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'Hard' and 'Soft' Money: A Crucial, Sometimes Fine Line

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By Ruth Marcus
Washington Post Staff Writer
Friday, September 5, 1997; Page A16

To anyone not steeped in the arcane details of election law, the difference between "hard" and "soft" money may seem like the most niggling of technicalities.

But for the Democratic Party, the distinction took on great importance before the 1996 election, when the party – scrambling to compete with the far greater financial resources of the GOP and to bankroll a massive television advertising campaign – found itself chronically short of hard dollars.

And for Vice President Gore, the difference between hard and soft money could be critical to his political future. The revelation that some of the money Gore raised for the DNC ended up in hard money accounts has prompted the Justice Department to formally begin considering appointment of an independent counsel in the matter.

Hard money is difficult to raise and easy to spend. It has to come from individuals – not corporations or labor unions – and the maximum that can be contributed to a party is $20,000. But unlike with soft money, there are few restrictions on its use, and the party can spend its hard dollars directly on support of federal candidates.

Soft money is the other way around. It can be raised from corporations and unions as well as individuals, with no limits on the amounts they can give. However, soft money is not supposed to be used in federal elections, only for general activities such as get-out-the-vote efforts or to pay administrative expenses.

In the 1996 elections, the DNC found a new way to use soft money – funding an advertising campaign that touted the achievements of the Clinton administration – that essentially obliterated the difference between hard and soft money. The soft money was used for ads that to all intents and purposes looked like Clinton-Gore campaign commercials, simply lacking a tag line at the end to urge President Clinton's reelection.

But one critical distinction remained: The Federal Election Commission's rules still required the advertising to be funded with a combination of hard and soft money. Generally, the DNC needed to come up with about one-third of the advertising costs in hard dollars.

The FEC rules led directly to both the DNC's hard money shortage and the predicament in which Gore now finds himself. To solve its hard money difficulties, the DNC simply took large checks contributed by individuals, and – apparently without receiving the required permission from the donors – plunked some of the funds into its hard money accounts. Some of that "reallocation," as it is called, took place with the money raised by Gore in a series of fund-raising calls in 1995 and early 1996; more than $120,000 brought in by Gore ended up in hard money accounts.

That presents a legal issue for the vice president. A federal law makes it a crime to solicit campaign contributions in federal offices. Until this week, Attorney General Janet Reno had taken the position that Gore's activities didn't trigger application of the independent counsel law because the prohibition on soliciting campaign contributions doesn't include soft money.

Once it became clear that Gore – knowingly or not – had raised hard money as well, Reno's stance changed, and the Justice Department began the first stages of deciding whether to seek appointment of an independent counsel.

The department's legal analysis, and perhaps Gore's presidential prospects, are likely to turn on what Gore knew about what he was doing. The law isn't clear, but it appears that Gore would have to have known he was raising hard dollars to be in violation, experts said. White House and DNC officials have said Gore was not aware that the contributions he solicited were put into hard money accounts.

The independent counsel statute further complicates the picture. During the Reagan administration, Attorney General Edwin Meese III cited lack of intent to violate the law in declining to seek appointment of an independent counsel in cases involving the Environmental Protection Agency. In response, Congress tightened the independent counsel statute to restrict the attorney general's leeway in such circumstances. Now, there must be "clear and convincing evidence" of lack of intent for the attorney general to refuse to go forward.

"The appointment of an independent counsel will probably depend on how [the contributions] got into the hard money account and what Gore knew," said James M. Cole, a former prosecutor in the Justice Department's Public Integrity Section, which is conducting the review of Gore's actions. The clear and convincing showing of lack of intent, he said, "can be difficult to establish, but not impossible."

Election lawyer Kenneth Gross, who has represented Republicans and Democrats, said the hard money revelation "complicated things but . . . I don't think it makes a sufficient legal difference. . . . In order to allege a felony you have to have a corrupt intent or willful misconduct and I think the vagaries of whether the DNC deposits the money into one account as opposed to another is a high technicality and I think it's credible the vice president would not know that."

Other lawyers differed. "It strikes me that it's virtually inevitable" that an independent counsel will be appointed, said Jan Baran, an election law expert who represents Republicans. While Gore's assertion that he did not know the contributions were being used as hard money "is a potentially important issue . . . in assessing whether to prosecute someone for a particular crime," Baran said, "that is not necessarily an excuse to be taken at face value to avoid the naming of an independent counsel."

Gore's backers make other arguments that he committed no crime. They say it's not clear the prohibition on soliciting contributions covers the president and vice president; that the law was intended only to prevent shakedowns of government workers on the job; and that, under a 1909 Supreme Court ruling, the solicitation of a contribution is deemed to take place where it is received, not where the solicitation is made.

In their support, they cite a recent analysis by the Congressional Research Service.

"The language of [the law] might appear broad enough to apply to all situations where one would initiate a request for a campaign contribution for a federal election in a federal building or office," the analysis said. "In more than 100 years since its enactment, however, the law appears to have been neither specifically construed by any court nor applied in any prosecution to cover one who solicits a campaign contribution from a federal building by letter or telephone to persons who are not located themselves in a federal building."

Staff writer Peter Baker contributed to this report.

© Copyright 1997 The Washington Post Company

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