Because soft money has been raised primarily by officials of presidential campaigns, critics charge that it is benefiting presidential candidates while undermining the spending limits imposed on them. Because presidential candidates themselves have helped to raise this money, it raises questions about whether they are violating the legal provisions by which - in return for public subsidies - they agree to strict limits on private fund-raising during the general election. Finally, because soft money permits the collection of unlimited donations from individuals, critics say it is a throwback to the days of the very large contributor.
Soft money has been present in presidential campaigns throughout the 1980s. What distinguished 1988 from past elections was its quantity. During the 1988 general election, more than twice as much soft money was expended as during the 1980 and 1984 general elections combined.
In 1980 and 1984, the Republicans had far outstripped the Democrats in raising soft money. The Republicans raised $15 million in both elections while the Democrats were only able to raise $4 million in 1980 and $6 million in 1984 (Citizens’ Research Foundation). That changed dramatically in 1988 when the Dukakis campaign raised $23 million, and a Republican response produced $22 million in soft money for the Bush campaign.
This money was raised frantically, as if no public funding or expenditure limits existed, and it was raised in large individual donations far in excess of federal contribution limits. The Republicans claimed 267 contributors of $100 000 or more; the Democrats counted 130 individuals who donated or raised amounts in six figures (Houston 1988).10 This return of the very large contributor seriously eroded the concept behind the presidential funding structure embodied in the FECA Amendments of 1974. Public funds were intended to provide most or all of the money serious candidates needed to present themselves to the electorate, yet soft money offers a pathway into presidential politics for direct corporate and labour donations; the former was barred at the federal level in 1907 and the latter in 1943. But 30 states permit direct corporate contributions, and 41 allow direct labour contributions. Therefore, a donation can be directed by a party’s national committee from, say, a corporation in a state that bars corporate contributions to a state party committee in a state that allows corporate donations.
Soft money is not the only form of disbursement in presidential campaigns that is spent outside the general election limits. As table 1.3 illustrates, while the spending limit was $54.4 million (federal grants of $46.1 plus national party spending of $8.3 million), the amounts actually spent by or on behalf of the major-party candidates totalled $93.7 million for Bush and $106.5 million for Dukakis. In addition to state and local party spending (soft money), labour unions spent $30 million in parallel campaigning; this amount consisted of voter registration and turnout expenses as well as partisan communication costs to their memberships. Most of this benefited the Dukakis campaign. Other costs outside of the candidate limits and labour spending included minimal corporate spending, candidate compliance costs and independent expenditures. Some of these various costs can be legally controlled by the candidates, some can be coordinated by the campaigns, some are limited, but others cannot be controlled, coordinated or limited.
Table 1.3 Sources of funds, major-party presidential candidates, 1988 general election
(in millions of dollars)
Source: Citizens’ Research Foundation.
aincludes money raised by the national party committee and channelled to state and local party committees.
bIncludes internal communication costs (both those in excess of $2 000, which are reported, as required by law, and those less than $2 000, which are not required), registration and voter turnout expenditures, overhead and other related costs.
cDoes not include amounts spent to oppose the candidates: $2.7 million against Dukakis,$77 325 against Bush and $63 103 against Quayle.
Legislative Proposals
The experience of the 1988 presidential campaigns led to numerous proposals during the 1989-90 session of Congress to restrict soft money. The House and Senate, both under Democratic control, passed soft money restrictions as part of comprehensive legislation. But differences between the two bodies prevented either campaign reform bill from becoming law before the 101st Congress adjourned in October 1990. (See following section, “The Debate over Legislative Proposals”.)
Both bills aimed to prevent a recurrence of the tactics used by the presidential campaigns in 1988. The House legislation would have barred presidential candidates from raising soft money. The Senate proposal would have placed under the limits of federal law all contributions solicited by a national party committee on behalf of a state party organization, thereby curtailing the $100 000 gifts raised in 1988. Both bills also would have sharply restricted the amount of money that a state party could spend on so-called generic campaigns in connection with a presidential race, including voter registration and get-out-the-vote drives.
But the Senate bill went further by placing strict spending limits on generic campaign activities by state and national party committees even when presidential and congressional candidates are not specifically mentioned. In the less stringent House approach, generic campaign efforts that made no mention of federal candidates were left outside the purview of federal law, even if a presidential or congressional candidate might realize some benefit from them.
Both bills would have required disclosure of soft money receipts and expenditures. The FEC passed regulations that went into effect 1 January 1991; these required disclosure and set allocation formulas for generic spending on behalf of the party ticket that may affect the election of federal candidates (Federal Register 1990).11
Meanwhile, Senate Republicans wanted restrictions on non-party money. They proposed to prohibit tax-exempt organizations from activities on behalf of a particular candidate. This was aimed at organized labour as well as a number of other issue-oriented groups - such as environmental organizations - that have tended to favour Democratic presidential and congressional candidates with various forms of assistance.
In seeking to regulate another device used to skirt campaign spending limits - independent expenditures - the Democrats and Republicans found more common ground. The reason is that legislators in both parties are clearly nervous about becoming victims of the stridently negative advertising that often has characterized independent campaigns. Although the Buckley decision found independent expenditures to be a protected form of free speech, both parties in Congress have looked for constitutional ways to discourage them.
The House-passed campaign bill would have required any television advertisement underwritten by independent expenditures to contain a continuously displayed statement identifying the sponsor of the ad. The Senate bill proposed that any broadcaster selling air time to an independent campaign favouring one candidate would then have to sell air time to the other candidate to allow him or her to respond immediately.
The Future of the Presidential Checkoff
While private money has found several channels into presidential campaigns, the flow of available public funding is in danger of slowing to a trickle. It now appears that the Presidential Election Campaign Fund will face severe cash flow problems as early as the 1992 campaign and will be in a deficit situation by the 1996 race unless action is taken.
The $1 federal income tax checkoff has not been increased since its enactment in the Revenue Act of 1971, despite the fact that the U.S. dollar is worth about a third of what it was then. Compounding the erosion of the dollar is the eroding support for the checkoff from taxpayers. According to the Federal Election Commission, there has been a 30 percent decrease in taxpayer support for the checkoff since 1980, when checkoff participation was at an all-time high. This translates into tax checkoff rates declining from the high point of 28.7 percent in 1980 tax returns to 20.1 percent in 1988 returns; the 1989 rate on 1988 returns produced $32.3 million - the yearly amounts being aggregated over a four-year period