congressional elections and the pressure that puts on lawmakers to raise campaign funds. Campaign spending in House and Senate races last year totaled $678 million--a 52% leap over the 1990 election cycle. The average Senate seat cost nearly $4 million to win; the average House seat almost $600,000.

“The vicious race to raise money has made us part-time senators and full-time fund-raisers,” complained Sen. David L. Boren (D-Okla.), the chief Senate sponsor of the Democratic bill. Senators who “came here idealistic, wanting to render a public service . . . have been turned into panhandlers on the street, for sale to the highest bidder on the auction block because they have to figure out how to raise $4 million to get reelected.”

The Democratic proposals embraced by Clinton, which would become effective after the 1994 elections, are exceedingly complex but the core reforms fall into three broad categories:

* Spending limits and public financing.

To control costs, the Clinton proposals cap campaign spending at $600,000 per House race and at levels ranging from $1.2 million to $5.5 million for Senate races, depending on the voting-age population of each state. Because the Supreme Court ruled in 1976 that mandatory campaign spending limits were unconstitutional, the limits in the bill are nominally voluntary. To make them work, however, the bill contains a mixture of carrots and sticks to persuade candidates to accept them.

Candidates who accept the limits would receive partial public financing for their campaigns in the form of matching funds, special mailing rates and vouchers to buy discounted television air time. Candidates who face opponents who do not accept the limits would both receive additional federal funds and be allowed to raise more money themselves to outspend the non-complying candidate. Non-complying candidates, moreover, would be required to run a disclaimer at the end of all their advertising saying that the candidate had refused to accept voluntary spending limits.

To finance the public contributions, tax deductions now enjoyed by lobbyists would be repealed, with the higher taxes that they pay going to a federal election fund.

* Lobbyist limitations.

To reduce the influence of special interests, the Senate bill would ban all contributions to federal election campaigns by political action committees. It also would bar lobbyists from contributing to the campaign of any lawmaker they have lobbied within the 12 months preceding an election.

Anticipating that the ban on PAC contributions could be ruled unconstitutional, the Senate bill would set a fallback limit of $1,000 for campaign contributions by political action committees. The House version of the bill is less stringent in this respect, retaining the current $5,000 limit on PAC contributions.

* “Soft money” restrictions.

Contributions raised outside federal election rules but used by party committees to indirectly benefit federal campaigns, would also be more tightly controlled. To close the soft money loophole, party committees would be barred from using these unregulated contributions to fund generic campaign activities, such as get-out-the-vote drives.

“Bundling,” a powerful tool used by lobbyists and PACs that collect individual contributions and then present them to a candidate in one lump sum, also would be banned.

Proponents of these reforms say that their enactment would be the single most important thing Congress can do this year to restore Americans’ faith in government. But Republicans, who have their own set reform proposals, charge that the Democratic bill contains major flaws, as well as new loopholes.

Although the Senate debate has been highly partisan, the differences cross political lines. In the House, 47 Democrats have announced their opposition to public financing--enough to kill the bill if all the Republicans vote no--and many more House Democrats remain opposed to the PAC ban without which the bill probably cannot pass the Senate.