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Soft Money: Is It the End--or the End Run?

Campaign-finance reform has always been a Sisyphean task. For years, special interests, adverse court rulings, and a divided Federal Election Commission have thwarted efforts to stop the flood of money pouring into the political system. Now, all three are conspiring to frustrate the intent of a sweeping reform measure pushed through by Senators John McCain (R-Ariz.) and Russell D. Feingold (D-Wis.) and signed into law by President George W. Bush just a few months ago.

Potentially the most damaging turn of events: attempts to create surrogate parties that would step into the void on Nov. 6, when the national parties are banned from raising soft money--unlimited donations to political parties by corporations, labor unions, and the wealthy. Even though they may be thinly disguised proxies run by ex-party officials, the FEC says it will treat them as independent groups not constrained by the soft-money ban. "It's a license for federal parties to evade the law," fumes Fred Wertheimer, president of pro-reform group Democracy 21.

The FEC's new rules make it easier for parties to remain involved in raising large contributions in other ways, too. The agency will allow lawmakers to speak at state party functions where soft money checks are collected. It's defining soft-money solicitation as an overt request for dollars--thus making legal a "suggestion" that a donor write a $100,000 check. But the pi?ce de r?sistance was a June 22 vote to let the two political parties spin off committees that are no more than front groups to handle soft money.

Even before the FEC vote, special interests were jostling to become the parties-in-mufti and take control of the soft-money purses, which came to $500 million in 2000. Since April, Michael Lux, a former Clinton-Gore fund-raiser, has been meeting with some 150 liberal groups, including EMILY's List, the NAACP, and People for the American Way. This so-called Progressive Donor Network hopes to position itself as a one-stop account for liberal givers who once wrote large checks to the Democratic National Committee (DNC). A rival group, the centrist New Democrat Network, hopes to draw corporate donors who once contributed to the DNC.

Superlobbyist Ed Gillespie is leading a similar Republican effort. Like the Dems, Gillespie hopes to concentrate money and spend it where it is needed most rather than dilute it among dozens of uncoordinated groups. "It is not in the interest of Republicans to let a thousand flowers bloom," he says. His goal: to raise $15 million to $25 million every election cycle.

Naturally, this has McCain & Co. hopping mad. On June 26, McCain said he will push legislation to overturn the FEC rules. Even DNC Chairman Terry McAuliffe is uneasy. The fund-raising maestro, unwilling to watch the soft-money spigot dry up, is touring the country to teach donors how to comply with the new law while maximizing their giving. McAuliffe's strategy: ask $100,000 donors to give $25,000--the new legal limit--and persuade the donor's spouse and adult children each to give $25,000 of their own. "I'm not trying to get people to go to auxiliary groups," McAuliffe says. Still, the DNC and the Republican National Committee are cutting legal ties to state party chairmen, freeing them to act as national party fronts by placing them beyond the law's reach.

With just four months to go before campaign reform takes effect and with the Supreme Court set to hear a constitutional challenge in December, the post-Nov. 6 landscape remains blurry. But the purse is power, and despite the soft-money ban, party leaders and their allies have no intention of surrendering control. With state budgets in crisis and government services being slashed, it's a terrible year to be an incumbent governor running for reelection. It's even worse to be a lieutenant governor seeking a promotion.

On June 25, Bob Peeler of South Carolina became the fourth lieutenant governor elected in 1998 to be defeated in a Republican gubernatorial primary this year. Peeler followed flops in Illinois, Idaho, and Alabama. And acting Massachusetts Governor Jane Swift, who took the top spot when Paul Cellucci became Ambassador to Canada, retired rather than face an uphill GOP primary slog against Salt Lake Olympics savior Mitt Romney.

Other current and former lieutenant governors face tough general-election fights. Among them: Wisconsin's acting governor, Scott McCallum, and Michigan Lieutenant Governor Dick Posthumus, who will be an underdog in November if he survives a primary fight.

What's going on here? Second bananas often are blamed when things go wrong in the boss's administration, and they rarely get much credit when things go right. With voters tired of state budget woes, "They're all in trouble," says Bernadette Budde, senior vice-president for the Business-Industry Political Action Committee. "Lieutenant governors are the [political] equivalent of dog meat."

Only two ex-lieutenants are favored for promotions: Rick Perry, who succeeded George W. in Texas, and Maryland's Kathleen Kennedy Townsend, whose name helps. But there's still plenty of time for disaster to strike.

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