'Soft money' and campaign finance

As a senior in his second semester, I am frequently asked on what I am writing my thesis. After I explain that I am analyzing the implementation of campaign finance laws, those considerate enough to feign interest almost invariably produce the same response: "Oh, campaign finance? There are just so many loopholes!"

I find the continued repetition of this exchange quite remarkable. Even people who have given very little thought to the funding of election campaigns know enough about money to understand that if two parties strongly wish to make a transaction, the funds will somehow travel, even through legal barriers. The smallest of holes in the dike is enough to let in the flood. And would-be reformers are like the poor little Dutch boy who sticks his finger in the hole, only to find another leak spring 10 feet off.

This metaphor captures the popular understanding of money in politics: that leaks keep springing in the legal barriers we construct. But it only tells half the story. Here's the other half: The hole that boy has plugged with his finger is actually the size of his head.

The hole is soft money, and the finger wiggling around in it is the Bipartisan Campaign Reform Act of 2002 (BCRA; or more familiarly, McCain-Feingold). The main section of the law was meant to close what has been termed the "soft money loophole" in federal campaign finance law, but in reality, that hole is too big to simply close.

"Soft money" is one of those imprecise terms that often gets used to describe things that it is not. It is correctly understood to comprise all funds raised and spent by a party or candidate that are not subject to federal campaign finance law. The money a political party spends on a state gubernatorial race would fall under this definition.

The problem has been that often money spent ostensibly for non-federal purposes has found its way back to influence federal elections. Because state and federal elections usually happen concurrently, many campaign activities will help both state and federal candidates. Think of a get-out-the-vote drive for a Republican gubernatorial candidate; if more Republicans go to the polls, the federal candidates on the ballot also benefit. So someone set on making a large donation to a set of national candidates could simply give it to the state party, which could then spend the money on activities that benefit the national candidates. And the favor would most certainly not go unnoticed.

The goal of McCain-Fein-gold was to prevent that sort of transaction from happening. federal contribution limits cannot work if the money can just be channeled through other means. So now, a great deal of state election activity has been federalized. If you run for Borough Council in 2004 and want to call people from your party to remind them to vote, you'll need to file with the federal Election Commission and adhere to all the federal laws. Those voters you get out will also be voting for President.

The problem with McCain-Feingold is that the only way to go far enough is by going too far. By definition, the only way to get rid of soft money entirely would be to federalize every election in this country, from President down to local school board. That outcome would be unnecessary and absurd. The new law simply federalizes those state and local campaign activities that have the potential to influence a federal election.

It may sound like a decent compromise, but in practice, it's almost impossible to draw the line. The new soft money regulations prevent money from going through the channels that have been the most popular, but they certainly do not close the loophole entirely. Our dike still has its hole.

Watch the state parties in the time leading up to the 2004 election. Watch the newest affiliates of the national parties. I guarantee we'll see increased fundraising activity as the money gets diverted, not eliminated.

The truth is, any law that tries to restrict the money used in federal elections will succumb to the soft money. The only plug big enough to fill the hole, the full federalization of every election in America, is one that no one wants to stick in there.

Some might say this is reason to give up on the project of trying to limit the role of money in politics. But the influence in wealth is too great to give up. More importantly, soft money only poses a challenge for one type of campaign finance law: mandatory contribution limits.

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A well-designed public funding program could eliminate the need for large private donations. Anyone serious about limiting the corrupting influence of big money in politics would be well advised to start exploring that option.