Last Hurrah for Big ‘Soft’ Spenders?

More than 5,000 of America’s corporate and political elite will pack the Washington Convention Center tonight, plunking down a near-record $25 million to dine with President Bush and, just maybe, influence the outcome of this year’s federal elections.

Tonight’s Republican House-Senate Presidential Dinner may well be notable for reasons even beyond the amount raised. It’s likely to be one of the last great gushers of soft money--the hundreds of millions of dollars in unregulated campaign contributions from once-prohibited sources that critics say have fundamentally corrupted American politics during the last decade.

In the hours leading up to the affair, the six-member Federal Election Commission will meet nearby to vote on regulations that purport to ban federal soft-money fund-raising after the Nov. 5 election.

The proposed rules have emerged from a bitterly contentious battle between the congressional authors of a hard-fought campaign-finance reform law and FEC commissioners over how the agency plans to translate the legislation into regulations.

An earlier set of regulations provoked protests from the law’s sponsors and reform supporters, who papered the FEC with written critiques and registered their complaints at an agency hearing this month. They accused the FEC of trying to weaken the law’s soft-money ban with narrow definitions and ambiguous language.

Soft money is generally defined as large political donations from corporations, labor unions and other special interest groups for issue ads and voter education. As long as the money is not used directly on an election campaign, federal limits on contributions don’t apply. But the use of this unrestricted money to influence voters and politicians through other means has ballooned into the hundreds of millions of dollars.

The FEC released a revised, 318-page final draft of the regulations this week that attempted to address some of the lawmakers’ most pressing concerns by tentatively expanding the definition of who and what will be covered by the soft-money ban.

But the revisions were written by FEC staff members and two commissioners. The soft-money feeding frenzy will not be over until the final vote of the full FEC board--if then. The commission includes members who have been openly antagonistic to campaign-finance reform for years. They and other opponents of the reform law believe it violates 1st Amendment rights.

FEC spokesman Robert Biersack cautioned Tuesday: “This is not the final word. The commissioners could conceivably change things at the table.”

In fact, two Republican commissioners posted amendments Tuesday night on the FEC Web site that they intend to introduce today. Reformers say the measures would continue to permit soft money to be used for attack ads on federal candidates and weaken other provisions of the ban.

Few analysts predict that the commissioners will approve the revisions as is, and most are bracing for fights, even if the final draft passes as written.

The commission’s three Republicans include two conservative intellectuals who have publicly opposed campaign-finance reform in the past: Chairman David M. Mason and Commissioner Bradley A. Smith. President Bush named the third Republican, Michael E. Toner, who was chief counsel to Bush’s presidential campaign and the Republican National Committee, as a recess appointment that bypassed Senate confirmation two days after the president signed the reform act.

Of the three Democratic commissioners, Karl J. Sandstrom, whose term has expired, represents a potential tiebreaker for the Republicans, having sided with them on occasion, according to independent and partisan analysts.

“The rules are better than they could have been, but still fall far short of what they need to be,” the reform act’s four congressional sponsors declared in a joint statement issued Tuesday night.

The sponsors were Sens. John McCain (R-Ariz.) and Russell D. Feingold (D-Wis.), and Reps. Martin T. Meehan (D-Mass.) and Christopher Shays (R-Conn.).

The revised rules, the statement said, “unfortunately leave open the question of whether two critical goals of the new law will be achieved--to prevent state parties from using soft money to influence federal elections and to prevent federal candidates and office-holders from raising, spending or receiving soft-money contributions.

“The FEC’s duty is to enforce and implement the law, not rewrite it or create loopholes in it. We will be watching carefully what the FEC does on these key issues.”

The battle lines are drawn largely over definitions. The bill’s sponsors and their supporters want the broadest definitions for the soft-money ban. The political parties, labor unions and independent groups have lobbied the FEC for narrower interpretations.

In its early version of the proposed rules published last month, the FEC defined “agent” narrowly, suggesting that only someone with written or oral authority to act for a federal party or candidate would be barred from taking and spending such contributions.

Such narrow definitions, the law’s sponsors argued in a recent letter to the FEC, “create loopholes through which the existing system could continue to operate.”

The final rules issued Monday expanded the definition of agent to include “implied” authority but stopped short of granting the sponsors’ appeal that it cover even “apparent” connections between a state committee and federal candidates or parties.

This week’s meeting won’t settle all the regulatory issues. For example, the board is not addressing changes to limits on individual campaign contributions to candidates and disclosure requirements. The FEC is voting only on soft-money reforms and deferring some of the most critical definitions.

Trevor Potter, a McCain advisor who served for more than three years as an FEC commissioner, said the commission has “postponed and placed in limbo the single biggest issue”: what rules should apply to the use of soft money by state parties for issue ads that effectively target or promote political candidates.

“One of the principal problems with the current system is that the state parties can take soft money and run what are indisputably federal attack ads,” he said.

Dubbed “sham issue ads” or “attack ads” by critics, such advertising has drawn the lion’s share of the soft money raised by the political parties in recent years--and the ire of soft-money critics.

The final rules signal that the commission will decide sometime in the future what kinds of issue ads or television commercials can be financed by the unregulated funds at the state level.

The loophole that has permitted the massive corporate and union contributions at the federal level in recent years was created in the late 1970s, when the FEC decided to permit corporations and unions--barred from donating directly to federal parties or candidates--to make contributions to national political parties for “nonfederal activities,” such as traditional voter registration drives.

But a study last year by the New York-based Brennan Center for Justice found that, after years of expansion of the rules by the parties and the FEC, “by far, the single greatest share of soft-money dollars spent by the parties relative to federal elections goes into electioneering advertising for or against candidates.”

The new reforms still face a challenge in the federal courts. Even so, McCain last week said he has a new target for reform: “the entire Federal Election Commission.” He said he is drafting legislation to revamp the agency.