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Consumer Groups Call for Ban on Soft Money in Political Party Conventions

June 2, 2003

Consumer Groups Call for Ban on Soft Money in Political Party Conventions


Method of Paying for Conventions Violates Law, Public Citizen, U.S. PIRG Tell Federal Election Commission

WASHINGTON, D.C. – The current way in which the Democratic and Republican party nominating conventions are funded is inconsistent with the original purposes of a key 1971 campaign law and violates a campaign finance reform law recently passed by Congress, Public Citizen and U.S. PIRG have told the Federal Election Commission (FEC).

In comments filed on the Notice of Proposed Rulemaking that is the subject of an FEC meeting on Tuesday, June 3, the groups urge the agency to act immediately to prevent special interests from footing the bill for the lavish bashes that nominating conventions have become.

In the past, party conventions were largely financed with government money. Because of revisions the FEC made to regulations, however, soft money began pouring into national political parties from businesses, other special interests and wealthy individuals seeking favors from the parties. Soft money refers to unregulated, unlimited contributions from unions, corporations and individuals. Although the solicitation and spending of soft money by the national parties was outlawed last year in the McCain-Feingold law, the FEC says that convention funding is not covered by McCain-Feingold. Concern over that stance is what prompted the upcoming hearing.

“The excessive influx of soft money into today’s conventions has not enhanced the effectiveness of the events but has merely facilitated a level of extravagance that is offensive to the general public,” said Craig Holman, legislative representative with Public Citizen’s Congress Watch division. “The extravagance is certainly not worth the actual or apparent corruption that accompanies it.”

In 1970, Congress enacted the Federal Election Campaign Act (FECA) to remove wealthy individuals and corporate and union money from funding the conventions and to set reasonable spending limits for the conventions. Congress substantially amended the law in 1974 and again in 1976. The law established a public financing program for presidential nominating conventions in which the parties, in exchange for accepting spending limits on their conventions, received a grant from the government. The law also prohibited corporations, unions and banks from making contributions “in connection with any primary election or political convention or caucus held to select candidates” for certain federal offices.

However, in subsequent advisory opinions and regulations, the FEC reversed the ethics gains sought by FECA. For instance, the agency determined that wealthy individuals, corporations, unions and even banks may make unlimited contributions to “host committees” that are “unaffiliated” with national party convention committees. A host committee is any local non-profit organization whose principal goal is to encourage the party conventions to come to town.

In effect, though, this has opened the door for wealthy special interests to pour money into conventions. For instance, in the 2000 Republican convention in Philadelphia, major corporate contributors to the host committee included Enron, Tyco and Global Crossing. A total of 473 business and governmental entities helped pay for the convention.

The FEC also weakened FECA in 1982 when it ruled that “municipal funds” could help pay for presidential conventions. Such funds are supposed to come from long-term entities whose principal purpose is to promote conventions in the city, not from entities established just to fund presidential conventions. In practice, funds spring up before a convention then disappear after the convention leaves town. For instance, the Dallas Convention Fund in 1982 was chaired by a Washington political insider, real estate development company Trammell Crow, which had corporate offices in downtown Washington, D.C. After the convention, the fund dissolved.

In 1976, the Democratic and Republican conventions cost $2 million each and were paid for almost exclusively from public money. In 1980 and 1984, the conventions were still largely financed with public money but cost more – a little over $4 million in 1980 and $7 million in 1984. After host committees came into vogue, the price shot up. In 2000, the Republican convention cost $60 million. Of that, just $13.5 million was public money.

Because the current system violates the spirit of the 1971 FECA, as amended, and the recent McCain-Feingold law, Public Citizen and U.S. PIRG are calling for the FEC to: 1) prohibit national parties from receiving in-kind contributions of soft money or pledges of soft money to defray the expenses of presidential nominating conventions; 2) prohibit national parties from receiving contributions for their nominating conventions from soft money sources; 3) disallow a special exemption from the spending ceiling for expenditures made by committees coordinated with parties and funded by soft money (despite the fact that it’s illegal under McCain-Feingold); and 4) end the practice of wealthy individuals and corporate and union financing of so-called “municipal funds” used to pay for presidential conventions.

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