Setting Limits: New Campaign Finance Law

KWAME HOLMAN:

In a single night during the 2000 election year, the democratic party collected $26 million in unregulated– so- called soft money– contributions from wealthy donors at a Washington gala. Some individuals gave hundreds of thousands each.

SPOKESMAN:

We don't care what's in your wallets, we care about what's in your hearts.

KWAME HOLMAN:

The donations have come to dominate political funding.

SPOKESMAN:

My friend and yours, George W. Bush.

KWAME HOLMAN:

Days earlier, in Washington, then-candidate George W. Bush helped collect $21 million in soft money from a small number of donors for the Republican Party. But on Wednesday, President Bush quietly signed into law the death warrant for soft money collected by the political parties. The new campaign finance law bans national parties from collecting soft money. The ban begins in November. Starting then, contributions to the parties will be limited to $2,000 per donor. From a headquarters near the Capitol Building, Terry McAuliffe runs the Democratic National Committee.

SPOKESMAN:

Any good action?

SPOKESMAN:

Lots of it.

SPOKESMAN:

Good. Dennis, how we doing? Ready to beat some Republicans?

KWAME HOLMAN:

As the party's main political and fundraising operation, the Democratic National Committee is preparing to live without the large, unregulated contributions from individual donors, which totaled $100 million for the DNC during the last election.

TERRY McAULIFFE, Chairman, Democratic National Committee:

I knew this thing was going to happen, so we have been working very hard here to build a small donor base to the party. It took the DNC 20 years, from 1980 to 2000, to get 400,000 direct mail donors. Just last year we went from 400,000 to 850,000 just in one year. Our e-mail addresses in one year have gone from 70,000 to 780,000, so we have been working very hard in here. We're going to make up that $100 million, we're going to do it with federal money, and we're going to do it with small donors.

KWAME HOLMAN:

McAuliffe, like most Democrats in Congress, favors the soft money ban, against the general opposition of Republicans.

TERRY McAULIFFE:

It's the right thing. I mean, it will take politics back to the grass roots. It will get big money out; it will get a lot more people involved in the system. It will get… force us as a political party to go out and get a lot more smaller checks, which is the right thing.

KWAME HOLMAN:

Three blocks away at Republican national committee headquarters, McAuliffe's counterpart, Marc Racicot, suggested why members of congress finally voted to ban large, unregulated donations.

MARC RACICOT, Chairman, Republican National Committee:

There was an appearance problem. I'm not certain that there was a real problem, but there certainly was an appearance problem, and I can tell you, having been a candidate and an officeholder, that you are particularly sensitive to these perceptions.

KWAME HOLMAN:

Like the Democrats, Republicans mostly purchased election-year TV ads with their soft money, but it funded other campaign activities as well, and Racicot says its loss be felt.

MARC RACICOT:

It will diminish the capacity, quite frankly, of the national parties and local state parties to be as active as they have been in the past.

SPOKESMAN:

Clay Colder in Georgia has posted $680,000. Which is good. And that's an open seat, so we have a good chance of winning that seat.

KWAME HOLMAN:

Upstairs in the same building, political operatives for Republicans in the House of Representatives geared up for this year's congressional races. Unlike the democrats, Republicans long have maintained a list of donors who can afford to contribute up to the new $2,000 limit that arrives next November. But congressional committee legal counsel Don McGahn says such contributions, known as hard money, won't fill the gap left by the ban on unlimited soft money.

DON McGAHN, National Republican Congressional Committee:

That supposes that we've been sandbagging on our fundraising, that somehow there is all this hard money out there that we haven't raised, and now that you've banned soft, we're going to miraculously find new money. I don't think there is new hard money out there. We simply will not have the same kind of funds that we currently have. And we will not be able to get the Republican message out in a way that we have in the past handful of elections, at least. It certainly will cause irreparable harm to the party committees, and that's Republicans and democrats.

KWAME HOLMAN:

Across town, the coming ban on soft money was met with smiles at the headquarters of Common Cause, one of the advocacy groups that lobbied for the ban for years. Chief lobbyist Meredith McGehee:

MEREDITH McGEHEE, Common Cause:

Who this legislation favors are average Americans that don't have the ability to go out and give $1 million in one day as a soft money contribution, as we've seen under the current system. I think this is a system that will favor the party that most nimbly and quickly understands that you're rewarded for involving people and the grassroots as part of your political party, and not become, as the parties are essentially right now, soft money Laundromats.

SPOKESMAN:

You want money?

KWAME HOLMAN:

The political parties also use the large, unregulated contributions to help fund their congressional candidates, so the coming soft money ban will cut off a potential source of campaign revenue. To help congressional candidates compensate, the new law doubles the $1,000 limit on contributions the candidates collect on their own. Maryland Democratic Congressman Albert Wynn opposed the soft money ban because it could hurt the party's efforts to increase minority voter participation. He says increasing the contribution limit for congressional candidates also has a downside.

REP. ALBERT WYNN:

Well, it puts a premium on individual contributors who can contribute large amounts of money, up to $2,000. This bill certainly hasn't helped the poor, the working class individuals. It's probably reduced their clout. It's increased significantly the clout of the professional cadre in this country.

SPOKESPERSON:

Marge Roukema, too taxing – too liberal–

KWAME HOLMAN:

The other major provision of the new law tries to broadcast attack ads run against congressional and presidential candidates. It requires disclosure of the ad's sponsors and limits on their funding. But that provision could be struck down by the courts, leaving candidates at the mercy of attack ads.

REP. ALBERT WYNN:

I think the courts will strike down the provisions of the law that affect third parties independent groups, special interest groups from participating with advertising and the like. On the other hand, I think the restrictions against the other political parties will remain in effect.

KWAME HOLMAN:

For now, both parties are likely to raise unregulated political money up to the November deadline.