Soft Money - A Look at the Loopholes
Over time, the politicians and special interests found ways around the rules.
Federal election law, especially after a 1979 amendment, allows political parties to spend as much as they want as long as the money goes to "party building activities," such as "get-out-the-vote" efforts and generic advertising, such as "issue" ads.
This spending is called "soft money." Unlike "hard money," with its firm limits on contributions, soft money is largely unregulated. There is, in fact, no limit whatsoever on the amount donors can give to a party as long as it goes into soft money accounts.
The parties raised small amounts of soft money through the '80s and early '90s. Then, during the 1996 campaign, the amounts skyrocketed. The two major parties raised more than $262 million in soft money three times more than in 1992.
A June 1996 Supreme Court ruling contributed somewhat, by explicitly allowing political parties to spend as much as they want on congressional races as long as they act "independently" of the candidates.
But the boom in soft money was mostly a function of the vastly increased imagination with which the parties spent it. Much of the soft money raised by the national committees in 1996 about $120 million was spent on "issue ads," theoretically supporting party positions, rather than specific candidates.
Both parties violated the spirit, if not the letter, of the law. Starting in late 1995, the Democratic National Committee used soft money to pay for a months-long blitz of television commercials, basically indistinguishable from campaign ads, that bolstered Clinton in the polls.
The Republican National Committee at one point spent soft money on a 60-second commercial crafted by Dole’s advertising team with footage originally shot for the Dole campaign. The ad devoted 56 seconds to Dole’s biography and four seconds to the issues.
Essentially, soft money blew a hole through the reforms of the 1970s. By any reasonable interpretation, the campaigns no longer adhered to contribution or spending limits. They voraciously courted private donors the only difference being that money was sent to party committees, rather than their own campaign coffers. And the presidential campaigns still got their public financing.
Much was written about the power of political action committees, or PACs, in the 1980s. Leveraging contributions from many individuals or companies, PACs could exert enormous clout. Their contributions, however, were limited to $5,000 per candidate, or $15,000 per national party committee.
Those numbers seem almost quaint compared to the soft money figures. Cumulatively, PACs still contributed about $218 million to federal campaigns in 1996. But in 1996, individuals or corporations that wanted to influence an election could donate hundreds of thousands of dollars to a party committee. Unions could do much more than just chip in $5,000 from a PAC. They could spend hundreds of thousands of dollars on "issue" advertising targeting or supporting a specific candidate without any reporting requirement.
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