After years of debate, Congress passed the McCain-Feingold campaign-finance law in 2002. The result? Special interests are playing an even greater role in raising money for the 2004 Presidential campaign than ever, hoping to parlay their big bucks into post-election inside-the-beltway power. True, online giving is bringing millions of small donors into politics for the first time. But the failure of campaign-finance reform to curb the influence of special interests in Washington is disheartening. Americans need to believe that their political leaders are doing what is best overall for the nation, not just their campaign contributors.
Despite McCain-Feingold, a whole new generation of fat cat fund-raisers is funneling millions to the election campaigns of President George W. Bush and Senator John F. Kerry. They are the bundlers -- executives and lobbyists -- who can pony up the legally permissible $2,000 and persuade dozens of friends, family, and business associates and employees to do the same. Bush bundlers come from Wall Street, oil and gas, health care, and manufacturing companies. His top bundler is Merrill Lynch & Co. (MER) Chairman Stanley O'Neal. Kerry's bundlers come from Washington law firms and lobbyists, trial lawyers, and large media conglomerates.
Then there are the 527s, which are advocacy groups, tax exempt under Section 527 of the Internal Revenue Code, that do not directly call for the election or defeat of specific candidates but finance more general political ads. These 527s are the new receptacles of soft money. Used mostly by Democrats, groups such as America Coming Together and the Media Fund are financed by unions and a new breed of super fat cats who are writing megamillion dollar checks. The best known is George Soros, who has donated $15 million of his own money.
McCain-Feingold isn't a total failure. Campaign contributions are now more transparent. Rich donors can't simply write million-dollar-checks directly to political parties. That's all to the good but not good enough. Special interests still dominate the campaign process.
The best hope for the nation is for the Web to unleash a torrent of small donor contributions so great that it eventually erodes the political power of the fat cat contributors. The White House and Congress should not be sold to the highest bidder even if we now know who they are.