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Soft Money and Campaign Finance Reform

In the late 1970s, Congress amended the Federal Election Campaign Act (FECA) to allow the national parties to finance some party-building activities with "soft money." Soft money—money in federal elections that would otherwise be illegal, such as direct corporate or union contributions or contributions in excess of legal limits—was then seen as a potential source of revenues to bolster non-electioneering party activities, and to place parties on par with the rising campaign activity of independent groups. Fearful that campaign finance regulations disadvantaged political parties in relation to outside independent groups, who could spend unlimited treasury funds for issue advocacy, Congress sought to strengthen the parties by permitting them to receive and spend those same corporate and union treasury funds for party-building activities.

Prior to implementation of the Bipartisan Campaign Reform Act of 2002 (BCRA), the national and state parties made direct appeals to wealthy individuals, corporations and unions for soft money contributions to the parties. In the 2000 election cycle, national and congressional party committees broke all previous records in soft money fundraising and, for the first time, Democratic party committees were on par with Republican party committees in terms of raising and spending soft money. National Republican party committees raised $249.9 million in soft money and spent $252.8 million in soft money, while national Democratic party committees raised $245.2 million in soft money and spent $244.8 million. These national committee soft money expenditures were for many political purposes, not just television advertising. This was a banner year for soft money, which totaled five times the amounts raised and spent in 1992.

Research, however, shows that soft money was rarely used for its intended get-out-the-vote and party-building purposes. In Buying Time 2000, for example, only 8½ cents out of every soft money dollar was spent by the parties on activities associated with mobilizing voters, such as get-out-the vote drives, party registration efforts, absentee ballot mailings, party slate mailings, phone banks, and other activities intended to fortify a party’s electoral base. By far, the single greatest share of soft money dollars spent by the parties relative to federal elections went into electioneering "issue" advertising for or against candidates.

Click here to read Buying Time 2000

BCRA has now prohibited the national parties from soliciting or spending soft money. But the Federal Election Commission (FEC) has significantly watered down that prohibition with a round of hostile regulations. [Click here for a discussion of the how the FEC is undermining BCRA.] Congressional sponsors of BCRA have filed a suit against the FEC’s unfriendly regulations. The final chapter on soft money will likely be written by the courts in the pending cases of Shays v. FEC and McConnell v. FEC – the first case challenging the FEC’s regulations to weaken the soft money ban, and the second challenging the ban on soft money altogether.

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