Question and Answers
on Soft Money
Q: What is soft money?
A: Soft-money contributions are unlimited donations
to the political parties from corporations, labor unions and wealthy
individuals. There are no limits on the amount of soft money an
individual, corporation or union can give to the parties. Six-figure
soft money contributions are now entirely commonplace. In theory,
soft money is used for “party-building” activities such as
voter registration and get-out-the-vote drives. In reality, soft
money is increasingly used to pay for a barrage of party-financed
negative attack ads that often depress voter turnout.
Q: Has the soft money
loophole always existed?
A: No. The soft-money loophole was opened by a 1978
Federal Election Commission (FEC) ruling designed to strengthen
political parties by allowing them to use unrestricted funds for such
activities as voter registration drives and get-out-the-vote efforts.
Soft money was used primarily for this purpose throughout most of the
1980s, but by the 1992 election cycle, clever attorneys for the
parties determined they could use soft money to pay for massive
amounts of television attack ads while remaining within the letter,
if not the spirit, of the law.
The soft-money loophole is
abused by both parties:
Soft money raised in 1996
election cycle Percent increase over 1992
Republicans:
$138.2 million
178 percent increase
Democrats:
$123.9 million
242 percent increase
Soft money raised in 1998
election cycle Percent increase over 1994
Republicans:
$93.7 million
144 percent increase
Democrats:
$78.8
million
84 percent increase
Q: Is the use of soft
money on the rise?
A: Over the last three presidential cycles, total
soft money receipts have grown exponentially. In the 1988 election
cycle, the parties raised a combined $45 million in soft money; in
the 1992 cycle, that figure nearly doubled to $82 million, and in the
1995-96 cycle, combined soft-money contributions tripled to an
astounding $262 million. During the 1997-98 election, the parties
raised $172.5 million in soft-money contributions, which was a 112
percent increase over the 1993-94 cycle.
Q: Doesn't the
Constitution prohibit the Congress from banning soft
money?
A: No. There is absolutely no constitutional
barrier preventing Congress from closing the soft money loophole. In
Buckley v. Valeo, the Supreme Court held that the government has a
compelling interest in combating the appearance and reality of
corruption, an interest that justifies restricting large campaign
contributions in federal elections. Raising constitutional questions
about banning soft money is simply a red herring, a way for
politicians to preserve the soft-money system without publicly
defending six-figure contributions. Fortunately, the Court in
Buckley clearly rejected the notion that limits on campaign
contributions violate the First Amendment.
Q: Who gives
soft-money donations?
A: During the 1995-1996 election cycle,
corporations were the single biggest source of soft-money donations
for both Democrats and Republicans. Labor unions also were big soft
money givers, almost exclusively to Democrats.
Tobacco industry giant Philip Morris was the single largest
soft-money contributor in the 1996 election cycle, weighing in with
over $3 million in contributions, mostly to the Republican party. Not
surprisingly, these donations coincided with a push by tobacco
companies for congressional approval of a settlement that could
shield them from smokers’ lawsuits, potentially saving them
billions of dollars.
In the 1998 election cycle, Philip Morris was once again the largest
single contributor of soft money to the political parties, giving
$1.7 million. The financial services industry was the leading
soft-money sector, with contributions of $28 million. In the 105th
Congress, both the tobacco and financial services industries were the
focus of key bills under debate.
Q: What effect does
the soft money loophole have on the public financing of presidential
campaigns?
A: The soft-money loophole has effectively
undermined the system of partial public financing of presidential
campaigns established in the wake of the Watergate scandal. During
the 1996 election, both President Clinton and Senator Dole directly
participated in the raising of enormous amounts of soft money for
their respective parties. The parties subsequently used this money to
pay for a barrage of sham issue advocacy television advertisements
that allowed the Clinton and Dole campaigns to ignore spending limits
they had agreed to in exchange for public financing of their
campaigns.
Unless the soft money loop is closed, it will be a simple matter for
candidates to evade the spending limits associated with public
financing of presidential campaigns.
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