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Senators Debate Campaign Finance (Sept. 27)
On Fund-Raising Issue, Clinton Has It Both Ways (Sept. 27)
In GOP, Two Sides of the Debate (Sept. 27)

At DNC's Fall Gathering, Money Matters Matter Most

By Terry M. Neal and Thomas B. Edsall
Washington Post Staff Writers
Saturday, September 27, 1997; Page A06

With the political debate in Washington dominated by the Democrats' campaign fund-raising scandal, members of the Democratic National Committee came to town yesterday and gamely dismissed it as an "inside-the-Beltway" show.

Still, many acknowledged that the scandal – especially the news that Attorney General Janet Reno is reviewing whether to open a preliminary investigation into fund-raising activities of President Clinton and Vice President Gore – had taken its toll on party spirits and fund-raising.

While the ostensible purpose of the DNC's annual fall meeting was to map strategies for the 1998 elections, the underlying theme was money and its corrupting influence on American politics.

The Democratic Party's quandary is simple: At a time when its leaders are calling for campaign finance reform, it needs to raise big money to retire a $15.3 million net debt, which has grown by the month.

Some of the state party leaders meeting here yesterday said the allegations about Democratic campaign finance abuses had not seriously hindered fund-raising efforts back home, but others acknowledged the scandal had shaken the confidence of some donors around the country and made raising money a little tougher.

"People are afraid now," said Iola McGowan, vice chairman of the Illinois Democratic Party. "They're not sure when they give money what's right and what wrong. It seems like the rules keep changing. People want to see what rules are going to be changed in the campaign finance hearings in Congress now."

Mike Harmless, executive director of the Indiana state party, said his organization raised $1 million in the first seven months of the year, exceeding expectations for a political off year.

"Hoosiers are very pragmatic, and they look at what is going on in D.C. as partisan attack on the Democrats by the Republicans for doing the same things they do," said Harmless, who ran unsuccessfully for Congress in 1994. He said people are not as focused on the subject in Indiana. "For however this looks to everybody inside the Beltway, this doesn't exactly resonate with the voters back in Green Castle, Indiana," he said.

Judith H. Hope, chairman of the New York Democratic Party, said the publicity about the party's fund-raising has hurt in her state. "It is very difficult fund-raising at this time," she said. "It [the publicity] is not fatal, but it makes the job more problematic."

The atmosphere represents a sea change from the ease of raising money in 1996 during the presidential campaign, she said.

Party leaders sought to soothe and reassure yesterday. At times, what was supposed to be a strategy session looked more like group therapy.

"We should be ashamed of nothing!" roared Illinois Democratic Party Chairman Gary LaPaille, drawing loud cheers from dozens of colleagues at a public noon session. "We are proud of our president of the United States and our vice president of the United States."

At a breakfast meeting, Jesse L. Jackson opened his speech with a passionate defense of Gore, calling him "a man of integrity. A man of honor. A man whose career of public service should not be damaged by trivial and technical arguments."

While many DNC members generally played down any difficulties raising money as a result of adverse publicity, DNC National Chairman Steve Grossman sought in a private meeting to respond to members' anxieties over the issue.

"Many of you have called in highly concerned that you cannot go to your friends, neighbors and colleagues in city wards and town committees and Jefferson-Jackson dinners," Grossman told a meeting of Midwest DNC members. "They [past donors] say `[I] don't want to give you my money any more.' "

Grossman said it was an "abomination" that the DNC transferred large unregulated "soft money" contributions, used to support general party building activities, into a federally regulated "hard money" account, used to support an individual campaign, without asking the donors.

"To put the money into a federal account without their permission, without their expressed permission, is an abomination," he said. "Number one, they might feel violated, and number two, they might just think twice about giving again."

In 1996, the DNC raised large contributions of $50,000 or more telling donors the money would go into soft, nonfederal accounts. Without asking, the DNC placed the first $20,000 into federal accounts. For those donors who had already given the maximum allowed to federal campaigns, the DNC action placed them in violation of federal laws.

Grossman said that under his leadership, the DNC now insists "on high standards of behavior. . . . If good business practices matter in an industrial company or service company or a labor union, they should matter in a political party as well."

Grossman acknowledged the publicity has been damaging. "For every story above the fold on the front page of the Chicago or Des Moines or Boston or San Diego papers that you've seen in the last year about political problems at the DNC, we've seen 100 stories about our failure to exercise proper fiduciary practices and managerial responsibility," he said.

New Hampshire Democratic Party Chairman Jeff Woodburn, however, said voters in his state were more concerned about education and other issues that directly affect their lives. Many potential presidential candidates for 2000, including Gore, have come calling on state voters in recent weeks, and campaign financing has rarely come up in forums, Woodburn said.

In New Hampshire, which gets inordinate political attention because of its status as the first presidential primary state, he said voters are smart enough to know that "there is too much money in politics. But they also know it's a bipartisan issue. There are no virgins here."

Staff writer John E. Yang contributed to this report.

© Copyright 1997 The Washington Post Company

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