Close the Soft Money Tap

In 2001, Princeton University Press published a book called “Unfree Speech: the Folly of Campaign Finance Reform.” It argued that more, not less, unregulated money was good for politics because it created a level playing field for everyone to spend and express his or her views: “Everything the typical American knows, or thinks he knows, about campaign finance reform is wrong.”

The author was Bradley A. Smith, the current head of the Federal Election Commission, which, despite its good-government name, has often upheld politics over probity.

The Supreme Court, in upholding the 2002 McCain-Feingold campaign finance reform act in December, specifically scolded Smith and his fellow commissioners for sanctioning loopholes over the years that permitted “national parties ... to use vast amounts of soft money in their efforts to elect federal candidates.” Soft money was a term invented to define a loophole in previous reforms that allowed unlimited contributions to political parties and “independent” political committees.

The FEC made a first step Wednesday toward regulating a different form of advocacy group that is opening another soft money loophole. Maybe the commissioners are starting to get the message: Stop obstructing reform.

The commission ruled that groups registered as federal political committees -- so-called “527 committees,” named after the IRS section under which they fall -- must use contributions subject to the federal limits on giving to individual candidates to finance ads that “promote, support, attack or oppose” a federal candidate. Such funds are called hard money. But it left open, and will have to address, the much wider use of soft money for ads that purport to be only about issues such as healthcare reform and for partisan voter mobilization. It was a well-funded 527 committee called Republicans for Clean Air that helped derail Sen. John McCain’s presidential candidacy in 2000. With conventional soft money gone, the 527s have become much more important.

It’s mainly the Democratic Party, which is less successful than the GOP at raising hard money, that’s been using the new groups to evade restrictions on unregulated contributions. Organizations like America Coming Together, which has received millions from George Soros, the financier and avowed foe of President Bush, and the Media Fund, which is headed by former Clinton White House Deputy Chief of Staff Harold M. Ickes, have each announced plans to raise and spend $95 million during the 2004 elections.

Because political parties themselves now aren’t allowed to receive soft money contributions from wealthy individuals, unions or corporations, the advocacy groups want to fill the gap. The commissioners must establish firmer rules for the fall presidential contest. They need to insist on complete transparency regarding donated funds and ensure that at least half of committee funds come from hard money.

When the Supreme Court reprimanded the FEC, it noted that the commission’s blase attitude about soft money had “invited widespread circumvention” of campaign finance laws. No system will be perfect, but that’s all the more reason for the commission to issue tough new rules in March. No matter what Bradley Smith believes about letting money rule politics, the FEC isn’t a vehicle for testing his personal theories.