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Playing With Fire On 'Soft Money'

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By E. J. Dionne Jr.
Tuesday, March 16, 2004; 7:00 PM

Harold Ickes has put reform-minded Democrats in a spot -- and on the spot.

Ickes, a shrewd former top lieutenant to Bill Clinton, is the maestro behind the Media Fund, a group that is raising big bucks from wealthy donors to run ads against President Bush. Ickes was once described by an adversary in the Democratic Party as "a nuclear weapon." The adversary meant it as a compliment.

Democrats committed to reforming the political money system worry that this time Ickes has aimed his nukes at laws that restrict the flow of large and unregulated contributions into the political realm.

The reformers have been on a high ever since the Supreme Court upheld the 2002 Bipartisan Campaign Reform Act, which shut off the flow of "soft money" -- those big, unlimited contributions -- to the political parties. Thanks to the new law, usually referred to by the names of its Senate sponsors, John McCain and Russ Feingold, contributions to candidates are limited to $2,000 per person, with limits set higher for political action committees and parties. Politicians are forbidden from raising soft money. That eliminates the spectacle of elected officials asking for huge donations from the lobbyists and business people whose interests they affect.

Along comes Ickes with a new idea. Under Section 527 of the tax code, political committees get special tax treatment as not-for-profit operations. Ickes created a special 527 committee to raise money for ads directed at Bush. With Bush saturating swing states with his own media spots, Ickes asked, shouldn't Democrats find a way to respond?

So Ickes traveled the country in search of money from rich Democrats. Billionaire George Soros was happy to help with a reported $5 million. Other wealthy Bush foes are said to have given almost as much.

Ickes argues that the McCain-Feingold law imposes no new regulations on committees such as his. That is technically true. Feingold himself insists that the reform law is still working because "it is preventing people in public life from engaging in this kind of fundraising" -- Ickes has raised his own money -- and because the parties are raising a lot more in smaller contributions.

But Ickes's claim is also beside the point. The real issue is whether his group should be required, under the law as it existed before McCain-Feingold, to register with the Federal Election Commission because it is a group whose main purpose is to defeat a candidate for federal office. If Ickes had to register, federal law would make it harder for him to raise and spend those big contributions. Ickes insists that the law does not require him to register. But as Feingold, a Democrat, notes, it's hard to see that the Media Fund has any other purpose than beating Bush.

"My view is that groups that claim a tax exemption because their primary purpose is to influence elections should be required to register as political committees with the FEC, unless their activities are entirely directed at state and local elections," Feingold told the Senate Rules Committee last week.

Under earlier Supreme Court rulings, Ickes and his allies could accomplish much of what they want without running so close to (or over) the edge of the law. Nothing stops Soros from sponsoring his own independent advertising campaign, and unions have the capacity to run "issue ads" between now and September.

But there is a larger point: If Ickes succeeds, does anyone doubt that Republicans will find more than enough rich people to finance groups on the Ickes model -- and probably outspend Ickes? The Media Fund is also based on a premise that no longer applies. Many Democrats assumed that their nominee would accept federal matching funds during the primaries and would thus be unable to raise money in the pre-convention period. But John Kerry turned down the matching funds and, learning from Howard Dean, is doing well in courting large numbers of smaller contributors.

A lot of Democratic reformers would prefer not to talk about the Media Fund. They're grateful for its work and don't want to challenge efforts to beat Bush on the basis of what they see as a close legal question. Such Democrats say that many Republicans who have opposed limits on campaign fundraising are now being hypocritical in going after Ickes. That's true but, I fear, shortsighted. My hunch is that in the long run, the country -- and, yes, especially Democrats -- will regret opening a new loophole in the campaign money system so soon after some of the more notorious of the old ones were shut down.


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