Republican 'Soft Money' Groups Find Business Reluctant to Give

Republican operatives attempting to compete with Democratic groups for large sums of unregulated presidential campaign funds have run into a number of roadblocks, including reluctance on the part of many corporations to contribute to new independent groups.

The Federal Election Commission last month cleared the way for liberal groups to continue raising millions of dollars of unrestricted contributions, and now GOP groups that have held back are joining in. But in a sign of the problems GOP leaders are encountering, one of the key Republican groups, Progress for America, failed in its bid to recruit James Francis Jr. to become chairman.

Francis ran the Bush 2000 campaign's "Pioneer" program, which produced 246 men and women who each raised at least $100,000. PFA organizers sought out Francis because his close ties to the administration would have lent enormous clout and prestige.

"It gets down to, 'What does it look like?' And it might not look like I was independent," Francis said, adding that he could have complied with laws requiring total separation from the Bush campaign, but critics would still have raised questions.

Meanwhile, election law lawyers said corporations are showing significant reluctance to get back into making "soft money" donations after passage of the McCain-Feingold law that went into effect on Nov. 6, 2002.

Unlike political committees regulated by the FEC, "527s" -- named for the section of the tax code that governs their activities -- have no restrictions on the sources or amount of contributions, and some have received gifts of $5 million or more. Republicans, encountering corporate unwillingness to give to GOP 527s and seeking to capitalize on the Bush campaign's unprecedented fundraising success, urged the FEC to clamp down on the these groups' activities.

"I would say that on the whole the corporate business community has been very reluctant to support 527s," said GOP lawyer Jan W. Baran.

Kenneth A. Gross, an election lawyer, said he has told his corporate clients "to proceed with caution." Prospective donors of soft money should be sure to get affirmative statements that the organization asking for money will not coordinate activities with federal candidates in violation of the law, and that the organization will abide by the rules governing political communications, he said.

Overall, pro-Democratic 527 organizations have raised at least $106.6 million, according to PoliticalMoneyLine, three times the $33.6 million raised by pro-Republican groups in this election cycle.

The Democratic advantage disappears, however, when these figures are added to the amounts raised by the national party committees and the presidential campaigns. Then the GOP pulls far ahead, $557.6 million to $393.6 million.

Lobbyist and former House member Bill Paxon, who is vice president of the Leadership Forum, a Republican 527, acknowledged that the GOP 527 effort will not be able to match the Democrats'.

Paxon said donations in the $25,000 to $50,000 range have started to come in from at least a dozen corporations, including Pfizer Inc., Union Pacific Corp., Bell South Corp. and International Paper Inc. In 2002, those four companies gave far more to Republican Party committees, more than $2.6 million.

"We don't expect to be posting huge numbers at the end of this filing," covering the period through the end of June, Paxon said, "but we have laid the groundwork."

Democrats have set up at least seven new 527 organizations. These groups are on track to raise $175 million to $300 million for "independent" issue ads and get-out-the-vote activities.

Financier George Soros, Progressive Corp. Chairman Peter B. Lewis and Hollywood writer-producer Stephen L. Bing have each given more than $7 million to such groups as the Media Fund, America Coming Together and MoveOn.org, which are working to defeat President Bush.

Privately, organizers of the Republican 527s said they have been banking on an outpouring of corporate support to defray start-up costs and to get their programs up and running. Corporate and union money cannot be spent on television ads mentioning federal candidates for 60 days before the general election, although it can be used for voter mobilization.

Signs of corporate wariness toward making soft money contributions could be found in a number of places.

A Wall Street Journal survey of the 20 top businesses giving soft money before the new law went into effect showed that more than half of the 20 companies are resisting pressure to give, and only one, Bell South, would say affirmatively that it plans to make corporate contributions.

Baran said that in addition to corporate wariness toward making soft money contributions, the success of the Bush campaign and the Republican National Committee has worked as a disincentive to giving to the 527s:

"A lot of folks on the business side are looking at the $2oo million the Bush campaign has raised, and the millions the RNC has raised, and they aren't sure the funding [of the 527s] is all that necessary."