Washington Post: FEC Drops ‘Soft Money’ Action; GOP, Democratic Groups Warned About Future Fundraising

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The Washington Post
FEC Drops ‘Soft Money’ Action; GOP, Democratic Groups Warned About Future Fundraising
Thomas B. Edsall
April 29, 2003

The Federal Election Commission dismissed complaints against two inactive “soft money” committees yesterday but warned that tougher steps could be taken once active fundraising begins.

The decisions announced yesterday were the first test of the regulatory enforcement of the new McCain-Feingold law.

Leaders of the organizations that brought the complaints said even though no immediate violations were found, they were pleased with the content of the rulings, which they said signal that new soft money organizations will have to remain separate and apart from party committees.

“There is a bottom-line message here,” said Fred Wertheimer, president of Democracy 21, a supporter of the McCain-Feingold bill passed last year. “No one who tries to evade the new campaign finance law is going to get a free ride, as people did in the past when they consistently broke the law without any accountability.”

There were, however, signs in the individual comments filed by commission members that the full commission, made up of three Republicans and three Democrats, could split on partisan lines in the event the general counsel pressed for sanctions against any group in the future.

The McCain-Feingold law bars national parties and organizations affiliated with them from raising or spending soft money, which refers to large donations, sometimes exceeding $ 1 million each, from corporations, unions and individuals.

Lawrence H. Norton, the general counsel, wrote that one of the organizations under review, the Democratic State Party Organization (DSPO), was not in violation of the law only because it has yet to raise or spend any money.

If DSPO does raise soft money, as its organizers intend to do, it will run head on into the law because, Norton wrote, “DSPO appears to be virtually identical to, and essentially an alter ego of, an organization called the Association of State Democratic Chairs, which is a subordinate committee of the Democratic National Committee.”

Joe Charmichael, head of the DSPO and chairman of the Missouri Democratic Party, said he had not seen the ruling, but “what this really points out is that we need more certainty and clarity in this law.”

The second organization, the Republican-oriented Leadership Forum, was ruled not to have violated federal campaign law in large part because the group returned a $ 1 million contribution it had received from the National Republican Congressional Committee (NRCC) just days before the McCain-Feingold law took effect on Nov. 6.

“Had the money not been returned, the evidence would have pointed strongly to a conclusion that the NRCC ‘financed’ the Forum,” Norton wrote.

While dropping the complaint against the Leadership Forum, which has not raised or spent any money other than the returned $ 1 million, Norton said the strong ties between the organization’s top officials and the House Republican leadership and a finding in the future that it was “controlled by the House Republican leadership . . . would still subject the Forum to a bar on raising or spending non-federal [soft money] funds.”

Susan B. Hirschmann, a lobbyist who is president of the forum, said, “The FEC ruling validates what we have said all along. The Leadership Forum was set up to and will function in compliance with [McCain-Feingold]. This ruling reaffirms a citizen’s right to actively participate in the political process.”

By a 4 to 2 vote, the FEC decided to “find reason to believe that the NRCC violated [campaign law by accepting the $ 1 million back from the Leadership Forum], and [to] send an admonishment letter but take no further action.”

The commission voted to accept Norton’s recommendations not to take action against the Leadership Forum and the DSPO, although a number of commissioners voiced concern with Norton’s comments on the potential future problems for the Forum and his assessment that the DSPO is affiliated with the DNC.