Über Geld spricht man nicht

A dollar is a dollar—except in politics, where some dollars are “hard” and some are “soft.” This hard-versus-soft distinction was invented by election lawyers and other political operatives looking for a way around the sweeping campaign-finance reforms ushered in by the Watergate scandal. It didn’t take them long.

Once again, repeating a pattern that recurs throughout the nation’s political history, the ink was barely dry on a reform measure before those it sought to regulate began to drill loopholes in it. Their end runs around the Watergate reforms, in fact, paved the way for, among other things, two of the most controversial but potent political advertising campaigns of the past two decades: the Willie Horton ad used against Michael Dukakis, the 1988 Democratic nominee for president, and the Swift Boat Veterans for Truth ads used against John Kerry, the 2004 Democratic nominee for president.

In revising the campaign-finance laws in 1976, Congress set limits on contributions to and from political action committees that were significantly higher than what individuals could give directly to a candidate. The limits, to the consternation of Common Cause and other reform groups, encouraged the rapid growth of political action committees. Corporations and labor unions, barred from giving directly to federal-level candidates and their official committees, quickly went the PAC route. By 1986 there were 4,157 such PACs registered with the FEC, compared with just 1,146 in 1974.

Beginning with a 1978 ruling, the Federal Election Commission interpreted the Federal Election Campaign Act in a way that allowed for money to be raised for grass-roots organizing, voter registration, and get-out-the-vote efforts, without regard to the FECA’s provisions regulating contributions. Then in 1979, Congress amended the law, strengthening the two major political parties by exempting the same activities from the FECA’s spending limits. These contributions almost immediately became known as “soft money,” as opposed to FEC-regulated “hard money.”

From the beginning, the FEC had focused on monitoring hard money raised to elect candidates directly, and restricted by law to that purpose. Now, with the parties and political committee free to raise funds for a wide assortment of “party building” and other political activities, the quest for unrestricted soft money turned into a stampede. The total of these unregulated funds climbed from perhaps $19 million in 1980 to $45 million in 1988, $86 million in 1992, $262 million in 1996, and $495 million in 2000.

Both parties found ways to exploit the soft-money loophole. The Democratic Party got a slow start in 1980, collecting an estimated $4 million in soft money, compared with the Republicans’ $15 million. But in 1988, the Dukakis campaign raised more than $20 million for the Democratic National Committee, which then spent it on Dukakis’s behalf, and the Democrats remained competitive in the soft-money race thereafter.

“Independent expenditures” became another early loophole, and committees sprang up that specialized in making them. Individuals or organizations could make expenditures as long as they were independent of a candidate or official campaign committee. Organizations that specialized in exploiting this loophole—chief among them the National Rifle Association—did not need any such communication or consultation to fill obvious needs, such as radio and television ads that were not being run by the campaign, or at least in the quantity desired, for lack of money.

The existence of such committees proved to be a mixed blessing. When one of them took on a campaign task that was unambiguously constructive, and in tune with the candidate’s or campaign’s objectives and manner of operation, that was all to the good. But some independent-expenditure committees that went off on politically destructive trails in conflict with the campaign saw their activities backfire. Then again, such groups could launch attacks on the opposition that would benefit a candidate while leaving him or her with “deniability,” plausible or otherwise.

Perhaps the most vivid examples were the so-called Willie Horton ad against Dukakis in 1988 and the Swift Boat ads against Kerry in 2004. Horton was a convicted killer in Massachusetts who, while on prison furlough during Dukakis’s tenure as governor, raped a woman. The ad, paid for by the National Security PAC, portrayed Dukakis as soft on crime and included a mug shot of Horton. The Swift Boat ad presented veterans alleging that Kerry did not deserve the combat medals he was awarded as skipper of a swift boat in the Vietnam War. In these cases, the formal campaigns—those of George H.W. Bush in 1988 and of his son in 2004—denied responsibility and the ads continued to be aired.

As the parties, corporations, and labor unions tirelessly worked to bring soft money to bear on presidential elections, the concept of “issue advocacy” also emerged. Committees paid for ads professing to push or oppose issues associated with a candidate without expressly calling for people to vote for or against that candidate. The Supreme Court’s Buckley v. Valeo decision had approved using soft money for such advocacy as long as it was devoid of such “magic words” as “vote for” or “vote against.”

The basic matching-funds system that was part of the post-Watergate reforms continued to function through the end of the century. Only one candidate, former Governor John B. Connally of Texas, in 1980, had opted out of the subsidy in order to raise unlimited campaign funds. He collected precisely one delegate to the Republican National Convention for the $12.7 million he spent. The GOP nominee and the eventual winner, Ronald Reagan, was a phenomenal fundraiser, but his campaign accepted matching funds that year and again in 1984 when he ran for reelection. So did winners George H.W. Bush in 1988 and Bill Clinton in 1992 and 1996.

Clinton and his vice president, Al Gore, came under intense scrutiny for having raised millions in soft money for the Democratic National Committee in 1996 under suspect circumstances. Clinton held events in the White House for political contributors, and Gore made numerous telephone solicitations from there. Allegations of putting the White House up for sale abounded, raising pressures on Congress for tougher campaign-finance legislation.

One result was a bipartisan reform bill aimed at soft money and issue-advocacy ads, sponsored by Senators John McCain of Arizona, a Republican (and now his party’s presumptive nominee for president), and Russell Feingold of Wisconsin, a Democrat. The legislation was sponsored in the House by Representatives Martin Meehan of Massachusetts, a Democrat, and Christopher Shays of Connecticut, a Republican. Over the next five years, various versions received increasing and eventually majority support in both chambers of Congress, but not enough to overcome threatened or real Republican-led filibusters.

All through this period, virtually all presidential candidates relied on the federal subsidy as the mother’s milk that sustained their quest. After John Connally’s feeble go-it-alone try, only Texas multimillionaire Ross Perot in 1992 ran on his own wallet as a general-election candidate. Publishing magnate Malcolm S. “Steve” Forbes did the same in the 1996 Republican primaries, with the same result.

After an initial period of public support for the $1 income-tax checkoff, and a growing number of major and minor candidates qualifying for the federal match, the demand for the matching funds began to outstrip the supply. In 1993, Congress raised the amount to $3, but taxpayer participation continued to slide. At the same time, a proliferation of states holding presidential primaries in the early months of the election-year calendar put increasing pressure on the fund, and especially on the timely distribution of money. Candidates increasingly had to resort to obtaining bank loans against the payouts due them. The system that began as a boon to presidential candidates became a headache, and a drag on their ability to run the best campaigns possible.