The Federal Election Commission yesterday rejected proposals to regulate the use of "soft money" in political campaigns, a practice that critics say has opened wide loopholes in federal law.
In short order, the FEC not only killed a series of proposals initiated by Common Cause to restrict the use of soft money and to require full public disclosure, but it also voted down a staff proposal to begin consideration of modest regulatory guidelines.
The issue of soft money grows out of a 1979 change in federal election law that was designed to encourage participation in federal elections by state political parties.
Under the change, state parties may spend soft money on voter registration and other nonmedia activities related to federal campaigns without regulation by the FEC.
The provision has been used by aggressive campaign strategists to justify spending millions of unregulated dollars in states where the presidential election is considered close.
"The use of 'soft money' practices to evade and violate the campaign finance laws is the most serious threat facing our nation's presidential financing system," said Fred Wertheimer, president of Common Cause. "Today, in another triumph of fantasy over reality, the FEC has stuck its head in the sand."
Democratic and Republican presidential campaign operatives have openly acknowledged using unreported "soft money," including contributions from labor unions and corporations, to directly and indirectly help win presidential elections.
In 1984, for example, Timothy Finchem, Democratic presidential nominee Walter F. Mondale's deputy campaign manager and finance director, directed the raising of about $6 million, which was given to state Democratic parties to be used for get-out-the-vote, bumper stickers and voter registration activities.
Because the cash did not go to the Mondale campaign itself, it was not covered by rules governing presidential campaigns. Much of the money would have been illegal if contributed directly to the Mondale campaign, because it came from unions and corporations, and from individuals who had already reached federal contribution limits.
The Mondale 1984 program, in turn, was patterned on a Reagan-Bush 1980 soft money drive that passed an undetermined amount of money into state Republican parties.
In 1984, Joseph Rodgers, the Reagan-Bush finance chairman, left the campaign after raising the maximum allowed under law to set up Leadership '84, which raised in the neighborhood of $2 million, much of it from corporations. The money was then channeled into conservative and religious voter-mobilization groups considered supportive of President Reagan's reelection.
In addition, the Democratic National Committee and the Democratic Congressional Campaign Committee maintain large soft money accounts. All these accounts are not publicly disclosed, except when money going into specific states must be reported under local laws.
In making its decision to leave soft money unregulated, members of the FEC argued that Common Cause's proposals went far beyond the powers now granted to the commission by Congress.
Among the regulations suggested by Common Cause were a prohibition on the use of a soft money account by the Democratic and Republican national party committees and a requirement for full disclosure to the FEC of all soft money activities.
After it rejected six regulatory proposals by votes ranging from 4 to 2 to 6 to 0, the FEC then killed on a 3-to-3 vote a staff proposal to begin a modest inquiry into the possibility of regulatory changes of far smaller scope than those proposed by Common Cause. The staff plan needed a minimum of four votes under FEC rules.