Campaign Finance '96: It Doesn't Get Much Sleazier Than This

The 1996 election is still two weeks away, but it's already clear who has won: the well-heeled special interests. Thanks to huge campaign-finance loopholes, Republicans and Democrats are in an "anything goes" spending frenzy. As a result, the price tag for federal races is expected to hit a record $1.6 billion for the first time. "The system used to be teetering out of control," says former Federal Election Commissioner Trevor Potter. "Now it's fallen off the cliff."

Both parties are eagerly bending the rules. And that's fine with powerful "independent" interests such as the AFL-CIO, which is spending millions on behalf of Democrats, and the Christian Coalition, which is backing the GOP. In some House races, these groups are usurping control of local campaigns. "There's complete lawlessness out there," says Donald J. Simon, executive vice-president of Common Cause, a citizen's watchdog.

Examples of anarchy abound. The Democratic National Committee is under fire from the GOP for taking an illegal $250,000 donation from Cheong Am America Inc., a South Korean company, despite laws barring contributions from foreign firms, and returning it only after the Los Angeles Times blew the whistle. The GOP also questions $900,000 given to Democrats since 1991 by individuals and companies with ties to Indonesian conglomerate Lippo Group.

SOFT MONEY. Republicans, not to be outdone, are using a recent court ruling to deliver millions beyond the legal limits to close Senate races. Meanwhile, Clinton and GOP nominee Bob Dole have accused each other of illegally funneling to their campaigns some of their parties' $240 million in so-called "soft" money. Such funds are to go only for party-building but often provide back-door campaign financing. While candidate contributions are limited to $1,000 per election, there's no ceiling on "soft" money. This year, the parties' soft money totals will be nearly triple the '92 figures. Abuses are so common that Common Cause on Oct. 9 called for a special prosecutor.

Some blame the U.S. Supreme Court. On June 26, it ruled that parties could make unlimited "independent expenditures" on congressional races so long as they weren't coordinated with candidates. That prompted National Republican Senatorial Committee Chairman Alfonse M. D'Amato (N.Y.) to lay out $10 million for GOP pols who'd already hit their limit on direct party donations. The Democrats, after losing a court challenge to D'Amato's plan, may now copy him.

Meanwhile, U.S. courts have blocked the Federal Election Commission from reining in an explosion of "issue" campaigns by groups such as the AFL-CIO. This year, business, labor, and other interests are spending an estimated $60 million of unregulated dollars on efforts like issue-oriented ads, voter guides, and getting out the vote. The catch: Ads must refrain from endorsements. But they can still attack candidates' positions. "Everyone knows what they are designed to do," scoffs a GOP insider.

Big Labor has spent $17 million in 30 GOP House districts since April. The Republican National Committee is fighting back with its own $10 million issue campaign. The result: Interest groups set the agenda, not candidates. In Arizona, a House race between GOP Representative J.D. Hayworth and Democrat Steve Owens has become a slugfest between the AFL-CIO and the U.S. Chamber of Commerce, eclipsing the candidates' efforts.

As the parties become ever more emboldened to push the envelope, they risk a return to the kinds of Watergate-era abuses that forced an overhaul of campaign-finance laws in the 1970s. But until voters drain the campaign-finance swamp, the pols will revel in the muck.

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