A reluctant Federal Election Commission yesterday began to explore the underbelly of campaign finance: unregulated terrain known as "soft money."
Soft money is cash, usually from corporations, unions and individuals, contributed to national and local party organizations for party-building activities. Because the money ostensibly is not used to help an individual candidate, it is virtually unregulated under federal election laws. Limits on amounts and the ban on corporate and union contributions have been avoided by those using what campaign reformers say is a loophole.
The money is either channeled by presidential and national party committees to local Republican and Democratic parties in states where there is little or no campaign finance regulation, or it is used directly by the national party committees for polling, media expenses, salaries and other operations costs.
Under pressure from Common Cause and the Center for Responsive Politics, the FEC held a hearing on soft money yesterday to determine whether the commission should issue rules governing the fund-raising tactic. There is substantial disagreement among legal specialists over whether the money is legal under existing law.
Mark Braden, general counsel to the Republican National Committee, testified that the RNC raises about $3.7 million annually in soft money, out of a total budget of about $40 million. RNC officials are willing to disclose the identity of donors to reporters, although they are not required to by law.
Officials of the Democratic National Committee declined the offer to testify. A DNC press aide said the DNC in 1985 raised $1.4 million in soft money, out of total revenues of $8.3 million. Democratic Party officials refused to disclose the identity of their donors.
Similarly, a spokesman for the Democratic Congressional Campaign Committee said it expects to raise about $1.8 million in soft money during the 1985-86 election cycle. The DCCC refuses to identify most of its soft-money donors.
Presidential candidates in the past two elections have begun to use soft money. After the 1980 election, officials of the Reagan-Bush campaign acknowledged that they had raised large sums from corporations and individuals, and then channeled the cash to strengthen the Republican parties in key states. Much of the money would have been illegal if given directly to a federal candidate.
In 1984, Tim Finchem, finance director of Walter F. Mondale's campaign, orchestrated a multimillion-dollar soft money drive with the DNC in an effort to channel money for voter registration and get-out-the-vote drives in a host of states, including Texas and California. Much of the money came from union treasuries, which are banned from direct political contributions to federal candidates.
Fred Wertheimer, president of Common Cause, and Ellen Miller, director of the Center for Responsive Politics, argued, in Wertheimer's words, that "soft-money practices constitute the most serious problem facing the nation's presidential system," undermining the principle of public financing.
The FEC, however, signaled little or no interest in expanding its regulatory mandate to cover soft money. Much of the questioning by members of the commission was hostile to entering a major new terrain, and one FEC source said a majority of the commission members appears to oppose issuing new regulations.