DNC Memo Advised Gore of 'Hard Money'By Edward Walsh
Washington Post Staff Writer
Thursday, September 11, 1997; Page A01
Senate Republicans yesterday seized on a newly released memo from a senior Democratic Party official in an attempt to show that Vice President Gore knew that some of the campaign donations he solicited from his government offices were "hard money," raising questions about the legality of Gore's conduct.
Clashing with Democrats over interpretations of law and language, members of the Senate Governmental Affairs Committee produced a 1996 memorandum from the Democratic National Committee's chief financial officer that they argued alerted both President Clinton and Gore that up to $20,000 of the money they solicited from wealthy supporters would be treated as hard money, which under federal law cannot be sought from a government office.
But DNC general counsel Joseph E. Sandler, who testified before the committee yesterday, strongly disputed this assertion. He maintained that Gore did not know about an internal DNC practice to convert the first $20,000 of large contributions into hard money, which is considered more valuable than "soft money" because it can be used directly in the election campaigns of party candidates.
Although the references to the differences between hard and soft money were sometimes bewildering, Gore was clearly the day's target for committee Republicans. The disclosure earlier this month by The Washington Post that some of the funds he raised went into hard money accounts has already prompted Attorney General Janet Reno to begin the process that could lead to the appointment of an independent counsel to investigate the case.
The distinction between hard and soft money is important, legally and perhaps politically to Gore's future. Soft money is defined as contributions not intended to support individual candidates but to promote "party building" and other general campaign activities, and it can be given in unlimited amounts. In contrast, hard money contributions are subject to strict limits, including the amount an individual can give, and there is a prohibition against seeking such donations from federal property.
Under federal law, an individual can make a total of $25,000 in hard money contributions a year, but no more than $20,000 can go to a single national political committee. According to Sandler, unless the donor specified otherwise, the DNC's policy during the 1996 election cycle was to treat the first $20,000 of most large contributions as hard money, with the remainder going into soft money accounts. DNC guidelines specified that the party then had 60 days to get the donor's permission to use this portion of the contribution as hard money.
In some cases, party officials have acknowledged, this was not done, leading Steve Grossman, now DNC national chairman, to show up outside the hearing room yesterday to issue an apology to those donors.
Yesterday's hearing into the fund-raising improprieties of the 1996 campaign centered on the question of whether Gore knew, or should have known, about this DNC practice. Republican senators built their case around a Feb. 21, 1996, memo from Bradley Marshall, the DNC's chief financial officer, to then-White House deputy chief of staff Harold Ickes, who passed on the memo to Clinton, Gore and others in the White House.
The Ickes memo is stamped "the president has seen this" and bears a left-handed check mark, apparently the work of the left-handed Clinton. Gore's spokeswoman, Lorraine Voles, said of the vice president: "He may have seen it. He has no recollection of seeing it." Voles said that if he had seen it, he would not have related it to his phone calls. Voles said that because Gore was requesting a minimum of $25,000 in his phone solicitations, he assumed he was requesting non-federal, or soft, money.
Marshall's memo outlined an ambitious advertising plan that, under federal regulations, would have to be financed with a combination of federal (hard) and non-federal (soft) contributions. In the key passage that was the subject of argument yesterday, Marshall wrote:
"Definition of federal and non-federal monies (from the DNC perspective): Federal money is the first $20,000 given by an individual ($40,000 from a married couple). Any amount over this $20,000 amount from an individual is considered non-federal."
Republicans said this passage clearly told Gore, as well as Clinton, the nature of the money they were soliciting.
"Without knowing the vice president's state of mind, my inference would be, absent a statement from him, that he knew a solicitation for $20,000 would be a solicitation for hard money," said Sen. Arlen Specter (R-Pa.). "The inference would be that the vice president knowingly solicited hard money, which would be a violation of the statute."
But Sandler argued that Marshall's memo was not meant to alert Gore but merely a statement in "plain English" of what was allowed under federal law. "I know what this memo means and it doesn't mean what is being suggested here today," he said.
Sandler also noted that Ickes, in his Feb. 22 covering memo to Clinton and Gore, reported that the DNC's soft money account was depleted and that until it was replenished "the DNC cannot buy media time." The whole purpose of Gore's phone calls from the White House during this period was to restock the soft money account, he said.
Sen. Joseph I. Lieberman (Conn.), the committee Democrat who has most often sided with Republicans in analyzing 1996 fund-raising practices, said it was not clear to him what the Marshall memo meant. "I'm not sure if it's a statement of law or of DNC policy," he said.
At least $40,000 of hard money can be attributed to Gore's solicitations after the Feb. 22, 1996, memo was sent to him.
An April 22, 1996, call sheet prepared by the DNC asked Gore to call Peter Angelos, owner of the Baltimore Orioles, and request "$50,000 for the DNC."
A month later, on May 24, Angelos gave twice as much $100,000, with $20,000 going to the hard money account and $80,000 to the soft money account.
A second $20,000 hard money contribution attributable to Gore's phone solicitations after the Feb. 22 memo came from Andy Morse, a senior vice president of Smith Barney Shearson Inc. in New York.
Morse waited several months and his contribution was not given until Feb. 29, 1996. In an interview, Morse said he intended to give only a soft money donation of $25,000, though the DNC put $20,000 into the hard money account. Morse said Gore wanted the contribution to support "the efforts to get the president's message across. . . . In my head I was giving for the overall effort of Clinton-Gore."
Staff writer Bob Woodward contributed to this report.
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