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New soft money { August 25 2002 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A58316-2002Aug24.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A58316-2002Aug24.html
New Ways to Harness Soft Money in Works
Political Groups Poised To Take Huge Donations
By Thomas B. Edsall
Washington Post Staff Writer
Sunday, August 25, 2002; Page A01
Some of the biggest names in Republican and Democratic circles are establishing new groups to collect and spend the unlimited political donations that are supposed to be curbed by the recent campaign finance law.
White House political operatives, high-profile lobbyists, former aides of President Bill Clinton and staffers at the Democratic and Republican senatorial campaign committees are setting up tax-exempt organizations to raise and spend "soft money." That term refers to the large sums collected from corporations, unions, trade groups and individuals outside the normal limits on donations to federal campaigns.
One of the new organizations, Progress for America, is operating from the downtown offices of a company run by Tony Feather. He was the political director of the Bush-Cheney 2000 campaign and remains a close ally of Karl Rove, President Bush's top political aide.
Democrats are busy, too. Three former high-ranking aides of Clinton -- Harold Ickes, Doug Sosnik and John D. Podesta -- are working to set up a Democratic soft-money operation with the goal of running pro-Democratic "issue ads." The three are part of the informal brain trust of Democratic National Committee Chairman Terence McAuliffe.
These efforts underscore the vital role that soft money has played in recent presidential and congressional elections. Until now, the Democratic and Republican parties have been the primary recipients and spenders of such funds, which totaled about $500 million in 2000. Soft money has been used to finance mass get-out-the-vote programs and ads that have been cloaked as issue discussions but are actually aimed at helping or hurting particular candidates.
The McCain-Feingold campaign finance law -- a bitterly debated measure that will take effect on Nov. 6 -- was meant to sharply restrict the influence of such money, mainly by forbidding the parties from raising and spending it.
That's why political activists on both sides are frantically creating new groups to fill the gap, using provisions of the tax code that allow the creation of tax-exempt organizations that they say are not covered by the new law. These groups can raise and spend soft money as long as they do not coordinate their efforts with the political parties or candidates, according to officials involved in these undertakings.
The officials describe their initiatives as a way to make sure soft money is used on behalf of the broad interests of the two parties, not just the interests of ideological groups on the left and the right. Democrats also contend that the party faces the prospect of being overwhelmed in 2004 by a Bush reelection organization equipped to raise $200 million to $300 million. Without some soft money support, the Democratic presidential candidate will be unable to compete, they say.
"It's very clear that there are going to be a proliferation of special interest committees to pick up where the parties were before on soft money funding," said GOP lobbyist Vin Weber. "The law is going to spawn a lot of efforts to fill the gap in party financing, and the gap should be filled by entities generally committed to the broad interest of the parties."
But supporters of the McCain-Feingold measure fear that these efforts might undermine the purpose of the law by creating new conduits for soft money that require less public disclosure than was required before the law was enacted. They contend that these activities are purposeful evasions of the law, encouraged by the weak enforcement regulations issued by the Federal Election Commission.
"To the extent the parties are planning a massive evasion scheme, they are planning massive illegal activity and they will be challenged," said Fred Wertheimer, president of Democracy 21 and former president of Common Cause.
Progress for America (PFA) is precisely the type of organization at issue.
It has raised millions of dollars, which it uses to promote Bush's agenda of tax cuts, energy legislation, conservative judicial appointments and free trade.
Although it takes unlimited donations from corporations and individuals, it discloses neither its contributors nor its expenditures.
Feather, in an interview, said PFA is simply a vehicle for building grass-roots support for Bush's policies. Many other Republicans, however, described it as the first organization designed to capture some of the soft money that the political parties will be barred from accepting after Nov. 6.
PFA has strong ties to the Republican establishment. Its spokesmen include Ken Adelman, the top arms control officer in the Reagan administration. White House operatives, such as Rove and political director Ken Mehlman, have addressed private PFA briefing sessions at the Hay Adams Hotel.
Progress for America isn't the only Republican-related group in the scene. Weber is working with lobbyists Ed Gillespie and Bill Paxon to build an organization to back GOP candidates. Gillespie has strong ties to both the Bush administration and the Republican House and Senate leadership. Weber and Paxon are former House members with extensive ties to the GOP establishment.
The clients of these three lobbyists alone gave $19.4 million in soft money during the 1999-2000 election cycle, according to the Web site of PoliticalMoneyLine.
Simon B. Rosenberg, president of the centrist New Democrat Network, said: "The center is going to have a hard time holding in the new system. Interest groups will be more powerful tomorrow than today, and there will be a real tug to pull candidates to the extremes."
Rosenberg and others contend that the flow of soft money that had gone to the parties will likely go to ideological and single-interest groups that take polarizing stands on guns, abortion, school prayer, unions and taxes, effectively driving the politicians receiving the money further to the right or the left.
To counter this, he said, the New Democrat Network will substantially expand its soft-money fundraising and will add "an aggressive paid media component to our activities." He added: "Our hope is that it will be in the millions of dollars."
From the more liberal wing of the Democratic Party, Mike Lux, a former Clinton aide and a former political director for People for the American Way, said he and his allies plan to unveil two projects in September -- which will tap liberal soft-money donors -- to fill the "need for more infrastructure on [the] progressive side of things."
"What I hope," Lux said, "is that, unlike so many times in the past, those on the progressive side will actually coordinate."
One affiliate of the Democratic National Committee -- the Association of State Democratic Chairs -- has already taken formal steps to create a separate organization, the Democratic State Party Organization (DSPO), to raise contributions, including soft money, for get-out-the-vote and voter registration activities.
"We must chart a new path after campaign finance reform," said Joe Carmichael, the Missouri Democratic chairman who will run the DSPO, which will be headquartered in Washington and will register with the Federal Election Commission as a political committee. "Without an organization such as DSPO, grass-roots activities and participation would be eradicated and replaced by television-only campaigns."
To preserve their ability to raise soft money, both the Democratic and Republican governors' associations are severing all ties with the DNC and the RNC, respectively. The new groups will have to live within the new law's restriction on "issue ads" financed with soft money within 60 days of a general election or 30 days of a primary.
Both the Democratic and Republican senatorial campaign committees are exploring the creation of separate soft money funds. Officials of the Democratic Senatorial Campaign Committee declined to discuss the work of staffers and consultants on the subject. Monica Dixon, a consultant to the DSCC, has been working on plans to channel soft money in support of Democratic Senate candidates, but she did not return phone inquiries.
Alex N. Vogel, general counsel for the National Republican Senatorial Committee, said: "We are looking at all the options for the committee, post-McCain-Feingold and post-Election Day."
A central factor shaping the new organizations is deciding how much information to disclose to the public. A number of operatives would prefer not to reveal the sources of the money raised or the details of how it is spent. They say they are likely to form "510c4's," tax-exempt advocacy organizations under the tax code.
Others, including Weber, Rosenberg and officials of the DSPO, say they intend to make this information publicly available by setting up what are called "527" committees, which must make regular disclosures to the Internal Revenue Service, or traditional political committees, which report to the Federal Election Commission.
Progress for America has rejected the disclosure option, and its leaders show little appetite for publicity. Adelman, who noted that he is the group's chairman, said he knows neither the organization's budget nor its sources of financial support.
"I can't tell you off the top of my head," he replied, when asked who was giving to PFA. "We get private donations from businesses and individuals."
Adelman could not remember the phone number of Progress for America, the name of the woman who runs it (Jennifer Oschal) or its address; he had to look them up in his directory. Oschal did not return a phone inquiry. At the office building address Adelman provided, the high-rent Lafayette Center complex in downtown Washington, there is no listing for Progress for America.
Instead, on the center's mezzanine floor, there are offices belonging to FLS-DCI, Feather's firm. Feather described PFA as a "a grass-roots organization that supports the president's agenda." Asked to provide its membership roster or to release the names of its donors, Feather -- noting that PFA has been organized under the 501c4 provisions of the tax law, which do not require such public disclosure -- said, "No."
© 2002 The Washington Post Company
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