'Soft Money' Study Shows Concentration
Of Donations From Wealthy Contributors

By DAVID ROGERS
Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- Nearly two-thirds of the unregulated "soft money" campaign contributions in the last election -- about $296 million -- came from just 800 donors who gave at least $120,000 each.

Those contributions -- largely from wealthy individuals, labor unions and corporations -- represent almost a quarter of the total $1.2 billion raised from all sources, in both hard and soft money, by federal candidates and the national political parties in the 2000 election cycle.

The numbers, compiled by the nonpartisan Center for Responsive Politics, underscore how the rise of soft money in American elections has tended to concentrate influence among the biggest contributors. This concentration -- and soft money's role in it -- is central to the Senate debate that begins Monday on overhauling campaign-finance law.

Most federal political contributions still fall under the "hard money" rules enacted after the Watergate scandals. They strictly limit how much individuals can give a candidate: $1,000 for each primary and general election. But soft money, which goes directly to parties without any limit, has soared in recent years, as both Democrats and Republicans have stretched the legal limits to use these funds to finance multimillion-dollar television advertising campaigns.

Sen. John McCain, who likens today's politics to the robber-baron era of the early 20th century, wants a flat ban on all soft-money to end what he sees as its corrupting influence on Washington.

"This extraordinary concentration of soft-money giving shows a relatively small number of powerful donors are using enormous soft-money donations to buy undue influence," said Fred Wertheimer, a longtime campaign-finance activist who is organizing support for Mr. McCain, an Arizona Republican, and his chief Democratic co-sponsor, Sen. Russell Feingold of Wisconsin.

In anticipation of next week's Senate debate, The Wall Street Journal asked the Center to prepare a breakdown of 1999-2000 soft-money contributions by the size of the donation. The top two-year threshold of $120,000 was used because one major alternative to Mr. McCain's soft-money ban is a proposal to cap annual donations at $60,000 -- or $120,000 for a typical two-year election cycle.

Sen. Chuck Hagel (R., Neb.), who backs a cap, said the numbers give "credibility" to his argument that annual limits will have a real impact.

"Of course, they'll do some good," Mr. Hagel said. In the course of floor debate, he said, he will be open both to reducing the cap further and attaching restrictions that would bar the use of soft money for television and radio ads.

For example, the Center estimates that an additional $67 million in contributions in the past election cycle came from donors who gave $60,000 to $119,999. An annual cap of $30,000 would cut into this money, and would cover almost 80% of the soft money raised by the national parties.

While such caps can be easily circumvented if not tightly written, Mr. Hagel said the numbers support his claim that limits would force some dispersal of the source of contributions.

For the first time, the Nebraska Republican also said he has discussed with Sen. McCain adding an amendment that would more clearly define legitimate uses of soft money by the political parties. These would include party-building activities and get-out-the-vote operations, Mr. Hagel said, but not television ads. "That clearly violated the intent of the use of soft money," he said.

Critics contend that Mr. Hagel's approach is too porous because it doesn't restrict soft-money donations funneled through state political parties. And it would continue to allow federal office holders to solicit soft-money donations -- something the McCain-Feingold bill would bar.

"There's a great deal of determination to send as strong a bill to the president as we possibly can," said Senate Democratic Leader Tom Daschle of South Dakota.

He described Mr. Hagel's plan as a "Trojan Horse," promoted by the White House to kill the McCain-Feingold bill. The president's top political adviser, Karl Rove, has been working with Mr. Hagel, and in a one-page statement of "reform principles" circulated in the Capitol Thursday, the White House implicitly took issue with several provisions in the McCain-Feingold bill.

Specifically, the president would support a ban on corporate and labor soft-money donations, but not those from wealthy individuals. Mr. Bush also wants to raise the limits on hard-money donations -- a key part of the Hagel bill -- and go further than either man wants to make it harder for unions to use dues for political purposes.

The man who seemed most pleased with Mr. Bush's stand was Senate Rules Committee Chairman Mitch McConnell (R., Ky.), a fierce McCain foe. Oddly enough, Mr. McConnell is more in tune these days with Big Labor, which also is afraid of seeing its influence reduced and on Thursday was sharply critical of the bill. The AFL-CIO is most unhappy with proposed McCain-Feingold restrictions on television ads in the last 60 days of a federal election. Larry Gold, the federation's general counsel, said the provisions amount to a "blackout on unions and corporations."

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