SOFT MONEY:
WHAT IS IT AND WHY IS IT A PROBLEM?

This selection was excerpted from www.commoncause.org.

Simply put, soft money is money which, by definition and law, is not supposed to be part of our federal campaign finance system. It is precisely the kind of money which federal law and policy have sought to exclude from national campaigns.

Since 1907, it has been illegal for corporations to spend money in connection with federal elections. Since 1947, it has been illegal for labor unions to spend money in connection with federal elections. And since 1974, it has been illegal for an individual to contribute more than $1,000 to a federal candidate, or more than $20,000 per year to a political party, for the purpose of influencing a federal election. Soft money is money which violates these rules. It is the corporate donations, the union contributions and the large -- $100,000, $250,000 or even $1 million - contributions given by wealthy individuals to the political parties.

The soft money loophole was created, not by Congress, but by the Federal Election Commission in an obscure administrative ruling in 1978. For years this potential loophole remained largely dormant. It emerged from this dormancy in the 1988 presidential campaign, first when the Dukakis campaign, and then the Bush campaign, began aggressive soft money fundraising. This fundraising involved the solicitation of corporate and union treasury funds, as well as unlimited contributions from individuals.

The myth of soft money is that it is contributed and spent for what is euphemistically called "party building" purposes that are unrelated to influencing federal elections. But this premise is little more than a widely acknowledged legal fiction which should not be taken seriously. Soft money corrupts for a simple and obvious reason. Soft money donations are given in such huge amounts -- $50,000, $100,000 or more - that the donors typically expect to receive something in return for their investment.

These amounts are so large they have become a viscous habit that Congressmen must break. Soft money is raised by federal candidates and federal officeholders and the spending of soft money, although nominally done by the parties, is controlled by or coordinated with federal candidates. The parties spend soft money as an adjunct to federal campaigns and for the purpose of influencing federal elections.