Campaign Reform: Where Do We Go from Here?

Here's how enactment of the McCain-Feingold bill could alter the political landscape

For six years, a small but determined band of senators, led by Arizona Republican John McCain and Wisconsin Democrat Russell D. Feingold, hammered their colleagues for not getting rid of the corrupting influence of big money in politics. Finally, on Apr. 2, the reform-minded duo got a downpayment on their wish when the Senate voted to ban soft money--the oversize donations to political parties by corporations, labor unions, and the wealthy.

Be careful what you wish for. That's the apocalyptic message from campaign consultants, party leaders, and fund-raisers. If the McCain-Feingold measure becomes law, it will destroy political parties, they say. How? It will entrench incumbents while depriving challengers of much-needed funds. And it will boost the power of loose-cannon special-interest groups whose coffers are likely to overflow.

Truth is, no one knows for sure who stands to win or lose the most. "We're heading off into uncharted waters," says Senator Fred Thompson of Tennessee, one of 12 Republicans who voted for the measure. But candidates and political parties are frantically trying to calculate their odds now that the marathon effort to turn McCain-Feingold into law has become a 40-yard dash.

Of course, several obstacles remain before that happens. A House battle over the bill still looms. And President Bush's signature isn't guaranteed. But McCain and Feingold now have the wind at their backs. The one certainty: If the bill is signed into law in something close to its current form, McCain-Feingold will turn federal campaigns topsy-turvy. After interviews with dozens of consultants, academics, lawmakers, and lobbyists, here's the most likely scenario of how the bill will affect the major players and the playing field:

Hard Money Is King

To get the bill passed, the Senate didn't just ban soft-money contributions. It opened the hard-money spigot wider so candidates can collect more contributions on their own. The bill would allow individuals to contribute up to $4,000 per election cycle, up from $2,000, to candidates. At the same time, the Senate boosted the aggregate amount that an individual could give to candidates and political parties from $50,000 to $75,000 per cycle. Such increases may seem small, but candidates that adjust the quickest to an all-hard-money world will have the advantage in 2002, when a closely divided Congress is up for grabs.

The GOP will benefit at first. In the 1999-2000 cycle, Republicans raised $447 million in hard money, 65% more than the Dems' $270 million. "I don't have any doubt this will enhance my political strength," says Senator Phil Gramm (R-Tex.). "I've never really been a user of soft money."

Nevertheless, the GOP's advantage isn't likely to last once Democrats learn the art of survival in the new hard-money era. "You have to spread yourself out to get less money from more people," says Larry Noble, executive director of the Center for Responsive Politics, a watchdog group. This means more $250-a-head dinners, more use of the Internet to build support and networks, and more personal appearances at community events.

Candidates Fly Solo

Without soft money, candidates will be on their own. "It's every man for himself," warns New Jersey Senator and former Democratic Senatorial Campaign Committee (DSCC) chief Robert G. Torricelli, who voted for the bill despite what he sees as major flaws. The dscc raised some $100 million for last year's races, Torricelli says, but only $9 million of that would be legal under the McCain-Feingold law. "That wouldn't even cover our costs." Women and minority candidates, who historically have not been able to raise as much money as their white male counterparts, would feel the pinch the most.

Political Parties Learn New Tricks

No doubt, without soft money, the power of political parties will decline. Indeed, both parties will suffer from a money shortage at first. "It's going to be a real scramble," concedes McCain.

Still, it won't be nearly as bad as doomsayers predict. Parties will have to re-learn how to raise money by appealing to their grass roots, rather than just a few thousand wealthy supporters. That means more phone banks, more door-to-door canvassing, more get-out-the-vote activities, and less funneling of soft money to broadcast stations for candidate ads. All of which is likely to revitalize the connections between Democrats, Republicans, and their respective constituents. Indeed, a recent study by the New York University-based Brennan Center for Justice, a nonpartisan think tank, concludes that some 92% of party TV ads in last year's elections did not encourage voters to join a party, support a party, or even mention a party name. Says Charles E.M. Kolb, president of the pro-reform Committee for Economic Development: "They will have to get back to business with retail politicking."

Because the Democratic National Committee relies more heavily than its GOP rival on soft money, DNC Chairman Terry McAuliffe has a bigger task ahead. He says he's not waiting for McCain-Feingold to become law. He has directed the DNC to raise more via direct mail--a lost art for the Dems--and to make better use of technology and the Internet to communicate instantaneously with core supporters. He's also building the DNC's first centralized voter file to match one maintained by the Republican National Committee. It contains 48 million names--a treasure trove for direct-mail pitches. But to do all this, McAuliffe is risking millions of dollars that could otherwise be used to support candidates.

Watch Those Ads

During the 2000 races, numerous lawmakers were attacked in TV ads sponsored by special-interest groups. Now, the Senate hopes to handcuff these groups--ranging from the Sierra Club and the AFL-CIO on the left to the National Rifle Assn. and the National Right to Life Committee on the right. They would be barred from airing political ads that target a specific candidate 60 days before an election, or 30 days before a primary. But the reformers' archrival, Senator Mitch McConnell (R-Ky.), says that infringes on free speech. McConnell already is laying plans to challenge the issue-ad limits in federal court.

If he wins, parties still would not be able to accept soft-money donations, but nothing would prevent them from forming unofficial, outside groups to air grievances against lawmakers. "I'm going to have to recruit a lot of people to do [my] work," gripes Ronald E. Eibensteiner, chairman of the Minnesota Republican Party. Where would the money come from? Most party operatives believe that $500 million in soft money--the amount raised in the 2000 races--will find a new home in interest groups.

Special Interests Rule

One thing is clear: special-interest groups, from the drug-industry-backed Citizens for Better Medicare to the labor-backed Alliance for A Real Patients' Bill of Rights, will grow in power. To help candidates, or attack opponents, "there will be a new class of political warriors who will create interest groups to attack or support whomever they please," grouses Shawn Steel, chairman of the California Republican Party. That may only exacerbate some current problems with the political process. For example, along with the rise in fly-by-night interest groups, political messages could get a lot more more shrill. Steel warns of "political terrorist storms. If [members of Congress] make the wrong move, special-interest groups can blow them out of their seats." GOP legal expert and Bush campaign adviser Benjamin L. Ginsberg agrees. "The new coin of the realm will be the ability to turn out voters who feel strongly about an issue."

The PAC Is Back

Corporate lobbyists, trade associations, and ideological groups will also have to brush up on old tricks to compete in the new landscape. One likely favorite will be harnessing the power of political action committees, which fell by the wayside once donors realized they could write large soft-money checks directly to the parties.

The reason PACs will be so attractive is that they can give up to $10,000 to candidates or $30,000 to parties. And those are all legitimate hard-money contributions. "Companies that don't have PACs will have to change their way of doing business," says Thomas R. Kuhn, president of the Edison Electric Institute, a Washington lobbying group for electric utilities.

In another throwback to the 1980s, lobbyists are also likely to take advantage of bundling, in which numerous like-minded PACs contribute together to multiply their influence. But because PACs must be broadly based, they can only accept up to $10,000 per election cycle from any one employee or trade association member--companies and unions can't turn the loophole into a new soft-money-like ploy.

In the end, McCain and Feingold don't promise to reduce the amount of money in politics, or to make political discourse more civil. But they are convinced that returning to the good ol' days when hard money ruled will make the political process cleaner. It breaks the unsavory relationship that had developed between lawmakers and fat-cat donors seeking government favors. And corporate executives tired of being hit up for money can opt not to spend funds on campaigns without fear of retribution. "Inevitably," sighs Senator Susan M. Collins, a Maine Republican and ardent reform backer, "we'll have to come back and figure out how to close all the new loopholes." For now, though, the soft-money loophole that swallowed the campaign-finance system looks set to disappear.

By Paula Dwyer with Laura Cohn, Mike McNamee in Washington, and Ann Therese Palmer in Chicago

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