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Finance loopholes { June 21 2002 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A20615-2002Jun20.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A20615-2002Jun20.html
FEC to Allow 'Soft Money' Exceptions
Campaign Finance Law's Sponsors Criticize Panel
By Thomas B. Edsall
Washington Post Staff Writer
Friday, June 21, 2002; Page A01
The Federal Election Commission yesterday finished crafting the major rules for the new campaign finance system, leaving intact the key provisions of the new law aimed at eliminating large, unregulated contributions but allowing some important exemptions.
Under the new rules, the parties will be banned from raising and spending "soft money" from businesses, labor unions and wealthy individuals. The commission also endorsed the law's ban on the use of soft money to finance "issue ads," which cloak partisan messages under the mantle of public policy debate.
However, over the course of two days of deliberations, the FEC also carved out several exceptions that will allow some soft money to be used indirectly to finance federal elections. For instance, soft money may be used to finance Internet communications, and federal candidates would still have avenues of soliciting soft money for state parties and other allied groups.
The FEC, composed of three GOP appointees and three Democrats, must still formally vote on the new campaign finance rules, probably Saturday. By the end of yesterday, however, the commission had finalized most of the major issues, and the shape of the new system had become clear.
The FEC's actions drew sharply differing reactions yesterday, with sponsors of the new campaign finance law contending the commissioners had undermined its purpose of limiting the influence of large campaign contributions on politics. But a four-member FEC majority said the rules are a reasonable accommodation between the law and the constitutional right to free speech.
After the FEC completed its work, the sponsors -- Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.) and Reps. Christopher Shays (R-Conn.) and Martin T. Meehan (D-Mass.) -- issued an angry statement saying the FEC adopted many regulations that "simply ignore the law. They show that a majority of the FEC is willing to flout congressional intent and substitute its own policy preferences."
FEC members, in turn, bristled throughout the two-day process of writing regulations, contending that the sponsors and the leaders of such groups as Common Cause and Democracy 21 were trying to influence commission decisions by lobbying through the news media.
"Prominent lobbyists and interest groups have argued that any effort to provide guidance and prior notice would create loopholes" in the McCain-Feingold act, said GOP commission member Michael E. Toner, referring directly to Common Cause and allied organizations. "Providing [politically active Americans] with clear rules is not a loophole, it is our civic duty."
While leaving the national party soft-money prohibition and the bar on "issue ads" intact, the FEC made several decisions that could in theory keep soft money in the system.
For instance, the commission voted 4 to 2 yesterday to grant a broad exemption to the law's prohibition on federal candidates' participating in soft money fundraising for state political parties. The commission declared that candidates for House and Senate seats attending a state or local party event where soft money is raised would be free to "speak at such events without restriction or regulation."
Under this ruling, a federal officeholder or candidate would be free to solicit soft money for use by the state parties.
Toner, who supports the exemption, described the rule as "a total carve out" from the law, which was intended to prevent federal officials from being involved in raising soft money.
In addition, the commission appeared ready to approve a regulation virtually eliminating any liability the parties may face for trying to circumvent the law by creating independently run soft money conduits in the months before the McCain-Feingold law takes effect Nov. 6.
Operatives close to both the Democratic and Republican parties are planning to try to create organizations to raise and spend soft money as "independent expenditures" for candidates.
But, without regulatory protection, these plans could run afoul of a provision in the McCain-Feingold law that challenges the legality of organizations "directly or indirectly established, financed, maintained or controlled by another entity" such as the national parties.
Toner's proposal, which the commission will take up Saturday when it meets to approve technical amendments, would prevent any legal challenge to an organization based on events taking place before Nov. 6, the period when party strategists are planning to create the soft money organizations.
The actions yesterday follow commission decisions Wednesday that allow for the extensive use of soft money to finance get-out-the-vote and voter-identification work by state and local candidates that could indirectly benefit federal candidates running in the same election.
In addition, the commission voted to exempt all Internet communications from the law's provisions. The Internet is rapidly becoming a major tool in campaigns, used to communicate with voters, to raise money and to develop lists of volunteers and activists.
Despite the weakening of some regulations, the national political parties, would still be prohibited from raising or spending soft money on federal campaigns.
In addition, the commission beat back an attempt to weaken prohibitions on the ability of state parties to use soft money to run issue ads.
Lawrence H. Norton, the FEC general counsel, warned members Wednesday that some of their regulatory decisions "have the potential for great mischief." At the conclusion of yesterday's session, he added: "We will need to look not only at the impact of one change or another, but the cumulative impact of all these changes."
He declined to provide a general assessment of the regulations approved yesterday and the day before.
© 2002 The Washington Post Company
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