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The bucks stop Get ready for last call for political excess, where soft money runneth over and quid pro quo is there for the quaffing. The soft-money tap goes dry after this year's general election.
this year
This election season is the last
chance for politicians to indulge
in unregulated soft money
By Lee Catterall
lcatterall@starbulletin.comCharles Lewis, director of the Center for Public Integrity in Washington, D.C., says the contribution of soft, unregulated money could reach new levels in the months ahead, with donations in six and seven figures, before the new rules take effect. However, he points out that soft money has accounted for only one-sixth of the political contributions nationally, leaving plenty of room for overwhelming influence of special interests in politics.
Still, Lewis hails the campaign-finance measure enacted by Congress last month as the most dramatic change since the aftermath of Watergate.
Likewise, proponents of pending state legislation believe it could end the practice of companies winning state and county contracts in return for bundling large amounts of campaign support for candidates likely to be mayor or governor.
But neither change will occur until Nov. 6 -- the day after this year's general election -- when both federal and state legislation, if enacted, are to take effect.
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"There's a great deal of corruption going on, massive corruption going on in the whole system," says Robert Y. Watada, executive director of the Hawaii Campaign Spending Commission.The corruption has involved the distribution of large amounts of money in ways aimed at concealing from the public the identity of contributors who expect returns on their investments. Company executives legally can collect donations from friends and relatives and bundle them together to contribute to a candidate, as long as the money did not come from the company's bank account.
Mayor Jeremy Harris has been accused of accepting nearly $750,000 supporting his 2000 reelection bundled in contributions from dozens of construction companies, engineers, architects and law firms that have contracts with the city. A bill before the Legislature, modeled after a law covering federal campaigns, would ban contributions from contractors or members of their immediate families to county or state candidates.
Congress enacted sweeping contribution and spending limits in 1974 following the Watergate scandal and created the Federal Election Commission to enforce them. Five years later, Congress amended the law to allow party organizations to spend unregulated -- soft -- money on various activities, including voter-registration and get-out-the-vote drives, "issue advocacy" advertisements and even direct contributions to candidates.
Wealthy individuals and corporations have channeled their generosity through national political parties for eventual distribution to candidates. A ban on such "soft money" was made illegal by legislation signed into law by President Bush on March 27.
Soft money has only trickled into Hawaii, where no member of the all-Democrat congressional delegation has faced serious opposition for re-election. Those federal incumbents have been provided more than they reasonably need in hard-money contributions.
Special-interest groups organized as political action committees have played a large role, accounting in the 2000 election for nearly half of Rep. Patsy Mink's campaign chest of $127,869 and nearly 60 percent of Rep. Neil Abercrombie's $411,266 in receipts, coming mostly from labor-union PACs, according to the Center for Responsive Government.
Of the more than $2 million amassed by Sen. Daniel Inouye since 1996, only 28 percent came from PACs, and three-fourths of that came from business. Still, the $129,700 he received from labor was only $32,000 less than the union contributions to Abercrombie. During the same period, Sen. Daniel Akaka received $630,346, including $146,190 in PAC money coming entirely from labor.
The Republicans have made greater use of soft money in Hawaii. The Republican National Committee contributed the state maximum of $4,000 to each of six Hawaii state Senate candidates and $2,000 to 18 House candidates. The contributions helped the GOP win 12 of those seats in the Legislature, toppling five Democratic incumbents. In addition, the RNC transferred more than $44,000 to the Hawaii Republican Party. In contrast, the Democratic National Committee gave a miserly $5,000 to its state counterpart and nothing to state legislative candidates.
"I guess part of it is, at the national level, the feeling is the Democrats don't need the help," says Watada.
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In 1998, gubernatorial candidate Linda Lingle received $50,000, the legal limit under state law at the time, directly from the Republican National Committee. She also received $50,000 from the National Republican Senatorial Committee, various amounts totaling $72,880 from the Republican National State Elections Committee and what Watada believes to be at least $130,000 in national GOP money funneled through other state party committees, including Nevada, New Mexico and Missouri.Watada says he tried to track the donations from other state parties to Lingle but "it was commingled too much .... I mean, we knew what it was, but to make a case of it, to say that it all came from the RNC, was pretty hard to do."
In addition, the state Republican Party contributed $40,000 each to Lingle and her running mate, Stan Koki.
Regardless of where the soft money originated, says Micah Kane, executive director of the Hawaii Republican Party, "I don't think it played a major role in the campaign." Nor does he think the ban on soft money will handicap Republicans in future elections. Christopher Ovitt, executive director of the state Democratic Party, declined to return calls to comment on the effects of campaign-finance reform.
Harris allegedly tried to make use of national soft money to launder dollars for his own campaign. Watada accuses Harris of raising $100,000, including $13,300 of his own, for the Democratic National Committee in what he alleges was a scheme to gain soft money in return from the national level for his 1998 mayoral campaign.
Among those contributing to the $100,000 raised by Harris were companies that Watada has been investigating for donations made directly to the Harris campaign, including SSFN International Inc., R.M. Towill Corp., Anbe Aruga & Ishizu Architects Inc. and Oceanit Laboratories Inc.
"These companies are the companies that received solicitation from the Harris campaign, and they said they were asked to make contributions to the DNC," Watada says. "What was being attempted here was to circumvent the Hawaii campaign spending law by giving money over there and having soft money circulating back. That is the scheme," Watada says. Harris has denied the existence of any such scheme.
Kane opposes a ban on contributions from any category. "We believe that the best reform is simply full, open and frequent disclosure," he says. "People will be able to assess whether or not something is, in fact, corrupt.
"I think the only way you can really restrict this kind of contractor effort he (Harris) has in place is by restricting individuals from contributing completely, and we definitely don't think that's fair," Kane says.
If such a ban is imposed, both Watada and Kane expect special interests probably will find different ways to inject money to gain both influence and favors in the political arena.
"The actors out there are very clever in figuring out ways of getting around the law," Watada says.
Among the money-raising vehicles that could be used is called a 527 group, named after the section of the Internal Revenue Code that authorizes it. Organizations started sprouting up several years ago, taking advantage of the code's failure to require identification of donors or disclosure of how much money was raised or how it was spent.
The Sierra Club set up one of the first known 527 groups to advance its environmental interests, and Rep. J. C. Watts Jr., R-Okla., formed a 527 called Saving America's Families Everyday (SAFE) to poll Americans on their views of the Republican Party.
Former Hawaii Congresswoman Pat Saiki created a 527 group called the Citizens for the Republican Congress in 1999, publicizing a $35 million fund-raising drive to promote the GOP agenda in 30 congressional districts. The plan was to "educate the public in support of the Republican legislative and public-policy-issue agenda" in Congress and "to promote the political and philosophical objectives of the Republican members of Congress without engaging in express advocacy for the election of any clearly identified federal candidates."
However, Saiki's group never got off the ground. Congress amended the law two years ago to require disclosure of donors' identity, but in a way more cumbersome to decipher than campaign records. Public Citizen, a private watchdog organization, says it is impossible to search for a contributor such as Enron Corp. "without opening the IRS folders for more than 14,800 different 527 groups."
Only two weeks after enactment of the soft-money ban, the U.S. House on Wednesday rejected a proposal to reduce the reporting requirements for what opponents call these "stealth PACs." Public Citizen issued a report that 25 such groups not directly connected to politicians raised $67.3 million in 18 months.
Whether 527 groups or other vehicles will be used, Kane believes large contributors will find loopholes. That and the continuing involvement of labor unions is likely to continue to put Republicans at a financial disadvantage in Hawaii.
"We're not going to be able to compete with Democrats in fund raising," he says. "The only way we're going to win elections is based on sweat equity, our ability to get a lot of people to give us a little bit."