As a matter of law, "soft money" is not supposed to have anything to do with electing members of Congress. But as a matter of practical politics, that is essentially no longer the case.
"Soft money" is political shorthand for unlimited contributions to parties from wealthy individuals, as well as corporations and unions that are barred from giving directly in federal elections. "Hard money," in contrast, is highly regulated. Individuals can give no more than $1,000 to federal candidates and $20,000 to political parties.
Soft money has been around almost as long as the post-Watergate reforms that were designed to prohibit unrestricted contributions. In 1978, the Federal Election Commission first authorized it as a way to fund "party-building activities" and overhead costs. By the 1980s, the political parties were actively raising and spending soft money, and court challenges seeking to block them from doing so were unsuccessful.
In 1991, the Federal Election Commission issued regulations requiring the parties to disclose their soft-money contributions. It wasn't until the 1996 election cycle, however, that soft-money fund-raising by the national parties exploded -- because the politicians had found a new way to spend it. The new use was television issue advertisements.
Relying on a series of federal court rulings, lawyers for President Clinton's reelection campaign concluded that they could pay for an expensive air campaign using soft money raised by the Democratic National Committee. The only catch: The ads had to refrain from "expressly advocating" his election.
On Capitol Hill, the congressional party committees were quick to catch on to this new use for soft money, deciding that they could air ads in individual House races that mentioned federal candidates by name. The ads were legal as long as they didn't say "vote for" or "vote against" a particular congressional hopeful.
Ever since, soft money has fueled a dramatic increase in party fund-raising. The parties spend it not only on multimillion-dollar television ad campaigns but also for get-out-the-vote drives, contributions to state and local candidates, overhead expenses and even donations to politically sympathetic tax-exempt organizations.
But soft money "is not the end-all and be-all," as a top House Republican official put it, and the national parties cannot rely only on soft money. The FEC has established complex formulas that require them to pay for their activities with a mix of hard and soft money. This year, for example, that means that the Democratic Congressional Campaign Committee and the National Republican Congressional Committee must pay for their overhead costs with no more than 35 percent soft money.