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  •   A New Conduit Created for 'Soft Money'

    By Susan B. Glasser and Juliet Eilperin
    Washington Post Staff Writers
    Sunday, May 16, 1999; Page A1

    At least 20 influential members of Congress have created unconventional fund-raising operations that offer a legal way to avoid the limits on donations and the reporting requirements of post-Watergate campaign finance laws, according to lawyers, lobbyists and congressional aides.

    So-called leadership political action committees have long been used as a vehicle by officeholders to collect contributions and dispense the money to their allies. Most of these PACs have focused on raising contributions known as "hard money," which under federal law cannot exceed $10,000 per donor each election cycle or come from corporations or labor unions.

    In a little-known but increasingly common twist, members of Congress of both parties have begun using these committees to collect unlimited corporate and individual contributions – known as "soft money" – with minimal, if any, scrutiny. They are permitted to do so because they don't spend the money directly on congressional and presidential campaigns, which would fall under the purview of federal election law.

    Still, the money can be used for a variety of political activities, including contributions to state and local campaigns, and to pay for political travel, consultants and polling. And in a number of instances, politicians do not have to report the source of their contributions at all.

    The roster of politicians using this money includes Senate Majority Leader Trent Lott (R-Miss.) and Minority Leader Thomas A. Daschle (D-S.D.) – who in the past has been a critic of such contributions – as well as rank-and-file House members such as football star-turned-representative Steve Largent (R-Okla.). In perhaps the largest such contribution, Sen. John D. Ashcroft (R-Mo.), exploring a presidential bid last year, accepted a $400,000 corporate check for his PAC from the House of Lloyd, a Missouri direct-sales marketing firm.

    In recent years, critics of the campaign financing system have focused on soft money, the large, unregulated contributions collected by the two major political parties. Under federal law, the parties are allowed to collect such unlimited contributions from corporations, labor unions and wealthy individuals as long as they are not spent directly on behalf of specific candidates.

    But the aggressive collection of soft money by members of Congress through their leadership PACs represents a new and – critics say – troubling phenomenon. Although political parties are required to report how they raise and spend their money to the Federal Election Commission, there is no such requirement for a leadership PAC, meaning that the contributions are always difficult and sometimes impossible to trace.

    Indeed, some say the whole purpose of this kind of fund-raising is to offer big donors anonymity. A leadership PAC started by House Majority Whip Tom DeLay (R-Tex.) was originally registered in Virginia – taking in one notable 1996 example $42,500 in corporate funds from oil giant Texaco – but has since shut down operations in the state, sources said, because it required too much disclosure.

    Asked last week to reveal the PAC's current donors – or even the overall amount of soft money it raised and spent last year – DeLay's PAC official, Jim Ellis, declined. "We want to protect our donors," he said. "We'll comply with the letter of the law, but we don't disclose what we don't have to."

    Such PACs also allow politicians to collect checks for amounts far beyond what they can get for their personal campaign committees, which are limited to $2,000 per donor each election cycle. "If you're not ashamed to raise a load of money, it's a very effective tool," said a senior Republican aide on Capitol Hill.

    Dan Meyer, a lobbyist who was chief of staff to Speaker Newt Gingrich (R-Ga.), called the practice "an evolution" responding to "the practical fact that soft money's easier to raise."

    But advocates of tightening the campaign finance laws regard the entry of leadership PACs into soft money as a dangerous development. "To the extent this now becomes a vehicle for soft money," said Fred Wertheimer, a prominent critic of the campaign financing system, "it blows apart every other provision designed to prevent huge financial favors being given to members of Congress by people seeking favorable government decisions."

    Because of the limited disclosure requirements, it is impossible to determine with any precision how many members have their own soft-money operations. But interviews with several dozen election lawyers, lobbyists and congressional aides produced more than 20 examples of such fund-raising by lawmakers.

    Embraced more by Republicans than Democrats, these fund-raising entities are set up through a variety of legal methods. Some are registered in Virginia, where unlimited contributions from corporations and individuals are legal.

    A few members of Congress have quietly spent soft money for years, mostly to advance presidential ambitions or aspirations to statewide office. But the list has grown rapidly. In the Senate, top Republicans raising soft money for their PACs include Majority Whip Don Nickles (Okla.) and GOP Policy Committee Chairman Larry E. Craig (Idaho). In the House, recent converts include Reps. Jennifer Dunn (R-Wash.) and David Dreier (R-Calif.), chairman of one of the panels that oversees campaign finance laws.

    Among Democrats, both congressional Kennedys – Massachusetts Sen. Edward and Rhode Island Rep. Patrick – collect soft money. The BACKPAC of Sen. Bob Kerrey (D-Neb.) raised $1.3 million in soft money last year, operating in 36 states as he considered a presidential bid.

    On Capitol Hill, the soft-money operations are a subset of an even broader change in the financing of House and Senate elections – the almost daily proliferation in the number of leadership PACs. Fueled by anxiety about a highly competitive 2000 election that will require record amounts of cash, Republicans and, increasingly, Democrats have turned to such federal PACs as an effective way to channel additional funds to key contests.

    In the 1998 election cycle, the Center for Responsive Politics, a Washington-based group that monitors campaign financing, found that $10.8 million from leadership PACs went to congressional candidates – 72 percent of it to Republicans.

    Overall, there are now close to 100 member-linked PACs that raise and spend hard money, including 35 in the Senate alone, according to a Washington Post survey. No fewer than 15 have started in just the last few months. One freshman, California GOP Rep. Doug Ose, was so eager he registered his leadership PAC even before he was sworn in. Many more members are considering starting them, including, sources said, Sen. Christopher J. Dodd (D-Conn.) and longtime PAC opponent Sen. John F. Kerry (D-Mass.).

    While also a growth industry, the scope of the soft-money fund-raising is even harder to pinpoint. Only one campaign finance watchdog group, Public Disclosure Inc., keeps a list of member PACs with "nonfederal" accounts – and that includes just seven examples. Just a hint of soft-money activity turns up in the FEC's computer system, revealed by the few member PACs that choose to pay some of their overhead expenses with soft money.

    And even for those PACs, the FEC reports offer no information about the source of the money. Sen. Kennedy's Committee for a Democratic Majority, for example, listed $73,000 in soft-money spending on his FEC reports last year. But he was not required to provide any details about the sources of the funds, which an aide said totaled about $100,000 since he started raising the money last July.

    What disclosure there is suggests that some lawmakers are taking big-dollar checks from businesses and individuals with a keen interest in Congress's legislative agenda. Lott's New Republican Majority Fund, for example, is registered in Virginia and reported contributions last year from Democratic Silicon Valley venture capitalist John Doerr ($20,000), Netscape CEO James A. Barksdale ($5,000) and US Tobacco Public Affairs ($10,000).

    In some cases, the PACs raise soft-money contributions that go directly into the national parties' coffers; where the money comes from does not have to be revealed. For example, Rep. Kennedy's Rhode Island PAC, despite its name, spent no money in his state last year. Instead, spokesman Erik Smith said, the $70,000 in soft money Kennedy raised went almost entirely to the Democratic National Committee and the Democratic Congressional Campaign Committee that Kennedy now chairs.

    Lawyers who advise members of Congress on soft-money fund-raising agree there has been heightened interest recently. But they are divided on the best legal route for the fund-raising. Some, such as Republican Benjamin Ginsberg of Patton Boggs, say that registering in states such as Virginia is the best way – in part because it provides at least some disclosure. But Democrat Robert F. Bauer, whose firm, Perkins Coie, advises 15 congressional Democratic leadership PACs (four of which raise soft money), insisted such registration is unnecessary if the intent is to raise soft money on a national level.

    Either way, there's no disagreement about the reason for the increased fund-raising: lawmakers are panicked about the rapidly rising costs of campaigns at a time when outside interest groups and the political parties have begun spending millions of dollars on "issue advocacy" advertising that can be paid for with soft money and is not subject to FEC limits.

    There are endless variations – one Democrat called them "flavors of money" – to the ways in which members are raising and spending soft money. Daschle, for example, is raising it but promises a self-imposed cap of $10,000 and voluntary disclosure of all contributions, according to adviser Michael Meehan. Sen. Kennedy does not take corporate contributions but will accept unlimited union and individual checks.

    Some members raise the bulk of their funds in one state where it is fully disclosed, even if that activity flies under the national radar. For example, Indiana Rep. David M. McIntosh (R), a possible gubernatorial contender, raised $373,969 through his state PAC last year, including big checks from out-of-state donors such as Wyoming financier Foster Friess and his wife, who gave $10,000.

    Dunn raised $394,000 in soft money last year through her PAC, the Washington Fund. Most of it, an aide said, went to support the "Permanent Majority Project," an effort to secure more of the women's vote for Republican congressional and presidential candidates. This year, the PAC has already raised more than $480,000 in soft money, the aide said.

    Other variants on congressional soft money include:

    Dreier, the chairman of the Rules Committee, has his own leadership PAC, the American Success PAC. Set up last year to promote "free trade" candidates, according to an aide, it raised $86,000 in soft money.

    Sen. Sam Brownback (R-Kan.), a backbencher who came to the Senate after just one term in the House, recently announced his own fund-raising effort – the Restore America PAC – and an aide said it will register in Virginia and engage in soft-money fund-raising. "He hasn't ruled out a future leadership position," the aide said.

    The West PAC of Rep. George Radanovich (R-Calif.), which is the political arm of the western caucus in the House, is actively considering raising soft money to fund "issue ads," an idea that may be one of the last unexplored frontiers of leadership PACs.

    Another westerner, Craig, has set up the Alliance for the West, which has already raised $150,000 this year – $50,000 of that in soft money – according to an aide. The PAC, the aide said, hopes to bring the Republican presidential candidates to the West and "educate" them about western issues.

    Largent's new PAC, Leadership for America's Future, aims to raise money to identify and support "younger conservative folks," said aide Craig Richardson. A major draw on the campaign circuit, Largent traveled to close to 100 districts last election cycle and the PAC will help finance that.

    A big fund-raiser at next year's Super Bowl is planned, Richardson said, as is a national direct mail effort. So far, the group has raised more than $100,000, 30 to 40 percent of that in soft money, he said.

    "Given today's weird rules, it's just one more available tool," said lobbyist Ed Brookover, the former political director of the House GOP campaign committee. "As complicated as that is, you're going to use all the arrows in your quiver."

    Staff researchers Madonna Lebling and Ben White contributed to this report.

    © Copyright 1999 The Washington Post Company

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