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DNC Dumps Ban on Donations From Legal Aliens

By Ruth Marcus
Washington Post Staff Writer
Sunday, January 11, 1998; Page A04

The Democratic National Committee decided yesterday to abandon its self-imposed prohibition on taking money from legal permanent residents of the United States and announced that it had trimmed its debt from $13.4 million to $9.4 million.

The ban on taking money from permanent residents, who are legally permitted to make political donations even though they cannot vote, was adopted by the DNC in the wake of controversy during the 1996 elections over contributions from foreign donors. The DNC ended up returning more than $1 million in questionable donations collected from such donors.

The DNC's executive committee approved a recommendation to lift the ban at its meeting here.

The DNC has already junked its pledge to limit donations to $100,000 and is considering getting rid of a ban on contributions from U.S. subsidiaries of foreign corporations – the final self-imposed rule adopted after the 1996 election in hopes of quieting the uproar over the party's activities.

DNC General Chairman Roy Romer said the prohibition on contributions by legal permanent residents was adopted "to try to convince . . . the people in America that we're not going to have foreign money in our system." But, he said, "frankly the policy was misdirected" because legal permanent residents are "citizens-in-waiting" who should be encouraged to participate.

DNC national chairman, Steve Grossman, said that, unlike the ban on contributions of $100,000 and up, which was costly to the party, the change on legal permanent resident contributions was "not an issue of money. This is an issue of principle."

The rule had angered some important Democratic constituencies, including the Hispanic and Asian communities, and party officials hope the change will help them generate turnout among those voters in the 1998 elections. "Once in a while, good policy and good politics intersect," Grossman said.

At the meeting, the party leaders were also told that, after a marathon season of fund-raising headlined by President Clinton, the DNC's debt is down at least $4 million from the June 30 level.

Finance Chairman Alan Solomont, who announced that he is stepping down, said the party's year-end financial report with the Federal Election Commission would show a net debt (the amount it owes less its cash on hand) of no more than $9.4 million. In contrast, the Republican National Committee had a net debt at year's end of $4.7 million.

The national party's appetite for cash to erase its debt has been so voracious that New York State Democratic Chairman Judith Hope has complained that the state party is having difficulty raising the necessary money and asked for a share of the national party's take.

Grossman said the party in recent months has been sharing 10 percent of its proceeds from large events with state parties and was completing an arrangement with state parties in which he said that percentage may be higher.

The Democrats' financial woes grow out of the 1996 election and the questions about its fund-raising activities. In addition to having to return about $3 million, the party has incurred $11 million in legal expenses and faced a hard time prospecting among skittish and angry donors.

Though Republicans have also experienced fund-raising difficulties, the disparity in the two parties' financial situations was apparent to Democrats during the off-year elections last year, when Republicans significantly outspent Democrats in the New Jersey and Virginia gubernatorial contests as well as in the race for an open House seat on Long Island. The GOP won all three contests.

© Copyright 1998 The Washington Post Company

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